July 2014

Written in Blood: Lost Accounts of China's Holocaust

SOCIETY

Naked Ambition: The Fall of a Vice Czar

CULTURE

Back to Basics: Zhang Yimou on his Return Home

Where next for China’s African Dream?

$4.99 www.NewsChinamag.com

Volume No. 071 July 2014

SPECIAL REPORT

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 Writers: Yu Xiaodong, Li Jia Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Du Guodong 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 Publishing and Development Office China Newsweek Corporation President: Wang Xiaohui Chief Executive: Fred Teng Publishing Associate: Zhang Tianli 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

CN11-5826/G2

NEWSCHINA I July 2014

The success of further reform hinges on rekindling Reform Spirit

I

n the past few months, with its high-profile as a whole appears to be resisting reform initiaanti-corruption campaign and ambitious re- tives launched at the central level. The result is that form plans, China’s top many reform initiatives are leadership has shown strong either rejected or suspended China’s new leadership political will to push forward at the local level, which is a with what it has referred to major reason behind the stagappears to be pushing as “deeper reform.” Many are nation of political reform has reform once more, hopeful that the top-down seen over the past decade. but that enthusiasm approach adopted by the top Now, China’s new leaderis lacking at the local leadership can deliver concrete ship appears to be pushing relevel results, and end the decadeform once more, but that enlong stagnation of political thusiasm is lacking at the local reform. level – grassroots officials have But while a strong central leadership is impor- taken a passive or even guarded attitude towards tant, the enforceability of reform plans and cooper- central initiatives. Such resistance has been particuation at the local and grassroots levels are also essen- larly obvious in the past year, as the recent reform tial. Given China’s huge population and significant efforts have been coupled with a high-profile antiregional disparity, a top-down scheme will not be corruption campaign. successful without grassroots support.

To deliver its pledge of more drastic reform, ChiSince China launched the Reform and Open- na’s leadership should not merely focus on making ing-up policy in the late 1970s that kicked off its top-down designs, but endeavor to overcome resisrapid growth, almost all successful reform plans tance in localities. have relied on experimentation and policy innovaTo achieve its goal, the top leadership should not tions at the local and grassroots levels, such as the monopolize the power of interpretation, so that rural reform that decollectivized agriculture in the local governments have more room for trial and 1980s, and the reform that liberalized State-owned error. More importantly, the government should enterprises in the 1990s. The role of the central overhaul its current appraisal system for governgovernment is to summarize its learning from such ment officials, which focuses on economic growth experiments, and make it applicable nationwide. and social stability, and discourages risky policy exUnfortunately, China’s rapid economic growth periments. has created many vested interests at both the Moreover, as local governments are only held central and local level, which have become so en- accountable to their superiors, they face no prestrenched that local and grassroots officials, who sure to address the needs of local communities. The were pioneers of reform in the 1980s and 1990s, government also needs to allow greater local parhave become staunch defenders of the status quo. ticipation in the decision-making process, so that With widespread corruption, not only has there government officials are held more accountable to been less incentive for local government officials the people. Only this way will the spirit of reform to conduct further reform, but local officialdom will be rekindled at all levels.

1

Contents

With its ‘Pivot to Africa,’ China is looking to win over those who doubt Beijing’s commitment to allowing locals to profit ahead of its corporations. Will this new strategy help win hearts and minds?

Editorial

politics

Cover Story

interview

P14

01 The success of further reform hinges on rekindling Reform Spirit 10 Public Opinion:

Web Watchers 12 National Security Commission:

Safety First

P26

14 China in Africa:

Forward March/A Smarter Helping Hand 26

28

Chen Chuanshu: Graying Area Cheng Siwei: “Reform is so difficult that its dividends can only be attained through rule of law”

special report

32 Jilin Archives:

Lost Voices

2

P36 NEWSCHINA I July 2014

Photo by CFP

all smiles?

Contents

P44

P38

P60

36

38

42

44

48

50

society

Construction Industry: The Bad Die Young Beijing, Tianjin and Hebei: Better Together Industrial Marijuana: Hemp Hampered Prostitution Crackdown: City of Red Lights Education Diary: School of Hard Knocks Death Industry: Gilded Coffins

economy

52 State Salt Monopoly:

Ancient Practices, Modern Times culture

56 Zhang Yimou Interview:

Time to Come Home?

NEWSCHINA I July 2014

visual report

60 Iron Ladies

P56

outside in

62

65

Tribal Taiwan: Drinking Wasps With the Chief Flavor of the Month: Courtly Chicken

Commentary

70 Another Shot in the Arm 72 Common political ground can be worth its weight in gold 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 55 China by numbers 64 real chinese 66 ESSAY 68 CULTURAL LISTINGS

3

NewsChina Chinese Edition

Xinmin Weekly

May 26, 2014

April 28, 2014

Going Global

During the 2014 China Green Companies summit, PC giant Lenovo’s founder Liu Chuanzhi stirred the waters by questioning attending government officials about corruption and what he perceives as unfavorable treatment of small private enterprises.

Former assertions by Liu that “businesspeople should only talk business” were cast aside as the billionaire told media that he doesn’t wish to evade political debate, adding that he wanted to see his peers take more responsibility for their companies’ behavior. A former darling of the Party who once pledged to “serve my country through its industry,” Lenovo’s 2004 takeover of IBM’s ThinkPad against shareholder opposition seems to have changed Liu’s formerly China-centric business model. “People now tend to buy good products rather than domestic products,” he told reporters. Based on capital and resources accumulated throughout years of worldwide growth and a major overseas marketing push, Liu has hinted that Lenovo is now looking to diversify in the higher end of the IT sector.

Caijing May 13, 2014

Laboring On Despite that China officially abolished its controversial laojiao or “reeducation through labor” system in 2013, many local governments seem to simply have siphoned off former inmates into other extrajudicial facilities. Laojiao was formerly a tool to deal with political and social dissent under which local police could force detainees, often petitioners or activists who were not in technical violation of the law and thus could not be formally charged, into unpaid work. So-called “disciplinary training centers” or “legal training correctional facilities” have been constructed across China to house those who, under current regulations, should have been released from labor camps. Experts have demanded that legislators speed up the process of dismantling the legacy of the re-education through labor system in order to draw a line under this unpopular form of punishment.

4

Schools for Scandal China has long required children of school age to be enrolled in the school closest to their home to increase fairness in the admissions system, only to find that China’s real estate market has stepped in to once again tip the balance in favor of aspirational parents.

Homes close to some of Beijing’s best schools now sell for 350,000 yuan (US$58,000) per square meter, nearly 10 times the average house price in the capital. Despite overwhelming criticism of the rich-poor gap, observers claim that many buyers are not, in fact, simply “rich,” but have instead downsized from much larger homes on the outskirts of the city and moved into smaller, pokier apartments in areas close to the best schools. Many claim this approach is preferable to striking backdoor deals with school admissions boards and faculty, which often involve bribes of hundreds of thousands of yuan and require ironclad political connections beyond the reach of the average family.

China Economic Weekly May 16, 2014

Censorship or Competition?

China’s State media regulator has ordered Chinese video sharing websites to drop four currently syndicated American TV series; The Big Bang Theory, The Good Wife, NCIS and The Practice. Audiences for these wildly popular shows have denied claims they were dropped due to sensitive content – other so-called “sensitive” shows such as Netflix’s House of Cards have remained available. American series have become a core moneymaker for Chinese video websites thanks to low syndication fees and a large, educated audience proving a draw to advertisers. Some have called this a cynical attempt by the authorities to win audiences back to domestic TV shows by force, as few believe China’s major networks, all at the mercy of the State censorship apparatus, can compete in terms of content. Others have pointed to State media CCTV’s syndication of several hit US shows as a factor – a heavily censored version of HBO’s Game of Thrones was aired the day after the above series disappeared from official video sharing websites.

Minsheng Weekly May 5, 2014

Stay or Go? A survey by Tencent’s news portal showed that China’s four largest cities – Beijing, Shanghai, Guangzhou and Shenzhen – saw a total average population drop of 10 million over the 2014 Chinese New Year period. After the vacation ended, 20 million new migrant workers allegedly arrived to take their place. Complaints of high house prices, general overcrowding and increasingly heavy pollution have failed to stem the tide of newcomers eager to make their fortunes in big cities. Netizens have termed those who choose to cram themselves into urban centers “sardines,” while those who remain sedentary in their hometowns are “salted fish,” so-called because they “bask in the sun” instead of working. Neither strategy is viewed as desirable by the younger generation, most of whom see life as a straight choice between two equally unpleasant modes of living – relative poverty and a fair amount of leisure time outside the major cities, or relative wealth and an unbearably stressful life within them.

NEWSCHINA I July 2014

Illustration by Wu Shangwen

“‘Dude’should not be a term of address between colleagues. And‘Big Boss’ should definitely not be how you refer to your leaders!”

The Party Disciplinary Inspection Commission of Guangdong Province warning Party members to clean up their slang to counter a culture of using “gangster” terms of address to refer to one another.

“It is up to Obama whether or not he visits China. We are always here regardless.”

China’s Foreign Affairs Spokesman Qin Gang responding to claims that Barack Obama chose to snub China on his recent Asia-Pacific tour.

“We don’t think we should publicize everything.”

China’s Administration of Press, Publication, Radio, Film and Television “explaining” its decision to axe popular American series like The Big Bang Theory and The Good Wife from video-ondemand sites.

“I encourage people to seek more freedom and to question the daily grind. I have no special destination, and my aim is just to silently walk the cabbage.”

Artist Han Bing explaining a piece of performance art in which he takes a “pet cabbage” for a walk.

“Democracy never did anything for GDP. Democracy is not democratic unless it is economic achievement that feeds the people.”

Terry Gou, president of Apple supplier, the Taiwanbased Hon Hai Group, lashing out against recent student protests in Taipei.

NEWSCHINA I July 2014

“You’re short on capital? With no official background? And you’re unattractive? And not naturally bright? And you still don’t study hard?!”

Xu Qunyi, vice president of Yanqiao Middle School in Wuxi, Jiangsu Province, under fire after delivering this little rant at the school’s flag-raising ceremony.

“I never considered promoting those who didn’t bribe me.”

Wu Zhengyang, former head of the Public Security Bureau of Jiujiang, Jiangxi Province, before being sentenced to 13 years for taking bribes.

“We still have time to read. We just don’t have respect for learning. We still have money to buy books. We just don’t have the drive to collect good ones.”

Critic Wu Lichuan on the declining popularity of reading.

“Some of our citizens are so pathetic they will insult their mothers before insulting the US.” Zhou Qifeng, former president of Peking University, on patriotism.

5

Top Story

Beyond the South China Sea

The Conference on Interaction and Confidence-Building Measures in Asia (CICA), a group consisting of 26 mostly Asian members aiming to promote regional peace and security, held its fourth summit in Shanghai in late May, where Chinese President Xi Jinping proposed a new concept for security in the region.

“Security does not mean damaging other countries’ interests for the sake of your own, but rather joining together and respecting each other for overall, equal and sustainable peace throughout the region,” Xi claimed at the conference.

His speech was believed to be in response to growing tensions in the South China Sea, where China has been involved in fierce disputes with Vietnam and the Philippines.

In recent days, violent protests in Vietnam, in opposition to a Chinese drilling project on Zhongjian (Triton) Island in the disputed Xisha (Paracel) island chain, have devastated hundreds of Chinese businesses in the country.

Meanwhile, the Philippines detained 11 Chinese fishermen for allegedly poaching endangered sea turtles around the disputed

Nansha (Spratly) Islands. China denied the accusations and has demanded the fishermen be freed immediately, but the request was rejected.

In China’s view, such provocations from Vietnam and the Philippines are closely related to the US’ “pivot to Asia.” “Several countries are taking this opportunity to do bad things. China cannot tolerate this,” Fang Fenghui, chief of General Staff of the People’s Liberation Army, told US Joint Chiefs of Staff Chairman Martin Dempsey, during his recent visit to the US. His view was shared by many Chinese experts who have criticized the US for conspiring with China’s neighbors to create trouble for China. “We will surely continue to drill on our own land. We will not lose any land our ancestors left for us,” Fang said.

During the CICA conference, China and Russia attracted global attention by settling a long-pending agreement on natural gas, believed to add more weight to the Sino-Russian “alliance” against the US’ AsiaPacific strategy.

Also in May, China and Russia jointly launched a high-profile military exercise in the East China Sea. As the situation grows more complex, it remains to be seen whether Xi’s new strategy will ease tensions.

Policy

China to Deepen Reform on the Capital Market The Chinese government issued in early May its new top-level program on reform of the capital market, emphasizing the need to protect the rights and interests of small and medium-sized investors.

Different from previous similar policies which have focused on regulation and administration, the new program, according to analysts, places more emphasis on a healthy and open capital market with measures such as further improving the

6

system of eliminating heavy loss-making enterprises, loosening restrictions on private financing, and clarifying responsibilities on information disclosure.

The program also clarified the plan to approve 100 new IPOs by the end of 2014 – a number that falls far short of the 600 companies that had applied.

Despite the news, the new program did not boost China’s depressed stock market as was expected. Analysts said the new pro-

gram, designed as a six-year outline, needs more specific implementation rules, and such a slow-burn policy is insufficient to offset investors’ worries over China’s overall economic slowdown.

NEWSCHINA I July 2014

Happiness Index of Rural People by Occupation

0.558

0.556

Other

Businesspeople

0.550

Farmers

0.552

Migrant Workers

0.554

Survey

Economy

Farmers Happier than Migrant Workers

China Allows Local Bond Sales

The Institute for China Rural Studies under the Central China Normal University on May 18 published their survey on the happiness of China’s rural population, revealing the group’s “general happiness index” to be about 0.5578 of 1.

A total of 3,648 rural people from 200 villages in 31 provinces and municipalities were surveyed during the four-year investigation, which covered issues including income, health, living standards, working conditions and other factors.

Despite the overall average level of happiness, the data showed that migrant workers from rural areas are less happy than those living on the land, often due to meager wages, a poor working environment and limited social welfare compared to urban residents.

The report also indicated unbalanced development between different regions, saying that the happiness index declines sharply from east to west.

Society

Incinerator Protest in Hangzhou A total of 53 suspects have been detained for allegedly using violence in a protest against an incinerator to be built near a residential community in Hangzhou, capital of Zhejiang Province.

The demonstration began on the afternoon of May 10 when a group of residents gathered on a nearby highway and blocked traffic, some of them reportedly damaging cars and assaulting policemen.

The local government told the media that the project aims to ease the city’s landfill capacity shortfall, revealing that Hangzhou now sees around 5,000 tons of garbage left unprocessed every day. However, the protestors refused to believe the government’s pledge that the station will meet environmental protection standards.

Since heavy pollution has led the Chinese public to be increasingly aware of protecting their rights and interests, the Chinese government faces the challenge of restoring public trust.

China’s State Council issued an official statement on May 19, allowing 10 municipalities and provinces, including Beijing, Shanghai and Shenzhen, as well as a number of provinces, to directly sell municipal bonds.

The move has been seen as a breakthrough solution to the growing risk brought about by the shadow banking sector, which local governments use to get around the law that forbids them from directly borrowing money from third parties.

Official data showed that by mid-2013, Chinese local governments were about 20 trillion yuan (US$3.2tn) in debt.

According to the statement, pilot local bonds could have a maturity varying from five to 10 years with a fixed, market-determined interest rate. However, the total amount of bonds is not allowed to exceed the quota set by the central government. Analysts hope that the government will gradually loosen restrictions to further decrease local governments’ reliance on land sales, a major cause of China’s real estate bubble.

Politics

Terror in Xinjiang The Chinese government has announced a one-year crackdown on terrorist cells operating in the restive western region of Xinjiang beginning in June in response to the May 22 bomb attack in the capital Urumqi, which killed 39 people and injured another 94.

The suicide car bombing of a local market came only weeks after a coordinated knife and bomb attack at the city’s train station killed two terrorists and one bystander as well as injuring 79 others, the latest in a series of attacks in Xinjiang and across the country. Urumqi police made a statement claiming that the groups implicated in both attacks were influenced by Islamic extremists.

TheTurkestan Islamic Party (TIP), an extremist group reportedly under the East Turkestan Islamic Movement (ETIM), claimed responsibility for the April 30 attack. No group has so far associated itself directly with the May 22 bombing.

A total of 29 countries, including the US, have announced their willingness to assist China in its efforts to combat rising extremism in Xinjiang, an ethnically diverse region that is experiencing some of its worst violence in decades.

NEWSCHINA I July 2014

7

Photo Credit: Top Story, Xinhua; Politics, CNS

0.560

Inspiring

Poll the People

A senior from Guangxi spent three months making his own motor tricycle to transport his twin grandchildren to and from their kindergarten. Other than the vehicle’s engine, tires and electronics, the entire bike was made from hand-planed camphorwood.

After a recent nationwide campaign to crack down on illegal and pornographic content online since the beginning of the year, has it had any effect on the websites you usually use?

Yes 45.84% 1,941 No 38.07% 1,612

Shocking

Saddening

Not Sure 16.08% 681 Source: www.weibo.com

An athlete named Zhang Baoqiang was assaulted twice by competitors who attempted to drag him off the track and beat him during a 10-kilometer race in Xi’an, Shaanxi Province, but managed to finish second after fighting them off. His assailants have yet to be named.

Most Circulated Post Retweeted: 136,032 A woman from Chengdu smashed a bus window and jumped out of it, injuring herself, after allegedly smelling “burning.” It turned out she just overreacted to the smell of the vehicle’s exhaust.

The People’s Daily posted a picture of two firefighters, aged 23 and 20, who were blown off a 13th-floor balcony in Shanghai before falling hand-in-hand to their deaths on the sidewalk below.

Amusing Hong Yaoming, deputy principal of an elementary school in Xianning, Hubei Province, kissed a piglet in front of his class. Hong had previously pledged to make the unusual gesture if students stopped dropping litter around the school for a month, and earned plaudits for keeping his word.

8

True brothers, they held hands at the last moment of their lives.

Please remember their names: Qian Lingyun and Liu Jie. NEWSCHINA I July 2014

WHO’S

Top Five Search Queries On

HOT? WHO’S NOT?

over the week ending May 19 Huang Haibo 836,185 The renowned actor was detained by Beijing police for allegedly soliciting prostitutes.

A Bite of China II 80,139 Widespread criticism of the second season of the documentary on Chinese cuisine proved popular.

Monkey Conscripts

Vietnam riot 108,833 Despite receiving little coverage in State media, attacks on Chinese nationals in Vietnam triggered concern.

A military airfield in Beijing employed the services of two monkeys to remove birds’ nests from the area after migratory wildfowl became a nuisance to pilots.

UFO in Heilongjiang 205,412 Several alleged UFOs crash-landed in China’s northernmost province in late April.

Top Blogger Profile Liu Su Followers: 60,646 This 32-year-old botanist with the China Academy of Sciences is one of the country’s most popular science writers. Unflinching in his criticism of Traditional Chinese Medicine and his support for the research and establishment of GMO crops in China, Liu is also unafraid to court controversy.

He doesn’t restrict himself to science, with some of his most popular posts being comments on current affairs, including education reform and China’s disputes with Southeast Asian nations in the South China Sea. NEWSCHINA I July 2014

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

CEO of Sanjing Pharmacy 102,701 Liu Zhanbin allegedly fell to his death during an anticorruption investigation.

Hangzhou Library The municipal library of Zhejiang’s capital city has since 2003 enforced a policy allowing vagrants to take shelter inside the building. China’s other libraries are notorious for ejecting the homeless from their premises, despite being public buildings.

Yanzhou Police Police in Yanzhou, Shandong Province detained a man for five days after he complained about a parking ticket online.

Fan at Large A fugitive who emerged after six months in hiding to catch a concert by Taiwanese superstar singer Jay Chou was captured shortly after the show. The man, on assault charges after allegedly attacking a neighbor, told police that the resk of getting caught was worthwhile.

9

politics

Public Opinion

Web Watchers

NewsChina meets the government workers charged with analyzing and “managing” public opinion on China’s Internet

D

By Liu Ziqian

Photo by Dong Jiexu

uan Saimin is the director formation science from Xiangtan Uniof the Internet Public Sentiversity in Hunan Province, and was asment Analysis Center under signed to work in the market research Xinhua, China’s biggest State-run news department of Xinhua News Agency. agency. Recently, he was also identiA year earlier, China had become fied as a leading lecturer for the “First the 71st country to gain access to the Seminar of Internet Public Sentiment Internet. Working at Xinhua, Duan Managers.” had access to an Internet connection, “When there is Internet exposure [of making him one the country’s earliest officials’ wrongdoing] and online proInternet users. test, it is extremely unwise to threaten In May 1999, the controversial the media, block information, or deNATO bombing of the Chinese Emlete posts,” said Duan in a lecture on bassy in Belgrade resulted in an outthe topic of media relationship mainteburst of public sentiment by ordinary nance and risk management.

