July 2013

INTERNATIONAL Friendly Ire: Middle East Policy ENVIRONMENT Dammed Nation: China's Hydropower Problem

Will the overturning of several decade-old murder convictions herald a new attitude towards due process?

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Volume No. 059 July 2013

POLITICS Self-discipline: How the Party Polices its Members

EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Director : Liu Beixian 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: Sean Silbert 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: Wang Yongzhi, Ruan Yulin, Li Yang Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Zhou Zhaojun Tokyo Office: Sun Ran Paris Office: Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Huang Hongbin Moscow Office: Jia Jingfeng Manila Office: Zhang Ming Berlin Office: Huang Shuanghong Sydney Office: Zhu Daqiang Legal Advisor: Allen Wu ISSN 1943-1902

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NEWSCHINA I July 2013

Put the debate back into politics

W

ith the rapid uptake of social me- they refute the right of their opponents to exist. dia, Mainland Chinese are becomThis is a worryingly familiar trend to those who ing increasingly outspoken when survived the Cultural Revolution, when “class it comes to politics, at least online. Engagement struggle” dominated daily life, and political differbetween diverse political ences were settled through viewpoints can enrich the intimidation, abuse and debate on public policy, violence. Indeed, many The issue of the helping China in its search buzzwords visible in today’s increasingly polarized and for the right reform agenda. online battles of ideas are puerile conduct of wouldUnfortunately, along with borrowed directly from the be political thinkers cannot legitimate and reasonable Red Guards. be solved by the judiciary debate, we have witnessed a As extreme comments rising tide of radical political tend to attract more attenviewpoints, expressed often tion, some of China’s intelin little more than verbal lectuals are now paying lip abuse. These kinds of “activists,” when faced with service to the trend of abuse in order to increase a well-informed opponent, even resort to physical their influence. As a result, the word “public intelviolence. lectual” itself has become a pejorative.

In the latest example, Mao Yushi, an economist In a recent case, Kong Qingdong, a political well known for his critical view of Mao Zedong (no conservative and a professor from Peking Univerrelation), was verbally abused when giving a speech sity, called student Guan Gaiyuan a “treacherous in Shenyang on April 25. At a separate speech in dog” for pointing out a technical error in one of Changsha, also by Mao Yushi, a group of protec- Kong’s poems published on his microblog. Guan tors occupied the venue, forcing the organizer to later sued Kong in a Beijing court, which on May abandon the event.

7 ruled, controversially, that Kong should apologize Earlier in January, Li Chengpeng, a famous and compensate Guan 1,200 yuan (US$193) for writer known for his criticism of the government, causing mental distress. was slapped in public by a protester during a book The issue of the increasingly polarized and pusigning. erile conduct of would-be political thinkers cannot This is just a glimpse of a radicalization of po- be solved by the judiciary. litical engagement. Instead of debate, the clash beAs a participant in public debate, one must be tween ideologies has become emotionally driven. aware that only when interaction between different On the Internet, detractors of the government be- opinions results in greater understanding can it be come “traitors” who should be “prosecuted,” while of use to society. Verbal abuse and the expression its supporters are mocked as “patriotraitors” or of personal hatred only serve to alienate political “running dogs of the government.” moderates, making it very difficult to foster a poWithout the ability to listen to other viewpoints, litical climate that allows for nuanced perspectives. there is no room for debate. In such an atmosphere, Only in such a political climate, will China be one’s “side” becomes more important than the issue able to deliver peaceful and meaningful political under scrutiny. As each camp claims to be right, reform.

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Contents

INNOCENCE REGAINED

Photo by CFP

The overturning of several decade-old murder convictions has done little but expose the widespread acceptance of miscarriages of justice in China’s courtrooms. What is to be done?

Editorial

politics

Cover Story

international

society

01 Put the debate back into politics 10 Inner-Party Investigations :

Harsh Discipline

12 Wrongful Convictions:

Prisoners of Circumstance/A Lost Decade

P20

20 Middle East :

Skirting Conflict 23 Nongfu Spring :

Water Fight 26 Cross-Straits Culture :

Political Drama 28 Liu Tienan :

Same Old Story

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P28 NEWSCHINA I July 2013

Contents

P32

P30 30

32

Politicians-turned-authors : Official Literature Disaster Relief : Quakes Apart

economy

culture

54 Zhao Wei :

A Star is Reborn 57 Shadow of Politics :

The Other Madame Mao

35 Alibaba Microloans :

Open Sesame 38 Sportswear Industry :

A Finished Line 40 Amazon Kindle :

Buy the Book?

42 Infant Formula :

Land of Milk and Money

visual report

04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 45 China by numbers 66 real chinese 68 ESSAY 70 CULTURAL LISTINGS 72 Commentary

2013 Fortune Global Forum

46 The Perfect Host/

Forum Helps to Attract More Multinationals environment

50 Hydropower :

Reservoir Clog

NEWSCHINA I July 2013

P54 P42

60 Driven to Distraction

outside in

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Hidden Shanxi : The Ghosts of Diantou Village Flavor of the Month : In Transit

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NewsChina Chinese Edition

Oriental Outlook

May 27, 2013

April 28, 2013

Breast Cancer Scare

Guinea Pigs Exploited

The news that Hollywood star Angelina Jolie has had her breasts removed to prevent breast cancer triggered hot discussion among Chinese women, many of whom flocked to hospitals to inquire about testing for BRCA, a genetic mutation that can lead to breast and ovarian cancer. Experts tried to dampen the hysteria, saying that Chinese medical authorities had not yet determined whether Chinese women with BRCA were as likely as Western women to develop cancer.

Chinese doctors are more inclined to recommend high-tech treatments that do not require breast removal. They told the media that although nearly 90 percent of Chinese breast cancer sufferers choose to have a mastectomy, this is unnecessary in 40 percent of cases.

It has been reported that China is home to about 500,000 professional drug testers who circulate from hospital to hospital, taking unidentified drugs or receiving newly developed shots. Despite its social stigma, drug testing provides those unable or unwilling to work with a meager income.

This rapidly growing group is controlled by middlemen between drug manufacturers and individual testers, who receive the majority of the remuneration but care little about the rights and interests of test subjects. Though many agents have potential testers sign an ICF (Information Consent Form), these forms, according to lawyers, do not generally clarify the possible side-effects of the drugs, or the compensation for any resulting problems. Many subjects do not realize they have no coverage until they fall ill after drug testing.

China Economic Weekly May 2, 2013

Cuts at Foreign Companies Many white-collar Chinese employees at foreign companies, especially those in high-paid middle-management positions, face a predicament, as an increasing number of foreign companies in China are cutting staff in the wake of the global financial crisis. These employees, many of them middle-aged, hit a glass ceiling due to their nationality, while at the same time losing their workplace advantage to younger employees who are often more energetic and have a broader range of knowledge. Some of these white-collar workers are now choosing to open their own businesses, often struggling to adapt to the drop in salary and social status.

Southern Metropolis Weekly May 15, 2013

Patently Problematic Pfizer Inc., the producer of Viagra, the erectile dysfunction drug, is soon to be under threat from competitors as Viagra’s 15-year patent is about to expire in China. According to media reports, when Viagra’s patent expired in South Korea last May, 30 similar, lower-priced alternatives flooded the market, cutting Viagra’s sales by about 58 percent. A similar challenge is predicted in China, where the market is already flooded with generic versions of the drug, in addition to counterfeit Viagra. In order to enlarge its market share, Pfizer has tried to make Viagra available over the counter for years, but has never earned approval from the Chinese authorities.

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Xinmin Weekly April 27, 2013

Tough at the Top As pupils in Chinese schools are busy with their middle or high school entrance exams, key schools that are allowed to recruit students in advance are in a fierce battle for the top students. This has created a vicious circle in which the schools depend on the top students to retain their superior status, and students are forced into unreasonable competition to win places at top schools. Worryingly, the phenomenon has now been passed down to the kindergarten level, where children are forced to learn skills and knowledge far beyond their age level in order to enroll in a good elementary school. Critics said that the pressure on both schools and students will not be relieved unless China can balance education resources between schools and regions.

NEWSCHINA I July 2013

Illustration by Wu Shangwen

“Visitors simply hurry straight to where the emperors sat, then where they rested, then where they slept, and then to the exit. They don’t care about any of the exhibitions.”

Shan Jixiang, president of the Palace Museum in Beijing’s Forbidden City, complaining that tourists view the museum as a scenic spot “It is my mission to sing for my biggest client, the Communist Party of China, whenever needed.”

British singer Iain Inglis, who shot to fame for singing Chinese revolutionary songs on the Internet, on his singing career in China.

“In China, copyright infringement is like running a red light – nobody can really control it. Anyone who tries to stop it just gets ignored.”

Renowned composer Gu Jianfen responding to broadcaster Hunan TV’s unlicensed use of an adapted version of one of her songs.

“It takes several years to finish a real estate program – it’s not like making clothes. A bra can cost several hundred yuan, which is much more expensive than a house if you’re going on price per square meter.”

Real estate developer Ren Zhiqiang responding to complaints about high house prices.

“We are not common people. If we were, we wouldn’t be able to come to Hong Kong to shop. We are people of standing on the mainland.”

The family of an official from Liaoning Province trying to use their “standing” to complain about a late tourist bus.

NEWSCHINA I July 2013

“When an investment goes wrong, those who want to jump off a building should just go ahead and do it.”

Zhang Weiying, an economics professor at Peking University, encouraging enterprises to take responsibility for their investments, rather than relying on the government.

“Please don’t go to my hometown – you will be disappointed. There’s none of the splendid, glorious scenery described in my novels.”

Mo Yan, China’s first winner of the Nobel Prize for

Literature, joking about the fact that his hometown has now become a tourist destination.

“If you don’t go drinking today, you’ll have nothing to drink tomorrow.”

An anonymous county Party secretary in Guangxi on the drinking culture of Chinese bureaucrats.

“Strong, rich, distracted and bewildered.”

Writer Yi Zhongtian describing parts of the Chinese elite.

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Top Story

Li Keqiang on First Official Trip Chinese Premier Li Keqiang headed for India on the opening leg of his first official trip May 20, a move that analysts say is an obvious signal of the Chinese administration’s intention to improve ties with its neighbors.

Just weeks ago, Beijing and New Delhi saw relations cool, with both sides encamped at the western section of their disputed border in a face-off that lasted for over 20 days. Although the confrontation finally ended with both sides pulling back, it has triggered a new wave of “China threat” rhetoric in India.

Li’s visit is of great significance in terms of easing tension. “China has left India far behind with its rapid GDP growth, causing India to worry about its leading position in South Asia,” Jin Canrong, an international relations expert, told the Beijing Times. “The visit aims to clear away the shadows and create more room for cooperation.”

“The purposes of my visit to India are to increase mutual trust, to deepen cooperation and to [better] face the future,” Li told Indian reporters.

These objectives were reflected in the joint statements signed by the two sides, covering cooperation on topics including border security and military issues.

“The [joint] statement has improved mu-

tual trust on both sides,” Jiang Jingkui, a South Asian issues expert, told CRI Online.

“It indicates that the two governments will maintain close contact and jointly defend the border until the territorial dispute is settled,” he added.

Li Keqiang left India on May 22 and visited Pakistan, where the traditional allies signed an array of cooperation agreements. Business deals were also inked at Li’s next two destinations, the economic powerhouses of Switzerland and Germany.

Military

China to Fly First Stealth UCAV China’s first stealth UCAV (unmanned combat aerial vehicle), the Lijian (literally “sharp sword”) drone completed trials in early May, indicating that China will become the third country to make use of stealth UCAV after the US and France.

According to media reports, the Lijian, developed with homegrown intellectual property, will be used by the People’s Liberation Army for tracking and reconnaissance purposes. Adopting the “flying-wing shape” which integrates wings with the body, a world-leading technology that makes signals

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hard for radar to detect, the new Chinese drone is capable of launching precision attacks on targets deep in enemy territory.

China began its research into UAVs (unmanned aerial vehicles) in the 1990s. Domestic media revealed that the country will

raise the ratio of unmanned to manned aerial vehicles to 1:1 in the following 30 years, with the long-term goal of 2:1.

NEWSCHINA I July 2013

Report

Top 10 Cities in Sustainable Economic Competitiveness (Longterm) Top 10 Most Livable Cities Top 10 Cities in Commercial Investment

Beijing and Shanghai“Unlivable” On May 21, the China Academy of Social Sciences, the Chinese government’s primary think tank, issued its annual report on the competitiveness of China’s cities, ranking a total of 293 cities including Hong Kong, Macao and Taipei.

The report for the first time ranked cities’ overall competitiveness by measuring both their economic growth and density, and rated their sustainable competitiveness with 68 indices including livability, investment opportunities, social stability, environmental factors, and average educational background of residents.

With the highest concentration of resources, China’s three biggest metropolises Beijing, Shanghai and Guangzhou unsurprisingly placed in the top 10 in terms of economic competitiveness, but all three dropped off the podium in the livability stakes, a sign of their growing pollution problems and over-eager consumption of resources.

According to its author Ni Pengfei, the report is expected to urge fairer distribution of resources between different regions, to counterbalance rapid urbanization.

Society

Economy

Xinjiang Mourns Murdered Police

China Issues Q1 GDP

The Xinjiang government held a memorial service April 29 for 15 local police officers and community workers who lost their lives in a recent clash with suspected terrorists.

The incident happened on April 23, when three community workers in a town in Bachu County, Kashgar Prefecture found a number of suspicious individuals gathered in a house and in possession of knives. The suspects killed the workers, set fire to the house and continued to use bladed weapons, including axes and machetes, to attack police and community workers. The group was eventually subdued by armed police.

A total of six terrorist suspects were shot dead at the scene, with another eight arrested. Police, who called the attackers an ethnic separatist group with plans to launch a terrorist attack, later arrested a further 11 people in connection with the incident.

31 of China’s provinces, municipalities and autonomous regions published in early May their GDP data for the first quarter of 2013, showing an average growth higher than the national level of 7.7 percent.

Though their respective total GDPs remained low, Yunnan and Guizhou, two ethnically diverse provinces in China’s southwest, topped GDP growth with 12.6 percent. Meanwhile, economic giants like Beijing, Shanghai, Guangdong and Zhejiang provinces were left at the bottom, indicating an obvious slowdown.

The trend appears to be spreading nationwide, with 21 regions registering slower GDP growth than last year, implying that China is still in need of an effective and sufficient stimulus to invigorate its economy.

Analysts have called for the promotion of the service industries to stimulate the economy. According to a report on BRICS (Brazil, Russia, India, China and South Africa) countries issued by the China Academy of Social Sciences in March, China was the only country of the group whose service industries accounted for less than 50 percent of its GDP.

International

North Korean Envoy Visits China On May 22, just one day after Beijing announced that its new President Xi Jinping would visit the US early in June, North Korean leader Kim Jong-un sent his envoy Choe Ryong-hae to Beijing.

Given Choe’s high military and political rank, Chinese experts believe the North’s visit was not simply a request for economic assistance, but more an attempt to exert influence on China’s policy toward the Korean issue.

As North Korea’s only ally and its main source of economic aid, China has been under enormous pressure both at home and abroad since the North provoked the international community by testing three nuclear missiles, with the most recent test in February. Experts predict that the North might promise to limit its nuclear tests in exchange for backing from China.

Speculation was fueled when Choe told Beijing that the North values bilateral relations with China and is willing to come back to the negotiation table on the nuclear issue. The Chinese government did not reveal any further details of the talks.

NEWSCHINA I July 2013

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Photo Credit: Top Story, CNS; Military, CFP; Society, Xinhua; International, CFP

Top 10 Cities in Overall Economic Competitiveness (Short-term)

What’s Making China Angry ?

A preface by Peking University professor Wang Dingding in the Chinese edition of The Limit of Liberty, a masterpiece by the late US economist James M Buchanan, was found to have been torn out of every copy when the book hit shelves in early May. Wang said on his blog that a Zhejiang provincial official had ordered the preface to be censored – he went on to post the preface in its entirety.

Poll the People Do you think China’s “people’s jurors” [jury members picked at random from the public] are just for show?

Yes 48,438 98% No 681 2% Source: www.weibo.com

What’s Amusing China ?

A photo of blooming China roses in a local newspaper in Zhuzhou, Hunan Province caused big trouble for two lovebirds in the background. The man and woman later stormed into the newspaper office to complain that their privacy had been violated – the woman was married, but not to the man in the picture.

What’s Shocking China ?

Wang Ping, a doctor from Guantao, Hebei Province, fell while climbing out of the window of her third-story office to escape abuse from the family of a boy who died on the operating table in late April.

Wang died after 30 hours of emergency treatment.

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Most Circulated Post Retweeted 454,726 times

The post featured a college student named Huang Yuzhou, who collected his roommates’ valuables before fleeing his dormitory when an earthquake struck nearby Lushan, Sichuan Province in late April.

This bro managed to leave his dorm with six laptops, three cameras and a pet turtle. He rescued everything in the dorm by himself.

NEWSCHINA I July 2013

Top Five Search Queries On

over the week ending May 22 Temporary Man and Wife 119,830 Migrant workers are reported to be finding temporary partners during long-term separation from their spouses.

WHO’S

HOT? WHO’S NOT?

Zhenjiang Earthquake 70,245 The 2.6-magnitude earthquake shook Zhenjiang, Jiangsu Province on May 19.

Chen Hao 61,734 The actress was reported to be involved in the corruption case of Liu Tienan, a government minister who was arrested this year.

Studious Security Guards Over the past 20 years, more than 500 security guards at Peking University have earned admission to universities through self-study. Some have even gone on to become college lecturers.

Hong Kong Train Derailment 28,860 The light railway accident on May 17 left 77 passengers injured.

Top Blogger Profile Kai-Fu Lee Followers: 41,058,860 The 52-year-old founder of Innovation Works, a Beijingbased venture capital fund for tech start-ups, is ranked the fourth most popular blogger on Weibo by number of followers, and the only one in the top ten who isn’t in show business.

The computer scientist, who used to work for Microsoft and Google, has established himself as a mentor for young Chinese people, blogging and writing books to help them succeed in their studies and careers.

NEWSCHINA I July 2013

Some of the pictures used in this section are from the internet

Heavy-metal-poisoned Rice 23,711 Rice sold in Guangdong Province was confirmed to be contaminated with cadmium.

Rambling Robber A man from Chongqing stole a car parked on a mountain path near the city on a rainy night in late April, despite not knowing how to drive. He soon abandoned the car and got lost on the mountain.

Frozen in the rain, the man had to call the police to turn himself in after wandering for four hours.

Thrifty Grandma

A grandma from Beijing tried to bargain with a policeman to have her 20 yuan (US$3.30) jaywalking fine reduced to 10 yuan (US$1.60).

Touchy Principal A student from a vocational school in Shenzhen was expelled after he posted on Weibo, China’s Twitter equivalent, criticizing the school principal over the low quality of food in the canteen.

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politics

Inner-Party Investigations

Harsh Discipline A The accidental death of a government official detained by the Party’s extrajudicial internal investigation system has provoked debate on the rights of detainees

Photo by CFP

By Yuan Ye

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t 11 PM on April 8, Yu Qiyi, an official from Wenzhou City was sent to a local hospital for emergency treatment. Four hours later, he was pronounced dead. The official’s body was emaciated, and covered with blood clots.

Thirty-eight days earlier, Yu Qiyi, 41, was placed under shuanggui (literally “double discipline”), a special system for investigating the wrongdoing of Party and government officials. In theory, errant officials are supposed to present themselves at a designated place (often in seclusion) to confess their wrongdoings to the Party’s internal disciplinary apparatus, rather than the judicial system – often, they are simply seized, and taken to secretive detention centers. Yu Qiyi was a member of the Party Committee of the State-owned Wenzhou Industrial Investment Corporation, as well as the corporation’s chief engineer. Suspected of involvement in various economic irregularities, Yu was taken away by the local Party commission for investigation.

No one knew where or how Yu Qiyi was being investigated due to the secrecy surrounding shuanggui. An hour before his death, Yu Qiyi’s wife received a phone call telling her she could see her husband at the hospital. By Yu’s doctor’s account, his vital signs were weak when he was taken into hospital, and although a preliminary autopsy showed that he died of drowning, Yu’s family suspect that he was tortured during interrogation.

On the evening of Yu Qiyi’s death, the anticorruption department of the Wenzhou Procuratorate began investigating the case. Yu’s medical records were sealed by the procuratorate, with Yu’s family and the hospital as witnesses. Media reports of Yu’s death caused a stir in the public domain. In recent years, media have reported widely on deaths of lay suspects due to police brutality during interrogation. But reports on “accidental” deaths of government officials under shuanggui are extremely rare.

In the wake of the 18th National Congress of the Communist Party of China (CPC), the Party’s efforts to strengthen its anti-corruption campaign had won acclaim from the public.

NEWSCHINA I July 2013

However, many argued that if the basic human rights of government officials were not protected during questioning, there was little chance for the rights of common people.

Peculiar Investigations

In China, complex networks of influence can mean that some officials are powerful enough to interfere in investigations into their own wrongdoing. In an attempt to prevent this, a special means of corruption investigation was introduced in 1990, when the State Council, China’s cabinet, issued its “Regulation on Administrative Supervision,” empowering the Party’s supervisory department to “order individuals concerned to explain allegations of disciplinary violations or corruption at a designated time and in a designated place.” This was the first time the concept of shuanggui had appeared in China’s laws and regulations.

In the following years, the scope of shuanggui gradually expanded.

In 1997, the National People’s Congress, China’s legislature, replaced the “Regulation on Administrative Supervision” with the “Administrative Supervision Law of the People’s Republic of China.” The law states that the Party’s inspection authorities have the right to “order relevant people to explain allegations of disciplinary violations or corruption at a designated time and place.”

However, in practice, shuanggui has not become part of the formal judicial system – it is a strictly inner-Party disciplinary measure to restrict personal freedom that takes precedence over judicial procedure. The purpose of shuanggui is to isolate the officials concerned in order to prevent outside intervention, destruction of evidence, and attempts by separate suspects to make their confessions corroborate. If, after a preliminary check of the evidence, the Disciplinary Inspection Commission decides that a criminal investigation may not result in a conviction, the authorities can decide to use shuanggui.

Party Discipline or National Law?

The use of shuanggui as a failsafe when there is insufficient evidence has made it highly controversial among Chinese legal circles.

First, to guard against external intervention and collusion among suspects, shuanggui is always carried out in secluded, undisclosed locations. The official concerned is questioned in secret, and contact with the outside is cut off. Once shuanggui begins, the official’s power is frozen.

Although shuanggui carries a designated timeframe, the person being investigated usually does not know how long he or she will be detained. If the official is eventually found guilty in the eyes of the law, the duration of shuanggui is not counted as part of the prison term, and the official does not have the right to meet with a lawyer during

NEWSCHINA I July 2013

their detention.

The Administrative Supervision Law states that shuanggui should not become a form of detention, but in reality, this is exactly how the system works. “To some extent, shuanggui is just a disguised form of custody. Party members are first of all citizens whose basic rights should be guaranteed, and regulations governing Party affairs should never in any case override the law,” said Wu Ming’an, professor of criminal law at the China University of Political Science and Law. Many in legal circles believe that shuanggui is a violation of human rights, but others see it is as a necessary evil. Li Yongzhong, chief of the Research Office of the Disciplinary Inspection Commission of the CPC Central Committee, holds that shuanggui is an effective tool in the Party’s fight against corruption. He told the media: “If shuanggui were not used, breakthroughs in some serious corruption cases would not have been made, and, in turn, the people’s confidence in the anticorruption drive could be weakened.”

Xie Pengcheng, a researcher from the Procuratorial Theory Research Institute of the Supreme Procuratorate, believes that although shuanggui lacks legal grounding, it is indeed necessary in certain circumstances.