Chinese people on the Internet, perXu Hong, in attendance at Duan’s haps the first event in the Internet age lecture, told NewsChina that she was to engage the Chinese public on such a older than most of her fellow attendees large scale. Tens of thousands of online – she said many were the same age as posts decrying NATO appeared every her son. This was the first time that Xu, day. Quickly, personal computers and an official in charge of Internet public the Internet came to play a large part sentiment in a city in eastern China, in the everyday lives of young Chinese had attended a class like this. The semipeople. nar was jointly held by the National Xu Hong bought her first computer Public Sentiment Test (NPST) of the in 2001, although it was her daughter Attendants take notes at the first “Seminar of International Ministry of Industry and Information who used it most. One year later, Xu Public Sentiment Managers,” March 2014 Technology, along with Xinhua’s Pubwas transferred to the Internet office at lic Sentiment Analysis Center. Those her city government. There were only who pass the graduation exam will betwo people in the office: Xu’s younger come the first group of certified Internet public sentiment managers colleague was in charge of searching for hot local talking points, while in China.

Xu was charged with compiling what she read online into concise Their job is to “manage” public sentiment, in order to provide de- analysis for the reference of her superiors. tailed analysis reports and reference for their supervising government In 2003, Sun Zhigang, a Chinese college student detained under departments, as well as building a positive public image for large cor- the system used to handle unregistered migrants, died in police custoporations or government departments. dy. The news was reported by Chinese newspaper Southern Metropolis Daily, and soon found its way onto China’s major Internet portals, Internet Sentiment causing an avalanche of public opinion to pour out on the Internet In 1995, Duan Saimin graduated with a degree in library and in- and quickly pushing the issue to the front pages of most major online

10

NEWSCHINA I July 2014

forums. Three months later, the State Council abolished the system for handling unregistered migrants, which had existed for 40 years.

But Xu Hong felt under pressure – as the number of netizens and online protests grew exponentially, their workload also grew, far beyond the capability of two people.

Facing this situation, many local governments took a simple approach – they chose to block all negative reports, and delete online posts they saw as problematic. But while local governments could easily delete posts on their local websites, posts on national portals were a different matter. Officials were forced to find new methods of “guiding” public opinion.

The demand gave rise to a “post deletion market,” which sprang up mainly among public relations companies, some of which devoted all their resources to deleting unfavorable posts at the request of the government. A county propaganda official, speaking on condition of anonymity, told NewsChina that the price for deleting a post could range from US$320 to US$1610.

“Deleting posts indicates the lack of an Internet mindset among those government officials,” said Duan Saimin “The most effective way is to tackle the problem at its root. Simply deleting posts cannot be effective in the long term.”

Gradually, the government also found itself unable to eliminate all negative Internet posts.

By 2008, China had amassed the largest population of Internet users and broadband subscribers, and had the largest number of domain name registrations on Earth. The birth of Weibo, China’s Twitter equivalent, made deleting posts effectively pointless. “Internet users can save screenshots, and re-post when their posts are deleted,” said Professor Shen Yang at the School of Information Management of Wuhan University. In Shen’s opinion, the government has gradually learned to deal with negative public sentiment through improvement of public services and implementation of laws, instead of using crisis methods.

Of the key events that affected public sentiment in 2010, 67 were first reported on the Internet, and among those, 33 percent were reported the same day the event occurred. In the age of new media, it has become useless to use traditional means such as blocking, deleting, hiding and delaying news. Local governments and enterprises have begun to pay attention to the collection and analysis of Internet public sentiment, and to build public sentiment monitoring departments and regular reporting systems to respond to public events as soon as they are reported.

Monitoring? Controlling?

In 2008, professional public sentiment analysis and research centers began to spring up all over China. Prior to that, People’s Daily Online, a major State-run news portal affiliated with the State-owned newspaper the People’s Daily, had already begun analyzing public sentiment, and publishing its China Internet Public Sentiment Analysis Report, in collaboration with the Chinese Academy of Social Sciences. By that time, Xinhua News Agency had already built up several years of exNEWSCHINA I July 2014

perience in delivering public sentiment reports to high-level decisionmakers in the government. Both the two outlets went on to set up public sentiment monitoring institutes.

According to Duan Saimin, aside from mainstream media outlets, the majority of Internet public sentiment analysis institutes in China are run by software companies, research centers at colleges, and government monitoring departments.

“Internet public sentiment analyst” has become a common job title within these organizations. Duan said that in addition to the training of personnel, the building of an appropriate system for monitoring public sentiment was another important task. Currently, there are two types of monitoring systems: The first is a database within which users can search for analysis by keywords, to which membership costs around 100,000 yuan (US$16,100) each year. The second system provides an independent server, tailor-made for the client, allowing the collection of exclusive data. The latter can cost from several hundred thousand to several million yuan (tens of thousands to hundreds of thousands of US dollars).

One government official with many years’ experience in public sentiment monitoring and management told NewsChina that the process is no dark art – all collected data are based on publicly available information on the Internet. Different from ordinary search engines, when a keyword is typed in the monitoring software, the system will automatically collect and classify the results. For example, when “demolition” is searched for in a particular locale, the system will summarize all relevant news and public posts in a recent time-span, and automatically generate various graphics according to the data.

The system monitors information 24 hours a day, and can also send data to users’ cell phones. When a monitor index crosses a set limit, the system will send a warning message.

This monitoring system has given rise to new high-security encrypted messaging software. Password-protected coded information can be sent directly to the cell phone of a decision-maker – if the password is incorrect, a virus implanted in the message will be activated.

The message will also be destroyed automatically when it expires.

“Monitoring is not controlling,” said Duan Saimin. In his opinion, the function of monitoring is to scientifically record and sift public sentiment in order to propose timely policy suggestions and plans.

Shen Yang suggests that the government make public the process of collecting, analyzing and dealing with public sentiment. “For example, in administration, which suggestions from Internet users are accepted? What improvements have been made? The publication of more details will enhance the public’s understanding,” he said.

Duan also believes more local party and government leaders should receive public sentiment management training, since they are usually the decision makers in dealing with public sentiment.

As officials pay more attention to Internet public sentiment, an “Internet mindset” is spreading among them. “There have been too many cases where ideas in the virtual world have quickly become realworld actions, so at least leaders no longer underestimate the power of the Internet,” said Duan.

11

politics

National Security Commission

Safety First

The Communist Party’s newly established National Security Commission, headed by President Xi Jinping, highlights the administration’s considerable emphasis on both domestic and international security

By Cai Rupeng

W

ith much public fanfare but fairly muted media coverage, the National Security Commission (NSC) of the Communist Party of China (CPC) convened its much-anticipated first meeting on April 15. Outlining the commission, President Xi Jinping raised the concept of a “general national security perspective,” emphasizing “national security with Chinese characteristics.”

After the Third Plenum of its 18th National Congress last November, the Communist Party of China established a central leading group charged with “comprehensively deepening reform” and a central Internet security and informatization leading group, both headed by Xi Jinping.

While scenes of the first meetings of the above-mentioned two groups were shown on Xinwen Lianbo, the official daily news broadcast on China Central Television (CCTV), no footage or images of the first meeting of the NSC has been seen so far. The parsimonious coverage gave away few clues as to the makeup of this politically sensitive organization.

According to the summary of the meeting published by State news agency Xinhua, Xi’s explanation of China’s security matters included both those at home and abroad, and the president elaborated on various aspects of the former.

Li Wei, director of the Research Center for Safety and Arms Control of the China

12

Institute of Contemporary International Relations (CICIR), said the importance of the idea of the “general national security perspective” should not be overlooked. He told NewsChina that the phrase has great significance in terms of maintaining international security, as well as providing a practical outline for China’s national security planning.

Three months after the decision to establish the NSC was made by the Politburo of the CPC Central Committee on January 24th, the “super-institution” has now formally been launched. With powers that bestride the Party, the government and the military, the group’s every move will likely be far-reaching and impactful.

Scaling Up

According to the Xinhua report, eleven security concerns will be put under the supervision of the NSC: politics, homeland, military, economic, cultural, social order, science and technology, information, ecology, resource, and nuclear.

Experts have said that the Chinese NSC plays a dual role, in that it takes charge of security relating to both domestic and foreign policy – many believe that its power will reach almost every corner of both.

According to Xinhua, Xi said at the first meeting of the NSC that the content and range of China’s national security is broader than at any time in its history, and the situation is more complicated than ever before,

giving rise to the need for a “general national security perspective.”

Li Wei said that the range of national security has been expanding against the backdrop of globalization. In his opinion, China has in the past paid more attention to “traditional” security problems such as territory and sovereignty, yet as times change, “non-traditional” issues, such as resources, energy and ecological safety have become more prominent.

The growing importance of national security can be seen in Xi’s speeches on his recent tours both at home and abroad. On March 24, he illustrated China’s nuclear safety outlook for the first time at the Nuclear Security Summit at The Hague, the Netherlands.

On April 9, while visiting the Special Police Unit of China’s Military Police, Xi stressed its importance as a key force in counterterrorism efforts and maintaining social order. On April 14, on a visit to the People’s Liberation Army Air Force, Xi insisted that it “combine the air and space forces” into a force “strong both in attack and defense.”

In recent years, China has faced national security challenges from terrorist attacks, altercations with neighboring countries like Japan and the Philippines, and due to its fast economic transformation, overconsumption and environmental destruction. The situation has forced China’s top leaders to contemplate security problems with a more comprehensive outlook.

Jin Canrong, vice-dean of the School of NEWSCHINA I July 2014

Photo by IC

The long line for the security check at a tube station in Beijing, May 26, 2014

International Studies at Renmin University, said that with Xi’s recent speeches and movements, his national security strategy is becoming clearer.

Yet in his speech at the first meeting of the NSC, Xi didn’t mention disputes with neighboring countries, focusing instead on mutual security, reciprocity and mutual interest.

Analysts point out that this emphasis suggests that the founding of the NSC should not be seen as muscle-flexing by a rising power, and that the NSC is not meant to address disputes in the South China Sea or around the Diaoyu (Senkaku) Islands. Many have claimed that it is more out of long-term order and stability considerations.

Common Destiny

However, Jin Canrong said that after the establishment of the NSC, China would likely be more active in foreign affairs. “The establishment of the NSC serves not only for domestic security, but for neighbor issues,” Jin told NewsChina.

In Xi’s speech, he used the phrase “combined destiny” to describe the relationship that China is to share with the international community. Jin said that this “combined destiny” was a strategic perspective in response to the Western idea that China is “alien.”

The expression, used mainly after the 18th CPC National Congress, has been used by Xi on a number of diplomatic occasions, such as during his first meeting with foreign coun-

NEWSCHINA I July 2014

terparts, on his overseas tour in March 2013, at the Boao Forum for Asia, and during his meetings with ASEAN leaders.

As early as July 2012, Xi, while attending the World Peace Forum as China’s vice-president, proposed a perspective of peace, cooperation and common security.

In the forum, he said that while facing complicated security challenges, no country can act alone while ignoring others, and that no country will have absolute safety.

Jin Canrong said that China is building a new type of security system based on this concept of a “combined destiny.” He said it is different from the American mode of maintaining security through military alliances, which often has the consequence of dividing countries into friends or foes, adding that a “combined destiny” is an all-encompassing binding relationship where both sides prosper and suffer damage together, which he said was a closer relationship than a military alliance.

“Super-institution”

According to Xinhua, Premier Li Keqiang and Chairman of the National People’s Congress Standing Committee Zhang Dejiang, both vice-chairmen to the NSC, attended the meeting.

Chinese media deemed the NSC a “superinstitution,” as it involves the power of the Party, the government and the legislature. Li Wei, of the Research Center for Safety and

Arms Control at the CICIR, said that executing the various functions of the NSC will require effective participation and coordination from the three branches. “That explains why Li Keqiang and Zhang Dejiang are vicechairmen,” Li said.

Professor Wang Yukai of the Chinese Academy of Governance (CAG) pointed out that China’s national security system had been relatively lax in the past, with organs from sections such as foreign affairs, military, national security and the political and legal systems often acting unilaterally. He said there is now a need for a comparatively concentrated and effective institution that allows quick reactions in the making of important decisions, as well as a need to avoid subversive mistakes.

Explaining the path of “national security with Chinese characteristics,” Wang said that it places national security institutions into the CPC’s power center, while being neither a Party organ, nor a purely administrative one.

Prior to the NSC, there had been various institutions involved in national security – dozens of these institutions were at the level of the central government and central committee of the Party. These included the State Commission for National Defense Mobilization, the central working group for “stability maintenance,” and the national leadership group for counter-terrorism. However, with overlapping responsibilities and power, these organs tended to cause disorder while trying to maintain order.

In the Xinhua report, Xi Jinping was quoted as saying that the NSC, the new national security system, must be “concentrated and effective.”

Li Wei said that the NSC is not an institution at the executive level – rather, it is in charge of making top-level strategic planning and coordinative commands to avoid security threats.

“To address security problems, the NSC will make panoramic considerations. Otherwise, it would lose its significance,” he said.

13

cover story

BEYOND THEIR AID

Despite massive investment and firm pledges of commitment to indigenous development, China and its corporations have had a mixed reception in Africa. Will a new strategy help to smooth out the wrinkles?

14

NEWSCHINA I July 2014

Photo by xinhua,cns and ap

Li Keqiang visits the Nairobi National Park, Kenya, May 10, 2014

Li Keqiang and Angolan Vice-president Manuel Vicente (R, front) cut the ribbon at the opening ceremony of a vocational school co-funded

by China and Angola, Luanda, Angola, May 8, 2014

Li Keqiang delivers a speech at the African Union Conference Center, Addis Ababa, Ethiopia, May 5, 2014

NEWSCHINA I July 2014

15

Photo by xinhua

cover story

Li Keqiang and his wife Cheng Hong leave Addis Ababa, Ethiopia, for Nigeria, May 6, 2014

16

NEWSCHINA I July 2014

China in Africa

FORWARD MARCH

Facing criticism for China’s policy towards Africa, Premier Li Keqiang unveiled Beijing’s new strategy towards the continent on his recent African tour

By Yu Xiaodong

F

ollowing Chinese President Xi Jinping’s visit to South Africa, Tanzania and the Republic of Congo in March, 2013, Premier Li Keqiang embarked on a high-profile tour to Ethiopia, Nigeria, Angola and Kenya on May 4.

According to Chinese officials, Li’s trip, during which more than 60 agreements were signed between China and the four African countries, aimed to “upgrade” and inject “new vitality” into the China-Africa relationship.

Since 2000, China’s presence in Africa has expanded rapidly, with billions of dollars funneled into mining, infrastructure and aid.

During this period, trade volume between China and Africa increased from US$10 billion in 2000 to US$210 billion in 2013, with China becoming the continent’s biggest single trade partner. China’s direct investment in Africa increased from US$392 million in 2005 to US$2.52 billion in 2012, and it is estimated that over 2,500 Chinese companies are doing business in Africa, employing more than 210,000 Chinese workers.

Although Beijing has also increased foreign aid to the continent – China is believed to have funded 1,673 aid projects worth a total US$75 billion in 51 African countries between 2000 and 2011 according to AidData – China has been increasingly under attack for what some have called a “neo-colonialist” approach.

Critics accuse China of focusing on importing Africa’s raw materials, rather than creating jobs and improving livelihoods, which they argue compels African countries to rely on this trade and undermines their NEWSCHINA I July 2014

ability to achieve sustainable development. It is estimated that 80 percent of Africa’s exports to China are minerals. Another criticism is that China’s business activities have endangered African ecosystems.

In the meantime, Chinese workers are increasingly targeted by insurgents and criminal gangs in various African countries. In the latest attack, on the work camp of a Chinese road building company in Cameroon on May 16, one Chinese worker was injured, and another ten are missing and presumed to have been kidnapped.

Soft Approach

Li Keqiang is clearly aware of these problems. Prior to setting off on his African trip, he acknowledged at a press conference that there were “growing pains” in the ChinaAfrica relationship, which need to be settled bilaterally.

Urging Chinese companies to respect local laws and interests and “shoulder due responsibility” for local communities and the environment, Li also called on African governments to protect the legal rights and interests of Chinese companies.

“China will never pursue a colonialist path like some other countries have, or allow colonialism to reappear in Africa,” Li was quoted as saying by the State-owned Xinhua News Agency.

To ward off criticism of its overemphasis on the mining sector, Li advocates for a more “comprehensive” cooperation with African countries. In his keynote speech delivered at the African Union headquarters in Addis

Ababa, Ethiopia, Li proposed that China and Africa join hands to bring forth an “upgraded version” of “all-round” cooperation.

Li announced that China will increase its pledge to loan US$20 billion to African countries by 2015, a pledge made by President Xi Jinping in his 2013 African trip, to US$30 billion, along with a project offering 18,000 government scholarships and training for 30,000 African professionals.

“Collaboration must not be limited to energy and infrastructure but expanded to industrialization, urbanization, the modernization of agriculture, with more attention given to green, low-carbon development and environmental protection,” Li said in a speech delivered at the World Economic Forum in Nigeria.

Later, in Kenya, Li pledged US$10 million in aid for wildlife-protection projects in Africa, and promised to provide wildlife protection equipment to the Kenyan government.

Earlier, on January 6, China destroyed 6.1 tons of confiscated ivory sculptures and raw tusks, a gesture hailed by many as a “landmark” move towards curbing demand in China, the world’s largest ivory market.

Another notable soft touch on Li’s African trip was the presence of his wife, Cheng Hong, a professor of English at Beijing’s Capital University of Economics and Business, who for the first time accompanied Li on a state visit. Cheng’s appearance immediately drew comparisons with the high-profile visit of President Xi’s celebrity wife Peng Liyuan, which has been hailed within China as a soft power success.

17

cover story

Observers believe that China has adopted a subtler approach in its African strategy.

“China is projecting itself as a gentle giant, tapping into soft power to blunt an ideological offensive that depicts it as a neo-imperial power scrambling for Africa’s wealth of natural resources and energy,” commented Professor Peter Kagwanja, the Chief Executive of the Africa Policy Institute, in an article published in Kenya’s Daily Nation newspaper.

Strategy Shift

With African oil accounting for about 30 percent of China’s total oil imports, few would expect Beijing to scale back its presence in the continent’s oil and mineral sectors. It is no coincidence that two of the four countries on the itinerary for Li’s visit, Angola and Nigeria, are key suppliers of oil to China, with Kenya projected to become a major oil trader in the near future.

But Beijing’s advocacy of “all-round” cooperation is not merely rhetoric. Given the strong economic growth across the continent, China now has its eye on the potential of African countries to become major markets and sources of low-cost labor. According to estimates by the International Monetary Fund, GDP growth of sub-Saharan Africa is estimated to grow by 6 percent in 2014, only slightly behind that of Asia at 6.5 percent.

Despite the rapid development of economic ties between China and Africa, China’s economic presence in Africa still lags far behind its presence in other regions. Currently, China’s investment in and trade with Africa represents 3 and 5 percent of its global investment and trade respectively.

In his speech, Li stated that China and Africa should double their bilateral trade volume to reach US$400 billion by 2020, and increase their total direct investment to African countries to US$100 billion by 2020.

18

It is estimated that total direct investment from China to Africa reached US$25 billion in 2013, which means US$75 billion will need to be invested in the next six years for Li’s pledge to be met. According to Liu Guijin, China’s Special Representative on African Affairs, most of the future investment will focus on infrastructure, including roads, railways, telecommunications, power grids, and manufacturing industries.

Several of the many agreements signed during Li’s trip were infrastructure projects, mostly railway construction. For example, China Railway Construction Corporation Limited and the Ministry of Transportation of Nigeria signed a US$13.1 billion railway project to build a coastal railway line that will traverse 10 of Nigeria’s 36 states.

Another railway project is a US$3.8 billion deal on a line linking Kenya’s Indian Ocean ports of Mombasa and Nairobi, the first stage of a line that will eventually reach Uganda, Rwanda, Burundi and South Sudan.

Pledging to set up a high-speed rail research center in Africa, Li envisioned a future when all African capitals would be connected by high-speed rail lines, and he stated that China was willing to share its experience and technology, having opened its own highspeed railway network in 2007 which carries over 1.33 million passengers on a daily basis.

Market

Along with a focus on transport infrastructure, Li also proposed to transfer China’s labor-intensive industries to Africa. “Through infrastructure building, we will promote industrial cooperation and help Africa to focus on developing labor-intensive manufacturing, which will create jobs and boost consumption,” Li said.