Now that the dark side of shuanggui has been exposed, many are urging that shuanggui be incorporated into the wider legal system. As early as 2007, Wang Minggao, a noted anti-corruption scholar, began advocating reform. He proposed that the system, in its existing form, be either abolished or made a part of the country’s legal system.

He Weifang from Peking University Law Institute holds a negative attitude toward shuanggui, saying that it involves the restriction of personal freedom, a right that can only be taken away by the judicial or public security departments. Many current shuanggui practices are extrajudicial.

“There is a rationality for shuanggui’s existence in this transitional period, but it should be gradually absorbed into the legal system,” said Zheng Chengliang, president of the National Justice Institute.

After the Yu Qiyi incident, the State-run Xinhua News Agency spoke out on Weibo, China’s Twitter: “Unless power is checked, few can feel safe. Common people and leading officials are potential victims of shuanggui. Good governance starts with the proper handling of every criminal.”

However, only 15 days after Yu Qiyi’s death, a 49-year-old judge named Jia Jiuxiang in Sanmenxia, Henan Province died an “accidental death” 10 days into his shuanggui detention. According to the deceased judge’s family, his face was covered with blood clots, his nostrils were stuffed with cotton, and there were signs that he had been beaten.

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cover story

CRIMINAL CONVICTIONS 12

Wu Changlong’s conviction is overturned in 2013.

Photo by AP

China’s highest judicial authorities are forcing local courts to overturn several high-profile former criminal convictions, many of them death sentences. The publicity surrounding the cases has exposed the extent to which China’s justice system serves a culture of short-termist political expediency. Can the system truly deliver justice to the innocent as well as the guilty?

NEWSCHINA I July 2013

Wrongful Conviction

Prisoners of Circumstance After decades of concealment, China’s judiciary is finally rolling back scores of wrongful convictions. Is this the first step towards long-term reform?

By Shen Xinwang and Wang Quanbao

NEWSCHINA I July 2013

Photo by CFP

“

Zhang Huanzhi, mother of Nie Shubin, a man wrongly executed for rape and murder

April 13, 2005, crowds gather outside a local court in Jinshan, Hubei Province awaiting the aquittal of She Xianglin

Wu Changlong (right) and his father

lowed up by separate charges being brought against the defense counsel.

Then, on April 26, Zhou Qiang, president of the Supreme People’s Court, commented publicly that “a fair judiciary is the eternal theme, task and aspiration of the people’s court.”

But will it become a reality?

Accountability

Photo by CFP

All effective measures must be taken to stop wrongful convictions,” Shen Deyong, executive vice-president of the Supreme People’s Court, wrote in the People’s Court Daily on May 6, calling for an end to miscarriages of justice.

“Once a wrongful conviction is made, the court will face finger-pointing from all sides.

In recent years, a number of wrongful conviction cases have posed unprecedented challenges to the court and it’s high time to rectify the situation. Otherwise, the judicial system will lose its credibility among the general population,” Shen concluded.

This article, written by one of China’s most senior judges, is regarded as an indication that China’s court system, long in thrall to the country’s internal security authorities rather than to the statute book or the constitution, may be undergoing its biggest shakeup in history.

In some localities, a number of decade-old murder convictions have been overturned.

The most recent example was the May 3 acquittal of Wu Changlong, who had formerly been convicted of terrorism and sentenced to a 12 year jail sentence in Fuqing, Fujian Province.

In early 2013, President Xi Jinping urged that China’s judicial and law enforcement organs “try to ensure” fair trials in every judicial case. While on paper this seems a modest request, in China, where almost all criminal cases end in a conviction and are often fol-

China’s wrongful conviction accountability system was set up in the early 1990s as an attempt to allow the courts to self-regulate, a policy in line with that used in other government departments. According to Professor Xu Xi of the Law School of Beijing Institute of Technology, in 1998 the Supreme Court formulated “the People’s Court Accountability Regulation for Adjudicatory Personnel in Illegal Trials,” clarifying who was to be held responsible in the case of a wrongful conviction.

As with other attempts to allow government departments to reform themselves, this move was a failure. “Some local courts regard the hearing of appeals, retrials and amendments as an admission of wrongful conviction,” Xu told our reporter. “Thus they have stymied the independence and enthusiasm of judges.”

“In order to avoid accusations of wrongful conviction, local courts often resort to passing cases up the chain of command,” he added. As a result, Xu believes, judges de-

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cover story

Photo by Mu Shui

When cases, specifically capital cases, are marred by such eventualities, Shen argues, higher courts will often choose to change a death sentence into death with reprieve or a life sentence in order to secure a conviction to satisfy law enforcement while also avoiding the execution of a person convicted despite the existence of reasonable doubt.

“Presumption of guilt,” a concept central to China’s pre-Communist legal system, still remains an unspoken feature of criminal cases, and is deeply rooted in the mentality of both judicial personnel and law enforcement agencies, who are incentivized to secure convictions, not acquit the innocent. This leads to miscarriages of justice beginning at arrest which can continue right up until a judge passes sentence.

China’s network of procuratorates, the intermediary bodies which determine which cases will go to trial, is also under pressure from special interest groups to fast-track certain cases and throw others out.

Guan Fujin, deputy director of the Anticorruption and Anti-bribery Bureau of the Supreme People’s Procuratorate, also pointed out that judicial independence is almost impossible to guarantee in most communities.

“Local governments can often intervene in decisions made by local courts and procuratorates,” he told NewsChina.

Wu Changlong, after spending 12 years in prison, finally returned home in early 2013 after his conviction was overturned

vote much of their time to cultivating good relations with their superiors, to guarantee a safety net should a case come under scrutiny.

Even the very basis and application of Chinese law is far from concrete. Despite the official adoption of presumption of innocence as a guiding principle, the meager number of acquittals in criminal cases in China is a testament to the historic bias against defendants in the country.

“Presumption of innocence was introduced into China’s Criminal Procedure Law in 1996,” Chen Guangzhong, a professor from the China University of Political Science and Law, told NewsChina. However, to what degree this principle actually exists in the letter of the law in China is open to debate. The clause Chen cites is Article 12 of

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the revised law, which states that: “Nobody shall be incriminated before the people’s court passes judgment.” Such vague wording allows courts plenty of room for interpretation.

“Wrongful convictions are often the result of dereliction of duty on the part of judicial personnel and the pursuit of a high arrest, prosecution and conviction rate,” wrote Shen Deyong in the People’s Court Daily. Referring to judges in the West, he argues: “The stain of a wrongful conviction would not be washed away in a lifetime.”

In Shen’s opinion, China’s courts, notorious for show-trials, biased testimony, insufficient or doctored evidence and the reading of confessions obtained through torture, are now under intense pressure from all sides.

Presumed Guilt

As a result of a number of embarrassing exposures of wrongful capital convictions, some of which had led to the execution of innocent people, the Supreme People’s Court in 2007 made an unusual U-turn, withdrawing the power to review capital cases from local judicial authorities.

Last year, Henan Province started holdNEWSCHINA I July 2013

ing judges and retired judges responsible for wrongful rulings in an effort to reduce miscarriages of justice. Since then, courts at various levels in the province have reviewed over 100 old cases involving hundreds of convicted individuals, of whom 116 have since been declared innocent.

Many legal experts believe this is only the tip of the iceberg. “It’s easy to make wrongful convictions but it’s very difficult to correct them after the fact,” Chen Guangzhong told our reporter.

Despite this, the newly-issued Criminal Procedure Law, signed on January 1, 2013, has proven more effective than its previous incarnation. Several capital convictions have been overturned, and many more are now up for review.

Li Huailiang, a villager from Henan Province convicted of murder on August 7, 2001, was released on April 25 this year by the Pingdingshan Intermediary Court, which had secured his death sentence 12 years previously. While the Henan Provincial High Court commuted Li’s sentence to life imprisonment on the grounds of a lack of evidence, as with so many capital cases in China, a lack of evidence hadn’t kept Li out of jail.

A lengthy campaign by Wang Yongjie, Li’s defense attorney, bore little fruit until the new Criminal Procedure Law, Article 96 of which declares that defendants must be released on bail if a case remains unsolved after a second hearing. This clause allowed Li Huailang to be released from jail, though he remains under surveillance, and his murder conviction remains in place.

Chen Keyun and Wu Changlong, convicted in June 2001 of carrying out a terrorist bombing in Fuqing, Fujian Province, were declared not guilty by the Provincial High Court on May 3.

While optimists claim that the admission of wrongful convictions and the overturning of some sentences as the result of the new changes to the statute book, Cheng Lei, associate professor at the Law School of Renmin University of China, does not see a direct connection with the new Criminal ProceNEWSCHINA I July 2013

dure Law. Rather, he believes that the new central government is attempting to send out signals to the public.

“The overturning of more wrongful “Wrongful convictions is due to acquittal is a change in the political environment,” he preferable told our reporter. “Afto wrongful ter the 18th National conviction.”

Congress of the Communist Party of China late last year, the new generation of leaders’ strong emphasis on rule of law led to indirect pressure on the judiciary to step up efforts to reform.”

Perversion

He Jiahong, law professor at Renmin University, believes that the problem with wrongful convictions is that they are neither the fault of individual law-enforcement personnel nor individual judicial personnel, but the judicial system as a whole.

Many other academics have a similarly pessimistic view, but few agree on the root cause of miscarriages of justice in China. In Professor Chen Guangzhong’s opinion, the majority of blame lies with police, and the commonplace use of torture to extract false convictions – a measure seen by many law enforcement personnel as legitimate so long as it has a positive impact on crime statistics.

“Law enforcement departments are under intense pressure to solve cases,” Chen told NewsChina. “For example, they are required to solve all homicide cases. Ignoring evidence, they simply target an individual and extract a confession by coercive means.”

According to Chen, once such a case proceeds to trial, the procuratorate and the court often fail to stick to the principle of “innocent until proven guilty.” Instead, they choose to suspend the case, or reduce the sentence, neither acquitting nor sentencing a defendant to death, thus leaving detainees to languish in jail indefinitely.

He Jiahong believes that the way criminal

investigations are carried out in China is a barrier to the concept of a fair trial. Flimsy, questionable or, at best, circumstantial evidence can often guarantee a conviction, while defense attorneys regularly find witness testimony disregarded, evidence ignored and their access to clients and court documents blocked.

Valuable forensic data, particularly a comprehensive DNA database, are advocated by attorneys and legal experts, but the ability to prove beyond doubt the innocence or guilt of a suspect is far from desirable to China’s law enforcement agencies as it would likely prove devastating to the country’s massaged crime statistics.

According to He, this reflects two vital defects in China’s judicial system: first, the lack of checks and balances on law enforcement and judicial procedure; second, what he describes as the “de facto invalidity” of criminal court hearings – namely, that most are a foregone conclusion.

In such a legal environment, progress is painfully slow. NewsChina has learned that the Supreme People’s Court’s wrongful conviction reform drive has been under review for years. The use of torture to extract confessions is technically banned under China’s new Criminal Procedure Law, but few observers expect this ban to be enforced.

“The new Criminal Procedure Law guarantees only that suspects be immune from coercion after they step into the detention center,” said Chen Guangzhong. “It does not account therefore by the 24 hours that are permitted to elapse between a suspect being taken into police custody and relocated to the detention center.”

“No regulation prevents ‘coercion’ during this period,” he added.

In his article in the People’s Court Daily on May 6, Shen Deyong, executive vice president of Supreme People’s Court baldly stated that: “Wrongful acquittal… is preferable to wrongful conviction.”

Despite concessions made to the new leadership’s reform agenda, for now, it seems, China’s legal authorities may beg to differ.

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cover story

Wrongful Conviction

A Lost Decade The overturning of a number of wrongful convictions that led to innocent people being jailed, sometimes for decades, has thrown a harsh spotlight on the Chinese police’s routine use of torture to extract false confessions

By Yang Di

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false convictions and forced confessions obtained through torture. The Zhangs’ acquittal was only made possible by the efforts of the convicted men and their families, as well as widespread support from lawyers and officials. The local authorities that had secured the initial conviction, by contrast, were far from keen to expose their own failings in overturning such a high-profile ruling.

Zhang Gaoping and Zhang Hui in court, 2013

Nightmare

Photo by Xinhua

O

n March 26, when the Zhejiang People’s High Court overturned the rape and murder convictions of 49-year-old Zhang Gaoping and his nephew, 38-year-old Zhang Hui, both men had already served 10 years of their life sentences.

Upon hearing the ruling, Zhang Hui burst into tears. His uncle, stony-faced, told the apologetic presiding judge that China needs institutions and laws to prevent such miscarriages of justice.

“Today, you may be judges and officials, but your offspring may not,” Zhang Gaoping told the court. “Without effective institutions and mechanisms, they could be wrongfully jailed as we were, haunted by the terror of execution. Please remember that.”

The Zhang case has been seized upon by public critics of the methods employed by the Chinese police, particularly the lack of an effective mechanism to guard against

Zhang Gaoping holds a photo taken before his incarceration

The Zhangs’ ordeal began on the night of May 18, 2003, when the two men, then working as truck drivers, offered a ride to a fellow villager, a 17-year-old girl named Wang Dong.

The Zhangs dropped Wang in downtown Hangzhou, the provincial capital, where she intended to hail a cab to a relative’s home.

The next morning, her naked body was found in a drainage ditch in a Hangzhou suburb. The two truckers, as the last people NEWSCHINA I July 2013

Photo by CPF

Zhang Gaoping returns to his deserted home after 10 years in jail

to see Wang alive, were immediately arrested as suspects, despite there being no physical evidence that they were involved in the murder.

According to Zhang Gaoping, both he and his nephew were interrogated for seven days, during which they were deprived of sleep, burned with cigarettes, beaten and starved.

When torture failed to produce a confession, the police sent them back to a detention center where they were assaulted and tortured by other detainees, before signing makeshift “confessions” prepared for them by inmates in the pocket of the police.

Even though forensic investigators found DNA belonging to an unidentified third party under the fingernails of the victim, these false confessions were all the police needed to secure a conviction, and they terminated the investigation, charging the Zhangs with rape and murder.

On February 2004, Zhang Hui and NEWSCHINA I July 2013

Zhang Gaoping were sentenced to death and life imprisonment respectively by a Hangzhou court. On appeal, these sentences were changed to death with a two-year reprieve (in China typically commuted to life imprisonment), and 15 years in jail.

Fight for Freedom

When serving their sentences in a prison in remote Xinjiang, the Zhangs continued to fight to overturn their convictions. In 2005, Zhang Gaoping saw a criminal trial on TV, during which a taxi driver named Gou Haifeng was charged with raping and murdering a young woman in Hangzhou. He was struck by how many details were similar to those in the Wang Dong case, and attempted to contact Zhejiang judicial authorities to request that the investigation be re-opened and DNA tests run, but received no reply.

However, Zhang’s appeal caught the attention of Zhang Biao (no relation to Zhang

Gaoping), a prison official charged with handling inmate complaints. After reviewing Zhang’s case, Zhang Biao noticed that out of 26 listed pieces of evidence in the trial transcript, 25 were circumstantial, with the only witness testimony being that of an inmate named Yuan Lianfang, who, according to Zhang Gaoping, had tortured him and his nephew into signing their confessions. Yuan had received a reduced sentence in return for securing confessions from his fellow inmates.

Zhang Biao told NewsChina that the use of other inmates as enforcers and informers was common in China’s jails. By collaborating with the police, inmates can easily have sentences reduced or even commuted.

In 2008, the acquittal of Ma Tingxin, whose murder conviction had also been solely based on Yuan Lianfang’s testimony, offered new hope to Zhang Gaoping and his nephew. Zhang Biao, however, lacked sufficient evidence to prove that the Zhangs had

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Zhang Gaofa shows the train tickets he has used in his decade-long campaign to free his son

Photo by CFP

Photo by CFP

cover story

Zhang Hui (right) with his lawyer

not committed the crime and thus found it difficult to challenge the Zhejiang verdict.

Only after he wrote a personal letter to Chen Yunlong, the chief prosecutor of Zhejiang Province, in 2009, did the Zhejiang authorities begin responding to their appeals.

A DNA screening by Hangzhou police in 2011 found that the DNA traces found under victim Wang Dong's fingernails matched that of Gou Haifeng, the taxi driver executed in 2005 after being convicted of a separate murder, just as Zhang Gaoping had suspected.

After overturning its previous verdict, the Zhejiang provincial police released an official apology to the two men. Calling their acquittal an example of “progress” in China’s legal system, Xu Ding’an, deputy chief of the Zhejiang provincial police, pledged a full investigation into the apparent police errors that had led to the wrongful convictions.

Ten years in jail have made it impossible for Zhang and his nephew to resume their old lives. Zhang Gaoping’s wife, who he had last seen four months pregnant, had aborted his baby and divorced him. His two daughters had dropped out of school, and his elderly mother had died in 2009. Battling failing health, Zhang has given up any notion of rebuilding his now-rundown village home in Anhui Province, or resuming his work as a truck driver.

As for Zhang Hui, his fiancee had disappeared, and his father had bankrupted his household with fruitless attempts to secure his release.

Photo by CFP

Not Isolated

March 27, family members set off firecrackers to celebrate the return home of Zhang Gaoping and his nephew, Shexian, Anhui Province

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The case of the Zhangs is but one of several wrongful convictions exposed this year, and many victims suffered much longer than a decade before their cases were redressed.

This January, also in Zhejiang, the provincial high court announced that it was reopening two robbery and murder cases dating back to 1995, involving five suspects, four of whom had been sentenced to death with two years’ reprieve and one to life imprisonment NEWSCHINA I July 2013

Recent overturnings of wrongful convictions in Chinese courts: (See “The Wrong Men,” NewsChina, April 2013). All five men were released “on parole” for the duration of the investigation. By the time Wang Jianping, the last of the five, left his cell on April 28, all of the men had served 17 years in jail.

On February 6 in Hebei Province, Zhao Yanjin, a female villager, was released after being cleared of a charge of murdering her neighbor’s daughter in 2001. Although she was acquitted in early 2011, she was kept in prison for another 20 months by local authorities to “prevent social instability.”

On April 25 in Henan Province, Li Huailiang, a 47-year-old villager, had a conviction overturned for the 2001 rape and murder of a 13-year-old girl, also due to a lack of evidence.

In each case, the newly-freed men and women claimed they had been tortured by police or hired thugs in order to force them to sign false confessions.

On May 17, the Zhejiang authorities announced that the Zhangs would receive a total of 2.11 million yuan (US$356,000) in compensation for their ordeal, the highest amount ever paid to victims of wrongful imprisonment in China, though the sum falls far short of the 7.02 million yuan (US$1.13m) demanded by the victims themselves.

After publicly admitting in March that the use of torture to obtain false confessions is common in cases of wrongful imprisonment, Qi Qi, presiding judge of the Zhejiang Provincial High Court, said in an interview with the State-controlled Legal Daily that the pursuit of a 100 percent solve rate for major criminal cases is a major reason for widespread police abuses in China.

Tackling this problem at the source, Qi claimed, would mean that law enforcement authorities would have to change some of their most fundamental doctrines.

“Instead of ‘not letting a single criminal get away,’ the judicial system should devote itself to the rightful objective of pursuing justice,” he said.  NEWSCHINA I July 2013

1995

21-year-old Nie Shubin of Hebei Province was executed for rape and murder. Ten years after his death in 2005, another man confessed to the crime, but the local court has refused to clear Nie’s name.

1998

Du Peiwu was convicted for murdering his wife, a deputy police director in Yunnan Province. In 2000, his wife’s actual murderer was caught during a separate investigation.

2002

Zhao Zuohai, a farmer in Henan Province, was sentenced to death with reprieve for murder. His alleged victim turned up alive and well in 2010.

2007

Guo Xinkui from Henan Province was sentenced to life imprisonment for alleged robbery and rape. He had refused to plead guilty. In 2010, the true perpetrator was caught.

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international

Middle East

Skirting Conflict Is it necessary for China to take sides in the Middle East?

Photo by Xiao ruo / ic

By Li Jia

National flags of China and the Palestinian Territories in Tian’anmen Square, May 4, 2013, the day before Mahmoud Abbas’ official visit

“

Israel may attack Iran? I didn’t know that. Israel bombed Syria?

I didn’t know that, either. What do I know about Palestine?

Well, wars. With Israel, it seems,” answered Mr Huang, a young designer in Beijing who has contacts with Israeli and Iranian designers from time to time. The conflicts of the Middle East do not concern him. He is fascinated by both Israeli and Persian art and design, which, as he told NewsChina, blend modern and traditional elements very successfully.

Huang’s political indifference when it comes to the Middle East, as well as his pursuit of friendship with opposing sides in some of the region’s conflicts, could be taken as a microcosm of China’s attitude to the Middle East in general. China shares no borders with Middle Eastern nations, nor do the varied, chaotic politics of the region have much of an impact on China’s domestic or international affairs when compared to the US, Europe and Japan.

Chinese tourists understand the appeal of Egypt and Turkey, but given recent events, they are more likely to choose the palm-fronded Maldives as a safe and luxurious holiday destination.

For decades, China has committed itself to befriending any and all countries willing to recognize it as a world power. In the Middle East, this has translated into direct, cordial engagement with most countries, some of whom are intermittently at war. Hua Chunying,

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spokesperson for China’s Foreign Ministry, has publicly referred to China as the “common friend of both Israel and Palestine,” an assertion difficult to imagine coming from a US politician.

However, as China has globalized, the Middle East, and its troubles, have moved closer to its borders. The source of almost half of China’s crude oil imports, conflict and economic instability in the Middle East directly affects the price of fuel and other petrochemical products in China.

As a result, the recent visits to China in tandem by first the Palestinian Territories President Mahmoud Abbas, followed by Israeli Prime Minister Binyamin Netanyahu, have triggered widespread speculation on China’s wider role in the Middle East, most specifically the sustainability of its “friend to all” strategy.

Discussions on the possibility of China rethinking its Middle East policy, though not headlined in the State media or online, have begun to surface in academic and diplomatic circles.

First and Last

The relations between China and Middle Eastern countries did not begin with pragmatism. In 1950, Israel was the first Middle Eastern nation to officially recognize the People’s Republic of China (PRC), lobbying for full PRC representation at the UN. NEWSCHINA I July 2013

In 1980s, Deng Xiaoping’s determination to save China’s failing economy rather than continue the ideological struggles of the past, finally saw pragmatism return to Chinese diplomacy. In 1988, China even sold missiles to Saudi Arabia simply to acquire US currency.

Professor Yin Gang, Deputy Secretary General of the Chinese Association for Middle Eastern Studies, told NewsChina that it was not until China established diplomatic relations with Saudi Arabia in 1992 that China’s lukewarm Cold War in the Middle East finally ended. That same year, Israel, the first Middle Eastern nation to officially recognize the PRC, ironically became the last to establish diplomatic ties with Beijing since the 1950s. Israeli weapons and agricultural technology, however, were already flowing into Deng Xiaoping’s China.

Photo by STEPHEN SHAVER / ic

A Friend to All

Israel’s state flag replaces that of Palestine four days later

The same year saw the League of Arab States pass a resolution calling for its members to continue to boycott the PRC. China soon sent diplomats to meet Israeli delegates in Moscow, while the Chinese media labeled Arab leaders “reactionary elites,” according to a book by Li Hongjie, a former Chinese diplomatic attaché in the Middle East.

According to the account of Professor Yitzhak Shichor at the University of Haifa, an expert on China’s Middle East policy, Israel, increasingly dependent on US aid, had to refrain from deepening its relationship with the PRC in the 1950s to accommodate Washington’s increasingly hostile attitude toward all Communist states allied with the Soviet Union. When hostilities broke out on the Korean peninsula in June 1950, China and the US became embroiled in a proxy war, with China’s formerly friendly attitude toward Israel changing accordingly.

In 1955, China decided to side with the Arabs when newly-liberated former monarchies in the Middle East began gearing up for a showdown with Israel. Egypt, for example, established diplomatic ties with China in 1956. However, the Sino-Soviet split in 1960 led to most Arab countries choosing the Soviet Union over China, or, as in the case of Saudi Arabia and other monarchies, cozying up to the West. With the US and the USSR by far the most visible players in the Middle East, China found itself on the outside looking in.

NEWSCHINA I July 2013

China has become Israel’s third largest trading partner. The country is eager to develop further cooperation with a country described as “strong in innovation,” by Gao Yanping, Chinese Ambassador to Israel in an article published in the Chinese State-owned newspaperPeople’s Daily during Netanyahu’s recent visit to Beijing. The Middle East has also been a major overseas market for Chinese construction contractors, though its market share has recently seen a slump. China’s less-developed western areas, as they rush to industrialize, are also keeping their eyes on the rapidly developing economies in the region.

Saudi Arabia has become China’s largest oil provider and has big petrochemical projects in China, while the Qatar Sovereign Wealth Fund, the largest in the world, is one of the most enthusiastic foreign investors in China’s capital market. Gulf countries are looking eastwards for LNG buyers, and due to UN sanctions Iran may be more reliant on orders from China than any other country in the region.

In 2012 China’s trade with Arab countries was only slightly lower than with its fifth largest trading partner, South Korea, though it still accounts for less than half of China’s bilateral trade with the EU and the US. China’s oil consumption has outpaced its domestic production for years. It is widely reckoned that Chinese reliance on Middle Eastern oil will increase, even as the US increasingly shifts its oil supply toward domestic and Canadian resources.

In addition, with more than 20 million Muslims among its general population, China has become increasingly aware of the importance of maintaining good relations with Muslim countries.

Some academics have even hinted that the US “pivot to Asia” could open up further opportunities for China in the Middle East, formerly US political territory, somewhat rebalancing international relations at a time when China is in need of stronger global friendships. At a recent forum sponsored by the Chinese Academy of Social Sciences, the concept of China “moving west” seemed to be gaining traction.

However, as Professor Yin noted, the build-up of China’s stakes in the Middle East has already been in progress for decades. While the region’s many conflicts might highlight China’s role, specifically on the UN Security Council, there is little evidence to suggest that China is willing to take the place of the US in this chaotic part of the world.

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Photo by an tu / cfp

international

Visiting Israeli Prime Minister Benjamin Netanyahu cuts the ribbon on the Cafe Atlantic at the Shanghai Jewish Refugees Museum, May 7, 2013

The Art of Distance

While China’s Ministry of Foreign Affairs offered to provide “necessary assistance” should Binyamin Netanyahu and Mahmoud Abbas wish to meet during their respective, separate, visits, this was more a diplomatic courtesy than a signal of genuine will to act as a gobetween in perhaps the world’s most delicate political relationship.

Abbas departed Beijing while his Israeli opposite number was in Shanghai, and their respective meetings with Chinese officials were largely by-the-book.

Nevertheless, in his meeting with Abbas, Chinese President Xi Jinping put forward four proposals to resolve the Palestine-Israel conflicts, each one essentially a reiteration of China’s official “land for peace” policy. While Chinese officials continue to express political support for the “national liberation” of Palestine, they are more than happy to continue business as usual with Israel.

Netanyahu’s delegation, as the Prime Minister himself admitted during an online discussion with Chinese Internet users on the Xinhua website, “was here to build a perfect partnership.” The “partnership” Netanyahu was referring to, was that between Chinese manufacturing power and Israeli R&D. US$400 million deals signed during his visit were far in excess of the total value of China-Palestinian trade for a whole year.

In Professor Schichor’s view, Netanyahu’s visit showed nothing other than that the two sides were “disillusioned about each other’s limit,” and “were concentrating on bilateral relations.”

“It’s impossible for China to be the place where any international meetings on the Middle East, whether the Palestine-Israel conflict, or Iran, or Syria, will be held,” Professor Yin told NewsChina. “It is

22

neither possible, nor is it geopolitically necessary, for China to lead the peace process in the region or provide guarantees for any party involved.”

Li pointed to the expectations following the collapse of the Soviet Union that China would become a major political force in former Arab allies of Moscow. China simply refused to fill the void left behind by the end of the Cold War, a void later filled by the US, the EU and the newly-formed Russian Federation.

Today, more political involvement does not sound like a good idea, either. “The Middle East is far away not only in geographical terms but also in historical, cultural, religious, political and social terms, making it marginal to China’s interests,” said Professor Schichor.

China’s ability to befriend opposing sides in Middle Eastern conflicts, Schichor added, was “precisely the outcome of its low political profile.”

Future Role?

In the wake of the Arab Spring, and faced with major domestic and global challenges even the US is more reluctant to be involved in Middle Eastern politics. China, meanwhile, is embroiled in saberrattling over territorial disputes with its neighbors, as well as struggling to maintain economic growth. In the view of Professor Schichor, more political involvement in the Middle East, a region with so much diversity, means China has to begin taking sides now, something the government has avoided. It also runs the risk of deeper scrutiny of its international policy, also something the government wishes to avoid.

China’s hands-off approach, however, has frustrated some of her Arab friends. Refusal to “take sides” in the Libyan and Syrian conflicts could prove a handicap in dealing with these nations in the future.

This, Yin insists, is just a short-term problem. Two months after taking office, Egyptian President Mohamed Morsi chose Beijing as the destination of his first overseas visit, despite China’s failure to support the overthrow of former president Hosni Mubarak. On May 12, the Libyan Housing Ministry signed an agreement with the China State Construction Engineering Corporation to resume projects in Benghazi suspended during the revolt against Muammar Gaddafi.

China’s continued opposition to regime change will not prejudice Middle Eastern countries against stronger ties. Indeed, Yin believes that China’s refusal to intervene in what it calls the “domestic affairs” of other countries is more likely to earn Beijing support rather than criticism.

Third-party factors remain important. Nearly all experts, including those most eager to talk about greater Chinese involvement in the Middle East, still view her interests in the region through the lens of China’s much more strategically important relationships with the US, EU, Russia and India. The consensus is that if China can adequately balance diplomatic relations between these major players, the Middle East is unlikely to present a problem.

For now, at least, China, and her Middle Eastern partners, have bigger fish to fry. NEWSCHINA I July 2013

Photo by AP

scoiety

A rural migrant worker moves from one Beijing construction site to another

Nongfu Spring

Water Fight Local newspaper the Beijing Times has found itself in hot water after a smear campaign against bottled water producer Nongfu Spring that caused the latter to close its Beijing plant

By Xie Ying NEWSCHINA I July 2013

23

T

he red-and-white label on bottles of Nongfu Spring water, one of China’s largest domestically-owned brands of bottled drinking water, is as ubiquitous in China as bottled water itself. However, since May this year, this familiar label will probably be seldom seen in China’s capital, after a local paper successfully led a campaign to have one of the country’s most popular brands of bottled water removed from local store shelves.

“We made this decision because of Beijing’s unfriendly atmosphere... After all, dignity is much more valuable than money,” claimed Zhong Shanshan, chairman of Nongfu Spring, during a press conference on May 6, announcing it was shutting down production of barreled water in Beijing.

In compensation, Nongfu Spring is offering regular customers one free liter of their favorite water for every barrel ordered in advance. According to Zhong, Beijing is home to about 100,000 Nongfu Spring customers, meaning the company’s withdrawal will result in massive losses.

However, market analysts suspect the curtailment of the Zhejiang-based Nongfu Spring’s Beijing operations as likely to be more tactical than moral.

Slipping Standards

On April 10, the Beijing Times, a leading local newspaper, began running what would later amount to 74 full pages of reports attacking Nongfu Natural Water, one of the company’s best-selling products, claiming that it was “poorer in quality than tap water.”

Zhong Shanshan himself called the campaign “the most violent media criticism of an enterprise.”

In the first article in the series, published April 10, the Beijing Times cited Ma Jinya, an expert from the China National Health Association Drinking Health Committee, as saying that Nongfu Spring bottling plants had adopted production standards lower than the national standards set for tap water, which is non-potable in China.

According to Ma Jinya, Nongfu Spring implements Zhejiang standards for its bottled natural water, with the ceiling for certain harmful substances, particularly selenium

24

and arsenic, set higher than those prescribed by the national standard. Ma went on to claim that Nongfu Spring contained perhaps four times more arsenic than mandated by the national standard.

“According to China’s food safety law, the national standard should be the baseline for any drinking water producer to follow,” said Ma Jinya. “The adoption of a lower standard constitutes a higher safety risk.”

Nongfu Spring swiftly denied Ma’s claims, stating on the company’s official microblog that the local standards marked on packaging are not an indication of a company’s own internal standard. “If we did not abide by the compulsory national standards, how could we be permitted to remain in the market?

Nongfu Spring actually follows the strictest criteria,” ran the strongly-worded rebuttal.

In China, however, such defenses when mounted by successful food and beverage companies rarely find favor with a public increasingly weary of learning just how toxic home-grown food can be. The complex and contradictory nature of standard-setting by the Chinese authorities further undermined attempts by Nongfu Spring to reassure its customers.

Currently, altogether four sets of national standards for different kinds of drinking water are implemented in China, including tap, purified and mineral waters. The so-called “natural water” products offered by Nongfu Spring are, however, absent from the list.

“Given that China has not yet worked out any specific standards for natural water, we have the right to use the local standards,” argued Zhong Shanshan.

The Beijing Times and other consumer watchdogs responded by stepping up their scrutiny of Zhong’s company. A dozen more drinking water and public health experts were consulted, some of whom revealed that the Zhejiang local standards for natural water were devised by the Zhejiang government and Nongfu Spring. No other agencies or enterprises were present for the negotiations.

On April 19, the China National Health Association Drinking Health Committee announced that they had rescinded Nongfu Spring’s membership due to the fact that the company “is too cocky to see their mistakes.”

Photo by Zhan Min / IC

society

Zhong Shanshan, Chairman of Nongfu Spring, drinks several bottles of Nongfu Spring water at the company’s press conference in Beijing, May 6, 2013

This added further fuel to the fire.

Sensing a public relations disaster, Nongfu Spring later made public an array of QA reports previously authored by different water quality testing organizations, including one by the US Food and Drug Administration (FDA), which showed that on a total of 77 indices, Nongfu Spring water exceeded FDA standards by 2-1,000 times.

The Beijing Times responded by claiming that the data released were already five years out of date, adding that the US FDA standard is actually much lower than China’s national standard for tap water, the latest series of which was issued in 2007.

“This out-of-date report proves nothing,” ran an editorial in the paper. “Just how reliable are [Nongfu Spring’s] samples?”

Special Interests

Nongfu Spring and the Beijing Times continued to trade blows until May 2, when NGO the Beijing Bottled Drinking Water Committee appealed to retailers to stop selling Nongfu Spring water.

“The committee has proved that Nongfu Spring did not provide any qualification certificates to Beijing authorities and local resellNEWSCHINA I July 2013

Photo by Wang Kaijian / IC

A correspondent with the Beijing Times raises questions at the Nongfu Spring press conference in Beijing, May 6, 2013

ers, so we suggest taking this brand off the shelves,” ran a statement on the company’s website.

The next day, the Beijing Times ran a gloating front-page headline “Shut Down,” with an accompanying article heavily implying an official clampdown on Nongfu Spring’s operations, rather than a plea from an NGO to stop sales of the company’s bottled water in the Beijing area.

“It was indeed a fatal blow to us,” remarked chairman Zhong Shanshan at the May 6 press conference, during which he repeated the denial that the Beijing municipal authorities had taken any stance on the quality of Nongfu Spring water. “A non-governmental organization has no right to order a business to stop operations or shut down... We will never yield to media violence,” he added.

Following a familiar pattern witnessed during other recent food scandals in China, Nongfu Spring was soon seeking to damage its competitors’ reputations. Soon after the Beijing Times report was published on April 10, Nongfu Spring implied on its microblog that Cestbon, a State-owned drinking water producer, might be behind what it called the “smear campaign” appearing in the Beijing Times, which placed advertisements for CestNEWSCHINA I July 2013

bon on its website.

More damningly, other media outlets uncovered evidence that, while also accepting advertising money from Nongfu Spring’s principal business rivals, the Beijing Times itself engaged in drinking water retail, and that Ma Jinya, the “expert” cited in the original article criticizing Nongfu Spring, worked as legal counsel for two other rival drinking water brands.

Soon, the Beijing Times found itself having to answer uncomfortable questions from all sides. “It is obviously not objective reporting if the Beijing Times is focusing negative content on Nongfu Spring alone” commented online critic Yao Bo. “Why didn’t the paper take a Nongfu sample for testing and publish the results?” he added.

No Judgment

Nongfu Spring has now filed a lawsuit against the Beijing Times for defamation, with the tide of public opinion, at least online, turning against the newspaper.

On May 8, the People’s Daily cited the local quality supervision bureau of Zhejiang Province as saying that their latest random sampling inspection carried out April 13 had found no violations in Nongfu Spring prod-

ucts, adding further weight to the company’s accusations of a smear campaign.

A survey by Sohu.com, one of China’s leading Internet portals, showed that over 70 percent of respondents said they would continue to drink Nongfu Spring drinking water. Surveys on other popular websites douban.com and ifeng.com returned similar results.

“At least Nongfu Spring publicized their QA [Quality Assessment] reports,” a Nongfu Spring customer in Beijing Xu Feng told NewsChina. “I believe them to be much more reliable than those who have kept their reports to themselves.”

Despite moderate success in protecting its reputation, Nongfu Spring and other bottled water producers are now under intense public scrutiny to prove that their products are fit for consumption. One month before the Beijing Times report was published, the website of business publication the 21st Century Business Herald quoted two consumers who claimed to have found foreign objects floating in bottles of Nongfu Spring water. Other unverified reports surfaced claiming that the company’s water source in Zhejiang was surrounded by landfill.

Proving the quality of drinking water is further complicated by a total absence of unified national standards in China.

Our reporter purchased seven different bottles of drinking water in Beijing, only to find that in total the respective companies seemed to have adopted at least three different sets of purity standards. While Beijing requires bottled water companies to supply certification attesting to the quality of their product before the city will issue retail licenses, there are no municipal standards for the quality of spring water.

Even more confusingly, several overlapping State-level departments overseeing food and beverage quality typically refuse to intervene in disputes between producers and consumers. Even Zhejiang Province, where Nongfu Spring is based, has several competing water quality standards, with local authorities attempting to unify these since 2008.

“Nongfu Spring may be neither as good as the producer says nor as bad as the newspaper says, but who knows?” remarked Xu Feng.

“All we can do is trust our own instincts.” 

25

society

Cross-Straits Culture

Political Drama In Taiwan, the growing popularity of Chinese-mainland TV shows is raising political concern over a “cultural invasion”

T

aiwan has never had to worry about cultural influence from the Chinese mainland. For the best part of the last 30 years, the island’s movies, TV shows and pop music have dominated in Chinesespeaking markets around the globe, including the Chinese mainland. Taiwan’s pop culture, like that of the US, wins big in the soft power stakes, and a flourishing cultural industry has long been a source of pride for the island.

In the early 1980s, the late singer and pop culture icon Teresa Teng became so popular on the mainland that the authorities in Beijing eventually decided to lift the ban on her songs. As the mainland opened up its market, Taiwan’s pop songs and TV shows, along with those produced in Hong Kong, have played a dominant role in the mainland’s pop culture landscape.

However, as the mainland’s entertainment industry has prospered due to its huge, relatively captive market and enormous investment off the back of its rapidly growing economy, pop culture is beginning to flow the other way.

Unexpected Hit

In 2012, The Legend of Concubine Zhen Huan, a big-budget historical drama series that centers on palace intrigue and the intricate relationships in the Qing Dynasty (1644-1911) imperial harem, with its compelling plot, lavish costumes and sumptuous sets, was an instant hit in Taiwan. It was reported that the show’s season finale,

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shown on Taiwanese station Videoland TV, scored ratings of 3.38 percent, the highest of any show that year. The 76-episode drama was later re-run five times on Taiwan’s CTS TV. This year, a reality singing competition produced on the mainland caused a splash in Taiwan, and not just in terms of ratings. I Am a Singer triggered heated debate on the island about the implications of the mainland’s growing cultural influence. The show was produced by the popular mainland station Hunan Satellite TV, which has churned out a fair few hit shows in recent years, including 2005’s Super Girl, an American Idol-style singing competition that attracted 400 million viewers in the mainland.

With four of the seven finalists coming from Taiwan, I Am a Singer caught the interest of the mainstream in Taiwan. When its finale was aired on April 12, several Taiwanese TV stations, including CTi News and ETTV, broadcast the show live. ETTV even canceled its flagship news program This Is It to make way for the show. The decision appeared to be pay off – ratings went up by an average of 220 percent on the stations that showed the final. In the end, the competition was won by mainland duo Yu Quan, with Taiwan’s Terry Lin in second place.

But the TV stations that broadcast the show seem to have courted trouble by doing so. While many prominent Taiwanese media figures lambasted the decision to ditch a news

Photo bycfp

By Yu Xiaodong

Dee Hsu (left) and Kevin Tsai, on the Taiwanese comedy variety show Here Comes Kangxi, June 29, 2012

program for a low-brow entertainment show, politicians warn that Taiwan’s media outlets are falling prey to Beijing’s charm offensive.

Calling the show Beijing’s effort to extend its influence “into the island, into the households and into the brains [of the Taiwanese],” Su Tseng-chang, chairman of Taiwan’s pro-independence opposition Democratic Progressive Party (DPP), warned against Beijing’s strategy of using the soft power of economic and cultural influence to “annex” the island, in a speech on April 15.

“TV stations, newspapers and magazines are promoting pro-China information on a regular basis, and if the government does not curb such practices, Taiwan could become the next Hong Kong,” said Su. Su was soon criticized by the spokeswoman for the mainland’s Taiwan Affairs Office for politicizing a commercial TV show and obstructing cultural exchange across the Taiwan Strait.

When asked about her views on the show’s NEWSCHINA I July 2013

Photo by bei pian / ic

Chen Yufan (right) and Hu Haiquan hold their trophy after winning I Am a Singer, April 12, 2013

success, Ta i w a n ’s culture minister Lung Ying-tai told the media that Taiwan still has a leading edge in pop culture, as many of the songs performed in the show, including those sung by mainland singers, were originally composed by Taiwanese musicians. But she admitted that she was “stunned” by the show, and that it challenged the presumptions many Taiwanese hold about the mainland.

In response to Su’s criticism, Lung said that Taiwan’s cultural authorities would investigate whether CTi TV and ETTV had broken the law by broadcasting the show live, as the broadcasting of mainland TV shows is officially banned in Taiwan.

Mutual Boycott

In the past decades, both Taiwan and the mainland have placed tight restrictions on cultural imports from the other side of the Taiwan Strait. For both sides, broadcast of the other’s TV shows is subject to strict administrative approval procedures.

A major concern is the mentioning of the issue of Taiwan’s sovereignty, either directly or indirectly. Beijing has long insisted that the self-governed island is a province of China, while in Taiwan, a self-governed island that calls itself “the Republic of China,” many consider it to be an independent country.

NEWSCHINA I July 2013

For example, for Beijing, mention of both “China” and “Taiwan” in the same context is unacceptable, since it suggests the existence of two separate entities. By the same token, many in Taiwan deem I Am a Singer unacceptable, since, they argue, the idea of Taiwanese singers performing alongside with their mainland and Hong Kong peers suggests a “unified China,” an idea long advocated by Beijing.

Despite improved cross-straits economic ties in recent years, limited progress has been made in terms of cultural exchange. For example, since a landmark agreement in 2010 to lift the quota on Taiwanese films in the mainland, fewer than 10 have been screened. Meanwhile, Taiwan continues to restrict the import of mainland films. Currently, only 10 are allowed into the island each year.

However, Taiwan seems to have more to lose under the current climate of mutual cultural protectionism, as the mainland’s fast economic growth is bringing about a boom in its entertainment industry, potentially to the detriment of its Taiwanese counterpart.

While Taiwanese entertainment companies are prevented from profiting from the mainland market due to limits on cultural imports, many Taiwanese entertainment celebrities have chosen to establish themselves in the mainland, attracted by the huge cultural market and higher pay.

Taiwan’s top three highest earning celebrities last year, Nicky Wu, Alec Su and Ruby Lin, earned the majority of their 2012 income from work on the mainland. Others, such as Julia Peng and Winnie Hsin, who placed fifth and sixth respectively in I Am a Singer, use the mainland to boost their flagging careers in Taiwan.

To attract entertainment personalities from Taiwan, the mainland authorities grant joint-venture films with Taiwanese producers the same privileges as those enjoyed by mainland films. Although such films are still subject to censorship, they bypass the restrictions imposed on purely Taiwan-made movies.

Whose Advantage?

On the surface, the robust popularity of

Taiwanese celebrities and strong presence of Taiwanese culture on the mainland shows that in terms of entertainment, Taiwan still has the advantage. But at the same time, their presence also boosts the mainland’s entertainment industry, and many are concerned that Taiwan may lose the edge in the long run.

Perhaps for this reason, Taiwan is also trying to open up its own market on a trial basis.

In 2012, Taiwan allowed mainland celebrities to host the Golden Horse Awards ceremony – often called “the Oscars of Chineselanguage films” – for the first time.

On April 29, Chiang Pin-kung, former chairman of the Straits Exchange Foundation (SEF), Taiwan’s former top negotiator with the mainland, suggested that Taiwan consider introducing international news programs broadcast by the Hong Kong-based Phoenix TV and Beijing’s State-run China Central Television (CCTV) satellite channel to offer local viewers more choice. His audacious proposal immediately drew vehement criticism.

When asked about her view on the proposal, Lung Ying-tai, the culture minister, said that there would be no opportunity to talk about the subject unless Beijing would show willingness to grant Taiwanese TV channels the right to enter the mainland.

The mainland authorities have not yet responded. But with a ban preventing nonmainland TV stations from broadcasting live on the mainland, including those based in Hong Kong (even the mainland-backed Phoenix TV), Beijing is unlikely to consider the proposal for the foreseeable future.

In the meantime in Taiwan, worries about the mainland’s “cultural invasion” are unlikely to disappear anytime soon. Following the success of I Am a Singer, several big-budget TV shows produced by various mainland TV stations, such as Crazy for Songs on Anhui Satellite TV, The Voice of China II and Celebrity Splash on Zhejiang Satellite TV, all of which feature Taiwan celebrities, are winning over legions of Taiwanese viewers.

“Whether or not Taiwan can maintain its advantage in the cultural industries and continue to be a source of creativity in the coming 30 years is a serious issue we have to deal with,” warned Lung.

27

society

Liu Tienan

Same Old Story Liu Tienan, a prominent government official, has been accused of corruption after a personal conflict resulted in his exposure. The Chinese public, by now used to such salacious stories, is looking to the case to gauge the attitude of China’s new leadership towards high-level corruption

Photo by

Photo by mu jjialiang / cfp

By Yang Zhongxu and Li Jia

Liu Tienan, former chief of the National Administration of Energy, refusing to answer questions about oil prices at a press conference at the Euro-Asia Economic Forum in Xi’an, Shaanxi Province, September 24, 2011

I

nternational fraud, corruption, assassination threats, midnight detentions, and the rise and fall of a powerful government minister – Liu Tienan’s story might make a decent Hollywood thriller.

On Sunday May 12, the State-owned Xinhua News Agency issued a very short story that Liu Tienan, deputy director of the National Reform and Development Commission (NDRC) and former head of the National Energy Administration (NEA), had been dismissed, and was under investigation for his “suspected involvement in serious disciplinary violations.”

Liu and his wife, a junior government official, were taken away from their home in Beijing by the Central Commission for Disci-

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pline Inspection of the Chinese Communist Party (CPC) at about 11 PM on May 11. Before long, Liu’s name, profile and all reports of his activity had disappeared from the NDRC website. The couple’s son had already been placed under investigation a few months earlier.