In recent years, with labor costs rising rapidly and economic growth slowing down at

Chinese Premier Li Keqiang and Ethiopian Prime Minister Hailemariam Desalegn (center left) tighten a bolt during a visit to a light railway project, Addis Ababa, Ethiopia, May 5, 2014

Cheng Hong (center), wife of Chinese Premier Li Keqiang, visits Addis Ababa University, Addis Ababa, Ethiopia, May 5, 2014

home, Africa has become an increasingly attractive place for Chinese companies to set up new factories. Instead of dispatching workers from home – a major criticism of Chinese investment – these Chinese companies have now begun to hire local workers.

For example, several Chinese automobile companies have ventured into the continent in the past few years. Chinese truck manufacturer Beiqi Foton Motors set up an assembly plant in Kenya in 2011, and China’s First Automobile Works has also begun construction on a US$100 million truck and passenger car plant in South Africa’s Eastern Cape Province.

NEWSCHINA I July 2014

Photo by xinhua

Photo by CFP

Photo by xinhua

Locals rush to apply for jobs at a Chinese funded shoe making factory at the Eastern Industry Zone, Addis Ababa, Ethiopia, October 15, 2011

In the newly completed Oriental Industrial Park, Ethiopia’s first industrial park and a US$21 million project funded by China, Chinese companies employ 3,400 local workers, accounting for 89.5 percent of all employees. Among them is Huajian Group, a Chinese footwear manufacturer which set up a factory in Ethiopia in 2011, employing 3,000 local workers. With US$15 million in investment, the company’s products now account for about 50 percent of Ethiopia’s women’s footwear exports.

According to Zhong Manying, director of the Department of Western Asian and AfriNEWSCHINA I July 2014

can Affairs, with 70 percent of its population under 35 and a high unemployment rate, the continent has significant potential for labor-intensive industries, although massive vocational training programs are needed to increase the productivity of African workers, currently behind that of Chinese workers.

Competition

But for many, China’s new African strategy is not only a response to external criticism, but also a move driven by geopolitical considerations. This is especially true given its strained relationship with the US regarding

the latter’s pivot towards Asia, and with Japan over historical and territorial disputes.

According to Liu Guijin, China’s new African policy is in line with its global strategies under China’s new leadership, which many have called China’s own “pivot policy.” Earlier in 2013, China launched its “New Silk Road” initiative in Central Asia, and a “Maritime Silk Road” in Southeast Asia. Similar to its new African strategy, both of these initiatives focus on regional integration, and nurture Beijing’s concept of a “multipolar world.”

It is not entirely coincidental that Li’s trip concurs with that of US State Secretary John Kerry, who visited Ethiopia, South Sudan, the Democratic Republic of the Congo (DRC) and Angola in late April, and that of Japanese Foreign Minister Fumio Kishida who on May 4 – the same day Li began his African tour – reaffirmed that Tokyo is ready to provide US$31 billion in aid to Africa over the next five years, a pledge made by Japanese Prime Minister Shinzo Abe during his 2013 African trip, a visit widely interpreted as an attempt to counter China’s rising influence in the continent.

While the US, whose investment in Africa was surpassed by China’s in 2009, has focused mostly on democracy and security, Japan has stepped up its commercial and security presence in the continent, positioning itself as a competitor. Beijing is particularly wary of Japan’s efforts to woo African countries into supporting its bid for a permanent seat on the United Nations Security Council.

With the new approach of “all-out” cooperation, Beijing is determined to maintain its advantage on the continent. “After several decades of hard work, China has established a solid foundation for its relationship with Africa,” Liu Guijin told NewsChina. “[With the strategy,] China will remain in an advantageous position in the future.”

19

cover story Sino-African economic cooperation

Sino-African trade volume as a percentage of China’s total trade volume

China-Africa trade volume Imports

85.3 US$bn

Exports

113.2

Import and export volume and growth in 2012

210.2

US$bn

2000 10.6

Chinese enterprises generated turnover of US$40.8 billion on contracted projects in Africa in 2012, a 45% increase on 2009, accounting for 35.02% of China’s total overseas contracts

198.5 US$bn

More investment in Africa

Population: 1.03 billion (2011) Area: 30,221,532 sq km

During Premier Li Keqiang’s visit to Africa, China pledged to donate US$12 billion more in Africa, and to support the construction of roads, railways, telecommunications and power infrastructure

Medical cooperation China sent a total of 1,006 medical staff to 42 countries in Africa 43 medical teams have treated 5.57 million patients

Nigeria

72 percent of Africans have “good feelings” towards China

China aided in the construction of 28 schools and provided 18,743 scholarships to Africans studying in China 6,717 scholarships were granted in 2012

Sino-African development fund (as of the end of 2009)

20

Ethiopia Kenya

Education (2010-12)

Source: Sino-Africa Economic Cooperation White Book 2013

Infrastructure

US$bn

Angola

Africa’s investment in China Direct investment of US$14.24 billion, 44% growth on 2009 Direct investment volume hit US$1.39 billion in 2012

China invested in 61 projects in 30 African countries and plans to invest US$2.39 billion US$1.81 billion investment in 53 projects NEWSCHINA I July 2014

China in Africa

A Smarter Helping Hand

Mixed attitudes towards China’s aid in Africa highlight the necessity of a new aid strategy

By Li Jia

Fin an ce

O

China’s investment in Africa Mini ng

As of the end of 2012, China had inked bilateral investment treaties with 32 African countries, and set up economic and joint trade committees with 45 countries

Ma nu fac tur ing

Construction

Source: SinoAfrican Economic Cooperation White Book 2013

r he Ot

te sta al e e R , stry ry ore and f il , s y eta ng sb ice log s dr mi al hu ries n r erv no rvey a a s F im she h e s l c u a te s es an d fi les h, cal sin ho an arc ologi bu e W d s n re ge ga tific nd sin a en ces a i e c L S rvi se

NEWSCHINA I July 2014

n May 5, on his first African tour as Chinese Premier, Li Keqiang hailed both sides’ “mutual support” during “shared hardship” in the 1960s and 1970s, symbolized by the Tazara railway, an icon of China’s assistance in Africa, and the People’s Republic of China’s (PRC) UN seat earned with the help of her “African brothers.” He spoke at Addis Ababa’s African Union Conference Center, the tallest building in Ethiopia, completed in 2012 with a US$200 million donation from China, and one of China’s more than 1,000 turn-key, or “ready-made” aid projects.

Later, Li met his old schoolmate, Ethiopian President Mulatu Teshome, who studied at Peking University in the late 1970s on a Chinese government scholarship for developing countries. They agreed on further cooperation on manufacturing and infrastructure. Partly due to the African links established by Chinese companies through China’s aid projects, China has been Africa’s largest trading partner for five years, and a rapidly growing investor, paving the way to stronger business ties.

Liu Baichen, a 40-year-old optometrist with the China Navy General Hospital, recalled the long line of people waiting outside the hall in Kenya as he and his colleagues worked on a medical aid mission in 2010.

Worried they might miss their chance, some

21

Turn the Tide

Africa was neither the first nor the largest destination in the early years of China’s foreign aid. Most Chinese researchers trace the development of China’s aid policy in the context of the country’s changing perceptions towards national interests and international

22

Photo by CFP

patients even sang a Chinese song popular in the 1960s to attract the doctors’ attention.

He was impressed by the trust and respect shown during the mission, which also served to improve his expertise. He told NewsChina that he would like to go back to Africa as a volunteer after he retired. According to China’s Foreign Ministry, Chinese medical aid teams have been working in developing countries since 1963, and there are currently 40 teams in 40 different African countries.

Aid has been one of China’s most important foreign policy instruments since 1950, with Africa one of the major destinations.

During his trip, Li announced that more than half of China’s foreign aid would go to Africa in the future, compared with 46 percent currently.

As these examples show, reciprocity and diversity have characterized China’s aid policy, and will likely continue to do so. However, the increasing mix of business and aid has also added a hint of controversy to this reciprocity. In the past few years, voices are getting louder from the Chinese public questioning whether foreign aid serves their national interests, and from the rest of the world, even recipient countries in Africa, accusing China’s aid of undermining social progress.

New aid would expand into new areas like the US$10 million commitment to wildlife protection, and would be more focused on non-economic projects, like the one that Dr Liu joined. The further diversification into livelihood improvement projects has received a comparatively warm welcome. However, without sufficient engagement of private stakeholders either in China or in aid destinations, the potential positive effects may be limited.

Photo by CFP

cover story

The African Union Conference Center under construction

The completed African Union Conference Center

conditions.

The military and ideological confrontation during the Cold War, combined with other geopolitical factors, shaped the foreign aid policies of the world’s major donors following WWII. While the US launched the Marshall Plan to help her European allies rise to their feet to counter communism, China was building her “united front” to fight first against western “imperialists,” then later against Soviet “revisionists,” and for diplomatic recognition for the PRC. This gave rise to “socialist brothers” in Asia, and newly independent countries in Asia and Africa. Among them, China gave top priority to countries that were both neighbors and communist, most notably Vietnam and North Korea. By the mid-1970s, military and economic aid to both, along with three others – Laos, Cambodia and Albania – altogether accounted for more than 60 percent of China’s foreign aid. However, by the end of the 1970s, due to the build-up of hostilities between China and all of these four nations except North Korea, aid was ended or suspended. Africa’s share began to weigh more heavily in China’s aid projects.

During this period, all China’s foreign aid was regarded as a political task that had to be achieved at all cost. It was offered in the form of free gifts or funded by interest-free loans, many of which were never repaid.

As a poor economy herself, China began to feel pressure in the late 1970s. Demand for China’s aid soared after the People’s Republic replaced Taiwan at the UN in 1971. In the five years between 1971 and 1975, six or seven percent of China’s budget went to for-

eign aid annually. This ratio was even higher than China’s public spending on domestic healthcare in 2012.

In Africa, China’s aid in the 1960s and 1970s was focused on food supply and building industrial plants so that new independent African countries could be weaned off economic and technical reliance on former colonial powers. However, a lot of equipment or food provided by China was left idle for years in recipient countries, and plants built there were in poor operation due to a lack of local technical and managerial personnel.

Meanwhile, a pro-market mentality began to build up both in China and Africa. In 1978, China’s national strategy shifted from dealing with the threat of world war and revolution toward ensuring the country’s own prosperity with Reform and Opening-up.

Chinese government entities implementing aid projects themselves became enterprises.

A privatization surge began to gain momentum in the 1980s and swept Africa in the 1990s. While former western “imperialists” were embraced as aid providers and investors in China, Africa began to realize that more international trade and investment could be more helpful than aid for their own economic take-off.

As a result, Africa became more important in China’s aid strategy, and more economic factors began to be considered.

Market Force

In 1980, the Chinese central government issued a document urging that aid be used more efficiently. Some struggling aid facilities in Africa, such as a sugar plant in Mali built NEWSCHINA I July 2014

NEWSCHINA I July 2014

Photo by Sven Torfinn / PANOS

in 1965, began to be jointly run by China and local authorities in a more market-oriented way. In addition, new projects were more focused on social infrastructure, such as sports stadiums and theaters, the maintenance of which was easier and less costly than factories.

Plants were back in fashion again in the 1990s as Chinese leaders found landmark buildings did little to help Africa’s development, according to a report by Chinese Academy of Social Sciences (CASS) in 2013.

While new plants were built, old ones built with China’s aid faced the risk of being sold to the highest bidder during the contemporary surge in privatization in Africa. The solution was to turn the old plants into joint ventures through re-negotiation, making them commercially feasible and keeping them at least partly in Chinese hands.

China had learned about more aid tools through her own experience of receiving aid from Western countries and the World Bank since the 1980s, and concessional loans with below-market interest rates were introduced into China’s foreign aid system. This new method of financing aid made up for the reduced budget spending on foreign aid, and the gap between real interest rates and market rates was covered by subsidies from China’s budget. However, as this involves interest rates and is operated by a designated bank (The Export-Import Bank of China), it is much more market-oriented than grants or lending with no interest.

When business got mixed up with aid, things became more complicated. According to the CASS report, as entities implementing foreign aid became enterprises, they began to consider costs and returns of all their activities, including aid projects. This led to quality problems in aid projects as a result of cost-saving measures. As the whole economy itself was in the process of building market rules from scratch, the government found it difficult to ensure that market forces served, not disrupted, the diplomatic purpose of foreign aid. This has been improved after

A staff member with China’s Non-ferrous Africa Mining Corporation (NFCA) talks with a local employee at Chambish copper mine, Zambia

rules on specific aid tools, mainly turn-key projects, were finally formulated, and several campaigns have been launched to scrutinize the quality of projects commenced since the 1990s.

Attitudes

Unsurprisingly, the most controversial and difficult issue is the use of the most marketoriented tool, concessional loans. Though this kind of aid was widely accepted since 2000 after a cold initial response from Africa due to high interest rates, critics said it benefited Chinese companies more through what were called “tied aid” arrangements. According to a regulation issued in 2006, at least 50 percent of the spending in a project in this framework, mostly economic infrastructure like roads, power and communications, must be used to buy Chinese products or services.

This proportion was later lowered to 30 percent, but was estimated to be about 70 percent in practice.

Positive views towards this tied aid have also gained momentum recently. Combining the commercial interests of aid providers with aid is nothing new – it was not until 2001 that the Organization of Economic Cooperation and Development (OECD), the club of industrial countries and much earlier aid providers to Africa, began to recommend “untied aid,” giving recipient countries the freedom to decide import sources in such projects. US companies, according to the

US Agency for International Development, are the biggest winner in the US$50 billion annual private power market created by US assistance to developing countries.

Deborah Brautigam, professor of international development at Johns Hopkins University, is an internationally renowned expert on Chinese aid in Africa. In her interview in April 2013 with China Africa Project, a multimedia information provider established by Western and African journalists, she questioned the fairness of requiring all countries to join untied aid, which rich countries have only recently been able to afford.

Professor Li Anshan, director of the Center for African Studies at Peking University, has noticed that attitudes on China’s engagement in Africa, including aid, have become more diversified in the past few years, compared with the prevailing accusations of neocolonialism previously leveled against China.

In his recent research, he attributed this to the increased participation of African think tanks, more field surveys on case studies by Western, Chinese and African analysts, as well as the US and the EU’s readiness to regard China as a possible partner on African issues after the global financial crisis. The US Government Accountability Office (GAO) in February 2014 recognized that US officials have observed that China’s economic infrastructure construction “addresses a key need in Africa.”

“Mutual help” and “unconditionality” are

23

cover story Fund sources of foreign aid from China by the end of 2009

Grants 17.2bn

Interest-free loans 12.4bn Concessional loans 12bn

Concessional foreign loans from China by sector by the end of 2009 (%)

Economic infrastructure 61 Industry 16.1 Energy and resources development 8.9 Agriculture 4.3 Public facilities 3.2 Other 6.5

Geographical distribution of foreign aid funding from China in 2009 (%)

Africa 45.7 Asia 32.8 Latin America and Caribbean 12.7 Oceania 4 Europe 0.3 Other 4.5

Source: Information Office of the State Council of China

the top two on China’s eight principles for foreign aid set by former Premier Zhou Enlai during his trip to Africa in 1964, and reiterated by Li Keqiang on his Africa tour.

Chinese analysts agree that the policy of “do as you’re told, or no aid” is unacceptable for countries with sore memories of being colonized, and moreover, has not proved effective for Western countries. But many have called for more flexible implementation of this principle, suggesting increased selectiveness in choosing aid destinations, and increased readiness to advise good governance.

Old Problems, New Changes

While the benefits of economic infrastructure for aid destination countries appear to be winning recognition, other thorny issues are becoming increasingly worrisome.

Poor environmental and labor protection are two of the most common criticisms of China’s presence in Africa. Some of the worst examples highlighted by analysts or media are not in fact China’s aid projects, but purely commercial ones. It is very common for China’s aid, trade and investment in Africa to be confusingly packaged together in the same research or media coverage. A World Wildlife Fund-sponsored survey by the Beijing-based NGO Global Environmental Institute (GEI)

24

found that in many cases, Chinese companies were unfairly blamed for social problems in host countries caused by their commercial counterparts on cooperative projects. The criticism that Chinese companies do not employ local staff is not as well grounded as it has appeared in the media. A report by the Brenthurst Foundation in South Africa released in 2012 shows that even in Angola, where one fourth of Chinese in Africa are located, Chinese traders employ more locals than Chinese.

An important reason for the criticism, according to GEI, is the lack of transparency on both sides and an overreliance on inter-governmental deals. China has refused to make regular disclosures of the total amount of aid provided, let alone details of specific projects and terms. The only relatively comprehensive picture of China’s foreign aid was the white paper in 2011. Big Chinese companies, either doing aid or business, rely too heavily on inter-governmental channels, and ignore the media or NGOs. They snubbed invitations to direct dialog with local communities or NGOs, until it was too late for them to respond effectively to criticism. They became an easier target than local governments in campaigns against the projects in question.

In terms of aid, Dr Zhang Mianli, an

expert on foreign aid with the Institute of Contemporary China Studies, believes that demands made by aid recipient governments may not match the reality of the local communities involved.

As she told NewsChina, it is necessary to acknowledge two fundamental social and economic changes. Firstly, aid is no longer effectively the only economic tie between China and Africa. China’s trade and investment also affect how Africans think about China’s presence. The nature of the mix of aid and business makes it even harder for ordinary Africans or analysts to distinguish between the two.

Secondly, awareness of global concerns, particularly ecological protection and social rights involving labor and livelihood, is now much stronger in Africa than it was 50 years ago. It is rarely sufficient for Chinese companies, either in aid or business, simply to meet the environmental or labor standards specified in local rules. Those rules themselves are swiftly tightening, and companies will have problems if they fail to adopt a forward-looking policy.

More Private

Besides increased transparency, two new solutions have gained support. Firstly, more NEWSCHINA I July 2014

NEWSCHINA I July 2014

Photo by CFP

resources should be spent on aid directly improving livelihoods. This has already been adopted, as shown in Premier Li’s commitments. As the GEI report suggests, this “private track” could help expand local groups with shared interests with China, without breaching China’s principle of not imposing political conditions.

This kind of aid, creating opportunities for people-to-people contacts, may also help to improve understanding among the Chinese public, who have begun to question the necessity of foreign aid while domestic poverty and poor social security remain problematic.

Now, there are even signs that the public is willing to be a part of aid when it is linked with their personal interests. In 2011, Liu Zelin, a 24-year old post-graduate student from China’s Guizhou Province, had to compete with nearly 100 other applicants for the chance to join a one-year volunteer training mission in Uganda, which has been implemented by the China Youth Federation since 2005. His 15-member team included journalists, teachers and owners of aquaculture farms. He told NewsChina that his students initially knew little about China – they even mistakenly identified Hong Kong as the capital of Japan – but one year later were able to express to him, in Chinese, their dream of visiting China in the future. He found the experience of making friends in a very different culture thrilling: “I have such a long story that it would take three days to tell,” he told NewsChina.

Secondly, Liu Zelin’s story, and Dr Liu’s desire to serve as a volunteer after retirement, show that the non-State sector, like NGOs and private companies, should be encouraged to join aid efforts. More than 70 percent of OECD aid is provided by private players.

This not only makes more aid possible, but could be more efficient, since private players are generally more careful with their own money.

Government officials from Tanzania and Zambia lay railway sleepers at their shared border for the Tazara Railway. Construction began in 1970 and was completed in 1976

This is particularly important for China’s aid efforts in Africa. As the Brenthurst Foundation has found, China’s presence in Africa is “multi-layered,” and the experiences of Chinese traders “could weigh heavily on the future of Chinese-African relations, more so than even big business or high politics.”

However, it warns, both the Chinese and African governments have done little either to help them in this plight, or to punish their misbehavior. Moreover, Dr Zhang stressed that encouraging Chinese companies there to engage in their own charity work to demonstrate corporate social responsibility was another way of providing aid outside official channels.

The Chinese government seems to have acknowledged this problem. Li Keqiang urged Chinese workers in Africa to mix with locals, and promised to protect the legal rights of Chinese residents during his recent trip.

Leaders’ commitments alone are far from enough. Along with other Chinese analysts, Zhang Mianli calls for long term strategies and standards to help the country’s foreign aid adapt to the new situation. The impor-

tance of engaging with private stakeholders both from China and aid destinations, and rules for all aid and business activities in aid destinations, Zhang noted, should be highlighted in these strategies and standards.

Even if such long-term planning and standards were to be implemented, as experts at a seminar sponsored by the GEI in April pointed out, indifference towards private voices and poor awareness of social agendas is actually common in Chinese companies’ domestic operations. This can only be changed through domestic reforms.

In April, the Ministry of Commerce of China, the agency implementing China’s foreign aid, issued China’s first draft on the foreign aid rules guiding the whole aid program.