The stage for Liu’s fall had been set for some time. What began as a fight with a media outlet and a group of retired senior officials on one side, and Liu on the other, was finally coming to its dramatic climax. Early this year, Xi Jinping, the CPC General Secretary, vowed at a meeting to fight against corruption by attacking “both flies and tigers,” meaning both small-time graft and high-level corruption. Liu was regarded as a tiger, and is the leadership’s biggest scalp to date.

NEWSCHINA I July 2013

The high-profile drama catapulted the story into the headlines, but the public, whose own interests are at stake, would prefer to be reading about rules-based prevention of these kinds of abuses.

Behind the Scenes

At the end of 2011, a report in Caijing, a popular economics magazine, reported that Chinese businessman Ni Ritao and some former senior government officials, and one from the NDRC in particular, had engaged in a series of domestic acquisitions in which Ni received huge subsidized loans, as well as an unsuccessful attempt to use fake documents to acquire US$200 million in bank loans for an acquisition by Ni’s companies in Canada. It identified two shareholders in one of Ni’s Canadian companies, Guo Jinghua and Liu Decheng, who, the report said, were the wife and son of a “prominent figure within the NDRC.” Personnel within the NDRC quickly recognized the names Guo Jinghua and Liu Decheng as those of Liu Tienan’s wife and son. Feeling the pressure, an official, on behalf of Liu Tienan, tried to negotiate with Caijing. The story went cold for a few months – few outside the NDRC knew details of Liu’s family, and Guo and her son were not the focus of the Caijing story.

However, there was movement behind the scenes. Aware that the Central Discipline Commission may have noticed the report, a group of retired NDRC officials began to consider taking action. In May 2012, the group signed a report to the commission, accusing Liu of corruption in the Ni Ritao case. By then, it had already been reported that investigations had been launched.

The investigations blocked Liu’s promotion track either into the CPC Central Committee or the Chinese People’s Political Consultative Conference. By the 18th CPC National Congress in October 2012, it had become clear that the best possible outcome for Liu would be to retire in two years as the deputy NDRC minister and NEA chief.

But even this comparatively low-key aspiration was suddenly disrupted by three posts on Weibo, China’s Twitter, at the end of 2012.

Luo Changping, deputy editor-in-chief of Caijing, accused Liu of corruption in the Ni Ritao case, as well as having a forged university diploma from a Japanese university, and threatening to have a former mistress assassinated. The woman in question, surnamed Xu, had allegedly aided Liu with the first two acts of misconduct. Luo urged the Central Commission for Discipline Inspection to launch a probe into the accusations.

Openly accusing government officials of misbehavior is rare in China. The involvement of a famous reporter and his influential media organization, as well as a ministerial level official, meant that the case regained public attention.

Still, the central government announced no action. Just when the public, as well as Luo Changping himself, thought the case had been silenced, a storm struck.

Caging Power

Many details of the story sounded all too familiar to the public, reflecting the problems chronically undermining the CPC’s anti-cor-

NEWSCHINA I July 2013

ruption efforts. It seems that personal connections, not rule of law, still play a bigger role in bringing high-level corruption cases to light.

The disgruntled mistresses of officials, who sometimes aid in corruption but do not always receive their share of the spoils, often play a crucial role in providing evidence. According to an investigation by NewsChina, Liu Tienan’s mistress telephoned Luo Changping from Japan and told him her side of the story at the end of 2012.

In Liu’s case, there was another personal factor at work. It is unclear why the retired NDRC officials rounded on him, but it is known that Liu’s personality had made him unpopular at the NDRC. In 2006, Liu failed the initial candidate assessment for promotion to a viceministerial position because many of his colleagues, including those at lower levels, complained about his arrogance. This, however, apparently did not hinder his promotion in 2006. Two years later, he became NEA chief, a much more important role than his previous job, though still at the vice-ministerial level.

A few hours after Luo’s Weibo posts, Liu ordered the NEA press office to declare that Luo Changping was “inventing rumors” and would face “legal action.” This response was immediately criticized by the media as an attempt to use government power to save an official’s personal reputation.

So far, there has been no information on whether any action has been taken against the officials named in the Caijing report on the Ni Ritao case. Ni’s manipulation of domestic and overseas acquisitions was impossible without the approval of the NDRC, long labeled “the mini State Council” due to its formidable power to set economic policy and approve large-scale investment projects. Calls to reduce the power held by various ministries, particularly the NDRC, thereby empowering market forces, have been unprecedentedly high since China’s new leadership took office in March.

On May 13, the Chinese Premier Li Keqiang declared at a State Council meeting that more than 100 items would be either be removed from the list of the various ministerial powers of approval, or delegated to the local level. Giving some examples of “confusing” approval powers, such as the naming of fishing boats, he vowed to cut more than one-third of the items on existing lists.

As experts have noted, this will be a very difficult task, as departments have more reason to resist than to agree to the reduction of their own power.

In addition, recently two local officials have died during the investigations by the CPC internal discipline inspection system (see Harsh Discipline, page 10). Their families said they were tortured during their extrajudicial detention. Handling suspected corruption cases through secret investigations, rather than through the courts, is a practice that is already the subject of much controversy.

What people want is not just the capture of the corrupt “tigers,” but a rules-based mechanism for preventing and punishing the abuse of power. How the new leadership deals with Liu will be a barometer of its attitude toward serious corruption. The public hopes that the Liu Tienan case will be the beginning of something new and encouraging, rather than just another corrupt official unfortunate enough to be caught.

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society

Politicians-turned-authors

Official Literature With loosened publication restrictions, China’s former State leaders are beginning to use their memoirs to talk from the heart

By Feng Shuangqing and Min Jie

“

You, ignorant and incompetent, have been busy – bribing, weaving your web of connections, embezzling and abusing your power…”

These lines of invective, part of a poem entitled “A Good Official Lashes Out at a Bad Official,” are the work of Wu Guanzheng, former member of the Chinese Communist Party (CPC) Politburo Standing Committee, and former secretary of one of the Party’s highest anti-corruption bodies. The short piece is included in Wu’s newly published – and much discussed – new book, Xian Lai BiTan, which translates as “a pool of writings from leisure time.”

A striking departure from Wu’s rather turgid previous publications, most of which are collections of his official writings and work reports, Xian Lai Bi Tan takes a distinctly more relaxed tone, covering Wu’s life experience, musings on his work, thoughts on various literature, and even a few of Wu’s original short stories.

The book’s editor Zhang Zhenming, a senior editor at the People’s Publishing House, told NewsChina that after his retirement in 2007, Wu Guanzheng collated his thoughts and ideas, many of them inspired by his tours around the country, into 40 notebooks, along with 40 or so pencil illustrations by Wu himself.

Compared with the traditional, dull, work-report-style writings about their time in office, recent books by former leaders have been showing a trend toward the lighthearted, becoming increasingly attractive to readers and publishers. What’s more, the authorities are beginning to loosen the strict procedure of examination and approval for books by officials, perhaps paving the way for more former officials to show readers their softer, more human sides.

The press conference for the release of Zhu Rongji Meets the Press in Beijing, September 1, 2009

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Photo by xinhua

Stick to the Script

Traditionally, books by former and incumbent Chinese government leaders are composed entirely of earnest collections of their political theory, extracts from their writings while in office, and reports to conferences. The majority of these books follow a very prescriptive style – few even deviate from the standard title format. Among the top Chinese leaders of the 21st century, only Jiang Zemin has had his collections – Selected Works of Jiang Zemin – actually published.

In the spring of 2003, when Li Lanqing retired as vice-premier, some proposed that he begin compiling material for his own contribution to the genre.

He later said: “At the time, the State Council had collected my reports, articles, written instructions and speeches into many voluminous files. But I thought NEWSCHINA I July 2013

Jiang Zemin

Li Peng

Zhu Rongji

Qiao Shi

Selected Works of Jiang Zemin On The Development of China’s Information Technology Industry Research on Energy Issues in China

Li Peng on Macroeconomics Li Peng on the Three Gorges Project Li Peng on Nuclear Power Peaceful Development and Cooperation: Li Peng’s Journal on External Affairs Li Peng on Economics

Zhu Rongji Meets the Press Zhu Rongji Speech Record

Qiao Shi on Democracy and Rule of Law

Zeng Qinghong

Li Lanqing

Wu Guanzheng

Li Ruihuan

On the Building of the Party

A Collection of Seal Cutting and Calligraphy Works by Li Lanqing Sketching for the Masters – The Sketch Collections of Li Lanqing Shanghai — Cradle of China’s Contemporary and Modern Music

A Collection of Wu Guanzheng’s Essays A Collection of Wu Guanzheng’s Speeches Wu Guanzheng’s Practice and Thought on Anti-corruption

Selected Works of Li Ruihuan Complete Works of Li Ruihuan Li Ruihuan on Peking Opera About Dialectics, Being Pragmatic and Truth Seeking Study and Application of Philosophy

all of this, with the passage of time, would eventually become unintelligible to future generations, and would likely end up as a relic.” Li turned the offer down, opting instead to commission a series of interviews, and compile them into a book: Li Lanqing Talks on Education (later translated into English and titled Education for 1.3 Billion: On 10 Years of Education Reform and Development).

Like Li, other national leaders have been departing from the subject of politics and returning to their respective fields of technical expertise in their recent publications. Jiang Zemin, who served as Minister of Electronic Industries in the 1980s, has published a book entitled On the Development of China’s IT Industry.

Distancing himself from current political affairs in his retirement, Li Lanqing now devotes his energy to the study of Western classical music, Chinese calligraphy and the art of carving traditional Chinese seal stamps. To date, his oeuvre includes Li Lanqing’s Essays on European Classical Music, Li Lanqing’s Seal Carving Art, and Li Lanqing’s Thoughts on Contemporary Chinese Music, among others.

The editing of books by former leaders is carried out under strict security. “All the works of the top leaders are classified documents before publication, particularly their writings on work involvNEWSCHINA I July 2013

ing State secrets,” said Zhang Zhenming, senior editor at the People’s Publishing House.

For a publisher, printing the work of a national leader is not only a highly prestigious project, but can also bring enormous economic gains. Inevitably, particular attention is paid to choosing the right publishing house – a very limited number of presses are granted the rights to such high-profile writings. But now that these books are becoming increasingly personal or going deeper into the leaders’ own areas of expertise, limitations on the choice of publishing houses are loosening up.

Jiang Zemin’s Research on Energy Issues in China, for example, was printed by the press at Shanghai Jiaotong University, his alma mater.

In Search of Approval

In China, for any book to be published, it first needs approval from the provincial-level authorities. Once approved, it must be reported to the General Administration of Press and Publication for archiving. Naturally, the publishing of books by national leaders goes through an even stricter approval procedure.

From gardening manuals to sci-fi novels, all books in China are subject to the approval of censors, and writings by national leaders are far from safe from the red pen. Zhang Zhenming told

NewsChina that books by officials above the level of vice-premier must be approved by the General Office of the CPC Central Committee, the highest authority within the Party. Before publication, manuscripts are submitted for approval from, or revision by, whichever department the Central Committee sees fit.

In some cases, the books are sent to current top leadership for their opinions. The manuscript of Education for 1.3 Billion, for example, was sent to Jiang Zemin, Li Peng, Zhu Rongji and Hu Jintao, the incumbent members of the Standing Committee of the Politburo at the time, for their approval.

As for Wu Guanzheng’s Xian Lai Bi Tan, the General Office of the CPC Central Committee ruled that because the book involves no government documents, it needed no further inspection beyond the office itself, and was quickly approved, according to Zhang Zhenming of the People’s Publishing House.

If the market responds positively, we may see more and more former officials turning their hand to the memoir game. It may not be long before all publishing houses are authorized to allow high-ranking politicians to wax lyrical about whatever subject they choose – as long as it isn’t politics.

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society

Disaster Relief

Quakes Apart

The response to the recent Ya’an earthquake, which struck not far from the devastating quake that rocked Sichuan Province five years ago, reflects a subtle and important change in the public’s mentality

By Yu Xiaodong

F

ive years ago, on May 12, 2008, a devastating 7.9-magnitude earthquake struck a mountainous region in Wenchuan, western Sichuan Province.

Destroying entire towns and villages, the earthquake left 80,000 people dead and was one of the worldwide deadliest natural disasters in decades.

While the Chinese government ordered State-run media to focus entirely on the relief effort, and censored reports on the widespread collapse of school buildings, China’ fledging NGO sector played a surprisingly visible role in the aftermath of the disaster.

Many called the 2008 earthquake “the birth of China’s civil society.” Not only did the incident reveal an increasingly sophisticated and influential NGO sector, it also suggested a growing willingness on the part of the authorities to allow NGOs a role in disaster relief, charity work, and the provision of social services.

Five years have passed. On April 20, a earthquake measuring 7 on the Richter scale shook the same region, with its epicenter at

32

Ya’an, 70 miles from that of the 2008 earthquake. According to official data, the quake caused 196 deaths and 12,000 injuries, with 250,000 locals left homeless.

Despite the comparatively small number of casualties, the April quake is similar in many ways to the 2008 disaster. Since the government and NGOs once again delivered an immediate response, it provided a rare chance to examine some subtle but important changes in Chinese society.

Just as former premier Wen Jiabao did five years ago, his successor Li Keqiang arrived at the disaster zone soon after the earthquake.

Visiting locals in their villages and hospitals, Li urged local governments and the military to do their utmost to rescue those left trapped by the damage.

Too Many Heroes

The authorities appear to have been more prepared than they were in 2008. Within 30 minutes after the earthquake, the military

had mobilized 1,200 troops to the quake zone. While the 2008 quake resulted in the collapse of many shoddily constructed school buildings and horrific casualties among local students, no schools collapsed this time, though some showed cracks.

The earthquake also triggered a similar volunteer turnout to five years ago – in Lushan County alone, over 1,000 volunteers arrived on the day following the earthquake. Five years of economic development have resulted in a rise in the number of private cars in the area, and roads in and out of the area soon became seriously congested with well-meaning people from neighboring regions who chose to drive to the disaster area to offer help.

On April 21, after two soldiers were killed when their truck drove off a cliff, allegedly in an effort to avoid a civilian vehicle, local authorities implemented a traffic ban on most civilian traffic on the road to the earthquakeNEWSCHINA I July 2013

affected region.

Many NGOs were required to hand over aid packages for the authorities to distribute, a similar scenario to the first days following the 2008 earthquake, while volunteers were left waiting in major town centers.

“In these towns, there may appear to be a so-called ‘over-supply’ of non-governmental relief forces, but the real problem is that there is still a lack of a cooperative mechanism between the authorities and civil society, despite recent developments,” Chen Kai, the director of Sichuan Response Center of the One Foundation Relief Alliance, an NGO network, told NewsChina.

Growing Skepticism

What appears to be the most significant change, however, is not the relief work itself, but

NEWSCHINA I July 2013

the public’s attitude towards the disaster and relief effort – in the intervening five years, the public has become noticeably more skeptical.

According to the Ministry of Civil Affairs, donations after the 2008 earthquake totaled over 76 billion yuan (US$122.6bn). 2008 was the year of the Beijing Olympic Games, and the terms “boundless love” and “national unity,” ubiquitous in media coverage at the time, had fostered a public sentiment that made donation almost compulsory.

When Wang Shi, chairman of Vanke, China’s largest real estate company, said that a 10-yuan donation (US$1.6) was all that was expected from Vanke employees, he came under fierce attack and was forced to apologize, pledging that Vanke would donate 100

Photo bycfp

Local people pick through debris following the earthquake in Ya’an, Sichuan Province, Aprill 22, 2013

million yuan (US$16m).

But following the 2013 earthquake, the obligation to donate appears to be waning.

The far smaller death toll was certainly a key factor, but various scandals involving government agencies and charities have also undermined the public’s confidence that their donations will be used as intended.

The Red Cross Society of China (RCSC) has suffered a particularly resounding fall in popularity. Since its image was tarnished by a 2011 scandal involving a young woman who showed off her luxurious possessions and claimed to be the general manager of the commercial branch of the charity, the RCSC

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Photo by zhang shibo

society

Photo byli qiang

A woman, surnamed Hong, after losing her family in the earthquake, Lingguan county, Sichuan Province, April 21, 2013

The China International Search & Rescue Team on the way to Baoxing county, Sichuan Province, after the earthquake, April 22, 2013

has been struggling to rebuild its reputation in recent years, but with little success.

While the Red Cross managed to raise 29 billion yuan (US$4.7bn) within eight days following the 2008 Wenchuan earthquake, it only raised some 14,000 yuan (US$2,250) in the first twelve hours after the quake this year. In comparison, the One Foundation, a charity fund founded by kung-fu movie star Jet Li, which in 2008 had not yet gained authorization to accept direct donations from the public, raised over 10 million yuan (US$1.6m) in the same period.

The RCSC eventually managed to raise 600 million yuan (US$97.6m) in the following nine days, and Zhao Baige, the organization’s executive vice-president, vowed that if

34

the RCSC could not patch up its reputation within three years, then she would resign.

With public confidence in government-associated charities continuing to fall, Zhao’s task is a daunting one.

‘Disaster Economy’

In addition to the growing cynicism towards State charities, local governments’ estimates of economic loss are also under increasingly rigorous public scrutiny. Citing figures provided by local officials, the 21st Century Business Herald newspaper reports local government estimates that the three affected counties had suffered losses of 170 billion (US$27.4bn), or 21 times the counties’ aggregate annual GDP. The huge figure was immediately decried as a cynical attempt to

extort more aid from the central government.

In recent years, with the public paying more attention to natural disasters, the central government has been under increasing pressure to provide funds for relief and reconstruction. Premier Li Keqiang, during his visit to the Lushan earthquake zone in April, promised locals that their new houses would be “better” than their old ones.

After the Sichuan earthquake in 2008, which resulted in an estimated total loss of 845 billion yuan (US$137.5bn), the central government provided 1 trillion yuan in aid. For the 7.1-magnitude earthquake that struck Yushu in Qinghai province in 2010, the central government allocated 32 billion to cover a loss of 26 billion yuan in the affected region.

The result is that many local governments take natural disasters as a golden opportunity to get rich overnight, a phenomenon dubbed “disaster economy.”

During the 2008 earthquake, for example, in Chongda city, two government agencies were found to have exaggerated their losses by 1.23 billion yuan (US$198m). In 2012, after suffering a flood, local officials in Taojiang County, Hunan Province exaggerated losses fivefold, from 18 million to 89 million yuan (US$2.9m to 14.5m).

Facing the public outcry, local officials in the region affected by this year’s earthquake have now retracted their estimates, claiming that the exact figures are still being calculated. According to Lu Ting, an economist with Merrill Lynch, financial losses caused by the earthquake may only only around 10 billion yuan (US$1.6bn).

As the initial relief work comes to a close, many are now considering the significance of the changes in the public’s attitude towards natural disasters and the response of the government. There appears to have been a more measured, less sentimental response than five years ago, which some have called a demonstration of a stronger sense of civil awareness. But for others, this awareness, often expressed in the form of skepticism and cynicism, marking a considerable decline in the public’s confidence and trust in China’s existing institutional framework, is not something to be celebrated. NEWSCHINA I July 2013

economy

Alibaba Microloans

Open Sesame Chinese e-commerce giant Alibaba is mining its data banks to assess potential borrowers for its new microloan business, causing a stir in the country’s stubborn banking sector

Photo by zhejiang daily media group / ic

By Li Jia

A

new online ad for Alibaba Group, the Hangzhou-based family of e-commerce platforms whose 2012 sales outperformed eBay and Amazon combined, identifies the ideal client for the group’s new microloan business: Confucius. Confucius was known for his integrity, and had a steady, modest stream of income from his schools – despite his unfortunate lack of collateral, the old sage would have qualified for a loan with no trouble.

Alibaba’s microloan business is all about allowing sellers on its ecommerce platforms to use their hard-earned online reputations, calculated automatically using transaction records, to gain access to quick injections of cash. The formula fits well with Alibaba’s corporate culture, which, in the words of Jack Ma, founder and chairman of the company, is based on the use of imperceptibly subtle maneuvers in the name of virtue.

In the two-and-a-half years since its launch, more than 230,000 small businesses have used Alibaba’s e-commerce-based loan service, the first of its kind in China. The company’s recent high-profile maneuvers, including its acquisition of a large stake in Weibo, China’s Twitter equivalent, and its recent consumer credit initiative, are expected to attract more sellers to go online, expanding Alibaba’s pool of potential borrowers.

From a broader perspective, the new service is regarded as an innovative solution to two chronic real-world problems: the difficulty of obtaining credit for small private businesses (the largest and most dynamic sector of China’s economy), and the lack of competition in China’s banking sector, an industry in urgent need of a lesson in alNEWSCHINA I July 2013

The flamboyant Jack Ma, chairman of Alibaba Group, sings at a party to mark the 10th anniversary of e-commerce site Taobao in Hangzhou city, Zhejiang Province, May 10, 2013

locating capital to the most efficient market players.

“If banks don’t change, we will change them,” declared Jack Ma at a forum in 2008. Four years later, he appears to be making good on his promise. Banks, as well as other financial market players, are noticing that Alibaba’s model may be workable – even China’s lumbering State-owned banks are following suit, building up their e-commerce platforms and chasing small businesses.

But looking past the fanfare, observers say that the success or failure of this new model will depend on the critical Confucian value of integrity – both on the part of the company, and of policymakers.

Small is Beautiful

At the end of March 2012, across all of China’s banks, the rate of outstanding loans to small businesses was growing slightly faster than was the case for medium and large enterprises, according to statistics from the People’s Bank of China (PBoC), the central bank. This is

35

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partly the result of a series of carrot-and-stick policies over the past two years encouraging banks to increase loans to small businesses, such as loosening the bad loan ratio standard and enforcing a mandatory increase in small business loans.

However, this short-term increase is not enough to make up for the chronic lack of private funding that has built up over the decades. Moreover, a recently published survey led by Dr Ba Shusong, a prominent financial expert with the State Council’s Development Research Center (DRC), revealed a surge in small businesses’ demand for capital, due to rising operating costs and the need to upgrade their products and services to survive the tough economic climate.

Unlike big companies, small businesses often struggle to provide proper balance sheets or collateral such as real estate, usually two of the most important factors that influence a lender’s decision on whether or not to approve a loan. This “information gap” between lenders and borrowers means that it costs banks much more time and human resources to assess a small client than a big one. Other lenders, including conventional microloan companies and online peer-to-peer lending services, face the same problem.

Alibaba is using its enormous banks of data to provide a solution.

The company keeps records on its sellers, including the number and value of their sales, their cash flow through Alipay (Alibaba’s PayPal equivalent), comments posted by their buyers, and tax payments and customs declarations for users who export. If applicable, even utility bills from sellers’ factories are included. This data is then automatically processed to calculate the seller’s default risk, without any need for a human analyst. After a loan is approved, Alibaba, the lender, has even more data with which to scrutinize the borrower’s operations.

Less than five minutes after submitting its application in April, Tangbo, an Yiwu-based seller of accessories and toys on Alibaba’s wholesale platform, received a loan of US$1660, manager Tang Jianghong told NewsChina. According to data provided to NewsChina

by Alibaba, the average loan per seller is about US$9660, a helpful yet affordable sum for the kind of borrowers the microloan industry tends to target, and Alibaba claims that its bad loan ratio stands at 0.9 percent, just below the average of China’s 16 listed commercial banks.

According to Dr Ba, banks cannot compete with Alibaba’s high turnover of money and flexible repayment arrangements, which have reduced borrowers’ costs to a level only slightly higher than banks’ benchmark three-year lending rates, and much lower than prices set by conventional microloan companies.