It has proposed that long term foreign aid planning is necessary – new changes both on the ground and in theory would be taken seriously, in order to fit into the biggest change of all: China becoming a global power. However, it is equally important to bear in mind the fact that, as the CASS report noted, for any world power, aid is no solution to diplomatic problems. 

25

Sun Sulan, 85, exercises on a sidewalk in Shenyang, Liaoning Province, March 2014

Chen Chuanshu

Graying Area

A comprehensive and robust senior care industry needs to be set up to cope with the aging problem

By Wang Quanbao

C

hen Chuanshu is a veteran of China’s civil affairs apparatus. In September 2008, Chen became deputy director of the China National Committee on Aging, and participated in the drafting of China’s Law on the Protection of the Rights and Interests of the Elderly. In an exclusive interview, Chen told NewsChina that to address the aging problem, it is vital to understand that China is “getting old before it gets rich,” and greater reforms and innovation will be required in order to build a diversified national senior care service system.

NewsChina: Can you give a brief introduction of China’s aging society?

Chen Chuanshu: The aging problem is a big challenge for virtually all countries in the 21st century. Generally speaking, since the post-industrial era, the declines in both birth and mortality rates, coupled with low economic growth rates, have lead to an aging society. China saw its birth rates peak in the 1950s and 1960s, when 20 to 30 million babies were born annually – nowadays that figure has dropped to 12 million.

26

The baby boomers, born between the 1950s and the 1980s, face a variety of problems including a schools crunch, a competitive job market, mounting house prices, and the difficulty of caring for themselves when they get old. The decline in birth rates has resulted in a change in demographics and age structure. The group of people who need care is growing much larger, especially compared to a diminishing group of potential caregivers.

China is now a rapidly aging society. It is universally accepted that a country where seniors (officially defined as 60 years old or older) account for more than 10 percent of the whole population is an aging society.

China reached this level in 1999.

From 1999 to 2013, China’s elderly population rose from 131 million to 202 million, with an annual growth rate of 5 million. The proportion of seniors among the population rose from 10 percent to 14.9 percent, with an annual growth rate of 0.35 percent. It is estimated that in 20 years, there will be an increase of 10 million seniors above 60 and a decrease of 5 million below 60.

In 2033, China’s senior population will reach 400 million, accounting for over 27 percent of the total population. By then, vast numbers of people born after the founding of the People’s Republic of China in 1949 will enter their twilight years. The proportion of seniors is expected to expand to 487 million, accounting for over one third of the whole population in 2053. The aging problem will not ease off until the latter half of the 21st century. Coping with this problem is of great strategic importance, and preparations should be underway.

NC: How does the aging problem affect rural areas?

CC: Over half of China’s seniors live in rural areas, and the population ages faster in rural areas than in urban areas. The challenges of the aging problem will appear in rural areas first. In urban areas, families with a single child make up a high proportion of the population, and in the coming 20 years, over half of the job vacancies resulting from retirement and new job creation [in cities] will be filled by the rural workforce, which NEWSCHINA I July 2014

Photo by IC

interview

NC: What is the most obvious problem with China’s aging society?

CC: In my opinion, the most urgent problem is that China is getting old before it gets rich. To cope with excessive population growth, China has adopted a strict family planning policy, which has made the country develop into an aging society faster than other developing countries. In the near future, the rate at which China’s population is aging will surpass the average among developed countries.

The problem is approaching so fast that Chinese society and individuals are not fully prepared when compared to advanced economies, either psychologically or in terms of material resources. In the future, China has to overcome two major problems: the middle-income trap, and its graying society.

The latter will bring about three major changes to China’s economy. First, it will affect the labor supply – the young labor force will shrink and the senior labor force will grow. Second, the growing cost of senior care will lead to a rise in economic operating costs. Third, the gradual labor market majority shift from young to old will have a big impact on the overall economic and social structure. Specifically, the consumption of real estate, vehicles and household appliances by the young will lose ground to healthcare and services used by seniors.

NEWSCHINA I July 2014

Photo provided by chen chuanshu

may further spur the workforce to shift from rural to urban areas.

The shift will boost urban economic growth while at the same time accelerating the aging problem in rural areas. Based on the resident population, as of the end of 2013, China was home to 202 million seniors, accounting for 14.9 percent of the total population. Of these seniors, 115 million live in rural areas, and account for 17.8 percent of the total rural population. It is expected that the rural population above 60 will expand to 20 percent in 2016 and 33 percent in 2030, 11.7 percent higher than urban population.

Without strategic planning, the aging problem will seriously affect the rural economy and the lives of rural people.

Chen Chuanshu

NC: How can China address its aging problem?

CC: Overcoming the aging problem is a major step in China’s drive toward modernization. Should it fail to do so, China will have to face pressure from both the technology monopoly of developed countries and the cheaper labor forces of developing countries, at a time when economic globalization prevails. Development is the key solution.

For a long time, China has had a cheap labor force and, compared to developed countries, a comparative advantage in laborintensive industries. With plenty of labor, economic growth has effectively been driven by investment. In the future, when the labor force supply diminishes, that advantage will disappear. As a result, increasing production rates is the key to coping with the adverse effect on economic and social growth resulting from the aging of China’s population.

NC: What is wrong with China’s senior care system?

CC: The system and its attending services are ill prepared, and the biggest problem is the vast population without workplace pensions, including rural people and migrant workers whose pensions are covered by the government and individuals.

China has to prepare for a worsening situation in the future, and is making efforts to establish more policies targeting seniors, trying to ensure that the elderly will be looked after.

Currently, young people have to both support their dependents and take care of themselves when they enter their twilight years.

NC: What are the risks facing the elderly?

CC: Based on previous research, I believe that seniors face three risks in their daily lives.

First, they are unable to work, giving them no source of income. Second, seniors are afraid of falling ill, since their retirement pensions may prove insufficient. Third, the inability to take care of themselves physically is often the most serious problem.

NC: How should we take care of those who cannot take care of themselves?

CC: It is unlikely that the problem can be solved with social pensions and medical insurance. The pensions of many seniors are insufficient to cover the costs of institutional care. Currently, it is imperative to set up rules and regulations targeting seniors with only one child who cannot take care of themselves.

Unfortunately, China lacks a comprehensive and robust senior care system.

In recent years, some elderly people have been sent to hospitals by their families during the Chinese New Year vacation, and have even stayed there for several years until their deaths, which is a big waste of medical resources. The lack of a comprehensive nursing care system has weakened the effects of social pensions and medical insurance, which has turned out to be a hindrance to the sound development of medical care services. Setting up a mutually dependent system where social pensions, medical insurance and social nursing care can come fully into play will prove to be the best option.

NC: Are there any common misconceptions towards the aging population problem?

CC: For a long time, we have tended to discuss the aging problem from the perspective of caregivers, and paid less attention to lives of the elderly themselves. With the growing proportion of seniors in future, the elderly will account for one third of China’s population. Seniors will become a main contributor to society, rather than care recipients dependent on their families. The aging problem is developing very quickly, and by the time it was spotted, the best time to solve it had likely passed; all we can do is take precautions.

27

interview

Cheng Siwei

“Reform is so difficult that its dividends can only be attained through rule of law” One of China’s most respected economists believes that China’s future economy must place emphasis on quality and steady growth

By Xi Zhigang

28

NEWSCHINA I July 2014

T

NEWSCHINA I July 2014

Cheng Siwei

Photo by dong jiexu

he Chinese economy, the world’s second largest, has maintained an average growth rate of nearly 10 percent during the past three decades, but now, the country is witnessing a slowdown throughout its economic structure. In 2014 and beyond, the economy is expected to see a slightly reduced growth rate of 7.5 percent.

In the future, how to maximize the dividends of reform, avoid the negative effects of overinvestment and cool the real estate market will be issues of growing concern for policymakers.

Cheng Siwei, senior economist and former vice-chairman of the Standing Committee of the National People’s Congress (NPC), China’s legislature, shares his views with NewsChina on the problems and risks that the Chinese economy may face.

NewsChina: You have recently mentioned that the Chinese economy faces three risks – environmental pollution, local government debt, and overreliance on GDP growth. How do these affect the economy?

Cheng Siwei: There is not much to say about environmental pollution, because economic growth is pointless if public health is under threat. As for local government debt, some have said that as long as it is under control, there is no need to worry. Personally speaking, however, I see it as a serious problem. It was previously reported that the combined public debt of local governments had hit 10.7 trillion yuan (US$1.7tn), but in a recent survey the figure was found to be 20 trillion yuan (US$3.2tn). To make matters worse, it is still growing. If one third of

local governments cannot pay the debt, and still more are able but reluctant to do so, the financial risk will grow.

If so, some local government debt will become bad loans for banks – a burden for the central government. I think the central government should not pay the bill, since this would fuel massive defaults. The bad loans will be covered by the gap between loan and deposit interest rate, which will eventually be passed onto the public and enterprises. Obviously, that is unreasonable. Without these bad loans, the deposit interest rate can be raised and loan interest rates can be lowered, which is good for liquidity.

There has not yet been an outburst of debt repudiation, but it is still worth noting that borrowing money to pay old debt is dangerous. In that case, money never plays a role in economic growth. It is a payment delay, and eventually the mess will be shifted to the next government.

More wisdom and different approaches are required to cope with local government debt. Issuing bonds can be encouraged after receiving due credit ratings. Besides, local governments can work out their own ways to raise economic efficiency and production rates to dispose of debt. It is not the responsibility of the central government and banks.

NC: You have said that institutional innovation is the source of reform dividends.

What do you mean by that?

CS: In March 2013, I wrote a book with economists Wu Jinglian, Li Yi’ning and Justin Yifu Lin. I wrote the first chapter, titled

29

interview

“Institutional Innovation is the Source of Reform Dividends,” wherein I propose points on four key relationships: between the rule of law and the rule of the people; between equity and efficiency; between government and market, and between concentration and decentralization of authority.

Nowadays, a lot of economic waste comes from the absence of rule of law. For example, well-planned projects are liable to be canceled due to the rotation of leadership. I know a city where the leader planned to develop its east side after receiving foreign investment.

But later, when he was transferred to another post, the new leader chose to develop the west side – a huge waste of resources.

The lack of rule of law is likely to result in an unhealthy and unstable economic growth.

Nowadays, all reform is likely to meet a modicum of opposition, and reform is so difficult that its dividends can only be attained through rule of law.

As for the relation between equity and efficiency, I think that without efficiency, equity is on the low level. On the contrary, without equity, efficiency is unreliable. I do not need to say much about the relation between the government and the market. It is a problem for the concentration and deconcentration of authority. If local governments neglect the central government, it will result in a state in which all sorts of creative ways are proposed to circumvent directives. If the central government fails to take into account the actual conditions of local governments and puts forth one-size-fits-all policies, it will not work either. The above-mentioned factors all make a difference. As a result, reform can only be pushed forward if institutional reform and these four relationships are straightened out.

30

NC: China’s economic cycles are a hot topic. How do you see them?

CS: Generally speaking, China has experienced an economic cycle every 10 years since the end of the Cultural Revolution (196676). The first was from 1984 to 1992. The second was from 1993 to 2002. The third was from 2003 to 2012 – a period of rapid economic growth with an average growth rate of 10 percent. Now it enters a fourth cycle – the decade following 2013. During this period, the Chinese economy will place its emphasis on the quality and stability of growth.

During the third cycle, inflation climbed to 5.4 percent. Meanwhile, environmental pollution began to take a heavy toll. That does not happen overnight. China’s smog dates back to the third economic cycle. We have calculated that the economic loss resulting from low efficiency and environmental pollution was equal to 13.5 percent of GDP in 2005. In 2010, the figure hit 12.3 percent, surpassing China’s GDP growth rate.

Now, we have to put priority on environmental protection, and push forward with green GDP growth. During this period, a growth rate of 7 to 8 percent is expected. Premier Li Keqiang has said to keep economic growth above the “lower limit” and inflation below the “upper limit.” I think the lower limit is 7 percent and the upper limit is 4 percent. Thus, the economy is currently operating within a reasonable range.

However, economic cycles are in flux.

Economic growth is expected to exceed 8 percent in 2019 through structural adjustments. Because China has a large economic aggregate, when the next economic cycle arrives, economic growth of 6 to 7 percent is

enough. There is nothing to fear. Take the US for example: its 3-percent growth is equal to China’s growth of 6 to 7 percent because of its large economic aggregate.

NC: How can China sustain a growth rate of 7 to 8 percent?

CS: Simply put, the first move is urbanization. The second is the new round of land reform, and the third is innovation. China is urbanizing at a rate of 1 percent every year, and this has huge potential to grow. Actually, rural people’s production rate is very low – on average each farmer has an output value of US$300 to 500 annually. But if a farmer works in an urban area, his or her output value can exceed US$10,000, creating more social wealth. The creation of social wealth boosts economic growth on the condition that farmers can land a job in urban areas.

The collectively-owned construction land in rural areas can be traded on the market like State-owned land. This will cause an appreciation of value, and the benefits will be divided between the country and individuals. The possibility of the transference of contracting rights to rural land and the use ownership of rural housing land have also boosted the incomes of rural people working in cities. These reforms will benefit farmers, and consumption can only be driven by rising incomes.

Innovation is the most important. Its core lies in the acceleration of productivity. Investment can boost employment and GDP growth, but it cannot raise productivity. To raise per-capita productivity, technology advancement, vocational education, labor training and scientific management have NEWSCHINA I July 2014

proven to be essential.

NC: How do you see investment-driven economic growth?

CS: Investment is necessary and it is a crucial factor in driving economic growth, but excessive investment will bring forth several problems. First, some flimsy projects are likely to emerge. Other projects may generate low revenue after completion. Some others, however, depend on financial subsidies – subways are a typical case.

Second, GDP growth is mostly easily driven by investment, and local governments rely heavily on it. The investment rush covers up the problem of low production efficiency. Investment, within a reasonable range, can play a better role, through innovation and raising of productivity.

NC: What is that reasonable range?

CS: The growth rate of investment should never double the growth rate of GDP. It is hard to control. If this happens, it is excessive investment. Some economists may have a different view, though.

NC: How would you see China’s investment fields?

CS: The productivity and efficiency of traditional industries must be enhanced through information technology. As for the traditional industries, expanding production should not be encouraged, because they are already over capacity. Great efforts should be made in new industries that have a growth cycle, requiring continuous financial input.

NC: Fueling domestic demand has been discussed for many years, but the public are NEWSCHINA I July 2014

still cautious about spending money. What’s behind that?

CS: As early as 2006, the goal of synchronic growth of the economy and incomes was put forth. To put it differently, the public’s slice of the pie should get bigger. Besides, residents’ incomes should be linked to CPI, and with a raise in productivity, workers’ incomes should grow accordingly.

Raising incomes relies on improving productivity. The per-capita industrial added value in China accounts for only one fifth that of Germany, and one eighth of the US. Raising purchasing power is unrealistic if productivity remains the same.

The public hold their purse strings tight because of a weak social security system. The rising cost of education and house prices are to blame. Social security includes unemployment insurance, senior care and medical insurance. At the current low level of social security, under-consumption is unavoidable.

NC: During this year’s CPPCC and NPC [China’s two annual high-level government conferences], the government did not unveil regulatory policies on the real estate market as was anticipated. Why? CS: The real estate market includes commercial property and commercial residential housing. Housing is a basic requirement for livelihood, and it is not only an economic issue, but a political and social one. The government’s responsibility is to ensure that the public have shelter, rather than to push forward the idea of home ownership for all.

Home ownership for all is a misguided concept, and no country can ensure that. In the US, 70 percent of residents had their own housing before the sub-prime crisis – the fig-

ure has dropped to 60 to 65 percent nowadays. In Germany, it is around 50 percent. In China, it is over 80 percent.

The government’s responsibility is to provide public rental housing for those who cannot afford commercial apartments. If rent is more than one third of salary, the government should offer subsidies. If incomes grow and exceed this line, the government should not help.

For those who want to buy their first apartments, the government ought to incentivize banks to grant loans on favorable terms including down payment cuts, preferential interest rates, and incremental pay. Incremental pay is very important because along with an income raise, equal pay will prove a heavier burden for mortgage debtors. One third of salary is the optimum scale.

As for commercial housing, the market, rather than government interference, should play the key role. Actually, rounds of policies have been made trying to rein in real estate prices, but all to no avail. Commercial housing prices have been growing year-on-year because of high demand, and a growing number of people want to improve their living conditions. China’s real estate boom will last at least 20 years, because every year 10 million more rural people flock to cities, and seven million college graduates join the workforce.

As a result, real estate will remain a pillar industry, sustaining the growth of more than 60 other industries including building materials, household appliances and even housemoving services. Like the stock market, the real estate market has price fluctuations but the main trend is ascending. I advise those who need and can afford an apartment to take quick action.

31

SPECIAL REPORT

Jilin Archives

Lost Voices Newly-deciphered documents provide first-hand Japanese accounts of atrocities committed during World War II. Will they prove the game-changers Chinese historians claim them to be?

By Du Guodong

T

he Jilin Provincial Archives recently published 89 files related to Japan’s Kwantung Kempeitai (military police corps) and the central bank of the puppet state of Manchukuo, which was established in 1932 by the Empire of Japan in Manchuria, which today is the northeastern Chinese provinces of Heilongjiang, Jilin and Liaoning.

Roughly 90 percent of the published documents are written in Japanese including soldiers’ letters, newspaper articles, telephone records and government surveys. The archives are being claimed as concrete evidence of atrocities carried out by Japan during its occupation of China from 1931 to 1945, including the Rape of Nanking, the operation of military brothels and experimentation on live prisoners of war by Japanese military scientists.

Exposure

The documents were unearthed in 1953 in Changchun, Jilin Province, while local workmen were laying underground cables. During the occupation, Changchun was known as Tsingking and served as the nominal capital of the puppet state of Manchukuo (1932-1945) and the seat of the government of the exiled former emperor of the Qing Dynasty (1644-

32

1911), Puyi.

The files, 100,000 in total, were preserved by local police before being shelved in the Jilin Provincial Archives in the 1980s.

After the surrender of Japan in August 1945, as Soviet troops marched into Manchuria, the retreating Kempetai burned thousands of files relating to the occupation, and buried others in the compound of their headquarters which later became the seat of the Jilin provincial government.

Zhao Yujie, a veteran researcher with the archives, told the Beijing News that when the files were unearthed, water and insect damage had fused much of the paper into a solid mass.

In August 2012, the archives commissioned a special team of conservationists to repair, decipher and translate the files.

Senior archivists carefully separated the glued-together papers, pasting recovered documents onto new backing before handing them over to the 14 research groups assigned the task of cataloging them. Zhao told NewsChina that a total of 50 translators working full-time on the project are expected to take some 70 years to finish this mammoth job.

“Another headache is that many of the files are written in classical, rather than modern Japanese,” she said. “To make NEWSCHINA I July 2014

Photo by xinhua

A researcher with the Jilin Archives presents a file in Changchun, Jilin Province, April 25

matters worse, the content, much of it lurid and gruesome, has caused depression among some researchers.”

Witnesses

Six official files relating to the Rape of Nanking were among those recently published by the archives. There included population estimates before and after the Japanese occupation of the then-capital of China, as well as first-hand accounts of the violence described by Japanese soldiers and one newspaper report of the atrocities.

“The Report on the Restoration of Public Order under the Administration of the Nanking Kempeitai,” signed by Commander Aoki Sigeru of the Kempetai’s Central China Column on February 19, 1938, stated that during a 10-week period since Nanking fell to Japanese troops on December 13, 1937, the population of the city dropped from 1.13 million to 345,000.

In another file, a Japanese journalist named Mitsumoto working for the Osaka Daily News wrote a story headlined “Witness of the Nanking Attack” on December 23, 1937, in which he claimed that 85,000 people were killed in the former capital over the course of three days, describing bodies NEWSCHINA I July 2014

heaped along 1.5 kilometers of roads from the port at Xiaguan to the Yangtze River.

The Chinese government has claimed that at least 300,000 civilians and prisoners of war were slaughtered in Nanking, present-day Nanjing, during the Japanese occupation. Many Japanese right-wingers have denied that the sack of China’s then-capital was as brutal as has been claimed, despite a wealth of first-hand evidence from Chinese, Japanese and international witnesses to the violence.

Some Japanese political historians have asserted that Nanking had a resident population of no more than 200,000 in 1937, and have refuted claims of a massacre of civilians. On February 3, Naoki Hyakuta, governor-general of Japan’s public broadcaster NHK, denied that the massacre took place.

More than two weeks later, Kawamura Takashi, the mayor of Nagoya, questioned the death toll typically given in China and abroad, saying the Rape of Nanking “probably never happened” during a meeting with a delegation from Nanjing itself.

Despite strong protests from China and other countries that such statements are equivalent to Holocaust denial, Japan’s right-wing have maintained their stance.