There is a lot more potential to be exploited. Alibaba has nearly 10 million sellers across its various platforms, including 8.5 million on Alibaba.cn (its domestic B2B platform), more than 1 million on Taobao (C2C) and 50,000 on Tmall (B2C), and the company is working aggressively to consolidate its dominance in China’s e-commerce market. It plans to expand its consumer credit service, launched in March, to all major cities across the country by September. Ads from Alibaba sellers appeared on Weibo the day after the acquisition granted it ac-

36

cess to Weibo’s hundreds of millions of users, most of whom access the service via mobile devices, the next big battleground for e-commerce.

Dinosaur Banks

In reality, Alibaba is not currently encroaching on the banks’ territory. The company has repeatedly stated that it has no interest in acquiring a banking license, and its clients are too small for big banks to be worried about anyway. In addition, microloan companies, including Alibaba, are not allowed to accept deposits, and there is a ceiling for how much a microloan company can borrow from banks to lend to clients.

Nonetheless, banks are still feeling the pressure, and with good reason. Speaking on the rise of Internet loan providers, Ma Weihua, former chairman and CEO of China Merchants’ Bank, openly warned of the danger of turning into what Bill Gates called “dinosaur banks.”

This reaction is evidence that the Alibaba model has the potential to turn conventional banking on its head, similar to the effect online shopping has had on bricks-and-mortar stores over the past decade.

Also, Alibaba is quickly laying claim to a market of borrowers that banks could find themselves desperate to attract in the future. Ye Daqing, co-founder and CEO of borrowing and lending information website Rong360.com and former executive of PayPal Greater China, said that if China’s banks have ambitions of becoming the next HSBC or Citibank, they may soon be forced to target small businesses, the real source of China’s economic growth, rather than continuing to focus on big State-owned enterprises or local governments. Ye has noticed that even giants like the Industrial and Commercial Bank of China (ICBC) have begun to take note of this, and are offering non-collateral credit products for small businesses. Minsheng Bank, China’s last remaining large privately owned bank, has already made small businesses its major clients. Competition on this market is getting fiercer than ever.

Many large banks, like China Construction Bank, have been hurrying to launch their own e-commerce platforms, most of which are attempts to mimic Alibaba’s. Recent analysis by Baoshang Bank, a medium-sized, small business-focused bank based in Inner Mongolia, pointed out that banks are moving to try out the Alibaba model, attracting online sellers and using their own data as fuel for their online lending services.

While remaining skeptical of bold diversification strategies like Alibaba’s foray into finance and banks’ e-commerce efforts, Bai Chengyu, chairman of the China Micro-finance Association, thinks that Alibaba has provided a potentially viable option, and that it is a positive sign that so many big players, including other e-commerce giants and banks, have joined this collective pilot project. This phenomenon itself, he said, is of greater significance than the money Alibaba will make from the service.

Uncertainty

Unlike e-commerce, said Ye Daqing of Rong360.com, banking is NEWSCHINA I July 2013

Photo by jiang lingguang / cfp Photo by Zhejiang daily media group / ic

Wang Wen, a Taobao retailer, packaging products for delivery in Hangzhou, Zhejiang Province, May 10, 2013

Lu Zhaoxi (front), takes over the position of CEO of Alibaba Group from Jack Ma (rear) at Taobao’s 10th anniversary party, Hangzhou city, Zhejiang Province, May 10, 2013

much more complicated and takes longer to develop, and is a challenging venture for Alibaba.

In an interview with Charlie Rose on PBS in 2010, Jack Ma said he was worried about the “greed” that drives people to focus on revenue rather than values. A sweeping internal campaign a few months later vindicated Ma’s concern, exposing widespread fraud that led to the dismissal of hundreds of staff, including a few senior executives and thousands of suppliers. In a subsequent crackdown, staff were found to have accepted bribes from sellers in exchange for deleting negative comments from buyers. The company needs to make greater efforts to ensure that data on sellers – the figures on which its loan model relies – are authentic.

Since Aliloan relies heavily on data analysis, the theory behind the company’s calculations must be watertight. Bai Chengyu, Secretary General of the China Association of Microfinance, highlighted the NEWSCHINA I July 2013

significant impact some sellers have felt from shrinking exports, and a local small bank executive told NewsChina that some of his employer’s clients had scaled down their demand for credit due to shrinking profits in the economic slowdown. It is unclear whether or how the company factors in such external elements.

Alibaba’s lack of a safety net puts it at risk. As Dr Ba stressed, while banks can limit their losses by selling off collateral in the case of mass default, Alibaba would have to shoulder these losses itself – a potentially massive cost should its calculations prove flawed.

Aliloan is a form of shadow banking, which, although it helps meet long neglected demand, poses risks to the financial system. So far, regulators have shown a relatively permissive attitude. Under existing rules, Alibaba should restrict its microloan business to borrowers in the locations where its two microloan subsidiaries are registered: Hangzhou and Chongqing. In practice, the service has extended to wholesalers in a number of provinces and cities, and Taobao and Tmall retailers around the country – the company has confirmed to NewsChina that regulators have approved this. And even though Alibaba’s microloan operations represent a significant disruption of the credit structure in the Chinese economy, Yan Xiandong, an official with the PBoC, told NewsChina that regulators had no plans to restrict the service.

However, this shows uncertainty on the part of the regulator. There is concern on the market that Alibaba may face pressure if it grows strong enough to challenge State-owned banks, similar to the trouble that Tencent’s mobile Internet messenger app Wechat has faced recently due to its challenge to the profits of State-owned telecom company China Mobile (see “Data Discrimination,” NewsChina, May 2013). In that case, the regulator expressed support for China Mobile’s plan to impose extra fees on the company for using its servers.

There are areas where government action is needed. Dr Ba stressed the need to reduce the tax burden on small businesses and strengthen accounting fraud supervision to ensure that reliable data is readily available. It is very common, as Ba pointed out, for small businesses to keep two sets of books – one with the true figures for their own reference, and the other with fake figures for regulators, in order to evade taxes or qualify for subsidies.

In addition, huge information resources held by the government, including various indicators that are necessary to assess a business’s fiscal position, remain fragmented and relatively inaccessible. As a result, a microloan operation like Alibaba’s has little access to information about the total debt a potential borrower owes to other lenders.

Thanks in part to their efforts to adapt to the Internet era, shopping malls and convenience stores have not yet disappeared – banks will have to do the same. Alibaba can be a catalyst for change, or even reform, of China’s banking sector, but no matter how much success it finds with its financial service, one company alone cannot bring about a revolution.

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A Li Ning outlet launches an aggressive promotion 50 percent off clearance sale in Xiangyang, Hubei, March 13, 2013

Sportswear Industry

A Finished Line Since the Olympic flame guttered, China’s overextended sportswear makers have lost out to foreign competition and the fickle fashion cycle

By Sun Zhe

A

fter a decade of good business before and after the Beijing Olympics, which led to a nationwide spending binge, China’s sportswear giants have floundered as their outdated and bloated business models have struggled to evolve with the country’s fashion-conscious consumers.

Li Ning, the largest Chinese sportswear maker in terms of revenue, recorded a net loss of 1.98 billion yuan ($319m) in 2012, its first recorded loss since going public in 2004. With a market share of 5.5 percent, Li Ning was the third-biggest sporting goods manufacturer in China after Nike and Adidas, with 12 and 11 percent of the domestic market respectively.

Also in 2012, Anta, the second largest Chinese sportswear brand, saw its profits drop for the first time since the company went public five years ago, recording a 21.5 percent net reduction in revenue. Other major brands Peak, 361 Degrees and Xtep also suffered between 16 to 60 percent falls in revenue.

Overexpansion

“Inventory excess corresponds to profit margin slumps for sports-

38

wear makers,” said Ding Liguo, an independent retail researcher based in Shanghai.

China’s sportswear manufacturers, buoyed by an unnatural surge in demand during the Olympics, enjoyed annual sales growth of 30 to 50 percent over the decade 2000 to 2009. A wholesale distribution model was adopted for maximum expansion in the domestic market, with top brands franchising a booming number of new stores and delivering products to a chain of distributors and subsidiaries.

During a boom, this model drives rapid expansion through low capital expenditure, as distribution and retail costs are largely borne by other business entities. This expansion produced reams of attractive figures for the Hong Kong stock market, leading to even greater revenues to be plowed back into further fueling this model.

Ultimately, China’s sportswear retail network ballooned so excessively that it became commonplace to see two or three outlets for a single sportswear brand appear on a single short street in a rural township.

By the end of 2011, Li Ning had 8,255 outlets nationwide while NEWSCHINA I July 2013

Photo by ic

An Anta street promotion in downtown Beijing

Photo by CFP

economy

Growth of China sportswear market over the past decade

billion yuan

% 105.7 84.2

89.8

97

76.5 66.4 49 35.9 20

26.2

Source: Wind

Anta had 9,297. Peak, Xtep and 361 Degrees each had a network of some 7,000 stores. In average, there were three to five outlets for each of these sportswear brands in every county or district in China.

Relying mostly on promotions and store openings for sales growth, rather than repeat custom, the average Li Ning or Anta store only made some 1.1 million yuan (US$178,500) in 2011. The figure for an Adidas outlet was eight times as much, while Nike led the pack with 24 times the sales revenue of both its leading Chinese rivals.

“The wholesale distribution model led to the stockpiling of inventory,” said Peng Gangxiang, an industry analyst with Guotai Jun’an International. “Consolidation and inventory clearance in turn led to a fall in profitability among major sportswear companies.

“Soon, all players had to join in a price war to clear their stock,” he added.

Worse was to come. As the Olympic boom finally ground to a halt, Chinese consumers lost interest in domestically-produced sportswear, turning instead to casual ready-to-wear fashion of the kind offered by H&M, Zara, Uniqlo and domestic equivalent Vanke.

“Chinese consumers now favor a less sports-oriented look in their apparel choices,” said Forrest Chan, an industry analyst with CCB International. “Sports brands now face competition from casual wear brands Zara, Uniqlo, and others increasingly penetrating China’s lower-tier cities.”

Out of Fashion

In 2011, sportswear sales grew only seven percent in China, down from more than 35 percent in 2007 and 2008. Li Ning’s share price has shrunk from US$4.90 in mid-2010 to less than 70 US cents in early May 2013. Share prices of other major Chinese sportswear makers have lost at least half their value in the same period.

Moreover, the wholesale business model has given these struggling

NEWSCHINA I July 2013

companies almost no control over retail pricing, with premium products often selling at a 90 percent-plus discount, undermining brand names even as they struggle for recognition by securing celebrity endorsements from NBA stars. In 2012, Li Ning signed a 10-yearcontract worth US$100 million with NBA All-Star Dwayne Wade as a brand spokesman, the biggest endorsement contract ever signed by a Chinese fashion label. However, this endorsement has done little to reverse the company’s fortunes.

Over last year Li Ning closed 1,821 domestic outlets, 22 percent of its total, and announced it would shell out 1.4 to 1.8 billion yuan (US$227-292m) to buy back unsold inventory, adding further pressure to the company’s finances.

Peak also closed more than 1,300 stores over the same period, shrinking its distribution network to around 6,500 stores with another 500 closures slated for this year. Other brands have followed their example in scaling back their market presence.

In the same period, however, Adidas saw its Greater China sales grow 15 percent over 2012, making China the company’s best-performing market that year. Some 2,500 new Adidas stores are planned to open in smaller Chinese cities by 2015, expanding the multinational’s presence in the Chinese mainland market from 500 cities to 1,400 by the end of 2010. Nike and Adidas, following a business model that has served these companies well in other developing markets, chose to target the high-end Chinese consumer first, a strategy which has paid off, creating widespread positive brand association and entrenching the world’s two biggest sportswear manufacturers in consumer culture.

Even in pricing, in which domestic manufacturers have previously had an edge over more expensive foreign brands, Nike and Adidas are now virtually on a par with Li Ning and Anta. Before 2011, domestic brands sold around 50 percent cheaper than Nike and Adidas. But multiple price hikes which followed the massive expansion of domestic sportswear brands across the country followed by Nike and Adidas’ expansion into third- and fourth-tier markets has eviscerated the market dominance of Li Ning in particular, according to a research report

by Huachuang Securities.

A report released February by Goldman Sachs has predicted that as Chinese urban consumers’ purchasing power gradually draws level with that of their US counterparts, Nike and Adidas will gain further market share at the expense of weaker domestic brands. So far, these two companies have captured 23 percent of the China sportswear market, half their market share in the US, giving both companies ample space to grow so long as China’s domestic brands remain, in the eyes of consumers, overpriced and unfashionable.

Felix Kwok, an analyst with investment bank Core-Pacific Yamaichi, said in a recent research paper that the operating environment in 2013 remains tough for Chinese sportswear brands.

“If another big sports event like the Olympics isn’t held in China soon, homegrown sportswear labels shouldn’t expect an easy ride in the near future,” said Ou Zhihang, an apparel industry analyst with Huachuang securities.

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economy

Amazon Kindle

Buy the Book?

Will the Amazon Kindle e-reader ever hit the Chinese market? Facing massive policy hurdles, a toxic, saturated e-reader market and readers unwilling to pay for content, would such a move even benefit the company?

By Sun Zhe

T

ong Xing was thrilled when she heard that Amazon had announced that the Kindle e-reader would hit stores in China on May 1 this year.

The stay-at-home mom of a toddler living in Shanghai, Tong was keen to trade up to the latest touch-screen Paperwhite after having spent years enjoying e-books on her Kindle handset. The new device would be cheaper bought from Kindle’s new China site than on the grey market, until now the only source of the world’s number one e-reader on the Chinese mainland.

Kindle Paperwhites smuggled in from Japan and the US are sold by hundreds of retailers on Taobao, China’s eBay equivalent, but at a 200 yuan (US$33) markup on the international price.

However, Tong would ultimately be disappointed. Rumors of an impending Kindle launch in China have been buzzing since Amazon China, who declined to comment on this story, launched its e-book storefront in December last year. The fact that four types of Amazon Kindle devices had already received authorization from Chinese regulators last June added fuel to the rumors, even driving illicit Kindle retailers on Taobao to trim down inventory by slashing prices.

However, the elusive device has yet to make an appearance in Chinese bookstores.

It is estimated that there are more than one million Kindle users in China, the majority

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of whom only use their devices to read pirated e-books. While partly a feature of the well-documented Chinese aversion to paying for content, this is also because Kindle devices used on the Chinese mainland are banned by regulators from buying most books from Amazon’s global site, meaning that simplified Chinese titles available for download are few in number.

China’s booming homegrown e-book industry, as rich in content as it is in piracy, is unlikely to embrace the Kindle’s more bythe-books business model.

Small Fry

“The Kindle device itself would not have a significant impact on the Chinese e-book market if there is nothing good to read on it,” said Julia Zhu, founder of e-commerce consultancy Observer Solutions. “A lack of quality e-books, both in terms of content and design, is the fundamental problem not only for Amazon but also for local players.”

Kindle’s many imitators on the Chinese market have yet to prove successful, while cut-price, locally-manufactured e-readers designed entirely for the consumption of ebooks downloaded for free have flourished in an environment where piracy is the norm.

More orthodox devices, such as Hanvon, Founder and Shanda e-readers, were almost ousted from the Chinese market because they failed to tap into a growing tablet mar-

ket dominated by the iPad. Dangdang, the country’s largest online bookstore, launched its e-books operation in late 2011, aiming to make e-book sales account for 50 percent of its revenue within five years. Dangdang was hoping to match the success of Amazon, which saw sales of ebooks outpace print by 2011.

As of 2012, Dangdang’s e-book sales only accounted for 3 million yuan (US$488,700) in profit, less than 0.1 percent of the company’s total revenue.

This is indicative of the problems faced by any company attempting to sell literature in one of the world’s most restrictive publishing environments. Despite having already launched its China storefront at Amazon.cn, Amazon has yet to receive a license from the Chinese government which would enable it to sell e-books online. Instead its e-book sales are certified with a license “borrowed” from a local website, which has led to an endless series of inspections from State regulators.

According to a report by the Southern Weekly newspaper, regulations on the sale of e-books might be relaxed this year to grant foreign companies access to the domestic market, but for the time being, Amazon’s ebook business is still operating in the shadows. Moreover, the company would need an additional license to enable it to sign independent writers directly for online publication. Chinese regulations currently prevent NEWSCHINA I July 2013

Photo by IC

A smuggled Kindle on sale at an electronics market in Shanghai

foreign companies from publishing works by independent Chinese authors.

Toxic Market

“The biggest challenge for Amazon’s Kindle is sourcing good Chinese content from Chinese publishers and writers,” Julia Zhu told NewsChina.

“Negotiating with traditional publishers will not be easy for Amazon. Compared to traditional book retail in China, the e-book business is not so attractive to traditional publishers. This is because the cost of producing high-quality e-books is high, while profits are low given the limited customer base.”

Zhu added that concern over piracy in particular makes traditional publishers in China skittish about the business potential of e-books. There are also doubts about the reliability of current encryption technology and the transparency of sales data on e-commerce platforms.

Even more worryingly, due to a splintered industrial chain, Chinese e-book retailers have proven unconcerned with the profit NEWSCHINA I July 2013

margins of publishers and authors. During a sales promotion in late April 2013, Dangdang offered all e-books free of charge for instant download. Publishers claimed that Dangdang had not consulted them prior to launching the promotion, and nobody but Dangdang saw any profits from the stunt.

Despite the outcry, Jingdong, the country’s second largest online retailer and another major bookselling portal, would soon follow suit, offering 50,000 e-books for download free of charge, without consulting publishers.

On Taobao, e-book buyers have typically received a gift case of a disc of including thousands of e-books, ranging from the classics to the latest bestsellers. There are also multiple file-sharing websites operating in China which allow consumers to upload and download e-books free of charge. Literary piracy is far less likely to be punished than the publication of a print edition of a book which falls foul of China’s extensive censorship apparatus.

“It will take a long time to cultivate the market as the Chinese have just gotten used

to free e-books,” said Sun Peilin, an industry analyst with Beijing-based think tank Analysys International.

According to a survey conducted in 2012 by the Chinese Academy of Press and Publications, Chinese readers only want to pay an average of 3.27 yuan (53 US cents) for an e-book, four US cents less than a year ago.

Meanwhile, nine out of 10 respondents said they would not bother to buy a paper book if they could find the same work for free online.

Those in China willing to pay for e-books, such as Tong Xing in Shanghai, remain a small minority, perhaps too small to interest a global giant like Amazon.

“A lot of books I read on my Kindle are not available in bookstores, because they cannot get published on the mainland,” Tong told our reporter.

Perhaps the only way Amazon can hope to tap the Chinese market, is if it can offer content available nowhere else in China. Such a move, however, would likely see the company’s China operations swiftly shut down by the censors.

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economy

Infant Formula

Land of Milk and Money

China’s infant formula producers are trying to win back the domestic market by sourcing untainted raw material from overseas

By Chen Jiying

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NEWSCHINA I July 2013

A

s soon as Xie Fei (pseudonym), an employee at a Shanghai-based telecommunication company, stepped off the airplane in Düsseldorf, Germany, he did exactly what any young Chinese parent would do: headed for the baby formula section at the nearest supermarket. But to his disappointment, Aptamil, Germany’s most popular brand of infant formula, was nowhere to be found. A supermarket employee informed Xie that the product had sold out, despite a regulation that restricted customers to a maximum of three cans per visit.

Since 2012, some European countries have been imposing quotas on the amount of milk powder each customer can buy, in an effort to prevent their supplies of baby formula from being

NEWSCHINA I July 2013

snapped up by Chinese parents or their “overseas purchase agents.” (See “Smugglers Caught,” NewsChina, January 2013).

This panic buying has been fueled by a lack of faith in China’s domestically produced baby formula. Xie Fei told NewsChina: “I would definitely not buy domestic milk powder – despite being unsafe, it’s still very expensive.”

Since 2008, when milk from a variety of Chinese brands was found to be contaminated with dangerous levels of melamine, a chemical that made the milk appear to have a higher protein content, the domestic milk production industry has been in a constant nose-dive, sending its reputation, and its profits, plummeting.

Now, China’s domestic milk producers are taking drastic measures to try to rebuild consumer confidence.

Greener Pastures

“Within two years, domestically produced baby formula will be a rare sight on the mainstream Chinese market,” said Zhang Liang, chairman and CEO of Chinese infant formula producer Synutra International, in mid-April.

On March 20, Synutra received approval from China’s National Development and Reform Commission and Ministry of Commerce for the construction of a new drying facility in Carhaix, France, for the purpose of producing powdered milk.

The facility, with a total investment of 700 million yuan (US$113.75m), is slated for completion by 2015 and is expected to turn out 100,000 tons of milk powder every year.

Since late 2012, all of China’s top baby formula brands have been seeking overseas milk sources, for two major reasons: First, the decentralized, smallholding-based na-

ture of dairy farming in China has driven up the price of milk resources, and second, the fragmented dairy farming industrial chain has made it difficult to determine blame when something goes awry. Numerous quality scandals have come to light, weakening domestic consumer confidence and forcing Chinese parents to turn to more reliable imported products. Facing a crisis, domestic milk powder companies have had to re-think their business model.

NewsChina has learned that so far, seven Chinese milk powder companies, including popular brands like Synutra, Biostime, Yili, Bright Dairy, Beingmate and Yashily, have shifted their milk procurement strategy overseas, through direct investment, acquisition, and stock purchases, mainly in Australia, New Zealand and Europe. Between September 2012 and early 2013, the total output of these companies’ overseas milk powder operations reached approximately 200,000 tons, accounting for 30 percent of China’s total milk powder imports in 2012.

The strategy seems to be paying off. Biostime, a health product producer, launched its baby formula import business in 2006. Its relatively expensive imported milk products initially failed to attract a market, but since the 2008 melamine scandal, business has been booming.

According to statistics released by Nielsen, a global information and measurement company, in the first half of 2011, Biostime accounted for over 44 percent of China’s high-end baby formula market. In 2012, the company’s total income and net profit hit 3.4 billion and 732 million yuan (US$550m and 119m) respectively, increases of 54.5 percent and 40.9 percent on the previous year.

Like Synutra, Beingmate and Yashily have

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economy

also established overseas operations.

In contrast to Beingmate, which has chosen to set up subsidiaries overseas, Synutra plans to move its entire production chain out of China, halting all of its domestic production. In early 2009, the company’s newly completed dairy production facility in Heilongjiang Province was sold for 200 million yuan (US$33m), a loss of 40 million yuan, according to Zhang Liang. Since 2010, all major raw materials for Synutra’s baby formula production have been imported from overseas suppliers.

In March 2013, Biostime and French dairy company Laiterie de Montaigu signed their third infant formula provision agreement. Under a three-year deal that becomes effective on January 1, 2014, the French firm will supply milk powder exclusively to Biostime, and Biostime will purchase no less than 10,000 tons of the product.

Furthermore, in July 2012, Biostime also signed a 10-year funding and supply agree-

ment with Arla Foods, a global dairy company headquartered in Denmark. The agreement aims to secure a yearly supply of 20,000 tons of infant formula powder for Biostime.

“Within two years, domestically produced baby formula will be a rare sight on the mainstream Chinese market”

Collective Disappointment

This collective pivot to overseas markets reflects Chinese dairy companies’ disaffection with their problematic domestic milk resources.

Currently, individual dairy farms still dominate China’s raw milk sector, with each smallholding raising a very small number of cows, putting the cost per cow much higher than on family-run farms in France that can raise up to 50 cows, and those in New Zealand that normally hold 200 to 300.

Furthermore, dispersed smallholdingbased farming gives rise to potential quality problems, and was partly to blame for the melamine scandal. A source at the China Milk Association told NewsChina: “Dairy farmers have little access to finance, so are unable to invest in constructing things like clean, sanitized cowsheds.”

In Panggezhuang, a village on the outskirts of Beijing, the landscape is dotted with ramshackle sheds, where cows are kept in unsanitary conditions. On these farms, factors such as improper storage of raw milk and the treatment of animal feed with excessive antibiotics result in a relatively high risk of contamination of raw milk.