33

SPECIAL REPORT

“Japan has often denied the scale of the Nanjing Massacre [Rape of Nanking], but these are official Japanese records.

Some people may have simply fled the city, but it’s an indisputable fact that the population fell sharply [during the massacre],” said Wang Jianxue, deputy chairman of the China Association of Historians Studying Modern Chinese Material, in an interview with China Daily.

Letters from Japanese soldiers detailing their reactions to and even participation in the wholesale slaughter and rape of civilians have been uncovered in the archives. These rare first-hand accounts are particularly valuable, according to Mu

Zhanyi, deputy director of Jilin Provincial Archives, as during the Japanese occupation, all mail and telegraphs that made it out of Nanking, even those composed by international diplomatic staff, were screened by Japanese military censors. As such, many accounts of the violence did not emerge until after the war.

Mu added that correspondence found to contain any information about Japanese troop movements or violence against the civilian population was routinely confiscated. Some of this content were copied and cataloged before being sent to the Kempeitai headquarters in the form of the internal circular Correspondence Censorship Monthly, used to monitor troop morale and watch for potential agitation in the ranks.

“Because the Japanese authorities ordered the military to destroy all files related to war crimes after the surrender, it was very rare for first-hand evidence to be discovered. We cannot overstate its historic value,” Mu told NewsChina.

Photo by xinhua

Rape

A survey report shows data of Japanese immigration to Manchuria in the 1930s

34

Among the documents, 25 of them related to so-called “comfort women,” civilian women and girls (and, sometimes, men and boys), forced to work as sex slaves in Japanese-run military brothels.

Telephone records show that from November 1944 to March 1945, a total of 532,000 Japanese yen was transferred by the Manchukuo central bank earmarked for the establishment of these military brothels, expenditure classed as “public spending for military use.” A letter written by a Japanese expatriate living in China to a friend in Japan in 1941 described how 20 Korean women had been forced to work for a “comfort station” through Japan’s “National Mobilization Law.” Another document, dated February 1938, showed that there was an average of one comfort woman assigned to every 178 Japanese soldiers stationed in Nanking. In Chenkiang, a city near Nanking, 8,929 Japanese soldiers visited comfort stations in the space of 10 days. Another document from the same month decried a shortage of comfort women and announced plans to “enroll” more from the local populace.

Large-scale forced recruitment of sex slaves by the Japanese NEWSCHINA I July 2014

ob ot Ph

yx

inh

ua

er s oth An detail land e e l s fi ane rom Jap ures f ian e s iz nchur Ma ls a loc

government or military has been denied by some right-wing elements in Japan, though the current government has acknowledged the existence of military brothels. Recently, the new head of NHK, Katsuto Momii, went on record stating that the Japanese military’s use of sex slaves was a practice “common in any country at war.” In 2012, Toru Hashimoto, mayor of Osaka, said that comfort women played a necessary role in keeping Japanese troops “in check” during war time.

Wang Fang, leader of a research group on comfort women with the Jilin Archives told NewsChina that since Japan invaded China proper in 1937, military brothels were established throughout the country. In the 25 deciphered files related to comfort women, 20 brothels are specifically named. Taboos surrounding the issue of sex and rape in Asian culture have meant few comfort women have been willing to go on record, meaning there is a paucity of dated or eyewitness accounts of the horrors they suffered. Wang believes this makes this new evidence particularly valuable.

Su Zhiliang, a professor at Shanghai Normal University who specializes in studies relating to comfort women, told NewsChina that the Japanese government procured sex slaves through military expenditure, naming Japan as the only country in modern history to have created a state-funded network of brothels.

Sparring

Zhang Yunhu, a history professor with Peking University, said the Japanese Kempeitai maintained a presence in China for 40 years from 1905 to 1945, its ranks growing from several thousand to up to 1 million. The discovery of the files in Changchun, he believes, will help to finally bring some of those who evaded punishment to justice.

“Because Chinese scholars conduct research mainly based on Chinese or second-hand sources, some Japanese historians were reluctant to recognize their claims, which has left a space for Japanese denialism,” Zhang said.

On April 21, Japanese Prime Minister Shinzo Abe brought a ritual offering to the Yasukuni Shrine, where the souls of Japan’s war dead, including several Class A war criminals, are enshrined. Last December, Abe’s visit to the shrine, the first

NEWSCHINA I July 2014

visit by an incumbent Japanese prime minister in seven years, provoked waves of protest in formerly occupied territories, particularly China and South Korea.

In a speech in Berlin in March, Chinese President Xi Jinping noted that the atrocities in Nanking were “still fresh in our memory.” His comments prompted an angry response from the Japanese government, which claimed that Xi’s remarks were inappropriate when delivered in the territory of a third party.

In January, China opened a memorial hall in Harbin, capital city of Heilongjiang Province, honoring Ahn Jung-keun, the Korean independence activist who assassinated Japanese Premier Ito Hirobumi during a visit to China in 1909, a man still labeled a terrorist in Japan. In February, China approved a National Memorial Day on December 13, the date Nanking fell to the Japanese.

Jiang Lifeng, former head of the Institute of Japanese Studies at the Chinese Academy of Social Sciences, told NewsChina that, in recent years, Japan has shown a dangerous tendency towards militarism and holds an ambiguous attitude to its wartime actions even as the 70th anniversary of World War II draws close.

“This files made public by the Jilin Archives have proven a great weapon against the voices of Japanese right-wingers,” he said. 

35

society

Construction Industry

The Bad Die Young

Corner-cutting, low industry standards and shoddy materials have turned the products of China’s rampant construction boom into ticking time bombs

By Qian Wei and Sun Zhe

W

Photo by CFP

hile leafing through had a habitable lifespan of around the local newspaper 30 years. In Europe and North of his hometown America, few buildings are erected of Ningbo, Zhejiang Province, that are not expected to stand for a 83-year-old Chen Zhaoyuan was century or more. unsurprised to spot a headline anQiu’s remarks made him a panouncing the collapse of a five-storiah among Chinese developers, ry residential building constructed many of whom argued that the 20 years ago, resulting in one fatalgovernment’s penchant for deity and six injuries. molishing awkward construction Chen, an academician with the The latest collapse of a five-story building in Ningbo that didn’t fit their plans for urban Chinese Academy of Engineering centers had drastically skewed data and a professor at Tsinghua Union the average lifespan of Chinese versity’s civil engineering departbuildings. ment, has dedicated his professional life to surveying the relative safety of Chen Zhaoyuan, however, is more inclined to believe Qiu’s assessmodern Chinese architecture. His research has made him less than en- ment. “If we discount shantytowns and Hoovervilles and focus on govthusiastic about the pace and nature of urban construction in his home ernment-supported and regulated developments, China’s construction country. industry is the worst in the world in terms of quality,” he told NewsChina.

Since the 1980s, China has witnessed a construction boom without historical precedent, a boom recently given a new lease of life since the Sand and Steel government declared its intention to further accelerate the country’s alAfter the latest collapse in Ningbo, Chen got in touch with his loready breakneck urbanization revolution. China now builds two billion cal contacts to enquire as to the cause of the disaster. He was told that square meters of new housing each year, about half of the global total. the mortar used in the residential compound’s construction contained But, if the national news media are to be believed, buildings are collaps- too little cement, and thus the entire building was structurally unsound. ing almost as quickly as they can be erected.

Chen had expected a different explanation, and the facts only alarmed In 2009, 17 residents were killed in Shijiazhuang, Hebei Province him further. when their compound collapsed. Ningbo, Chen Zhaoyuan’s home In the mid-1990s, when Chen was serving as a visiting professor town, has been particularly unfortunate, with three collapses that same at Ningbo University, he had discovered seashells in the sand used on year, all buildings constructed within the last two decades. construction sites in the area. Enquiries made at these sites led Chen to While efforts have been made to keep the shoddy foundations upon discover that coastal sand – riddled with soluble salt crystals – was being which many residential compounds in China are built away from pub- substituted as a cheap alternative to non-saline sand excavated inland. lic scrutiny, some government officials have publicly expressed concerns Sensing a catastrophe in the making, Chen wrote to the local governover the quality of urban construction. At an international conference ment to advise stricter regulation of sand used in construction, warning in 2010, Qiu Baoxing, then deputy head of the national Ministry of that not only would saline sand cause steel superstructures to rust, the salt Housing and Urban-Rural Development, said that Chinese buildings crystals could be dissolved by rainfall, resulting in stonework becoming

36

NEWSCHINA I July 2014

porous and, in the worst cases, causing complete structural failure. Even after costly desalinization procedures, sea sand remains outlawed in the construction of public or high-rise buildings, as any building utilizing sea sand is seen as at risk of collapse.

Chen received a courteous but dismissive response from the Ningbo government. No regulations or additional oversight emerged. Prior to 2005, about two thirds of the sand used in construction in the city was sea sand, according to a research report by Zhang Yong, a civil engineering researcher with Huaqiao University in Fujian Province. The relatively high cost of river sand and a general shortage of alternatives meant that even after regulations were introduced that year, cities continued to rely on sea sand for construction projects.

Between 2010 and 2011, only 12 million cubic meters of river sand was legally approved for excavation in Guangdong Province. As this could only meet one-sixth of the province’s total demand for sand, the shortfall was made up for with largely untreated and highly unstable sea sand.

Apart from the illegal use of sea sand in urban construction, poorquality steel and adulterated cement have been discovered on construction sites across China. A 2014 inspection found one third of steel girders approved for construction projects in Anhui Province were unfit for purpose, while an 2010 investigation in Guangdong Province revealed that 80 percent of the cement sold for urban construction in the province was defective. A year later, this figure had dropped to a still-alarming 45 percent.

Chen’s discovery that the Ningbo collapse was in fact the result of improper construction and not the use of sea sand only added to his anxiety that further collapses were inevitable. The poor quality of construction materials, Chen believes, is symptomatic of a national construction industry without adequate standards, regulation or enforcement.

Standard Shortcomings

To help fuel its construction boom and minimize delays in the launch of new projects, China has set lower standards on the major load-bearing frames of all buildings, a key factor in the longevity of a new construction. China’s standards for structural durability are, on average, about half as rigorous as those set in the EU and North America, with even the country’s road bridges only required to be two-thirds as strong as their European equivalents.

On paper alone, therefore, China’s buildings can only expect to have half the usable lifespan of similar buildings in the West. According to Chen, public buildings in China are typically built to last for a century, whereas in the West the goal usually begins at 250 years, with major projects designed to endure indefinitely.

While some claim that China’s low construction standards are to be expected in a developing country, insiders are aware that Beijing once led the way in Asia in terms of the lifespan of its buildings. In the Republican and Nationalist eras, between 1912 and 1949, China adopted Western standards for architecture, and many public and private buildings from this time have endured in major cities despite decades of neglect.

After 1949, however, architects and developers were asked to apply the far less rigorous standards set by the Soviet Union, which prioritized

NEWSCHINA I July 2014

speed and economy of construction over the longevity of finished buildings. In the 1950s, China even looked into replacing steel in the skeletons of public buildings with bamboo, to save money.

Such cost-cutting would soon take its toll. When a 7.8-magnitude earthquake hit Tangshan, Hebei Province, a city of four million, in July 1976, more than 242,000 people died, most as a result of building collapses. An earthquake of similar magnitude that hit Santiago, Chile nine years later, resulted in only 177 deaths. Comparing the two disasters, experts concluded that the main contributing factor to the high death toll in Tangshan was the poor quality of urban construction.

In 1996, a 7.0 magnitude earthquake hit Lijiang, Yunnan Province, causing hundreds of deaths. The fact that most buildings in the ancient, rambling Old Town remained standing while the newly-built residential walkups around them were utterly flattened did nothing to awaken the authorities to the necessity for building to last.

Even when the catastrophic earthquake that struck Sichuan in 2008 killed more than 69,000, including thousands of school children, further reinforcing the argument that shoddy urban construction had guaranteed that many public buildings in China were deathtraps in the making, the government remained silent on improving urban planning regulations. Instead, as happened after Tangshan, the authorities were quick to curtail domestic criticism, ensuring that corner-cutting and time-saving in the construction industry, especially in impoverished areas, remained the norm.

In the 1980s, skyscrapers in the new Special Economic Zone of Shenzhen were being built at a rate of one story every three days. Today, China’s leading developer of commercial real estate, Wanda, has smashed records by opening shopping malls only 18 months after securing a lease on the land they occupy. Many developers break ground even before a building’s designs have been finalized, simply to save time. Praise for such speedy construction, a common theme of State media reports, belies the often horrific corner-cutting that lies beneath these towering modern constructions.

Concrete, for example, needs to stand for a minimum 28 days to reach its optimum tensile strength. In China, a contractor willing to halt construction for two days is a rarity, according to an industry insider in Hebei Province, who declined to be identified by name.

“To guarantee the bottom line, contractors will try every means to cut corners,” the source told NewsChina. “You can imagine how low the quality of such housing would be.”

The fact that no independent regulator exists, and that government interests favor speedy construction, only serves to further destabilize the situation. Developers need to build fast and sell faster in order to maximize capital turnover. Residential compounds unoccupied before construction is completed are seen as loss-makers. Contractors willing to bid low and cut corners get more business than more conscientious alternatives.

For analysts like Chen, the situation is so grave that many have already resigned themselves to a future dotted with fatal building collapses. Chen confidently believes that China’s poorly regulated, highly speculative and largely irresponsible construction industry has effectively halved the lifespans of almost all its urban buildings.

37

society

Beijing, Tianjin and Hebei

Better Together The “synergistic” development of Beijing, Tianjin and Hebei has been on the agenda for some time, but its viability depends on whether or not the central government can balance the respective interests of the three regions

By Han Yong and Xie Ying

W

ith the capital under a cloud of heavy smog, Chinese President Xi Jinping made a surprise public outing into the streets of Beijing on February 25, where he gave a speech emphasizing the urgent need to ease Beijing’s “urban diseases” – its swelling population and worsening pollution. “We should transfer nonessential functions outside of Beijing, and focus more on high-end services, integration, and technology, as well as low emissions,” the president said at a conference on the governance of Beijing.

When talking about his vision for the functions of China’s capital, Xi listed politics, culture, science and international exchange.

Economics, however, was absent from the list.

This was an obvious endorsement of what Xi has often called the “synergistic development of Beijing, Tianjin and Hebei Province,” a concept on which he hopes the three regions could base their collective strategic development.

“Beijing is too fat, while Hebei is too thin.

We should strike a balance between them by promoting regional cooperation,” Xi claimed.

The following day, Xi presided over a symposium on “synergistic development,” attended by eight members of the politburo – an unprecedentedly high profile for a meeting of its kind. Xi proposed seven key factors

38

for the implementation of the new development scheme, in particular the devising of a top-level program as soon as possible and the need to break local protectionism.

Xi’s speech, according to analysts, has reignited talk of synergistic development, which has remained fruitless since it was first proposed in the 1980s – Beijing’s protectiveness of its own GDP has left it reluctant to assist Hebei. Hebei, its resources depleted, has equally found little space to cooperate with Beijing.

“Different from other regional cooperation and development projects (such as those in the Yangtze and the Pearl River deltas), the synergistic development between the capital and its neighboring areas was not only an economic issue, but more a political issue,” said Han Jing, an economics professor from Shijiazhuang, capital of Hebei Province, in an interview with NewsChina. “All sorts of difficulties had been piling up for a long time.”

Hebei’s Sacrifice

According to Han Jing, the cities neighboring Beijing, most of which are located upstream of the capital, have paid a significant price for Beijing’s economic development and ecological environment. “To be around the capital is to sacrifice for the capital,” Han told NewsChina.

The cities of Zhangjiakou and Chengde,

where Beijing’s two major reservoirs are located, had to shut down hundreds of industrial plants to ensure the cleanliness of Beijing’s water supply, causing many local residents to lose their jobs and forcing them to live on meager government allowances.

Chicheng, a county separated from the capital by a single mountain, has banned animal husbandry on its grasslands since 2002, to ease the sandstorms that blow into Beijing, reportedly shrinking the local annual revenue by 65 million yuan (US$10.8m). Despite having its own water source, Chicheng also converted a large portion of its paddy fields into dry land to bolster the water supply to Beijing, wiping another 70 million yuan (US$11.7m) off the books. The county is now home to around 160,000 people – over 60 percent of its total agricultural population – living below the national poverty line.

“It was like donating our blood to Beijing, but the compensation far from offset the loss,” Yan Dongqing, director of the local poverty-relief bureau, told domestic media.

“Actually, on similar projects, we always receive much less government allowance than counties in Beijing municipality would,” he added.

In 2005, an economic investigation team from the Asian Development Bank coined the term “the capital’s poverty belt,” revealing that they had found over 3,798 povertyNEWSCHINA I July 2014

Baoding: 1,016.7

Tangshan: 1,196.8

Langfang: 1,233.3

Qinhuangdao: 1,300

Shijiazhuang: 1,466.7

Tianjin: 2,866.7

Beijing: 7,766.7

Average price of second-hand apartments (US$/square meter)

Source: www.fangjia.com

Per-capita GDP of Beijing, Tianjin and Hebei Province (2012, US$) Beijing: 14,027.13 Tianjin: 15,129.04 Hebei: 5,838.95 Nationwide: 6,094 Source: The 2014 Report on the Development of Beijing, Tianjin and Hebei Province

stricken villages in 32 impoverished counties around Beijing and Tianjin.

Their data was supported by the 2014 annual report on the development of Beijing, Tianjin and Hebei Province issued by the China Academy of Social Sciences in late March. This revealed that Hebei has lagged increasingly far behind its two neighbors, with its urbanization rate only half that of Beijing and Tianjin.

“Using their status as core national interests, Beijing and Tianjin have siphoned too many resources, further marginalizing Hebei Province,” warned the report.

In recent years, Beijing has transferred a portion of industrial enterprise to Hebei Province, hoping to “compensate for” the slow economic development there, but most NEWSCHINA I July 2014

of those transferred were high-pollution, high-consumption and low-profit plants, and failed to receive a warm welcome in Hebei. “Due to the short distance between Beijing and Hebei, such plants would continue to pollute the capital even if they moved to Hebei,” a Hebei official, who asked not to be named, told NewsChina.

“We have made such big political concessions that we deserve corresponding political benefits. In order words, we hope the central government will push the concept of ‘synergistic development’ harder,” he added.

Cooperation?

However, as GDP still remains a major performance criterion for local officials, the central government is often reluctant to dig

more compensation money out of Beijing’s coffers. Furthermore, since recent political rhetoric has been discouraging local governments from interfering in the market too much, Beijing has argued that it would be improper for them to force any enterprises to move out.

This is why some Hebei officials are advocating a more market-based approach to the problem, rather than simply asking for handouts from the capital.

“Beijing is not obligated to help Baoding.

The key is to improve our ability to meet Beijing’s demands,” said Zhang Xinjian, deputy director of the industry and information bureau of Baoding, a city in Hebei Province. He told NewsChina that Baoding in 2013 signed 33 cooperation agreements with Beijing and

39

Photo by Xinhua

Photo by CFP

society

The buses between Beijing and the neighboring counties of Hebei are always crowded A real estate agent in Baoding tries to control a crowd of people keen to buy houses, March 31, 2014

Tianjin in the areas of high-end manufacturing, aerospace and biological medicine, which he called “the future direction of Baoding’s industrial development.”

His views were shared by Ma Jianzhang, the Hebei government’s chief policy researcher, who encouraged Hebei officials to “find a link between Beijing and Hebei” and then “prescribe medicine according to the symptoms.” “We should not stand on the side of Hebei only. This is a game of chess – as required by the central government,” he said.

However, even so-called “market-oriented” officials believe that meeting the capital’s demands will not be easy, since Hebei still bases much of its economy on traditional industries such as manufacturing and raw materials, whereas Beijing is now emphasizing the development of tertiary industries such as high-end services, telecommunications and the Internet.

This “mismatch,” according to Xiao Jincheng, director of the Institute of Land Development and Regional Economy under the National Development and Reform Commission (NDRC), China’s highest macroeconomic planning body, stems from the “long-term competition between the three sides across similar industries.”

Since the 1950s, Beijing has concentrated much of its effort on industry, developing the capital from a city of consumption to one of production, and draining the resources of

40

its neighbors in the process. Now, as Beijing attempts to transfer those low-end manufacturing plants outside its borders, it has found that these industries are also saturated in Hebei Province.

Even though there were some higher-quality enterprises to move out, most of them prefer Tianjin or the coastal areas in East China over Hebei.

“What enterprises need in order to upgrade or transform are funds and resources, both of which Hebei lacks,” said the 2014 report on the development of Beijing, Tianjin and Hebei.