Zhang Liang said that it will be very difficult to upgrade China’s dairy farm smallholding system in the short term, meaning that “domestic consumers will continue to rely on imported milk power,” according to Zhang.

Photo by CFP

Fragile Business Environment

Smallholding-based farming in China ensures individual farmers can neither reduce costs, nor invest sufficiently in producing high-quality milk

44

Going overseas appears to be a wise choice for domestic milk powder producers – Synutra’s import strategy has succeeded in establishing the company as a high-end supplier.

Yet for companies that have only recently set foot on foreign soil, whether they can regain

NEWSCHINA I July 2013

china

bynumbers $4,637

Average annual wage for urban privatesector employees in 2012, 63% lower than the equivalent in the public sector

The highest annual wages in public vs. private sector 0

3000

6000

9000

12000

15000

Source: China National Bureau of Statistics

US$243.5bn Value of foreign currency purchased with Chinese yuan by China’s central bank in the first four months of 2013, 205% more than for the whole of 2012.

17.4%

Year-on-year growth in outstanding personal mortgages by the end of March 2013, higher than the growth of the average outstanding loan rate.

New funds outstanding for foreign exchange, US$bn 120

Source: People’s Bank of China 100

58th China’s ranking on the 2013 Networked Readiness Index, a survey of 142 economies designed to show the capacity to exploit opportunities offered by digital technologies.

80

60

China’s ranking 60

58th

57th

40

51th

50

46th

20 40

37th

Dec 2012 Jan 2013 Feb 2013 Mar 2013 Apr 2013

consumers’ confidence remains to be seen.

In countries such as France and the US, the infant formula market is dominated by two or three major brands. In China, there are around 1,000 different milk powder brands, and the top 10 account for around 70 percent of the market.

This comparatively high level of competition among China’s dairy businesses has driven them to invest heavily in marketing, further driving up the cost of the final product.

For example, in Germany, the price of a 900gram can of baby formula made by Aptamil, a subsidiary of Danone, is around 11 euros (US$14). However, Dumex, another Danone brand, sells for 200 yuan per can (US$33) in China.

Zhang Liang admitted that the baby formula sold on the Chinese market is currently overpriced. “In a few years, we hope the price will fall by a considerable margin,” he said.

But in terms of rebuilding consumer confidence, no effective solution has yet been suggested: “I just hope we can win over consumers by offering them quality products. However, consumers trust their own judgment, and won’t just buy what I tell them to buy,” said Zhang Liang.

Since the melamine scandal, China’s baby formula industry has seen sporadic food safety scandals, the most recent of which happened in June 2012, when excessive levels of mercury were found in baby formula made by Yili.

While domestic dairy businesses search for a way to win back their customers, another threat is emerging: active foreign competition on their home turf. At the end of March, Fonterra Cooperative Group, New Zealand’s largest milk processor and dairy exporter, announced the launch of its infant formula brand in China, and the company also plans to set up a liquid milk manufacturing plant in the country in the near future. Danone also recently began promoting its own brand, Nutrilon, in China.

China’s domestic producers may find ways to cling on for now, but as long as foreign infant formula brands remain scandal-free, they may be fighting a losing battle.

0

Source: People’s Bank of China

30

2008

2009

2010

36th 2011

2012

2013

Source: People’s Bank of China

1,030.37% Increase in the actual use of foreign direct investment in fuel gas production and supply for the first four months 2013 compared to the same period in 2012. The service sector as a whole attracted 49% of FDI, a 7% increase, compared with 43% in the manufacturing sector, a 4% decline.

Source: Ministry of Commerce of China

NEWSCHINA I July 2013

45

2013 Fortune Global Forum

The Perfect Host T

he 2013 Fortune Global Forum opens June 6 in Chengdu, Sichuan Province. Business leaders including CEOs from Fortune 500 companies gathered to discuss “China’s New Future” – focusing on the Chinese economy, the development of China’s west and the new role of China in the world.

The Fortune Global Forum is seen as a weather vane for the global economy, with host cities typically in some of the most dynamic areas on the planet. Chengdu is the fourth Chinese city to host the Fortune Global Forum, after Shanghai, Hong Kong and Beijing.

Why did Fortune select Chengdu? Andy Serwer, Fortune’s editor-inchief, has many answers to this question.

Sincerity and Passion

Chengdu’s candidacy was announced in 2010 after a year-long promotional campaign. Along with a delegation including TIME editor-in-chief Rick Stengel, Andy Serwer came to Chengdu in January 2011 to assess the city’s capability to host the Fortune Global Forum 2013. He was impressed upon landing by Chengdu’s bustling Shuangliu International Airport.

Along with local landmarks, Serwer visited the Chengdu Giant Panda Breeding Research Base during his visit. Both Serwer and Stengel got to cradle an infant panda, with Serwer’s bubbly new friend

46

in particular proving a perfect match, constantly lapping at his face.

Stengel also found a kindred spirit in his introverted, serious baby panda cub.

During a visit to Chengdu’s Kuan and Zhai Alleys, two historic landmark streets, Serwer and Stengel sipped American-style coffee in elegant, unmistakably Chinese surroundings at the city’s largest Starbucks, furnished in traditional local style.

Following his visit, Serwer commented that he was impressed at how Chengdu, a city with a relatively small economy, punched so far above its weight in terms of dynamism and forward-planning. The organizing committee of the 2013 Fortune Global Forum paid multiple visits to Chengdu to assess the performance of Fortune 500 enterprises based in the city. The committee members were particularly impressed by Danish transportation and energy giant Maersk’s two subsidiaries in Chengdu.

The committee was informed by Maersk’s senior managers that the company had chosen Chengdu for its talent resources, efficient government and development potential, with both subsidiaries in the city operational within a year.

Perfect Choice

Serwer attributed the committee’s choice of Chengdu as host for the NEWSCHINA I July 2013

A press conference to discuss Chengdu’s selection as host city for the 2013 Fortune Global Forum 2013.

Tianfu Square

2013 Fortune Global Forum to the city’s excellent infrastructure and rich culture coupled with the positive attitude of its government. Serwer believes Chengdu has played an irreplaceable role as an engine for the development and urbanization of China’s western regions, boosted

by State support, and that China’s ongoing urbanization is fascinating to the senior management personnel of Fortune 500 enterprises.

By the end of April 2013, 238 Fortune 500 companies had opened branches in Chengdu, many drawn by the city’s reputation as a leading cutting-edge research and development base in China. In 2012, Chengdu-based businesses obtained approval on 48,901 patent applications, outpacing all other competitors in China’s central and western regions.

Chengdu’s unique culture, famously combining a slow pace of life with rapid development, has earned it the reputation of being among China’s happiest cities.

Chengdu is also famous for hosting exhibitions, a gauge of the quality of a city’s service industry. An efficient municipal government has put the city on track to become China’s exhibition capital by 2015, and Asia’s exhibition capital by 2030.

Ge Honglin, deputy Party secretary and mayor, believes that Chengdu has a bright future, commenting that Fortune chose Chengdu to host its 2013 Global Forum in Chengdu not only because of NEWSCHINA I July 2013

Kuan Alley, a Chengdu landmark

the city’s rapid recent development but also its great potential.

Chengdu and the World

The influence of the Fortune Global Forum on its host city was proven by previous forums in Beijing and Shanghai.

“The Fortune Global Forum will bring real fortune to Chengdu as it attracts attention from all over the world,” said Chen Fang, a member of the Chinese People’s Political Consultative Conference and chairman of Sichuan Federation of Industry and Commerce.

In Chen’s view, an inland city like Chengdu’s best chance at opening up to the world would come in the form of major events like the Fortune Global Forum, which would garner global publicity and promote the city’s international image. “High-end events like the Fortune Global Forum would greatly enhance Chengdu’s popularity, leading an increasing number of multinationals to look to Chengdu and thus bring in a steady flow of fortune,” he said.

Norwegian economist and Nobel laureate Finn Kydland said of his visit to Chengdu in early May that it was a “glory” for the city to host the Fortune Global Forum, and that it would offer local entrepreneurs a great opportunity to learn from foreign companies.

Mayor Ge Honglin has called the Forum a chance for Chengdu to get to know the world, and for the world to get to know Chengdu.

47

2013 Fortune Global Forum

Forum Helps to Attract More Multinationals T

he 2013 Fortune Global Forum will open in Chengdu from June 6 to June 8, allowing the city and its people to open their arms to welcome guests from around the world. As the fourth Chinese city to host the Fortune Global Forum, Chengdu will receive honored guests from all around the world, meeting expectations with world-class service and a brand-new look.

By mid-May, more than 400 delegates, including CEOs from 116 Fortune Global 500 companies, had accepted invitations to the 2013 Fortune Global Forum, the biggest ever in terms of participation. Also, Chengdu is attracting investment from multinationals all over the world.

Volunteers

Jin Zhoujian, one of more than 1,200 volunteers at the 2013 Fortune Global Forum, is a sophomore finance major from the Southwestern University of Finance and Economics.

Clad professionally in a suit and black dress shoes, only a wisp of blonde hair dye betrays his young age.

As an ethnic Korean, Jin was born in Jilin, northeast China before moving to Seoul with his parents. Korean is his mother tongue and he started learning Chinese when he moved to Chengdu to begin his second year of middle school. Now, Jin proudly speaks flawless Sichuan dialect.

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Volunteers in training for the 2013 Fortune Global Forum NEWSCHINA I July 2013

Volunteer candidates wait to be interviewed

Volunteers training

“Fortune Global Forum volunteers are selected on the basis of foreign language skills and their enthusiasm,” said Ning Ke, head of the Forum’s volunteer training department. Recruitment started in early December 2012, and by early May, more than 66,000 young people from around the world had applied. After undergoing various tests and interviews, only 1,200 volunteers made the cut, 149 of whom held master’s degrees, while 25 local volunteers had studied overseas.

“During training, we endeavor to promote the overall quality and personalities of our volunteers, presenting the spirit of Chinese youth to the world,” said Ning, adding that those who had studied overseas, compared to locally-educated volunteers, had a far better service mindset.

Zhou Zhichen, a Chengdu local and a volunteer for the Forum, used to work at a Fortune Global 500 company in Great Britain, leaving his job to return to Chengdu in October last year.

“Knowing that Chengdu was going to host the Fortune Global Forum, I could not suppress my eagerness to go back home,” said Zhou, adding that the Forum gave him the chance to put his overseas training to good use at home, so he applied at once.

Helped by his background in banking, Zhou also developed a QR code system for the use of foreign guests visiting Chengdu over the Forum. Simply scanning strategically-placed bar codes with a cellphone provides visitors with up-to-date currency conversion rates and the nearest locations of bank branches.

eign companies as well as offer local enterprise a platform for internationalization,” said Zhao Yun, chairperson of the Southwest China bureau of the British Chamber of Commerce.

Multinationals

Foreign companies based in Chengdu are expecting the city to become a popular investment destination.

“We are looking forward to the 2013 Fortune Global Forum,” said Saefuddin Junejo, Commercial Counselor with the Chengdu Consulate General of Pakistan. “We are optimistic about the development of this city.”

“The 2013 Fortune Global Forum will help to bring in advanced forNEWSCHINA I July 2013

Complex Chengdu

As an engine supporting the State strategy of developing western China, Chengdu has progressed fast over the years, and the 2013 Fortune Global Forum will attract attention from investors worldwide.

During a promotional event in April this year at the Chinese Embassy in Washington DC, Fortune editor-in-chief Andy Serwer remarked that Chengdu had developed rapidly following its successful campaign to host the 2013 Forum.

Since Chengdu was unveiled as the host city for the 2013 Fortune Global Forum in April last year, 31 Fortune Global 500 companies had launched branches in the city, including Roche Pharmaceuticals, Danone and Schneider Electric, and by the end of this March, a total of 238 Fortune Global 500 companies representing a range of industries from IT and automobiles to the service sector had branched out into Chengdu. These multinationals chose Chengdu for its advantageous human resources, efficient government, attractive living conditions and prime location.

Laurent Vernerey, executive vice president of Schneider Electric, said that the development of western China and the country’s urbanization mean great market potential for his company, which made the China market Schneider Electric’s top priority.

Roche chose Chengdu as the location for its first regional fulfillment center. Luke Miels Roche’s Asia-Pacific CEO, viewed China’s west the engine of development for the entire country, with China his company’s priority market. Luke Miels added that the fulfillment center in Chengdu would be the launch pad for the company’s operations in neighboring areas including Yunnan, Guizhou, Gansu, Ningxia, Shaanxi, Xinjiang, Qinghai and Tibet.

49

Hydropower

Xiaowan dam forced the relocation of over 30,000 people living on the Lancang River, but netted 200 million yuan in tax revenue for the local government

Photo by CFP

environment

Reservoir Clog Excessive damming of rivers in southwest China has not only resulted in massive environmental damage, it may also be responsible for the increasing frequency of earthquakes. Meanwhile, a glut of hydropower stations has resulted in energy overcapacity. So why are projects still being approved? NewsChina investigates

By Wang Yan

O

ver the past eight years, villagers living by the Jinsha River in the upper reaches of the Yangtze, near Hutiaoxia (known in English as “Tiger Leaping Gorge”), have been haunted by uncertainty. While a major project to dam the gorge has been suspended thanks to protests from environmentalists and specialists in various sectors, no-one is certain if the project has been

50

permanently canceled – the villagers have no idea whether or not their homes have been saved from the threat of flooding.

“The debate on whether or not to build the dam has been dragging on for almost a decade, and in Shigu town where my family lives, most of the 10,000 locals, like me, are against the project,” Yang Xueqin, a stocky man in his early fifties told NewsChina in NEWSCHINA I July 2013

early May. “We got our way in the previous round of debate. But we now see signs that the project will be re-launched. We are very worried,” he added.

For Yang Xueqin and other residents in the region, the development of the Jinsha River, a plan initiated in the mid-2000s by hydropower companies and the provincial government, is a sword of Damocles above their heads.

The “signs” Yang refers to are in the newly issued “National 12th Five Year Plan (2011-2015) for Energy Development,” which emphasizes the “active development” of hydropower projects, as well as other clean energy resources.

According to the plan, hydropower construction along the middle and lower streams of the Jinsha, Lancang (Mekong), Yalong and Dadu rivers, the upper reaches of the Yellow River and the middle sections of the Yarlung Tsangpo (Brahmaputra) and Nu (Salween) rivers, will press ahead with renewed enthusiasm. Li Bo, director of the environmental group Friends of Nature (FON), said: “The plan, if implemented, would mark a big step backward for the efforts made by environmental organizations over the past decade.”

Construction Craze

To develop clean energy and cut carbon emissions, China aims to raise the share of non-fossil fuels in its energy consumption to 15 percent by 2020, up from 9.4 percent in 2011. Hydropower is expected to make up more than half of this contribution. By the end of 2012, China’s total installed hydropower capacity accounted for 250 gigawatts, already ranking top in the world.

The new energy plan is regarded as an official commitment to speeding up construction of dams between 2011 and 2015, after a lapse following the completion of the main body of the controversial Three Gorges Dam project in 2006.

At the local level, however, dam construction and hydropower projects have never stopped.

The middle sections of the Jinsha River cover 564 kilometers between Shigu town in Lijiang, Yunnan Province, and Yabijiang in Panzhihua city of Sichuan Province. According to the initial middle Jinsha River development plan, eight terraced hydropower stations are to be built along the section, starting with Longpan in Tiger Leaping Gorge, followed up by Liangjiaren, Ahai, Liyuan, Jin’anqiao, Longkaikou, Ludila and Guanyinyan. The total investment would reach 150 billion yuan (US$24.5bn), and the total installation capacity would reach 21 gigawatts, equal to that of the Three Gorges Dam. Over the past decade, campaigns opposing dam construction on the Jinsha and Nu rivers have attracted global attention. In 2004, the Chinese government floated initial proposals for damming projects on the Jinsha River. The plan also included Tiger Leaping Gorge as an essential part of the development of a vast area known as “Three Rivers Flowing Abreast” in Yunnan, a region on the UNESCO list of World Heritage sites. Due to protests from environmentalists and NEWSCHINA I July 2013

scientists, the then Premier Wen Jiabao ordered the suspension of the project, and the Yunnan provincial government finally shelved the plan in 2007. However, NewsChina has learned that aside from the main reservoir at Longpan, construction of seven other dams in the same project, lying just outside the boundaries of the world heritage site, had either begun or had been completed, even though some of them had not been approved by the State Council.

Projects on other rivers have been springing up all over the country, particularly in Sichuan and Yunnan provinces (see “Stemming the Tide,” NewsChina, April 2011). In “New dams are mid-May, amid concern from scibeing constructed entists over the project’s geographic non-stop on all and ecological impact, the Ministry these rivers, mostly of Environmental Protection (MEP) in seismically granted approval to the construction of what will become the country’s unstable regions.” biggest hydroelectric dam – the Shuangjiangkou project – on the Dadu River, a tributary of the Yangtze in Sichuan Province. Upon completion, this dam, with a height of 314 meters (1,030 feet), would dwarf the 185-meter Three Gorges Dam. The project, according to the MEP, would have a negative impact on rare flora and fish species, and would also affect local nature reserves. In 2011, Yuan Guoqing from the Chengdu Geotechnical Engineering Investigation Design Institute published an article entitled “Study on the Slope Stability of the Shuangjiangkou Hydropower Station” in the Sichuan Geological Journal, claiming that the large number of precariously balanced rocks and stones on the slopes over the project site could potentially pose a large threat to the construction of the dam.

Danger Overhead

Now, along the rivers of southwest China, terraced hydropower stations are a common sight. In Sichuan Province, for instance, there are a total of 7,000 dams either under construction or completed – there are so far over 365 reservoirs and dams being constructed along the 1,000 kilometer course of the Dadu River alone.

These cascading reservoirs stimy the natural flow of the Dadu River, leaving the riverbed dry in many sections.

Wang Yongchen, 58, founder of Green Earth Volunteer, an environmental NGO in Beijing, has been visiting six major rivers – the Min, Dadu, Yalong, Jinsha, Mekong and the Nu – once a year for the past eight years, to observe change.

In late April, after finishing her eighth tour along these major rivers, Wang told NewsChina: “New dams are being constructed non-stop on all these rivers, mostly in seismically unstable regions.”

According to Wang, she and other team members have personally witnessed landslides on the slopes surrounding several dam projects,

51

environment

“At Maji, one of the four hydropower plants on the Nu river and part of the hydropower construction spree in the 12th Five Year Plan, the dam is to be built on a mountain slope composed of shale rocks, which are soft and unstable,” Wang continued. “Unstable geographical locations have caused the deaths of many people due to collapses or landslides.”

One particularly pressing concern is that the reservoirs might induce earthquakes.

Globally, scientists believe that there have been over 100 earthquakes triggered by reservoirs – a phenomenon known as ReservoirInduced Seismicity (RIS). After the Wenchuan earthquake in 2008 that measured 8.0 on the Richter scale, experts in both domestic and international academic circles claimed that the Zipingpu Dam, constructed on the Longmenshan Fault, had helped trigger the quake.

“I cannot say there is direct proof that the Zipingpu Reservoir triggered the earthquake,” Liu Shukun, 73, a professor at the China Water Resources and Hydropower Institute, told NewsChina. “But what has been proven is that the construction of dams can impact geology.”

Geologists Wang Huilin and Zhang Xiaodong analyzed the data they collected while observing the reservoir in question between 2004 and 2008, and concluded in an article published in Acta Seismologica Sinica in September 2012 that “water storage had enhanced seismic activity in the reservoir area and increased the activity of small earthquakes of magnitudes up to two on the Richter scale.”

“We might need further study to pinpoint the cause of the Wenchuan earthquake,” said Liu Shukun. “But at least now we should be more cautious about building hydropower stations in seismic fault areas.”

In early May, Li Yonggang, an earthquake expert from the University of Southern California, said that the 7.0-magnitude earthquake along the Longmenshan Fault at Ya’an, Sichuan Province in late April had a similar seismic pattern to the Wenchuan earthquake of 2008. He predicted more earthquakes in Sichuan and Yunnan in the not-too-distant future.

Unfortunately, there are already thousands of dams in these two provinces.

“In fact, the severe environmental impact of the Three Gorges Dam on the local ecology has appeared in the past few years,” Liu Shukun told NewsChina. “We should not embark on any more dam projects before we conduct sufficient research and assessment.”

Clean and Cheap?

From the very beginning, there has been heated debate between dam construction supporters, such as the National Development and Reform Commission (NDRC), and those opposed to dam construction, such as environmentalists and some scientists. Advocates claim that the foremost advantages of hydropower are that it

52

is clean, renewable energy, costing only 25 percent of the equivalent thermal power.

But the pro-dam camp’s claims are questioned by experts and the public.

Aside from the damage done to aquatic ecosystems, they argue high levels of greenhouse gases are emitted throughout the construction of dams, and in the operation of hydropower stations.

Dam projects require the construction of infrastructure such as roads, often resulting in deforestation and the consumption of large quantities of cement and steel. When the reservoir is filled, the submerged plants and trees will rot, releasing potentially harmful biogases. Decades later, when the dam is eventually decommissioned, explosives will likely be used, potentially resulting in even more environmental damage.

“We cannot say hydropower is clean energy, since each case requires scientific evaluation,” said Liu Shukun, the senior hydropower expert.

“Now, the biggest problem facing our country’s hydroelectricity development is at the most basic theoretical level. Our education has taught us the abundant economic benefits of hydropower, while ignoring the related environmental impact,” said Liu. He said that China’s enthusiasm for dams is based on the energy policy of the Soviet Union in the 1950s.

Lü Zhi, founder of the Shan Shui Conservation Center and professor of conservation biology at Peking University, said the building of large dams in China is done without comprehensive, long-term planning, and water resources are used irrationally. “Some hydropower stations have a ‘grave effect’ on biodiversity and freshwater ecosystems and, taken as a whole, are not necessarily beneficial.

Large dams will actually impact our ability to adapt to climate change,” said Lü.

China’s feed-in tariff on hydroelectricity is mostly between 0.2 and 0.3 yuan (3 to 5 US cents) per KWH, but the on-grid price of thermal or nuclear power is much higher. Water, the cheapest resource for power generation in the short term, can bring investors returns as high as 36 percent, perhaps the main reason behind the current dam construction spree.

According to statistics obtained by China Central Television (CCTV), in 2011, there were a total of 140 GW hydropower installations under construction across the country, with a combined capacity eight times that of the Three Gorges project.

The low cost of hydropower projects, according to Liu Zhi, a researcher with The Transition Institute, a consultancy firm based in Beijing, is due to two factors: the low cost of relocating local residents, and the low cost of “clearing the ground,” a euphemism for ecological destruction.

In most cases, large dam projects are seen by local governments as an important opportunity to increase local revenue, meaning that State-owned power companies can count on the support of NEWSCHINA I July 2013

Damming projects on major rivers in Southwest China areas, we saw the ridiculous phenomenon of private hydropower providers being ordered by the local government to temporarily turn off their turbines due to power overcapacity.”

The costs of human relocation and ecological compensation have forced most developed countries to scale back their plans for new dams. Yet in China, the government-backed dam construction spree continues unabated. “Hydropower development in the country is far from a market-oriented undertaking, as the developers play the combined role of local governments and hydropower company,” Liu Zhi told NewsChina.

“Taking into account elements such as relocation costs and ecological destruction, among others, the hydropower price may not be cheaper than thermal power or other forms of energy,” claimed Han Xiuji, a sociologist from Beijing University of Technology.

Yangtze Lancang (Mekong) Nu (Salween)

Shigu Town Hydropower projects either built, under construction or under consideration on three major rivers in China’s southwest region

Photo by CFP

Bottom Line

Xiaowan hydropower station in Yunnan goes into operation, September 10

these authorities.