Data from the report showed that Hebei’s 2012 GDP per capita was less than US$6,000, only around 40 percent of that of the two municipalities of Beijing and Tianjin respectively, and even lower than the national average (US$6,094), leading the province to invest far less in public services and infrastructure than Beijing and Tianjin. The limited resources have also caused a brain drain – Hebei sees an outflow of about three million college-educated residents to other regions every year, 60 percent of whom move to Beijing and Tianjin, while the number flowing in is only 1.4 million.

“Hebei’s poor infrastructure capacity and public services have made it unattractive to both enterprises and talent…we suggest encouraging government-backed organizations and departments to transfer to Hebei first,” the report continued.

A Bleak Future

This may be the suggestion that is driving areas around Beijing, especially Baoding and Langfang, which are only about 100 kilometers away from the capital, to strive to position themselves as future “sub-centers.”

Some Baoding officials have told the media that since they have neither energy resources (as some other cities have) nor a port (such as Tianjin’s), they must make the most of their geographical proximity to Beijing.

Talk of “sub-centers” came to a peak when Xi Jinping designated the “synergistic development” issue as a matter of national strategy at the February symposium, with Hebei’s Party Secretary Zhou Benshun making frequent investigations throughout the province, urging the cities around Beijing to “seize the chance to develop with Beijing.”

“We should concentrate our full effort on what the capital intends to transfer,” Zhou said at a local work conference. On March 26, Hebei issued two new draft urbanization plans, defining Baoding as “a center for the accommodation of government-backed organizations and industries transferred from Beijing,” and Langfang “a core city to the formation of an urban agglomeration with Beijing and Tianjin.”

China’s typically excitable investors took the news with enthusiasm, flooding into the local real estate market and raising Baoding’s house prices by 1,000 yuan (US$160) per square meter per day during the first week NEWSCHINA I July 2014

Photo by CFP

Photo by CFP

A new steel technology was used to build the Beijing-Shijiazhuang special railway, an effort to enhance regional transport links

Baoding on a smoggy day

after the publication of the two drafts. Despite the national housing market’s recent sluggishness due to China’s overall economic slowdown, data from the China Real Estate Appraisal Center showed that Baoding ranked first nationwide in house price growth in March.

Beijing, however, has responded to Hebei’s enthusiasm with relative coolness, vaguely telling the media that they have yet to work out a specific program of “synergistic development.” On April 4, Beijing Party Secretary Guo Jinlong claimed that the Beijing government plans to build Tongzhou, an eastern suburb of Beijing, into a sub-center. Many believe the announcement to be a tacit negation of Baoding’s dream of becoming the capital’s sub-center.

Enthusiasm fell dramatically, with the real

Hospital beds per 1,000 people (2010)

estate market suffering a sharp drop in Baoding since late April. Under heavy public criticism for rushing into the program before Beijing and the central government took first step, Hebei has since been exercising caution, trying to ensure that the “synergistic development” issue remains low-profile. The province even canceled a related press conference in April.

“Hebei will not officially issue the [said] two drafts before soliciting enough expert advice and suggestions,” a Hebei provincial official told the media.

The unclear prospect has reminded people of a regional cooperation agreement concluded 10 years ago between Beijing, Tianjin and eight cities of Hebei Province, including Baoding, Langfang, Zhangjiakou and Chengde.

Though then viewed as a turning point of the

hard-to-achieve “synergistic development” of the three regions, the agreement finally came to nothing.

Now, Beijing’s worsening “urban diseases” are being viewed as a new “tipping point” to push synergistic development, but as the central government has not yet publicized the top-level program that Xi talked about, worries have begun to spread among Hebei officials.

“Nobody knows to what level the synergistic development will go – we have no idea even how to design a transportation scheme, since we cannot predict the future population and industrial size, both of which will sharply differ depending on whether or not the policy is implemented,” Deng Wei, a transport official from Baoding, told NewsChina. 

Bachelor’s degrees per million people (2010)

Beijing:

Beijing:

Tianjin:

Tianjin:

Hebei:

Hebei:

Nationwide:

Nationwide:

Source: The 2014 Report on the Development of Beijing, Tianjin and Hebei Province

NEWSCHINA I July 2014

41

society

Industrial Marijuana

Hemp Hampered

Despite a strict official attitude towards narcotics, China is the world’s biggest producer of industrial hemp. Are national laws holding back a potential windfall?

By Yuan Ye

I

n February, reports surfaced that American industrial hemp company Hemp Inc. and China’s Gansu Yasheng Industrial Group had announced that in accordance with an agreement between the two companies, Yasheng had in 2013 shipped a batch of shelled hemp seeds to the US, which had been planted the same year and had yielded over 40,000 tons of hemp. The reports claimed the two parties were negotiating new agreements for the 2014 growing seasons.

While the reports were quickly refuted by Gansu Yasheng, their wider impact continued to swell, drawing attentions towards the development of industrial hemp in China.

In fact, industrial hemp has been grown in China’s Yunnan Province for 13 years, and has become a huge industry. According to the China Agriculture Statistics Yearbook and the United Nations Food and Agriculture Organization (FAO), China now has the largest plantation area of industrial hemp, accounting for approximately half of the world’s total. According to the World Intel-

42

lectual Property Organization, among all the 606 patents related to hemp, 309 belong to Chinese companies and individuals.

“The authorized hemp species are lowtoxicity types, with levels of THC [hemp’s psychoactive compound] under 0.3 percent,” said Yang Ming, a hemp scientist with the National Hemp Industry and Technology System, and a researcher at the Yunnan Academy of Agricultural Sciences (YAAS).

These industrial hemp species (those with THC levels under 0.3 percent) are considered as non-narcotic use plants, and are useful in a variety of industries including textiles, paper, food, medicine, cosmetics, leather, automotive, construction, decoration and packaging.

“It is a classic means of production,” said Director Gao Yunhong of the Anti-Drug Use Department at the Narcotics Bureau of the Yunnan Public Security Bureau (PSB).

According to data from the Yunnan PSB, since 2010, Yunnan has had a confirmed industrial hemp plantation area of over 14,700 hectares, spread across 13 autonomous prefectures and 38 counties.

Breeding

Located in southwest China, Yunnan Province borders the drug-producing regions of Southeast Asia’s “Golden Triangle,” which includes parts of Myanmar, Laos and Thailand.

The area is a key region of anti-drug work, and in the 1980s, Yunnan launched its own antidrug campaign. Though police efforts to control heroin and cocaine were comparatively successful, hemp proved more difficult.

As an economic crop grown generation after generation by ethnic minority groups in Yunnan such as the Yi, Miao and Yao, hemp plays a role in local minority culture and traditions – while locals have no tradition of smoking hemp, many use it to make clothes for weddings.

But the local government felt under increasing pressure, partly due to foreign backpackers who discovered that the growth and sale of marijuana was loosely policed in the province, particularly in the popular tourist destinations of Dali and Lijiang. As this information spread, numbers of local and foreign drug users began to increase, giving NEWSCHINA I July 2014

Photo by CNS

The production line of a hemp textile enterprise in Shanxi, April, 2007

“Compared with other plants, industrial hemp has many advantages,” said YAAS researcher Guo Hongyan. Guo said that hemp is heat-resistant, does not compete with other plants for soil, grows well on barren earth, and does not require pesticides. “It is also very useful in improving land polluted by heavy metals,” he said.

Golden Years vs. Gray Area

rise to an illicit marijuana economy and attracting growing numbers of drug tourists to Yunnan. To this day, marijuana pushers can be seen everywhere in bars and on the streets in major tourist cities in the province.

The situation created a conflict of interest between the government, who aimed to eradicate the use of hemp as a drug, and locals who depended on the growth of hemp as an economic crop.

The YAAS was then entrusted by the government to establish a research team to tackle the problem. After attempts to replace hemp crops with ramie and linen failed, the team returned to experimenting with hemp.

In the early 1990s, the Netherlands and France bred low-THC strains of industrial hemp, and had put them into legalized production. The YAAS team also began to breed local low-toxic varieties. After several years of experimentation, in 2001 the team finally gained national authorization for China’s first viable industrial hemp variety – “Yunma 1.” Later, the YAAS went on to breed Yunma varieties 2, 3, 4 and 5.

NEWSCHINA I July 2014

In 2001, Yunnan began to introduce the growing of industrial hemp. However, since market recognition was low, most of the early investors lost money. But in recent years, with increased market recognition and favorable policies, Yunnan hemp has seen significant growth.

In 2012, the Yunnan government listed industrial hemp as one of the key areas in its “biological manufacturing industry,” and announced its intention to invest in building high-technology industrial hemp processing bases for medicine, food, healthcare products and cosmetics.

In Dali, with a series of favored policies in land use planning and capital support, an industrial hemp park of 335 hectares is planned. In a recent interview, a spokesperson for the park said that the estimated investment may reach over 2 billion yuan (US$321m), and the growing area will be around 53,000 hectares, with the participation of more than 30,000 farmers.

In Yunnan’s Xishuangbanna Prefecture, Sinohemp Company, founded jointly by the Military Equipment Academy of the People’s Liberation Army General Logistics Department and Youngor Group, processes 5,000 tons of hemp fibers annually. Honghe Juheng Technology Company of Yunnan Ruisheng Tobacco Group processes the crop into smoking papers.

However, while the hemp yield is large, there has as yet been no breakthrough in national legislation in relevant areas.

In March 2003, the Yunnan Public Security Bureau issued its Provisional Regulations on Industrial Hemp, and seven years later, on January 1, 2010, the province implemented its Authorization Regulations on Growing and Processing Industrial Hemp. Yet today, Yunnan is still the only province that has legalized

and supervises the growing of industrial hemp.

Due to the scarcity of legal industrial hemp seeds in China, Yunnan hemp is becoming popular in other provinces such as Guangxi and Guizhou. Yet the lack of regulations leaves growers in other provinces in a legal gray area.

In Liu’an, a traditional hemp growing city in Anhui Province, the government issued a document in 2009 including industrial hemp in the city’s top ten agricultural industries, and founded the Liu’an Hemp Industry Association. Yet while hemp is important to the city of Liu’an, Anhui Province is not entirely in agreement. Those in the hemp industry in Liu’an have been promoting legislation, but have made little progress.

This gray area means risks. Liu’an Academy of Agricultural Sciences in 2008 identified two new strains of hemp, Wan 1 and Wan 2, but technically speaking, these strains are not internationally recognized as industrial hemp. According to test results from YAAS, the THC value of both is 0.3-0.5 percent.

In 2009, police in northeastern Jilin Province brought down the largest hemp operation ever exposed since the founding of the People’s Republic of China in 1949, in which 600 hectares of premium land were being used to grow high-THC marijuana, and services including seed distribution, planting guidance and harvesting were being offered.

The operation was traced back to a researcher from Heilongjiang Academy of Agricultural Sciences, who commissioned a farmer in Jilin to grow hemp for research use.

However, the farmer sold hemp flowers to a buyer from northwestern Xinjiang Uygur Autonomous Region. The researcher had been implicated as a suspect in the case.

Even in Yunnan, where regulations and management are comparatively mature, there remain significant difficulties – many local people have a habit of eating hemp seeds, and discarded seeds on the ground often grow into plants. According to local media reports, a large number of wild hemp plants were found growing in an open area near a suburban court in Kunming, capital of the province. Every July and August, local governments organize campaigns to uproot wild hemp – in many counties, over 10,000 hemp plants are destroyed per year.

43

society

Prostitution Crackdown

City of Red Lights

Businessman Liang Yaohui, a former delegate to the National People’s Congress (NPC), was expelled from his political positions after the recent crackdown on vice in Dongguan exposed his five-star hotel as a brothel

By Xu Zhihui and Xie Ying

“

Liang Yaohui has been detained for allegedly organizing prostitution,” announced the official microblog of the Guangdong police bureau on April 14, triggering a new round of speculation about Liang, a delegate to the NPC and also chairman of the luxurious Crown Prince Hotel in Dongguan, Guangdong.

On February 9, State TV network CCTV ran an expose of the “rampant prostitution” in Dongguan, Guangdong’s “sex city,” explicitly naming the Crown Prince in the report.

Liang, as both a prominent businessman and an official, immediately fell under scrutiny, and disappeared from public view, failing to appear at the two annual meetings of the NPC and the Chinese People’s Political Consultative Conference (CPPCC) held in March in Beijing.

Soon afterwards, his arrest was announced to an unsurprised public, and the NPC de-

44

clared that his position as delegate had been withdrawn.

Since these two parallel announcements were made, however, no official source has revealed any further details concerning Liang’s case. Given that the authorities have failed spectacularly to suppress the sex industry in Dongguan for any sustained period – the city largely exists solely as a result of prostitution – speculation has continued to foment about the origin of Liang’s fortune, and how he was able to evade prosecution for so long.

Hotel Vice

Official media ran lurid reports of how vice was managed at the Crown Prince Hotel.

One service, nicknamed “choosing goldfish from a bowl,” involved patrons selecting girls parading behind a screen of one-way glass, dropping a curtain to change candidates until they found their favorite.

The Crown Prince commanded a high price for these services – a minimum room charge of 2,000-3,000 yuan (US$333-500) per night which had to be paid before guests could avail themselves of “special services.”

Business was, according to insiders, steady.

Speaking to an undercover CCTV reporter, a waiter at the hotel revealed that the whole third floor was fully occupied.

Liang Yaohui built the first incarnation of the Crown Prince Hotel in 1996, a venue which specialized in erotic massage. As the hotel attracted more customers, Liang began marketing it as an executive spa, and invested 300 million yuan (US$50m) in a new building in 2003 with a vast performance arena as its centerpiece.

“The arena was shaped like that in the Roman Coliseum and featured performances by many international porn stars. It was the biggest nightspot in Dongguan,” an anonymous NEWSCHINA I July 2014

Photo by Fang Guangming

insider told NewsChina.

“No other five-star hotel [in Dongguan] provided better service than the new Crown Prince,” he added.

“Generally speaking, it takes an investor eight to 10 years to cover the cost of building a hotel, but prostitution helps shorten that period to four or five years, or even less,” Tang Ruigang, director of a local law firm specializing in vice-related crime in Dongguan told NewsChina.

Based on the tariff that appeared in the CCTV news report, Tang estimated that the Crown Prince could earn 3,000 yuan (US$500) per massage room per day. Supposing all 100 rooms were occupied, the hotel could make at least 100 million (US$16.7m) in a single year from its “massage services” alone, meaning Liang would have seen a return on his investment within three years.

Although Liang had tried to hide his inNEWSCHINA I July 2014

volvement in prostitution by registering the hotel in his father’s name, he was soon known locally as “Prince Liang.” Data from Hurun, China’s Forbes equivalent, showed that Liang came 406th in the publication’s 2008 Rich List with two billion yuan (US$330m) in assets, twice his value in 2007.

Fall of a Titan

Since the 2008 financial crisis resulted in declining profitability in China’s hotels, Liang Yaohui began to fade from public view. Media reports said that Liang tried to sell the Crown Prince for 600 million yuan (US$100m) in 2011, but couldn’t find a buyer.

Since then, Liang had shifted his investment into the petroleum industry and attempted to remould his image into that of a “Confucian businessman,” donning traditional Chinese garments, sporting gold-

rimmed spectacles, and giving generously to charity. The Great Sage’s well-documented contempt for the merchant class does not appear to have dented Liang’s desire to be seen as a scholar and a gentleman.

Liang was elected as a delegate to the NPC in 2008. He cherished the title so much that he once reportedly spent several millions on investigations for a bill to the Two Sessions of the NPC and CPPCC. At the end of 2012, Liang caused a stir in business circles after securing a rare second nomination as a delegate. At the Two Sessions of 2012, Liang earned column inches with a public tirade against recycled cooking oil or “gutter oil,” which saw his star rise further, as did his advocacy for better food security and social morality.

However, raising your head too far above the parapet in China’s complex political milieu is a risky business, and soon Liang’s

45

society

“I believe higher-level ‘umbrellas’ are protecting hotels, otherwise, why would even city-level police bureaus be reluctant to investigate them?” the anonymous insider told NewsChina.

According to the same source, a license to open a massage center could be sold for one million yuan (US$167,000) in Dongguan, since it effectively made the licensee exempt from prosecution. Reports in other media, including an investigation by Southern Weekly, alleged that government support for the sex industry largely forced police to turn a blind eye.

So far, 36 police officers have been removed from their posts or put under criminal investigation, including Yan Xiaokang, head of the city’s public security bureau. 167 locals were also arrested, and 67 criminal gangs allegedly busted. Given the size of Dongguan’s sex industry, and its integral role in the local economy, this has barely made a dent.

Red Light Boom

According to domestic media reports,

Dongguan saw the number of five-star hotels rocket from 16 to 96 from 1996 to 2006, most of which, including many operating under international brand names, allegedly provided sexual services.

Prostitution became so ubiquitous in the city that a standardized “Dongguan-style” service, a pick-and-mix of various sexual acts performed within a two-hour window, became fashionable. CCTV’s undercover reporter was solicited by one worker at the Crown Prince, who offered exactly this service. “[Dongguan-style] service was actually available in nearly every entertainment venue in the city,” the anonymous insider told NewsChina. “Dongguan’s specialty lies in that it can cater to any kind of customer, no matter whether rich or poor, a migrant worker, a businessman or an official,” he added.

“The hotels did not create the prostitution business but slipped an expensive coat around its shoulders,” said lawyer Tang Ruigang. “Prostitution has actually been rampant since the 1990s. I used to see work-

Photo by Fang Guangming

alleged involvement in vice resulted in the CCTV News exposé. Actually, as early as 2012, a post on China’s popular Tianya forum had named him one of Dongguan’s four “mafia bosses.” Allegations were made that due to Liang’s stranglehold on local business, nobody could touch him.

During the anti-prostitution campaign, eight local policemen were removed from their posts for failing to act on media reports naming known centers for prostitution in the city. However, in private interviews with NewsChina, many local policemen complained that they were unable to act against major operators due to their powerful connections.

“As police officers, we were supposed to crack down on any prostitution, but sometimes when we tightened controls, the government would blame us for impacting the local economy,” one officer told NewsChina.

He further revealed that few new recruits were willing to occupy vacant posts, due to the pressures of policing a city as vice-ridden as Dongguan.

Female workers from an electronics factory in Dongguan watch TV, their major after-work entertainment

46

NEWSCHINA I July 2014

as a result of limited investment channels.

With easy money to be made from the entertainment and hospitality sectors, private money flowed into hotels, salons and massage centers.

“When there is no other upgraded industry to invest in, entertainment is obviously a better choice than low-end manufacturing,” he said.

Dongguan’s nightlife not only attracted a growing number of visitors, it also lured women from poor rural provinces with the promise of riches. “Supporting industries” sprang up around prostitution – catering, karaoke and beauty parlors all began to multiply.

The central government crackdown which netted Liang, however, resulted in empty streets and unoccupied hotels. Some media estimated that the complete dismantling of Dongguan’s sex industry would drain the city of 15 percent of its total GDP, despite public denials from the embattled mayor Yuan Baocheng.

Few expect vice to remain off the streets for long in South China’s Sin City.

Crowds attend a lingerie exhibition at a Dongguan hotel, March, 2013

NEWSCHINA I July 2014

Photo by Fang Guangming

Dongguan became the country’s biggest car assembly center. He once again got ahead of the competition, accumulating capital for his future hotel business by allegedly smuggling luxury cars into the country.

Dongguan’s municipal government, according to the local tourism bureau, has so far invested over 40 billion yuan (US$6.7bn) in the hotel industry, 95 percent of which was sourced from private businessmen like Liang Yaohui.

“Dongguan’s hotel craze is based on abundant and cheap land resources. With millions of migrants flooding into the city, local businessmen earned huge profits by building factories and houses and renting them out,” Xu Qingmei, a local resident, told NewsChina.

“The hotels were merely another form of real estate investment, since many operators believed that they’d keep the land even if they lost the business,” she added.

According to Lin Jiang, a professor from the Guangzhou-based Sun Yat-sen University who serves as a consultant to the Dongguan government, the city’s vice boom came

Photo by Fang Guangming

ing girls crowding on street corners, in alleys and in hair salons all the time.”

It was allegedly from just such a “hair salon,” many of which operate as cover for sex work in China, that Liang made his first fortune in the 1990s. At that time, China was throwing its doors wide to the market economy, and Dongguan became a hub for businesspeople entering the mainland from neighboring Hong Kong and Shenzhen.

With the influx of money and men on business trips, the sex industry exploded.

“Liang Yaohui is a shrewd judge of commercial opportunity,” a local resident surnamed Huang told NewsChina. Living in such a rapidly developing city, most saw Liang as an example to follow rather than a glorified pimp.

“He was bold and aggressive,” Huang continued. “His prosperous business did not depend on his skills as a ‘hair stylist,’ but on the 50 girls he managed who charged four times more than those working in other salons.”