Local populations displaced by dam construction have no right to negotiate with developers, and are ordered to relocate by the government, usually with very little compensation.

“Power generated by hydropower projects is transmitted to energy-consuming manufacturing hubs,” Liu Zhi told NewsChina.

According to Liu, in order to acquire an abundance of cheap hydroelectricity, heavy-industry players, such as those in the mining and metallurgy sectors, are keen to invest in dam construction, which only serves to worsen pollution.

“Innumerable mining companies and other high energy-consuming projects are seen operating in Yunnan and Sichuan as a result of the oversupply of hydropower,” said Wang Yongchen. “In some NEWSCHINA I July 2013

Over 75 percent of China’s total water resources are in the country’s southwest, and, according to the latest National Renewable Energy Plan, the country’s total hydropower capacity would increase to 420 GW by 2020. The upcoming decade is expected to see a continuing surge of hydropower projects.

“If we are bent on having more dams, we should at least stop building terraced hydropower stations that segment and destroy entire rivers,” Professor Liu Shukun told NewsChina. “Enough distance should be left between the dams for the sake of preserving the habitat of fish, and other ecological resources.”

Weng Lida, former head of the Bureau of Yangtze River Water Resources Protection, once said that comprehensive planning for each individual watershed is a prerequisite to the exploration of large rivers, and the hydropower development plan should be in line with the overall watershed plan.

“However, we do not yet have an advanced watershed planning system. For the Jinsha River, though it has been overexploited, I still hope 50 percent of the river’s course will remain free of dams, and that the natural river flow will be guaranteed for the sake of protection of the overall environment,” said Liu Shukun.

Most farmers in Shigu by the banks of the Jinsha River have lived there for generations, living off the land’s fertile soil and sufficient natural resources. However, this could all soon come to an end as a result of the country’s hydropower-focused energy development plan.

“Although the Diqing Prefecture government promised in 2006 that it would not dam Tiger Leaping Gorge as long as the majority of local people disagreed with the project, we know we have no way to negotiate if the project is locked in by official decisions,” said Yang Xueqin. According to Yang, if the reservoir is built and begins to store water, his home, along with those of 100,000 other people, could be submerged.

53

culture

Zhao Wei

A Star is Reborn Announcing her retirement, renowned actress Zhao Wei has turned her hand to directing. NewsChina got a sneak peek at the results

By Wan Jiahuan and Yuan Ye

A

t 37, actress Zhao Wei seems a little young to be announcing her retirement. Having made her debut while still a Beijing Film Academy (BFA) sophomore, playing a coquettish teenager in the popular 1998 TV series Princess of Pearl, Zhao was catapulted to stardom very early in her career.

However, as Zhao revealed in a recent interview, arriving so suddenly and so completely in the public eye left her feeling empty. A few lackluster roles in a series of box office turkeys rapidly eroded her star power, a decline which

54

prompted her to return to school.

In 2007, the same year that Zhao Wei re-entered her alma mater to begin a master’s degree in directing, Xin Yiwu’s coming-of-age novel So Young hit bookstores across China, becoming an overnight success.

The novel was particularly popular with young readers, as its bittersweet depiction of a campus romance was a departure from the gritty “ruthless youth” genre that had typified 1990s young adult fiction in China.

In So Young, Zhao found the plotline for her graduation work. In the pages of

the novel, she saw characters and situations familiar to any ordinary Chinese person who grew up in post-Reform and Opening-up China. “I’ve never seen a single mainland-made movie that tells the story of our younger generation,” she told NewsChina.

Following its premiere at the end of April, Zhao’s directorial debut quickly garnered positive reviews, and generated more than US$56 million in box-office in its first week of release. Zhao Wei’s transition to behind the camera was hailed as a particularly shrewd move.

“There were only a very limited numNEWSCHINA I July 2013

ber of movies about China’s youth,” said screenwriter Li Qiang. “The theme alone helped make So Young a success.”

Youthful Realism

Despite falling in love with the characters’ “trenchant views on growing-up and the sorrows of parting” while reading So Young, Zhao felt that the story in its original form lacked a degree of big screen potential.

She thus sent a copy of the novel to screenwriter Li Qiang, who agreed that more elements would need to be added to enrich the plotline.

NEWSCHINA I July 2013

They decided to set the story on a university campus in the mid-1990s, rather than the late 1990s as in the original novel. While such a change might have minimal impact on a US-set story, the pace of change in China meant this adjustment had major implications for both screenwriting and production design.

In Zhao and Li’s adaptation, the main characters would like Zhao herself be members of China’s first generation of “only children,” born after the implementation of the One Child Policy of the 1970s. This generation bore witness to the dramatic transformations of the 1990s but were unable to share them with siblings, forming a unique social perspective quickly becoming mainstraim as this generation comes of age.

To ensure that her adaptation would hold up to scrutiny from the people who had lived the very lifestyle it depicted, Zhao approached shooting from a naturalistic perspective, becoming obsessive over seemingly minor details during the four-month shoot, which was followed by three months in the editing suite.

To faithfully reproduce the atmosphere of a 1990s university campus, the production team spread location shooting between five universities in Nanjing, filling each shot with nods to the popular culture of the era, down to hairstyles, reading material and TV shows.

Li Qiang also sought to incorporate characters from across the social and class spectrum, in order to give as balanced a portrayal as possible. Female protagonist Zheng Wei was written as the archetypical spoiled brat from a one-child household. Supporting role Zhu Xiaobei meanwhile is an unapologetic tomboy whose sister has just been laid off from a State-owned enterprise and has fallen back on her for financial support. Another female character, Li Weijuan, typifies the 80 percent of university students in the mid-1990s who had come from rural areas in the hope

of bettering themselves at an urban college. The character even cruelly dumps her high school boyfriend after he fails to gain entry to her college. By contrast Ruan Guan, a dreamy girl from a village close to Li’s, is on a quest to find true love.

As the story unfolds, rapid social changes occurring in the background continuously overshadow campus life.

As Li Qiang sees it, the 1990s was a period when Chinese society was becoming increasingly stratified, a process whose results are obvious to any modern observer of China’s rich-poor and urban-rural divide. Zhao Wei told NewsChina that she wanted this movie to portray the social position where the young people of her generation found themselves just before entering the world of work.

Even before her film took the domestic box office by storm, Zhao’s vision was earning high praise. As an academic submission, So Young was a resounding success. Zhao’s BFA tutor was so impressed that he gave her a score of 99 out of 100.

Getting Grounded

Zhao told NewsChina that she struggled to shake off her former persona even while on set. During the shooting of So Young, even though Zhao hid her familiar features under a black cap and a padded jacket, crew and cast found it hard to accept her as a director. In the years between her screen debut in Princess of Pearl and taking the director’s chair for So Young, Zhao felt she’d learned so much about naturalistic acting that her early performances only served as a bad example.

“I feel more embarrassed than proud [of my debut performance] as the acting style is completely different from what we’ve been taught at the film academy,” she told our reporter.

“Many producers of commercial movies and hit TV series wanted to work with me after seeing my performance in Princess of Pearl. In most cases,

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a personality disorder in Zhang Yuan’s acclaimed Green Tea, which was followed up with a return to type, as Zhao took the female leads in A Time to Love, directed by Huo Jianqi, and Jade Goddess, directed by Xu Anhua. After both movies flopped, Zhao began to lose her shine, and came to resent what she saw as a fickle market.

Her commanding performance in supernatural martial arts epic Painted Skin which smashed domestic box office charts in 2008, raking in more than US$35 million, went some way to restoring Zhao’s profile. In 2012, Zhao played a disfigured character in the follow-up Painted Skin II, which took US$111 million at the box office.

A scene in the college washhouse

Zhao Wei (left) in the director’s chair

Poster art for So Young

I was given parts that were similar to that of [character] Xiao Yanzi.”

In 2001, Zhao played a disfigured female street food vendor in the Stephen Chow smash-hit Shaolin Soccer. Even back then, critics hinted that Zhao was seeking to shake off her image as a pretty, poised leading lady. In 2003, she portrayed a woman struggling with

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However, despite box office success, Zhao was still uncomfortable in her leading-lady bubble. Prior to the release of Painted Skin, she had already been invited to pursue a master’s degree in performance by her undergraduate tutor at the BFA. “At the time, nonstop acting made me feel like I was just treading old ground, never overstepping the boundary,” Zhao told NewsChina.

Feeling she needed more inspiration, Zhao began to push herself towards more challenging projects. In 2006, she guest starred in The Post-Modern

Life of My Aunt, on the set of which she met future collaborator Li Qiang. Li later recalled that first meeting, saying Zhao struck him as “honest, smart and straightforward.”

After years of postgraduate study, he told our reporter, Zhao had transformed beyond recognition. “She has extraordinary sensitivity and a deep understanding of spiritual matters,” he told our reporter. “She is equipped with the qualities of an outstanding director.”

Zhao’s wide connections and reputation also meant that her directorial debut had a head start at the box office.

The high profile nature of the production team – herself, Li Qiang, at that time a well-regarded screenwriter, and Hong Kong-based producer Guan Jinpeng – meant funding came easily.

However, Zhao refused to sit back, instead opting to work more than 18 hours a day during the four-month shoot.

“Unlike when I was an actress, as a director I was highly motivated,” she told our reporter. During the shoot, she strictly stuck to her shooting script, which had taken two months to complete. Actors were required to rehearse lines and blocking long before they arrived on set, and Zhao took a dim view of ad-libbing.

“This time around, we chose the most traditional and orthodox shooting style,” Zhao told NewsChina. “I told myself, the quickest way to get close to my role models is to be rigorous.”

On the morning of April 21, NewsChina reporter caught So Young at an advance media screening. Zhao’s vision brims with nostalgia, and moved many in the audience, though others preferred to focus on the potential profits of such a savvy piece of work, helmed by familiar faces. Zhao Wei herself, however, refuses to label her work as mainstream entertainment. While the aspiration is unquestionably there, it is too early to determine if Zhao will realize her dream of being perhaps China’s first “post-90s” auteur. NEWSCHINA I July 2013

A

The Other Madame Mao

Jiang Qing performs Tradition and Transformation in 1974

Photo by Ke Xijie

Shadow of Politics

In 1964, a photograph of Mao rtist Jiang Qing has grown Zedong’s fourth wife Jiang Qing, accustomed to surprised a former actress, appeared in the reactions when she intromainland People’s Daily for the first duces herself. Her autobiography, time, making the face of this fortitled Memory, Bygones and the Past, merly cloistered figure known to which she began 22 years ago, has most Chinese. At the same time, only recently been approved for her namesake had begun to gain publication on the Chinese mainfame in Hong Kong and Taiwan. land. The reason? Jiang’s name.

When the Cultural Revolution This sixty-seven-year-old artist broke out in 1966, Madame Mao, and impresario shares her name with the late wife of Chairman as the chairman’s wife was known in the West, began to promote “revoMao, the ringleader of the Cultural lutionary model operas,” restrictive Revolution Group, later known as

By Wan Jiahuan and highly stylized socialist-realist the Gang of Four, and the scapegoat productions overseen by Jiang and for many of the worst excesses of the purged of all “questionable” content. At the same time, the movie Cultural Revolution Born in Shanghai, Jiang was raised in post-war China. She be- industries in Hong Kong and Taiwan were beginning to bloom, and gan studying classical Chinese dance at the Beijing Dance Academy the younger Jiang Qing won her first Golden Horse Award for Best (BDA) at the age of ten, before relocating to Hong Kong at age 17 Actress, the Taiwanese equivalent of an Oscar, for her performance in Many Enchanting Nights. where she went on to become a movie star in Taiwan.

For her whole life, artist Jiang Qing has had to live in the shadow of a much more famous namesake

NEWSCHINA I July 2013

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culture

As the Cultural Revolution took hold, devastating art, film and drama on the mainland, Jiang Qing left Taiwan for America, where she would later become a choreographer. When the Gang of Four fell in 1976, and her namesake was blamed for the chaos of what would become known as the “ten disastrous years” before finally committing suicide in jail in 1991, Jiang Qing eschewed politics, and tried to disentangle her name from its negative associations.

However, more recently, Jiang has gotten closer to the disgraced Madame Mao, and has found a source of inspiration in the woman who became one of modern China’s greatest political pariahs.

In 2008, Jiang co-produced a stage play in Germany with Chinese musician Liu Suola. The play, Comrade Jiang Qing, told the story of a young “on-the-make” Jiang Qing, who struggled for fame in the movie industry of 1930s Shanghai. When asked by reporters about why she had chosen to produce a play about her namesake, Jiang replied “Come on, it’s just a name.” Now, Jiang is collaborating with an American author on a second script about Madame Mao, and has also become an avid collector of materials relating to the Revolutionary model operas of the Cultural Revolution period.

Jiang Qing became a pin-up in 1960s Taiwan

Descendents of Thieves

Jiang Qing knows better than most the effect of political associations on the lives of ordinary people. In 1954, her grandfather was carted off to jail, accused of being a counter-revolutionary during the Anti-Rightist Campaign. In Mao’s China, this was all it took to taint every generation of a person’s family. Her mother, at the time a university dean, was demoted. None of her grandfather’s descendents were permitted even to apply to college. Her uncle, a student at the time, was expelled from the prestigious Nankai University in Tianjin.

Two years later, a young Jiang Qing was still snubbed by her classmates and teachers due to her background. At the age of 10, however, she passed the entrance exam for the Beijing Dance Academy (BDA), China’s premier dance school at the time. She went to Beijing determined to erase the “stain” of her family background, later writing that “I felt I would return to innocence when I arrived in a new environment.”

After moving to Beijing, however, Jiang found herself struggling to maintain the guise of an unsentimental revolutionary, instead longing to see her family. She kept her family life hidden from her classmates, and on one occasion when she went to visit her grandfather in jail, she removed the obligatory red scarf worn by students at the time so that nobody would notice that a “young pioneer” was visiting a counterrevolutionary.

Despite her inner sadness, however, Jiang Qing still felt like a “little master,” and was even selected as an aesthetically-pleasing youth to flank then-premier Zhou Enlai during meetings with foreign dignitaries.

Her parents, meanwhile, living in Hong Kong, were disgusted with what they perceived as their daughter’s duplicity. On the two occasions when Jiang went to visit them, she quarreled with her father, who insisted that she had been brainwashed. In return, she argued

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that Hong Kong was a “bastion of materialism” that had made her father unpatriotic, rounding off her argument with an epithet straight out of the Red Army playbook: “No matter where my motherland needs me, I shall go without hesitation.”

Stateless Artist

Aged 17, Jiang came on another visit to Hong Kong and her father refused to let her return to Beijing. Jiang, an unwilling detainee who had, in her eyes, been forced to betray her country, responded by dropping out of school and opposing her father’s every wish. She later wrote that she deeply resented having to stay in Hong Kong because it was “colonized” and “filled with crime.”

Despite her troubles at home, however, Jiang couldn’t stay away from the limelight, and joined an acting program run by Shao Films.

She was soon spotted by filmmaker Li Han Hsiang, also a refugee from Mao’s China, who eventually introduced his protégée to the budding Taiwanese movie market. Five years later, she claimed her first Golden Horse statuette, and went on to star in 29 movies during the seven years she lived in Taipei.

However, once again Jiang found herself disenchanted with her surroundings in the crowded capital of Taiwan. “It was like constantly living in a zoo,” she recalled. In 1970, her marriage failed, which brought with it a painful and acrimonious divorce, and crushing depression. Desperate for a new start, Jiang headed for the United States, a move she describes as an “escape,” the same word she uses to describe every occasion in her life when she has relocated to a new place.

After settling down in the US, Jiang quickly picked up her dance career, which had atrophied since leaving Beijing, and established her NEWSCHINA I July 2013

Photo by Wang Xuhua

Jiang Qing in Beijing, April 2013

own dance studio. Her childhood experience on the Chinese mainland kept her glued to the local Chinese-language press and radio stations, and while she put roots down in America, Jiang retained a strong sense of cultural identity.

Jiang became a US citizen in the 1970s, but felt that she “should behave like a Chinese in every way,” she told interviewers in 1990.

Finally, Jiang determined to return to her homeland to share her experiences with a new generation of people growing up in a new era, out from under the shadow of the Cultural Revolution. While she was prepared for the transformation her homeland had undergone since her unexpected departure, she was not prepared for how much her name would affect her prospects.

Beyond the Sea

While only becoming aware of her infamous namesake in the mid60s, soon Jiang couldn’t avoid the association, which even confused her fans in Taiwan. The local media eventually resorted to calling Jiang “Taiwan’s Jiang Qing,” while Madame Mao became “Jiang Qing from the other side of the ocean.”

By the time the Cultural Revolution ended, and even into the era of Reform and Opening-up, Jiang was banned from entering the Chinese mainland simply because of her “sensitive name.” Only after she married, taking her husband’s name of Blomback, was she granted a

NEWSCHINA I July 2013

visa.

Unlike in Taiwan and Hong Kong, few Mainlanders had ever heard of this other “Jiang Qing.” Those that had, as Jiang discovered when she returned to Shanghai, knew her only as a defector, a traitor and a capitalist-roader. All her family members who had remained in Shanghai during the Cultural Revolution were prime targets of persecution simply due to their association with her. Jiang’s most egregious crime, according to her family’s persecutors, was her brazenness in “daring” to share a name with Madame Mao but still “defect” to Taiwan.

In 1979, Jiang visited her former teacher Chen Jinqing, who was also the principle of the BDA. Chen admitted that she had suffered many reprisals after her connection to Jiang was uncovered. Despite all that, Chen still arranged for Jiang to perform in China under the alias Jiang Jing, a name she habitually used on the Chinese mainland to avoid unwanted attention. It was not until 1987 that someone suggested that perhaps the name Jiang Qing could be used positively for promotion, and Jiang toured eight cities under her own name.

She later recalled that “this was the first time ever that my name had proven useful to my career.”

In 1991, while Jiang was putting the final touches to her autobiography Memory, Bygones and the Past, the news broke that Madame Mao had hanged herself in a prison hospital. Interest in this almostforgotten relic of the Mao era was rekindled, and once again Jiang’s name proved a barrier to her success.

During the 2008 Olympic Games, Jiang choreographed and directed an opera called Tea performed at the newly-built National Grand Theater in Beijing. Despite a smooth production, Jiang was furious when she discovered she had been credited as “Chiang Ching,” an archaic transliteration of her name, written in Latin characters, sticking out among the Chinese names on the playbills and posters. She refused to appear for the curtain call on opening night.

In March this year, the National Congress was held in Beijing. As Jiang was departing for Beijing to prepare for the publication of her new book, she received a call from her publishing house urging her to postpone her journey. “Do not purchase the ticket yet, there might be a problem with the trip,” she was told.

By this point, Jiang was in no doubt as to what the “problem” might be. Someone had caught a glimpse of the name on her ID. Even in 21st century China, her name remained toxic enough to keep her out of the country during important political meetings. Even in the artistic realm, Jiang is often frustrated by the popular focus on her name, rather than her achievements.

While she remains committed to promoting contemporary dance in China, Jiang’s formerly fiery nationalism has been softened by her second marriage in America, her experiences in the Chinese diaspora as well as on her return to the land of her childhood, and her many years of living “stateless.”

“Mentally, I feel like a world citizen,” she told NewsChina.

An abridged version of Memory, Bygones and the Past will be published later this year 

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visual REPORT

The difficulty of flagging down a taxi in Beijing is legendary. Sometimes, passengers will wait on the streets for over an hour just to secure a ride. Taxi drivers often refuse to take passengers to remote or sparselypopulated districts in case they can’t find a return fare quickly enough. Complaints about the capital’s taxi service have long been a feature of Beijing life.

However, the other side of the story is rarely told.

Many taxi drivers have their own gripes. High agency fees paid to their companies leave them out of pocket unless they always have a passenger on board. Fuel charges are going through the roof, but fares are capped at a ridiculously low level by the central government. Rowdy passengers often wreck the interiors of their precious vehicles.

Taken from January to March this year, this collection of images depicts the work and living conditions of a taxi driver in Beijing. Recently, Beijing’s government announced a plan to allow taxi fares to increase by 15 to 30 percent.

However, public sentiment is more in favor of reducing mandatory agency fees.

At 6AM, a shuttle bus from his taxi company takes driver Li Yu from his home in the eastern suburbs of Beijing to the east third ring road. The 60 kilometer ride often takes longer than a hour

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NEWSCHINA I July 2013

After lunch, Li Yu takes a nap in his car. Half an hour later, he is back to work

DRIVEN TO DISTRACTION Li Yu spends 11 yuan (US$1.75) on this lunch. He complains about the rising prices of food and fuel NEWSCHINA I July 2013

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visual REPORT

1. Li Yu says he wants to make more money to improve the life of his child 2. At 7PM, Li Yu takes the shuttle bus back home 3. Li Yu takes a passenger to the south second ring road at around 11AM 4. Li Yu gets his car washed every day to provide a comfortable ride for the passengers 5. After breakfast, Li Yu counts his income in the past 24 hours - he makes 300 yuan (US$48) after deducting 300 yuan for fuel and 200 yuan (US$32) in agency fees 6. Li Yu spends 300 yuan to refuel his car. Again, he complains of rising prices

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OUTSIDEIN perspectives from within China

Hidden Shanxi

The Ghosts of Diantou Village Having survived the collapse of dynasties, the Japanese invasion and the Great Leap Forward, a visit to the once-proud, now abandoned, fortified town of Diantou, Shanxi Province, is a rarefied step back in time

By Jack Smith

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NEWSCHINA I July 2013

W

hile the Chinese authorities insist on calling Diantou a village, the size, beauty and scale of its crumbling edifices, honeycombed into the loess plateau in the Longshan mountain range, make it look more like a diminutive fortress.

Since the time of its founding at the birth of the Tang Dynasty (618-907), when the future Gaozu Emperor Li Yuan concealed his armies in its labyrinthine cave dwellings, Diantou has seen more than a little bloodshed. Li Yuan himself would later overthrow the short-lived Sui Dynasty (581618) from this hidden mountain retreat.

Diantou village appears to have a knack for remaining unseen. When Gaozu’s nearby capital at Jinyang (its ruins lie a mere 2.5km away from Diantou) was razed by the vengeful Taizong emperor of the Song Dynasty (960-1279), Diantou remained sequestered in its river valley, its citizens continuing to eke out a living by sowing the rich loess terrain with crops, fishing the nearby river (now heavily polluted with mining runoff and silt), and generally keeping out of sight.

After weathering the Mongol invasion, the collapse of the Ming Dynasty and the foreign incursions into China in the early 20th century, Diantou re-fortified itself during World War II, becoming a base for local Communist guerillas raiding Japanese military bases and railroads in the area who could disappear underground in this isolated community built in the shadows.

Lost Labyrinth

Diantou can only be reached from a tiny off-ramp connected to the highway leading to nearby Jinci and the provincial capital Taiyuan. The handful of longhouses around the village car park are the only inhabited buildings in the settlement, still daubed with slogans advocating resistance against Japan.

Shanxi Province, which by some estimates is home to 70 percent of China’s ancient buildings and towns, has failed to promote tourism in Diantou beyond a few mentions in the State media and the occasional inclusion on a bus tour itinerary.

This removal from Shanxi’s recent mining boom and consequent economic acceleration NEWSCHINA I July 2013

has meant that Diantou mercifully lacks the usual tourist-trap irritants – loudspeakers blaring music, incomplete or incomprehensible information panels, tacky souvenir stalls and tenacious “guides” speaking pidgin English. This also means that Diantou has spadefuls of that rare thing that most Chinese historic sites now lack – atmosphere.

The entire village is built onto and carved into the mountainside on a series of gradated levels jumbled together in no visible order and served by a network of tunnels on the inside and rickety wooden staircases and long, winding streets on the outside.

Despite the village’s relatively small size, it is simplicity itself to get lost in Diantou, though the placement of the village’s Buddhist temple at the hub of this spider’s web of streets makes it the ideal meeting point should your group wish to disperse.