Liang’s second big break, according to Huang, came knocking in 1995 when

Two female hotel employees on the move in Dongguan

47

society

Education Diary

School of Hard Knocks

A new book chronicles the trials and tribulations of a writer couple and their son, as they face the reality of China’s State education system

By Sun Zhe and Wan Jiahuan

W

u Chuntao and Chen Guidi may not be the most famous writer couple in China, but they may well be the boldest.

Their popular work of non-fiction A Survey of Chinese Peasants, published in 2003 but swiftly banned on the Chinese mainland, exposed exploitation of China’s farmers by government officials. The book won them as much praise from readers as it did retaliation from the government officials named and shamed in its pages.

One official sued the couple for libel, and even now, a decade later, the case has yet to be settled. The family found themselves under constant anonymous harassment – their house in Hefei, Anhui Province was frequently bombarded with rocks.

For the safety of their son, then five years old and soon to begin elementary school, the couple decided to move to Pingxiang, Jiangxi Province, hometown of Wu Chuntao, wife of Chen Guidi. They never expected the move would inspire a new title on another sensitive topic – Chinese education. Based on Wu’s diary, the book, titled Going South and North to Seek Schooling, was published late last year.

Wu had kept a diary for many years, and when her only son Xiaoming was born, she had started a special section dedicated to him. By the time Xiaoming finished elementary school, Wu had written hundreds of thousands of Chinese characters on his school life, most of them bitter memories.

No Place

In the book, Wu depicted the city of Pingxiang as a typical inland Chinese third-tier backwater – she observed that many people, including schoolteachers, preferred playing mahjong to reading. And while few in Pingxiang were rich, this did not stop them from spending what money they had on fancy clothing and food, Wu wrote.

Like many children, in his first few months at school, Xiaoming encountered bullies for the first time. To seek protection for him at school, Xiaoming’s parents tried to curry favor with his teachers by treating them to dinners. Normally, the smartly dressed principal would swiftly excuse himself from the table to join a game of mahjong with his colleagues.

The gambling habits of Xiaoming’s teachers, added to the fact that the boy found it impossible to finish the excessive homework assigned

48

by his teachers, before long, forced Wu to pull her son out of the school.

Xiaoming was transferred to a second school, but the school’s poor equipment and facilities left Wu unsatisfied, and she eventually managed to secure a second transfer to a “key school,” where the boy would finish his elementary education.

Like most Chinese parents, Wu and Chen were willing to exhaust all means to enroll their only child into a key school, which tend to be better equipped and staffed than average, and often serve as a fast track to a good university.

But, Wu wrote, this quickly proved to be one of the worst decisions she had ever made. Shortly after the transfer, a tearful Xiaoming told his mother that after discovering a formatting mistake in his homework, his class teacher Ms Zhou had hurled his workbook to the floor and mocked him in front of his classmates.

The couple was as hurt as their son, but chose to stay silent. Wu opted to send a gift to the teacher, an effort that proved fruitless.

Weeks later, when Xiaoming accidentally ran into a classmate, Zhou punished him by slapping him across the face.

The furious Wu and Chen tried to unite other parents to have Zhou dismissed, but discovered that she was related to a powerful official in the local municipal government. They were told there was no chance that she would even be transferred to a different school.

At the time, Wu and Chen were researching another book on rural children left behind in villages by their migrant worker parents, and found that most teaching posts in small cities and rural areas were filled by those with the best conNEWSCHINA I July 2014

nections, many of whom bribed their way in. With three months’ paid vacation and a constant stream of gifts from parents keen to secure special treatment for their children, teaching jobs in key schools were highly coveted.

Wu reasoned in the book that since college graduates usually prefer government jobs over teaching, those who taught in small backwater cities tended not to be very devoted to their jobs, and teaching was merely a way of making a living.

A Way Out

Photo by dong jiexu

Xiaoming’s school life became even more difficult after his mother tried to have his teacher replaced. A classmate, Xiaoming’s class monitor, who had been empowered by the class teacher to punish wayward classmates, moved Xiaoming’s desk away from his seat after waste paper was found in his desk.

proportionately distributed among provinces according to numbers of examinees, and students from the municipalities of Beijing, Shanghai and Tianjin have a much higher chance of admission into the country’s top universities.

Taking advantage of this privilege to boost the local real estate market, the Tianjin government had previously offered hukou to outsiders who bought housing in the city. But it turned out that the policy did not make good on what was advertised – only one tenth of outsiders who bought property in Tianjin could get their children into local high schools, based on the results of a challenging examination.

This revelation pushed Wu to break away once and for all from the public school system, sending Xiaoming to a private school in Beijing run by a Taiwanese principal and staffed mostly by Catholics, where physical abuse was banned and each class had only 20 students. To Wu’s surprise, the school organized a parents’ commission to facilitate communication with the faculty. The commission had once worked to replace a principal who had failed to satisfy them.

Wu found this to be the first school she had encountered where teachers would not give up on students with poor academic performance, and she soon saw change in her son.

At a sports meet, when Xiaoming lagged almost one lap behind in the 1,000-meter race and was struggling to finish, the whole audience began cheering for him. From then on, Xiaoming began visiting the gym to run on the treadmill. He became outgoing, and took part in debate contests, drama performances and a charity bazaar.

“He changed almost overnight into another person after entering the school, no longer a child with no personality or confidence,” said Chen Guidi, Xiaoming’s father.

Xiaoming later developed an interest in painting and his parents, having lost all hope in the exam-oriented State education system, allowed him to give up on senior high school and eventually the national college entrance examination, in order to focus on art.

“My hopes for him are now the same as when he was a toddler,” Wu said.

“I no longer want the honor of having him admitted to an elite university. I just want him to be a kind and appreciative person – someone who can find his own interests and support himself.”

The book’s message of frustration with their lack of education options and advocacy for more holistic teaching methods seems to have struck a chord with Chinese readers. However, for most families in China, expensive private schooling is simply not an option, and even fewer can afford the risk of abandoning the university system. While Xiaoming is far from a classic case, his rare story at least sheds light on the advantages of alternatives to the State education system.

Chen Guidi (right) and Wu Chuntao

On another occasion, when Xiaoming got into a fight with a classmate, the class monitor forbade his entire class from talking to him. His academic performance went from bad to worse, and he was banished to the far end of the classroom, the section reserved for “bad students,” compounding the boy’s hatred of school.

Out of other options, Wu spent much of her savings on a house in the wealthy east-coast city of Tianjin, in the hope of acquiring a local hukou, or residence registration, so that Xiaoming would be entitled to schooling and be able to sit the national college entrance exam.

Admissions quotas to State universities in China are not NEWSCHINA I July 2014

49

society

Death Industry

Gilded Coffins

Taboos surrounding funeral arrangements and even discussing death have allowed some unscrupulous companies in China to make a killing

By Sun Zhe

Funerary busts in Biian’s store window

T

he area outside the south gate of Jishuitan Hospital in downtown Beijing bustles with businesses targeting the hospital’s patients. From the obvious – stores selling flowers and baskets of fruit, for example, to the unorthodox – boutiques offering prosthetic limbs, wheelchair rental shops. Perhaps the most unnerving are the storefronts offering urns, shrouds and other funerary accoutrements at discount prices.

Biian is the only funeral product store on the street that has a brand name, which in Chinese means “the other shore.” Others have tended to go for something more generic, usually just the name of their specialty product, though most offer a range of goods and services, from urns and funeral outfits to burial plots and hearse rental.

Biian offers much more to its clientele. Its services include a feng shui assessment of a planned burial plot, processing human ashes into diamonds, shooting caskets into space, adding lifelike portraits to headstones and even counseling for the recently bereaved.

However, the major business of Biian, according to Wang Dan, the company’s co-founder and CEO, is a pre-funeral consultation service designed to educate clients about the risks of being exploited by profiteering funeral homes and crematoria. While many complain about the prohibitive cost of healthcare, China, with its universal social taboos surrounding death, can be an even more expensive place to die.

50

Superstition

33-year-old Wang, an e-commerce veteran of group purchasing portal lashou.com, said his interest in the death industry was first aroused when one of his friends was gouged by a Beijing hospital morgue.

After an elderly relative died in hospital, Wang’s friend was moved when a mortician lit candles and incense, and offered up a few prayers to the deceased before placing their corpse in a refrigeration unit. It was only when the family received their bill that they realized they were being charged 1,800 yuan (US$290) for this extra, unsolicited “service.”

When they argued over the charge, the hospital flatly declared it would not release the body until the bill had been paid.

After visiting all the crematories, major hospitals and more than 1,000 funeral product stores in Beijing, Wang found that transparency was the scarcest resource in the city’s death industry, and opened the first Biian store last March, along with an accompanying website.

Recruitment was not easy, since most Chinese still view any funerary business as profiting from death, and thus money earned performing such services is also seen as inauspicious, even cursed. Despite some early success, Wang experienced many setbacks, not least when his company inadvertently delivered urns to two customers who had not ordered them, an error which resulted in the company’s website shutting down its direct retail service.

“An urn is the last thing you want send to the wrong person!” said Wang, who speculated that one of his nearby business rivals may have had something to do with the erroneous purchase. He told NewsChina that he was hated by every other funeral product store on the same street because he undercut them so heavily on price.

Wang is able to save his clients money due to his intensive research into the Chinese death industry. For example, after learning that the municipal morgues charge a minimum price to house remains, whereas hospitals can set their own prices, he advises clients to move their deceased loved ones directly to the crematories rather than allowing hospitals to care for them.

However, Wang is also aware of how crematories also have their own ways of profiting from unsuspecting clients, and thus his company aims to smooth the process and prepare the bereaved for the possible obstacles encountered in a bureaucratic, underregulated and rather cold and impersonal system of morgues, crematories and funeral homes.

Although one year into his new business, Wang found himself insufficiently prepared when his mother died of cancer, and he took it upon himself to arrange her funeral. Wang admitted he was ripped off by Beijing’s Babaoshan crematory, charged 1,000 yuan (US$160) for two palm-sized wreaths placed upon her coffin by a staffer who insisted that tradition dictated that the head and feet of NEWSCHINA I July 2014

Photo by wu shangwen Photo by wu shangwen

the deceased be covered in flowers.

“You could buy those flowers for no more than 20 yuan [US$3],” Wang told our reporter. Since then, he added, he has instructed his clients to design and provide their own wreaths for funerals.

Customs surrounding filial piety along with a general fear of death and its associated customs have made the bereaved an ideal target for unscrupulous businesspeople, argues Wang. Few want to appear unfilial, and can thus be easily talked into overspending on unnecessarily lavish funerals.

A Biian staffer arranges merchandise

Wang plans to expand his business to Shanghai and possibly other first-tier cities, but has no intention to enter smaller ones, where, he claims, the extortion racket surrounding the death industry is so entrenched that someone like him would be unable to sell even a casket without vicious reprisals.

A crematory in Cangnan of Zhejiang Province, for example, banned the use of urns bought outside the crematory according to a report by local newspaper Wenzhou City News. The reporter claimed that urns of an identical size and make to those sold outside the crematory’s gates were sold inside of them for three times the price.

Though the government sets prices for the basic services including the transport, refrigeration and cremation of remains, the rental of funeral halls, labor cost of transporting the deceased and other equally essential services

NEWSCHINA I July 2014

Photo by wu shangwen

Monopoly

A model sedan, one of the many grave goods popular at Biian

have no fixed tariff. Most people spend far more than they should simply to have the whole process concluded as swiftly and painlessly as possible.

As with many nominally public services in China, the cremation business is fragmented and monopolized along administrative di-

vides. As the government has a monopoly on both morgues and crematories, it has also extended its involvement into all other aspects of funeral services, causing the artificial inflation of costs.

According to a report by China Comment magazine, the municipal crematory of Hangzhou city, Zhejiang Province charges 3,600 yuan (US$576) to rent a funeral hall for an hour, plus a compulsory fee of 2,600 yuan (US$420) for floral tributes, or about double the cost of renting a similarly-sized meeting room in a top hotel in the same city. At the same crematory, if relatives wish to personally take delivery of their loved one’s ashes, that’s another 1,000 yuan (US$162).

“This is not a business you can advertise,” Wang said. “You’re also prevented from direct promotion to clients.”

More than 100 billion yuan (US$16.2bn) is spent annually on funerals in China, according to the Ministry of Civil Affairs. Most of this flows straight back into State coffers, as private interests are largely kept out of the death industry as a matter of policy.

10 million people die in China each year, with that number set to rise as the population ages. About 50 percent of people, mostly those living in rural areas, are buried, but in the country’s expanding urban areas, cremation is often the only option.

Unless China can shake off its hang-ups surrounding death and funerals, there will always be plenty of people willing to make a quick buck from the bereaved.

51

economy

State Salt Monopoly

China’s top economic planning agency has announced its intention to revoke a regulation that grants the State exclusive rights to produce and sell table salt. Is this the beginning of the end for one of the world’s oldest State monopolies?

A salt heap at a factory in Jiangsu Province, October, 2013

By Yu Xiaodong

I

n the past year, China’s top leadership has repeatedly pledged to allow private capital access to industries previously monopolized by State-owned enterprises.

During the annual National People’s Congress sessions held in March, the central government declared that it would allow private capital to enter seven industries, including finance, oil, electricity, railways, natural resources and public utilities.

Then, when the National Development and Reform Commission (NDRC), China’s top macroeconomic planning agency, announced on April 21 that it would overturn

52

a rule that limits the right to produce and sell table salt to State-owned enterprises, some observers speculated this could be the death knell for the government’s monopoly over this crucial resource.

As soon as the announcement was made, the China Salt Association and the China National Salt Industry Corporation (CNSIC), de facto regulator of the table salt industry, upheld that the decision would only devolve power over salt production, and asserted that the monopoly would remain in place.

While industry analysts disagree over the significance of the announcement, it once

again calls attention to China’s State monopoly over consumer staples – including table salt – which critics argue have become a tool to siphon vast profits from an essential consumer good. In one form or another, this monopoly has existed in China for over two millennia.

Obsolete

With its origins in the Spring and Autumn Period 2,600 years ago, China’s State salt monopoly was institutionalized during the Western Han dynasty (206 BC-24 AD), and became a benchmark policy of almost all sucNEWSCHINA I July 2014

Photo by IC

Ancient Practices, Modern Times

Photo by CFP

cessive dynasties. Salt’s status as an essential industrial contamination. Thus the concept As industrial salt, an industry which has staple in homes meant that a government of ensuring a strategic reserve, derived from had its own State monopoly lifted, is being salt monopoly was a reliable and lucrative an ancient fear of “salt famine,” has become sold for 500 to 600 yuan per ton, adulterasource of government revenue for thousands obsolete. tion of table salt with industrial salt has beof years.

“The salt monopoly was created around come a nationwide problem. In a single case Income generated from sales of salt ac- the ideas of food security and strategic plan- in July 2013, Guangdong authorities confiscounted for over half of the total revenue col- ning, but in practice this policy has been mis- cated 5,000 tons of industrial salt being used lected by the tax inspectors of the Tang Dy- applied,” Sun Jin, a professor of competition by a local food company in their products. nasty (618-907 AD), and over 80 percent of law and policy at Wuhan University told the the revenue collected by the ethnically Mon- Economic Information Daily.

Cash Cow golian and highly trade-centric Yuan Dynasty In response to criticism of the salt monopAccording to Sun, the CNSIC, the com(1271-1368). pany the government has charged with the oly, Huang Wei, deputy general manager of Similar monopolies held by European national salt production strategy, has long the CNSIC told media in April that his commonarchs began to be phased out during the been skewing the production chain by buy- pany “enjoys no monopoly profits,” citing Industrial Revolution. modest official revenue When production of salt data. became industrialized in With revenues of China in the mid-19th 27.3 billion yuan century, the importance (US$4.38bn) in 2012, of the salt monopoly as the CNSIC only reporta revenue source began ed profits of 220 milto fade as other monopolion yuan (US$35.3m) lies, particularly fuel and that year, a profit margin utilities, rose to promiof less than 1 percent. nence. In 1950, revenue Moreover, in the first from salt as a percentage three quarters of 2013, of total national tax inthe company reported a come was estimated to net loss of 428 million be around 5.5 percent. In yuan (US$67m). In the 2006, this ratio dropped meantime, the company further to 0.04 percent. received government It has long been argued subsidies of 236 million yuan (US$38m). that continuing to im- Workers at a salt processing plant in Nantong, Jiangsu Province, March, 2012 For Kuang Xianming, pose a relatively unprofitDirector of the Research able and ancient tithe on Center of Economics for an essential as basic as salt has no place in the modern world. ing salt at or below the actual market price the China Institute for Reform and DevelopWhen the Chinese government upheld the from producers before inflating the official ment, these reported “losses” are an artificially calculated “managerial loss,” meaning that State salt monopoly in the 1950s, following market price. years of wars, the major motivation was food Industrial analysts point out that the retail most of the actual revenues from salt sales are security and the maintenance of a strategic price of table salt set by the CNSIC is more funneled directly into managers’ pockets, and reserve of table salt to guard against salt short- than 2,600 yuan (US$417) per ton, more are thus kept off the books.

“The [salt] monopoly is now serving the age that may lead to social instability. than five times the claimed ex-factory price interests of a tiny minority of people, rather But after more than a half century, China of 300 to 500 yuan (US$48-80) per ton. has become the world’s largest salt producer The inflated price of table salt not only al- than the general public,” commented Kuang with a production cap of 82.30 million tons lows the State sector to make exorbitant prof- in an editorial published in the Beijing News.

Corruption allegations have dogged the in 2011. The introduction of refrigeration, its, but has become a tangible threat to the canning and increasingly secure food imports security of the national salt supply – creating CNSIC for decades, and the organization’s have also given the country its most stable the problem the monopoly was expressly de- status as both operator and regulator has made such claims tough to disprove. The food supply in history, despite concerns over signed to solve.

NEWSCHINA I July 2014

53

Photo by CFP

economy

Workers gather sea salt in Vietnam, April, 2011

company’s executives have been alleged to demand high kickbacks from salt producers when issuing quotas, and in recent years, these executives have become entangled in several significant corruption cases. In one 2009 case, 37 officials, including the director of the Salt Affairs Bureau of Guangdong Province, were arrested on corruption charges.

Iodine Buzz

In defending the CNSIC’s position and the government salt monopoly, Huang Wei argues that the company bears a “strategically important responsibility” for ensuring China’s supply of iodized salt in particular, raising health concerns related to iodine deficiency, a major justification of the current salt monopoly regime, which is established upon two regulations released in 1994 and 1996, when China cracked down on hundreds of private producers and retailers that

54

had emerged in response to Deng Xiaoping’s market reforms.

The crackdown was accompanied by a national campaign to fortify all salt with iodine, as at the time it was believed that 80 percent of China’s estimated 10 million mentally disabled people were victims of iodine deficiency. By 2000, about 90 percent of China’s 1.3 billion population were eating iodized salt, which has been claimed to be a major success as thyroid problems and iodine deficiency-related prenatal complications fell dramatically in the general population.

However, as iodized salt became the industry standard, iodine overdose, rather than deficiency, emerged as a public health concern, especially as the diets of increasingly urbanized Chinese have seen a massive increase in salt intake.

According to a report released by the Ministry of Health in 2010, the average daily iodine intake for residents in the costal mu-

nicipality of Shanghai, and the three coastal provinces of Liaoning, Zhejiang and Fujian, amounted to 226, 366, 421 and 288 micrograms (mcg) respectively, far exceeding the 150mcg recommended by the World Health Organization (WHO).

Although the authorities insist that these amounts remain below the maximum safe level of 1,000mcg determined by the WHO, many health professionals warn that the widespread and excessive use of iodized salt is directly linked with iodine overdose, which can lead to autoimmune thyroid disease.

Citing an unnamed surgeon from the No 2 Hospital affiliated with Zhejiang University, news portal 163.com reported that the hospital received 205 thyroid cancer cases in 2013, a tenfold increase in a decade.

Critics argue that the salt monopoly is the very reason behind the overuse of iodized salt, which commands a higher market price.

It is argued that dismantling the monopoly would allow greater diversity in the salt supply, and could moderate iodine intake in the general population.

Resistance

Despite public outcry in opposition to the salt monopoly, it remains unclear whether a decision has been made regarding the future of the salt monopoly, as various agencies have sent mixed messages on the subject.

Following the announcement made by the NDRC, an unnamed official from the Ministry of Industry and Information Technology, which administrates the salt sector, told China Business News that the NDRC’s announcement only demonstrates the intent to delegate power to their provincial level, while a general plan to liberalize the table salt industry is still “under review.”

There is limited optimism that delegating power to provincial authorities will encourage competition. But without lifting the monopoly that prohibits interregional and NEWSCHINA I July 2014

china

bynumbers US$1.2bn interprovincial trade in salt, many posit that this “change” is meaningless and is simply intended to dampen criticism of the monopoly. Indeed, this ban was cited when in March, Taobao, China’s largest online retail platform, was ordered to de-list all table salt products, as these allegedly violated the ban on the trans-provincial salt trade.