The gorgeously-tiled temple itself is lovingly tended and maintained, but intermittently open to the public. The courtyard, dominated by a large and imposing Chinese scholar tree, is typically guarded by a furious-looking mongrel dog, and unless the temple’s human guardian is around, awake, and in the right mood, you have scant chance of seeing the interior.

However, there is plenty more to explore in this architectural and archaeological playground.

Brave the dark caverns which form the bulk of Diantou’s former mercantile quarter, and descend into earthy blackness. A clap of the hands will illuminate these interiors with single, bare lightbulbs, and then it is up to you to guess at the function of each individual space, as there are only a handful of signs in the entire site, and none in English.

Some of the village’s former businesses are easily identified by the wealth of equipment and even produce abandoned inside them. The distillery retains its piping and fermentation barrel. The local restaurant’s vast stoves and oven remain intact. The granary and its attached mill are still complete with a human-driven quern which still responds to a good push.

The buildings in the main cliff-face are equally redolent with wonderful echoes of the past. A butcher, complete with polished wooden counter, shelves and meat hooks still stares out on the deserted valley. The sails of the village’s windmill have collapsed onto the roof of its main building, but cloth still clings to their spokes.

Lost Actors

Following the narrow street west of the temple

Getting There: Taiyuan is easily reached by high-speed rail from Beijing or Xi’an in less than three hours. The city’s airport also serves destinations across China as well as Hong Kong and a few international hubs. From Taiyuan, Diantou is only accessible by hire car, taxi (expect to negotiate upwards of 100 yuan [US$16] each way, and make sure the driver sticks around to pick you up) or a few public buses from Taiyuan’s main bus station that drop visitors near the off-ramp leading to the village.

While You’re There: Nearby Mount Tai is home to the Dragon Spring Temple and its attached reliquary, rediscovered in the 1990s during earthworks and believed to have been a major religious site from the Tang to the Qing Dynasties. While the reliquary’s five-layered (one stone, one bronze, one silver, one gold, one likely jade) housing for a relic of the Buddha (likely his knuckles, according to X-ray scans of this artifact) is not on display, the covered dig site, plus the Dragon Spring Temple’s incredible collection of preserved religious statuary (ask a staff member at the dig site to let you in) is well worth seeing. Simply walk or drive along the highway from Diantou Village back toward Taiyuan, and the temple’s main approach, a long staircase set in charmingly landscaped forest, will become visible on your left.

brings you past a long row of shallow, still-furnished homes and businesses. Here is where the relatively recent abandonment of Diantou, which seemingly emptied following the construction of the new highway, is made painfully visible. Elderly former residents still come here once a year to paste traditional scarlet New Year mottoes of good fortune, health and peace around the doorways to their now-derelict former homes before returning to whitewashed concrete box accommodation in nearby urban centers.

Other reminders of the recent past greet the visitor at every turn. Old shoes occasionally surface when one explores an interior. Tiny shrines are still laden with the shriveled remains of former offerings to household deities. Paper windows, riddled with scars, still keep the worst of the wind out of the narrow dwellings.

A particularly poignant site is the village square, located at the western end of the main east-west thoroughfare which begins at the village temple.

Here, long-abandoned strips of communal land are overshadowed by a small outdoor stage, beside which is a tall shrine filled with the guttered remnants of red tea lights. The shrine’s line of sight goes directly to the village temple, meaning that

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when it was illuminated its lights could be seen from the temple’s main altar. Inside the stage’s attached dressing room are the skeletons of faded red lanterns used to illuminate performances, along with the collapsed remnants of the dressing tables.

From the Tang Dynasty right up to the Cultural Revolution (1966-76), this stage would have hosted traveling performance troupes and been a gathering point for the whole village. Now, the only audiences are the crows that have taken up residence in the collapsed thatch of the town’s former theatre district.

Up the hill from the stage are some of Diantou’s most plush residences, the homes of the village elite. Courtyards filled with apple, pear and pomegranate trees are protected by high walls and gatehouses overtopped with elegant carved calligraphy. Within, the houses retain the classic features of Shanxi homes – cave dwellings with arched roofs – and are tiered according to the complex Confucian hierarchy, with the main dwelling at the rear and the servants’ quarters at the front.

Some residences in this district still have visible electrical wiring and telephone cables, indicating that they were inhabited well into the 1980s when the telephone became a luxury even rural householders could afford. Advertising hoardings from

the 90s are further testament to just how long the former residents of Diantou held out before surrendering to the developers who built the unsightly two-lane highway right across their doorstep.

Lost Legends

Even further up the hill we come to the poorest of Diantou’s districts, where smallholders farmed tiny plots of land surrounded by dry stone walls.

Here also are some of the village’s largest caves, the source of many legends now attached to Diantou village.

Few locals now stray into these deep, manmade caverns. One allegedly contains a vast stone disc which, when rolled aside Temple of Doom style, revealed an underground living space large enough to conceal the village’s entire population, which stood at several thousand even in the twentieth century.

Another cave houses a spring which once supplied locals with water and irrigated their smallholdings. Yet more caves nearby, legend has it, are blocked by vast chunks of ancient ice which formed centuries earlier and sealed off underground passageways to nearby Mengshan, a lastresort escape route for the besieged.

There are more than 400 distinct caverns in Diantou, which made it a perfect place to house a guerrilla insurrection but a difficult and dan-

gerous place to explore alone. Intrepid travelers should pay attention to potentially loose ceilings, and not disturb the more contemporary earthworks which prop up many older structures both in the village proper and in its mountainside cave network.

Indeed, as one wanders deeper into the bowels of the village, it is easy to become disoriented and even uneasy. Sometimes, the signs of former habitation are so poignant that you can begin to imagine the faces and clothing of the residents of this once-beautiful settlement. Old shoes, broken bowls, chopsticks, even ration books often surface with even the most cursory amount of digging around in the debris on the floors of homes. On one wicker-covered walkway, a row of withered leeks dangles along a frayed string, hung out to dry by a local householder and never collected.

Chinese visitors in particular are often overcome with the sad aspect of Diantou, its collected history which stretches back 1,000 years now rotting in a senseless jumble on a forgotten mountainside. Any archaeology, history or architecture enthusiast should see this derelict masterpiece of Chinese rural town planning before the loudhailers of overzealous tour guides or, much worse, the bulldozers of “development” scatter its fragile ghosts to the winds of history.

real chinese

xiǎo

Xiao Qingxin Clean, Simple and Pure “In a white cotton dress, she stands in a vast stretch of golden paddy field, her eyes closed and her head tilted 45 degrees up toward the sky. A breeze ripples through the paddy field, gently teasing her dress.”

This is a typical paragraph in xiao qingxin literature. With xiao meaning “little” and qingxin meaning “clean, simple and pure,” xiao qingxin originally referred to Britpop, a British-born style of independent music noted for its freewheeling vibe. Since the turn of the 21st century, xiao qingxin has been adopted into Chinese pop culture, and soon evolved into a popular art form redolent with sentimentality and idealism.

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A recent example of the genre is the high popularity of “light blogging,” a social media application similar to Tumblr which Chinese netizens use to share short video clips, a snapshot or just a few words.

“At first glance, it seems that everything is casual and unremarkable,” ran a commentary on Internet arts portal Douban. “But they stealthily attract you by tugging at your heartstrings.”

Now, the “xiao qingxin” group on Douban has over 50,000 members. More and more young people are imitating the style, which is now advocated as a way of life – going with the flow and not taking the world too seri-

qīng

xīn

ously.

As with any social phenomenon in modern China, however, this movement is increasingly questioned along with its rising popularity, with opponents warning against the tendency towards fatalism seemingly on the grow among the young.

“Xiao qingxin works are often tinted blue – showing the hypocrisy and sentimentality of these so-called artists,” exclaimed a post from the “anti-xiao qingxin” group on Douban, “How could [these people] experience the true colors of life if they immerse themselves in an imaginary world of peace and quiet?”

NEWSCHINA I July 2013

flavor of the month

IN TRANSIT

By Stephy Chung

NEWSCHINA I July 2013

pressed from Playdough, and delicately absorbed the film of the chili-oil broth. The Mapo Tofu was rather underwhelming, neither spicy enough, nor savory enough, and would have benefited from a smoother, crumblier consistency.

The Mouth-Watering Chicken was as appetizing as the name suggests, with pulled organic chicken drowning in a mala (spicy and mouth-numbing sauce) and floating sesame seeds. The numbing spiciness, created by Sichuan peppercorns, was considerably light. The Wok-fried Dragon Beans stir-fried with smoked ham was a bit too salty.

Many of Transit’s most successful dishes are inspired by elements used in Luzhou-style cuisine.

Luzhou is a city in the southeast of Sichuan province, and is influenced by the lighter, fragrant flavors of neighboring Guizhou and Yunnan.

The litsea oil – popularly used in Luzhou – gave a citrusy, lemongrass-like hint to the dinner’s beautifully conceived sea bass.

The head and tail of the fish were laid out, as one would expect with a whole fish.

Its body on the other hand, was deconstructed into smaller rolls, tightly hugging small morsels of pork and lightly infused with zippier notes of lime jus and litsea oil. The sea bass, first frozen and then steamed, gave the meat a tougher quality that didn’t flake.

The Crispy Wild Eel was the meal’s surprising highlight. Slices of eel were fried into dry, tasty strips that were satisfyingly salty. The eel was scattered into a platter of toasted red Sichuan chilies. The thin, crackling chilies were a delight to munch on, though I got overzealous at one point, and was smacked by the spiciness of one of the unseeded bits.

The dessert was a refreshingly cool palate cleanser. Iced passion fruit sorbet was stuffed into individual balls of lychee, and yielded a perfect balance of tart and sweet. Courtesy of Transit

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oing out for a Sichuanese meal is not usually the type of occasion that warrants a nice dress. You are, after all, consuming the China’s spiciest, oiliest cuisine in the confines of a stuffy hot, hole-in-the-wall space joint. Park yourself in front of a bubbling vat of hotpot and you’re likely to leave sporting more than a few grease stains and reeking of stewed meats and chilli peppers. Mop your sweaty brow throughout the meal freely, and no one will judge.

Transit, an über-chic contemporary Sichuan restaurant in Beijing’s uppity Sanlitun Village North, has a different approach. It’s located on the third floor, just above the Diesel store, in a shopping Mecca glittering with luxurious high-end fashion brands. It boasts staying power, that is, it first opened its doors in a nearby hutong in 2002. After being demolished pre-Olympics, it shut for a few years and then re-opened in 2011 in its current location.

The décor – black and gray tones, rustic wooden floors, emerald-colored walls and soft lighting all pull together for a trendy, stylish dining experience. As for the menu, my eyebrows doubtfully raised at ingredients like bourbon, grapefruit vinaigrette, avocado and dark chocolate worked into the main courses. Was this to be another example of “Classy Chinese” throwing out the classics?

Instead, Transit takes age-old favorites, and gives them a unique, modern take. The popular street food, liangfen, or chilled starchy rice noodles mixed with peanuts and spices, is done up neat and tidy in the “Summer Roll” appetizer. In this version, shredded crabmeat and julienned cucumbers are wrapped in vermicelli sheets and served with a separate dipping sauce.

Famed mainstays like the Dandan noodles and Mapo tofu stayed true to form. The pillowy soft wheat noodles bit as if they were

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essay

Taking the Low Road

By Elyse Singleton-Okuda

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A woman rode past on her bicycle, its basket stuffed full of blackened goats’ heads

Illustration by Xiang Zhaohui

Everyday life in big city China could often be mistaken for life anywhere else. Metro-boulot-dodo as our French friends call it. Breakfast in the morning, hop on the subway (or sit down at the home office desk), coffee, finish work, out to dinner or the gym, shower, bed.

There's traffic on the highways, decent lattes to be found, crowded subways... sometimes you feel you really could be anywhere.

And then you leave the city. Woah, mama!

A while ago, I hopped on a bus from Lanzhou to Xiahe. As soon as I arrived at the bus station, I got the feeling that Toto and I weren’t in Kansas anymore. Sure, I am a minority in the center of Shanghai, but here, I was a minority amongst minorities. There was me, the lone laowai (foreigner), toddling along among the white-capped men and the lace veiled women of the Muslim Hui and the highcheekboned, ruddy-faced Lamaist Tibetans wrapped in their chuba with daggers on their hips. I was definitely, even more so than usual, the odd one out.

First on the bus, I glibly (or, as it later proved, gullibly) paid the 30 yuan that the driver asked. I thought that was a bargain for a six or so hour trip. Soon after we left, I realised we were really no longer in delicate urbanite territory. As we pulled out, I noted that the toilet was not euphemistically marked as the “washing hands room,” but more clearly as the “sh*t room.” Inside the bus, another sign helpfully informed me that “there are no thieves in the heaen” (sic). Pretty sure I was not in “the heaen,” I decided to keep an eye on my stuff.

Nor was there any vague attempt to stick to that old “no smoking on public transport” chestnut. The bus driver, looking a wee bit older than his proclaimed 25, chain-smoked the whole way. One of his passengers, a Tibetan with a wrinkled sultana-brown face, a few missing teeth and glasses held on with elastic, from time to time stopped fingering his huge prayer beads and pulled out a long thin

pipe from his sheepskin coat to puff down on something that smelled both vile and illegal.

This too continued for the whole journey.

In the juddering, stinking bus, the variety of interesting passengers made up for the lack of comfort. Besides my smoking friend, at some indeterminate point on our route, three young Hui men hopped on the bus with large falcons

on their wrists. The birds had bells attached to their backs and one of them kept staring at me in a most disconcerting manner. If it could talk, it would probably have shrieked “Laowai!

Laowai!” Everyone on the bus seemed interested in the birds, but panicked when an army officer spread one falcon’s immense wings to get a better look at its massive talons, giving us all a fright.

My attention turned to the action outside.

At one point, the road forked abruptly and the bus took the low road. Just as well, as it later turned out. On the high road, a sheep had just been slaughtered, an act that I was fortunate enough not to witness, being somewhat weak of stomach, and its blood was being drained, as a camel and a cow tethered to a trough looked on, hopefully not the next victims.

We passed snow-covered terraced hills and cave dwellings, corn drying on rooftops and signs painted on walls encouraging people to have daughters. At Guanghe, it was market day and the spires of the mosques cast shadows over an ocean of white fezzes. A woman rode past on her bicycle, its basket stuffed full of blackened goats' heads.

The main form of transport here was no longer the black Santana, the luxury Lexus or the mighty Shanghai taxi, but a tricycle truck – a three-wheeled device that looks like a moped with a tray at the back. On one of them, a veiled woman was perched high on a bale of straw. Having seen one of my fellow passengers fly up in the air with her baby as we went over a huge bump, I hoped that this woman wouldn't meet too many potholes. In others, men and animals got to grips with each other.

A man clung to his sheep as he hung off the back, and cows packed in head-to-tail left little room for four standing passengers.

Suddenly, I felt that perhaps, in comparison, my rattly old bus was the height of luxury. It's all relative, I suppose.

Now, where to find a latte? NEWSCHINA I July 2013

Playing it Straight

By Niall O Murchadha

NEWSCHINA I July 2013

A gay child must labor under the overwhelming burden of trying to be someone they are not

Illustration by Xiang Zhaohui

Growing up in 1980s Ireland was to come of age between two distinct worlds, as the past struggled with the future. One of those seminal clashes was the divorce referendum, my first time voting. This epic battle between the old conservative Catholic society and a new liberal secular one saw the right to divorce passed by the slenderest of margins.

Only two decades later, Ireland finds itself at another crossroads as a constitutional convention has approved a referendum on same-sex marriage by seventy-nine percent. As an Irish friend remarked to me this week, we really have come a long way.

Looking back, it amazes me the length the older generations would go to talk around the subject of alternative sexuality. Cryptic phrases, nods and winks were the order of the day, along with dark mutterings about engaging in acts against God, the same God I was always informed was responsible for creating us in His image.

In many ways, I hear these conversations replicated here in China. A family is a man, woman and (single) child, and any other combination is considered inherently wrong. In the Ireland of the past there was at least the possibility of being regarded as being “not the marrying kind” but that is an unacceptable state of affairs for someone in China. I have several Chinese friends who are “leftover women,” women over thirty given up on as marriageable material, left on the shelf like so much stale bread.

Any deviation from the norm is considered unacceptable by Chinese conservatives. As in the West, there is a certain degree of hostility as well as sympathy towards LGBT individuals, as online discussions of recent unofficial same-sex weddings in China can attest. With its strict media controls, China lacks the violently public homophobia found in the West, but there is a certain sense that LGBT people, in most cases, try their hardest to be invisible.

Sometimes, of course, this is just not possible. I have encountered men as flamboyant as a production of Rent staged in a Christmas decoration factory, men euphemistically described by their Chinese peers as “weak” or “fragile.”

The lack of a functioning gaydar in much of the general population could explain the lack of genuine consideration of the role of sexuality in modern Chinese society. The topic did come up in a former place of employment about an openly gay foreign employee. One of the Chinese staff could accept that he was gay, and could accept that his boyfriend worked for the Chinese government. But the notion of the existence of gay bars in Beijing stumped her.

“Are there that many foreign gays in Beijing?” she mused, unconvinced. When I informed her that these bars tended to be overwhelm-

ingly local in nature, this relatively urbane lady was truly shocked.

Discreet dalliances may be tolerated, just as long as you ultimately marry a member of the opposite sex and procreate. I am aware of cases where gay male friends attempted to tell their parents they were engaged to a man, only to be informed that they may continue their relationships with their fiancés, but only in secret, and on the condition that they marry a woman and produce grandchildren. The same-sex partner in China has, in some cases, the same status as the mistress: something secret that can be tolerated to a point, at least if you are male.

My abiding memory of youth is the feeling that so many people struggled to maintain this veneer for the outside world, a veneer that filled their real lives with despair. My best friend in childhood caused a bit of a stir when she came out to her parents, but she was fortunate in that her straight sister went on to produce a prolific brood of grandchildren for her mother to coo over.

In China, the vast majority of families get only get one throw of the dice, and if your child is, for one reason or another, childless, then the all-important family line disappears.

A gay child must labor under the overwhelming burden of trying to be someone they are not, and may end up luckier than others by having a lavender marriage with a gay person of the opposite sex. Then there are the “gay wives,” women corralled into marriage only to discover their spouse is gay. And then there are the children of these deceptive unions, who are only now being identified.

I was always assured that things like samesex marriage would never happen in Ireland, and yet here we are, a time when the constitutional change will be put to the people with an expectation of success. Things change, and, if I may be cynical, people die, new people are born. So there may be hope for the future. 

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Cultural listings Cinema

The Chinese Dream What is the “Chinese dream?” Thirty years of market reforms and urbanization have allowed many Chinese people to get rich quick, but great wealth rarely comes without trials and tribulations. The movie American Dreams in China humorously portrays the tough times that often come in tandem with success. Directed by well-known Hong Kong director Peter Chan, the movie hit screens in the Chinese mainland in mid-May. In the movie, three young men with distinctly different lives and educational backgrounds start up a business together, and struggle to make it succeed. While ostensibly a comedy, the movie also makes an attempt to interpret the concept of the “Chinese dream,” a current government buzzword.

Music

Book

Rock Music Invades Cinemas

Factory Girls

By Ding Yan

Transcendence is a 3D documentary movie based on the pioneering Chinese rock musician Cui Jian. After a month of ticket presales, the movie was released in seventeen cities across China in May, and centers on a performance by Cui Jian and the Beijing Symphony Orchestra. Transcendence, the first ever attempt at cooperation between a Chinese rock star and a classical orchestra, vividly and incisively uses rock music to portray a generation’s nostalgia for their youth.

Exhibition

Plain Paper China was one of the first countries to use paper, and although traditional Chinese artists made limited use of the material, it failed to become a key aspect of Chinese art. “The Thickness of Paper” is an exhibition held at the Arch Space in Xi’an from May to June, with seven contemporary artists displaying their paintings and sculptures, all of them based on the theme of paper. In these works, the artists explore the relationship between paper and the arts, the function of paper in modern civilization, and how paper might be used in the future.

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Dongguan is the largest manufacturing base in China, and one that attracts millions of young women to move from their villages to work on production lines doing repetitive manual labor. A worker might repeat the same simple physical action thousands of times every day. Published in May, Factory Girls documents individual destinies in the context of modern Chinese industry. To gain an insight into the lives of factory girls in Dongguan, Ding Yan, a female poet, worked at two electronics factories and one injection molding factory for 200 days, experiencing the harsh reality of factory life. In Factory Girls, Ding documents the youth of these young women with hopes and dreams, and questions the humanity of modern industry.

NEWSCHINA I July 2013

NEWSCHINA I July 2013

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Commentary

Restore confidence by respecting public opinion As increased civil awareness of environmental issues leads to more public protests, policymakers must learn to listen

By Deng Yuwen

F

ollowing a spate of NIMBY protests against petrochemical their decisions – the mayor of Kunming pledged that the future of plants in coastal cities like Xiamen, Dalian and Ningbo in the proposed PX project would depend entirely on public opinion. the past few years, a new round of similar protests has been The authorities in Pengzhou promised that they would not grant the sparked in inland cities such as Pengzhou in Sichuan, and Kunming, project administrative approval until relevant environmental standards capital of Yunnan province. were met.

Producing the chemical paraxylene (PX), used in the production of A confrontational pattern of interaction between the public and textiles and plastics, local residents are concerned with the impact the the authorities has been established, leaving no room for debate over factories will have on the local environment, although government- public policy, and the authorities’ reluctance to communicate effecbacked assessments claim that the imtively with the public only serves to pact would be minimal. create suspicion and paranoia about Although they have to bear the According to industrial professionchemical plant projects. As similar als, demand for PX projects has been scenarios have been repeated, the environmental costs of potentially rising rapidly in China. With inadpublic has lost confidence in the dangerous projects, local residents equate domestic production capacity, government, and refuses to trust are excluded from the decesionChina has greatly increased its imports government-backed environmental making process – with those from South Korea alone organizations. amounting to 806,657 tons in the first The only way to break this vicious quarter of 2013, a 41.4 percent incircle is to include public opinion crease from the previous quarter. The price of imported PX products is early in the decision-making process, rather than as a crisis measure said to be several times higher than that of domestic supplies, making to placate street protests. The authorities should have learned from PX projects very attractive to both local governments and enterprises, experience that thanks to improved civil awareness and the power of despite the fact that it can pose an environmental hazard. social media, they can no longer ignore the opinions of local residents, Under the current decision-making mechanism, the power to ap- especially on environmental matters. prove an industrial project lies in the hands of a small number of govAlso, the authorities must realize that it is utterly unfair for governernment leaders. Although they have to bear the environmental costs ments and enterprises to reap the economic benefits of a project while of potentially dangerous projects, local residents are excluded from the forcing the public to shoulder the environmental cost, and equally undecision-making process. Typically, the public only learns of the proj- fair to force local residents to suffer the damage caused by a project that ect’s existence when construction is about to begin. is intended to benefit the whole country.

The result is that there is no time or method for residents to negotiAllowing the public to participate in the decision-making process ate with the authorities or relevant enterprises, forcing them to turn to can facilitate a proper debate over public policy in this field, and negopublic confrontation to make their voices heard. So far, this seems to tiations can be held between different stakeholders to find a solution have worked. that balances the interests of all parties.

With the maintenance of social stability a political priority, local This is not only a key issue for breaking the political deadlock regovernments have tended to give in to protestors – the authorities in garding environmental policies – by restoring public confidence in the Xiamen, Dalian and Ningbo all dropped their PX projects following authorities, it is also a key issue for China’s political future. the eruption of public protests. After the more recent protests, governments in Kunming and Pengzhou were also forced to consider (The author is a senior media commentator. )

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NEWSCHINA I July 2013

NEWSCHINA I July 2013

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