Analysts claim that State-owned salt companies and salt affairs bureaus at the provincial level, which control 83 percent of all table salt sales, constitute a single special interest bloc with the CNSIC. Critics argue that rather than delegating power to lower levels, the authorities should aim to separate the operation of salt companies and the regulation of the salt supply, powers which currently rest in the same set of hands.

But with apparently contradictory messages originating from different agencies, many are concerned that the current “review” of the national salt strategy will meet a similar fate to other attempts in 2005, 2009 and 2011, when CNSIC lobbyists saw attempts to liberalize salt policy quashed at the central level.

Dong Zhihua, President of the China Salt Association (CSA) and former director of the CNSIC is reported to have earlier openly hailed the efforts of the CSA in suspending reform plans, actions which, in his words, “bought precious time for the salt sector.”

But given China’s economic slowdown, pressure is mounting to further liberalize the national economy in order to offset profit losses in the inefficient State sector. Some see opening salt up to market competition as a litmus test for the Party’s pledge to open up a wide range of monopoly industries and to create a consumer economy.

However, for many salt officials already smarting from widespread criticism, calls for further reform have salted their wounds. NEWSCHINA I July 2014

Net outbound FDI of Chinese financial institutions in Q1 2014, less than half the volume of the previous quarter.

Source: China State Administration of Foreign Exchange

Net FDI inflow and outflow of China’s financial institutions, US$bn 7.0

Outflow Inflow

5.6 4.2 2.8 1.4 0.0

QI 2012

US$19bn

China’s additional yuan supply in April – an eight-month low resulting from banks bulk-buying foreign exchange.

Forex purchasing per month, US$bn 80 70 60

Q2 2012

Q3 2012

Q4 2012

QI 2013

Q2 2013

Q3 2013

Q4 2013

QI 2014

#1

China replaced the US in terms of total power generation capacity by the end of 2013, with 31.6 percent of 12.5 trillion kilowatts coming from non-fossil fuels. Since 2011, China has generated more electricity than any other country on Earth.

Structure of China’s 5.35 trillion kwh power supply in 2013

50 40 30

Coal Hydro Nuclear Wind Others

20 10 0

09/2013 10/2013 11/2013 12/2013 01/2014 02/2014 03/2014 04/2014

Source: People’s Bank of China Source: China National Energy Administration

4.4 million

The number of Chinese migrant workers classed as “self-employed,” or 16.5 percent of the total 269 million migrant workforce in 2013.

What businesses are China’s self-employed migrant workers doing?

4.2%

Reduction in operations tax receipts from property companies in April, compared to a 5.5 percent increase in March.

Retail and wholesale Logistics Housekeeping and maintenance Manufacturing Hospitality Construction Other Source: China National Bureau of Statistics

Source: China Ministry of Finance

55

culture

Zhang Yimou Interview

Time to Come Home?

China’s best-known director on nostalgia, criticism and the future of China’s movie market

56

Photo by Yu Xing

By Ding Chenxin and Ma Haiyan

NEWSCHINA I July 2014

NEWSCHINA I July 2014

veered sharply towards the frosty.

Zhang’s most ambitious project since Hero, A Simple Noodle Story (2009), for example, a Chinese remake of the Coen Brothers’ classic Blood Simple, starring a mix of comedians and acting heavyweights and set in Tang Dynasty Shaanxi Province, earned 256 million yuan (US$41m) at the mainland box office, but was savaged by domestic critics.

Despite still being lauded in the State media, particularly after directing the acclaimed opening ceremonies of the 2008 Beijing Olympics, Zhang began to withdraw from public view. 2010’s Cultural Revolutionset romance Under the Hawthorn Tree was panned across the Chinese blogosphere as revisionist schmaltz, with Zhang accused of trying to sugarcoat one of the most agonizing events of living memory. Similarly, Christian Bale vehicle The Flowers of War (2011), set during the Rape of Nanking in 1937, was attacked for its focus on its A-list stars, and its perceived use of spectacle, sex and glamor to eclipse the realities of a genuine historical tragedy.

Now, with his latest work Coming Home, Zhang claims he is returning to art cinema after what most see as a 12-year hiatus. Adapted from writer Yan Geling’s 2011 bestseller The Criminal Lu Yanshi, Coming Home tells the life story of Lu (Chen Daoming), an intellectual born before the founding of the People’s Republic of China, and details his grueling experiences during decades of political upheaval, in particular the Cultural Revolution (1966-1976).

In adapting the original novel to the big screen, Zhang chose to focus on Lu’s “return home” to his amnesiac wife (Gong Li) in his later years, rather than emphasizing the book’s political content. Some observers are already claiming that this is another example of Zhang attempting to dodge political interpretations of his movies after To Live (1994), despite still being referred to as one of Zhang’s greatest works and a watershed in Chinese film history for its unflinching por-

Photo by CFP

I

n 1988, Zhang Yimou’s debut feature Red Sorghum won this unassuming then 38-year-old Chinese director a Golden Bear for Best Picture at the prestigious Berlin Film Festival. International fame ensued, and Zhang enjoyed follow-up hits with Ju Dou (1990), Raise the Red Lantern (1991), To Live (1994) and Not One Less (1999), all of which earned further plaudits from critics at home and abroad. The man who director Chen Kaige once described as “just my f*cking cameraman” became a household name.

In 2002, Zhang turned away from narrative-centric screenplays exploring contemporary and traditional Chinese cultural themes, and almost single-handedly revived the long dormant genre of the mainland Chinese blockbuster with his record-breaking martial arts epic Hero.

With a budget of 260 million yuan (US$30m), Hero secured 250 million yuan (US$29m) at the domestic box office, but was put firmly in the black after becoming the most successful Chinese-language mainland movie ever released on the international market, raking in US$177 million outside China (though it only secured a US release in 2004 through the intervention of director Quentin Tarantino).

Hero, the highest-grossing mainland film in Chinese history, accounted for half the total box office revenue of its home market in 2002. That year, Chinese movies earned a total of 500 million yuan (US$58m) at home.

In 2013, this figure had risen to 12.8 billion yuan (US$2bn).

While the multiplex is now making money for some Chinese directors, however, many believe that Chinese cinema, at least on the mainland, has been crippled by commercialism. Zhang knows better than most the sting of being called a sell-out – while Hero and follow-up epics House of Flying Daggers (2004) and Curse of the Golden Flower (2006) made Zhang a millionaire and brought his work to mainstream global attention, critical reception for his work, particularly at home,

Chen Daoming in Coming Home

“A good commercial movie is the hardest thing in the world to write well. A shallow popcorner is a breeze”

trayals of China’s chaotic 20th century, was banned by mainland censors.

In May, NewsChina caught up with Zhang just after a pre-screening of Coming Home to ask him for his insight into his own creative legacy, and where he sees himself in relation to China’s ever-expanding movie market.

NewsChina: How long did you spend preparing the screenplay for Coming Home?

Zhang Yimou: About two and a half years.

NC: Coming Home mainly focuses on what happens to the lead character and his family after the Cultural Revolution. Was this a deliberate attempt to avoid the period?

Zhang: There are two levels to the story.

One is what we called the “joys and sorrows, partings and reunions” of life. The other is the social and political realities of the time

57

culture

itself. I tried to avoid a straightforward portrayal [of the Cultural Revolution]. I didn’t want to make a meal [of Coming Home]. This is a virtue of Chinese esthetics, emphasizing blankness and simplicity over glitz. If an idea could be communicated in a single word, then don’t write it into a whole sentence. We have done that many times before. A story like Coming Home needs no flag-waving, no grand denouement.

It was extremely difficult to depict the Cultural Revolution with simplicity. It takes the utmost self-consciousness and confidence all the time. You need to fight the temptation to “get creative.” Sometimes, others say “Why not shoot it in this way? It’d look great and be more exciting.” Then you start thinking, “Should I? The last thing I shot like that was a hit!”

But I would insist, I’d say no. Or I’d even cut the scene in question just to end the argument. [As a director], you’ve always got to believe you’re making the right call.

NC: Did you know you were taking a risk with this new direction?

ZY: It’s very risky! I don’t think that other successful directors would dare to take such a risk. The simplicity, blankness and restraint I talked about were very difficult to maintain.

There was only a thin layer of paper between them and just being tasteless.

NC: What if your gamble doesn’t pay off?

What if audiences don’t like it? Will it influence your future direction?

ZY: It’s unlikely. I am also curious and looking forward to seeing what the audience reaction is! I’m just not that thin-skinned!

[Laughs] I wasn’t being experimental on set, I spend a lot of time thinking over how my works will be presented. There’s no need to “shoot from the hip.” Now the creative work has been done, and so it’s time just to put the finished piece out there and see what the response is like!

I believe that the “cake” of the Chinese movie market has been growing bigger and bigger, and the growth in negative criticism

58

reflects this. For audiences born after 2000, after 1990 and after 1980, esthetic criteria are completely different. Certain criticisms of the current trajectory of the Chinese movie market come not all from “old intellectuals” but from the young audience, a diverse demographic with a whole range of expectations. This makes me eager to hear what they have to say!

NC: If Coming Home were directed by a comparatively young and unknown director, it might then be seen as awards-fodder. Does your fame, and that of your stars, allow you to make both commercial and creatively daring films?

ZY: The conditions under which I work are inescapable. My “status” in the industry means that a movie directed by me and starring [Gong Li and Chen Daoming] will succeed so long as it isn’t over-invested. Yet my “daring” is maybe different from that of a younger director. I believe that my two leads did an amazing job, and that their performances in this story will inspire young people to ask their parents about the past, and thus learn more about history.

Zhang Yimou on the set of Coming Home

19-year-old Zhang Huiwen in a still from the film

NC: You have cooperated with Gong Li for decades. How did she feel about your new direction? Did it make her uncomfortable?

ZY: No, she was totally the same as she always is! First, she trusts my judgment.

Secondly, I didn’t get her too tied up in my own artistic considerations. For actors, there is simply too much to think about already.

We talked in detail about the characters and the development of their relationships, then we mainly stuck to concrete things, like basic blocking, and [Gong Li’s] talent did the rest.

Playing a role like Gong Li’s, especially in

the final act of the movie [in which she develops senile dementia], was very challenging. I think few actors could avoid becoming hammy – except her. She had to evolve with the progression of the character’s illness. Both she and Chen were amazing in this regard, they shored up the movie and realized my goal of restrained drama.

NC: From Red Sorghum to Hero and now Coming Home, you have changed style so much. What effect has this had on you, and NEWSCHINA I July 2014

Home sooner or later. I wasn’t proving anything. It’s just a part of me.

I was aware of the criticism of my commercial movies. I disappointed a lot of people with my choices, but I still think it’s necessary for [directors] to try their hand at commercial fare. We need practice, to improve our skills and capability. There is such a huge movie market in China, but if there are no good, capable, young Chinese directors, we will give the whole market away to Hollywood. I may not be young anymore, but I aspire to having a young mind, and will make commercial movies in the future. People have expected a lot of me in the past – not just of me, but of the future of commercial Chinese movies.

NC: But didn’t Hero bring change?

ZY: I certainly didn’t! I think Hero came out at a time of transformation for the Chinese movie market. We were going from a planned economy to a market economy. It was just beginning to change, and we were lucky enough to be there at the start.

Gong Li in Coming Home

the movie industry as a whole?

ZY: [laughs] Quite a lot of people divide my career into these three stages. But this wasn’t a deliberate choice. I had wanted to make a movie like Coming Home for a long time, though I didn’t tell anyone I was waiting for an opportunity.

My love for art cinema has never died - it has, I believe, grown stronger - but I have to walk on two legs, if I just keep hopping along on one leg, the other becomes atrophied. I knew I would make a movie like Coming NEWSCHINA I July 2014

NC: In 2006, when you directed Curse of the Golden Flower, you borrowed the story from Cao Yu’s 1930 play Thunderstorm. You said at the time this was because contemporary literature was “insufficient.” What would you say today?

ZY: It is still the same. Frankly speaking, stories I am interested in, which reflect my own feelings, like Coming Home, are few and far between. Now I’ve made Coming Home, there isn’t another one right there, waiting for me. I worry about this!

The market is developing so fast, and everyone is madly grabbing at resources. Good writers would be nabbed right out of school, but put straight to work on soap operas, or

commissioned to write another Lost in Thailand [a lowbrow box office smash in 2012].

This undue haste is spoiling things.

The phenomenon might last for years.

So my worry is deep in my heart – I had no more stories, what should I do? After watching Coming Home, some of my friends said to me, “It’s very good. You should shoot more movies like this.” But how? I can’t find more scripts!

NC: It seems that commercial movies have lower standards for screenwriting?

ZY: It’s worse for commercial movies. People all criticize us, saying our technical abilities are flawless but all our stories are sub-par.

I now know this isn’t a deliberate choice by directors. It’s still that the base is weak. Commercial movies typically allocate 60 percent of their running time to the “commercial;” action set-pieces, visual effects, beautiful people. That leaves us with 40 percent of our scenes to focus on storytelling and characterization. A good commercial movie is the hardest thing in the world to write well. A shallow popcorner is a breeze.

Hollywood is the same, isn’t it? This is a universal problem. There will be no sudden renaissance for directors until we have an inexhaustible wellspring of great screenplays.

NC: Your late teacher Wu Tianming once said that he wished that you and [former collaborator] Chen Kaige would one day again produce works like To Live and Farewell, My Concubine (1993). You also said that whenever you met, Wu barely mentioned your recent works. How do you feel about this?

ZY: I later said that I wholeheartedly believe that a lot of people share Wu’s wish including myself! I knew I would direct art movies again. I don’t know whether I can still reach that former height – the conditions and opportunities have to be right – but I hope. I would have liked Wu to have seen Coming Home, but it’s too late now. It’s not that I want to prove anything. It’s just that he might be happy and say, “You are still the same Zhang Yimou I knew.”

59

visual REPORT

Iron Ladies

60

NEWSCHINA I July 2014

T

he officers of the Chengdu Women’s SWAT Team in Sichuan Province are college graduates with an average age of 24. Founded in September, 2011, the team now has a total of 10 officers originating from the provinces of Sichuan, Anhui, Shandong and Hunan, all of them selected from the ranks of China’s national police force.

To become a qualified SWAT officer requires at least two years of professional year-round training, seven hours a day, including running 5 kilometers a day wearing bullet-proof armor wearing 10 kilograms.

Also on the curriculum are target practice, hand-to-hand combat, rockclimbing and abseiling. Around 80 percent of candidates ultimately qualify as SWAT officers.

Among them, there are demolition experts, champion swimmers, skilled drivers and even a hurdler, all skills seen as essential to China’s expanding counterterrorism and anti-riot squads.

NEWSCHINA I July 2014

61

OUTSIDEIN perspectives from within China

Tribal Taiwan

Drinking Wasps With the Chief One of the least populated areas of Taiwan, mountainous Maolin District is home mainly to aboriginal Taiwanese. A chance encounter leads our writer into a household he’ll never forget

By Frederick Green

How to get there: Maolin can be reached fairly easily from Kaohsiung – take a bus via Kaohsiung Transportation Company (www.ksbus.com.tw) to Liuguei, then transfer to the line headed for Dajin. From Pingtung, take the bus headed to Maolin – www.ptbus.com.tw Where to stay: Deen Gorge Guesthouse is a highly recommended guesthouse run by friendly hosts. It’s also a good place to camp for the complete Maolin experience.

62

NEWSCHINA I July 2014

I

t was a scene more befitting an Indiana Jones film than a Tues- The aromatic fumes and the fresh mountain air form an invigorating day evening in Taiwan’s Maolin scenic park. cocktail.

Dusty boar skulls line the walls, their teeth coated with a thin Waved a hearty goodbye by the shopkeeper, we head up the paved film of dirt. Large, curved swords sit proudly inside their display cases. road to a local walking route. The eerie silence of Kungadavane is But my eyes are drawn to the center of the room, where two beaded punctuated by victorious cries from groups of card game players situheaddresses, elegantly adorned with boar horns, glitter in the light ated in the narrow alleys, and the crack of a haphazard New Year’s from the bone chandelier. It’s not your average living room. firecracker. Down one road, I stop to ask to photograph an indigHours earlier, my trip to the scenic park in Pingtung County had enous family sat together. Burdened with a clumsy digital SLR, sweat seemed a lot more straightforward, but no less stunning. Verdant patches dotting my hiking gear, I’m acutely and embarrassingly aware mountains, their tops obscured by a thick mist, flanked my friend’s of my “anthropologist” look. The family politely decline, but offer car as he powered down the winding roads leading into the park. A me a taste of some local alcohol, a palatable, sugary concoction that sharply angled slope led to rocky outcrops on either side. A native of provides the final energy burst to reach the top of the hiking route. the area, my friend appeared to have chosen this inopportune moAnd it’s a view worth drinking for. Little houses, in a mix of soft palment to display his driving prowess, testing in equal measure my fear ettes, straddle the hilly landscape, tempting greater comparison with of heights and his dilapidated SUV’s sports mode. an Andean mountain village than an indigenous Taiwanese town. As Our first stop is accidental. we walk further down the route, Limbs still unsteady following a we come to a temple building, stomach-churning drive, we step surrounded by a slate wall, puncout into a camping area in a small tured by various square-shaped town in “Purple Butterfly Valholes. It was here that the Rukai ley,” looking to ask for directions. tribe would traditionally decapiStraight in front of the lawn lies tate their unfortunate adversara dry riverbed, snaking away into ies, and display their heads for the distance. Only when we apceremonial purposes. It’s a dark proach a nearby store do we noreminder of the less-than-savory tice the surrounding shrubbery is aspects of Taiwanese tribal history. festooned with butterflies, fanning We stumble back down the their wings, undeterred by human hilly walking path towards town. company. The town seems quiet, A pair of local children, keenly almost deserted – the only other thumping a football along the group on the lawn edge closer to cobbled route, freeze and gaze a nearby bush, brandishing an at us. After a moment, a young, unwieldy zoom lens, eager to capstrongly built man emerges from ture the perfect shot. Directions a nearby house. obtained, we need to continue on One of Maolin’s many tribal monuments “Hello, I am the tribal chief of our journey, but the valley would this place.” be highly recommended for an Never having encountered a overnight wintertime camp, when tribal chief, I am at a loss as to how the winged arthropods are at their most plentiful. to respond.

Stumbling out of the car once more, the fresh mountain air allows “H-Hi there. Thanks for having me.” me to regain my bearings. Before me lies the sleepy town of KungaOn hearing my grateful reply in broken Chinese, his stern expresdavane, an area well known for its cultivation and trade of coffee. sion transforms into a broad smile, and we swiftly enter into keen First introduced by the Japanese, and later inherited by the local in- conversation. Behind me, my friend is quickly surrounded by other digenous Rukai tribe, the high-altitude coffee culture of the town is members of the family, and handed a large baby, as if to try it out for a flourishing trade, and coffee is top of the menu. The nearest store size. A series of delighted smiles follow on almost every face, except for displays an eclectic variety of teapots, mugs and curiously high-quality that of the baby, whose eyes maintain an alarmed expression throughtaxidermy. The town, it seems, is strangely proficient in displaying de- out. My new friend grips my arm and pulls me into his home. Inside, ceased animals in creative ways. I sip my rich, borderline spicy coffee. his living room constitutes a small exhibition of deceased fauna and

NEWSCHINA I July 2014

63

travel

At first, the contents are slightly unclear. But as the alcohol settles, I (supposedly) the tools with which to hunt them.

“Oh, don’t worry, they’re only decorative, we don’t use them any- begin to notice the main ingredient. A pile of dead wasps, two inches thick, fills the bottom layer of the canismore.” ter. It’s a vicious concoction that makes I begin to feel more at ease. the notorious Chinese baijiu seem like “Now we’ve got a gun,” he adds, watered-down Smirnoff Ice. with a glint in his eye. “The police At the sight of expectant faces, I know about it. As long as they can see take a hearty gulp, a stray wing having we are indigenous, they don’t bother found its way into my cup. The taro is us. We made it ourselves, they know a more palatable treat, and I savor its we only use it to hunt.” salty goodness. As we refill our stomOur increasingly visceral conversaachs, the family is keen to relate their tion about the hunting process, inhistory. Proudly, they tell us of how cluding a detailed account of skinning, their ancestors rolled heaving boulders is abruptly brought to an end. The down the mountains to deter Japanese grandmother of the family, a burly lady colonists. It’s a story related in vivid in her eighties, stumbles into the house, detail, and plenty more follow. Somefiring off a tirade in Taiwanese. Some- Our writer (right) and a companion try on how, the tourist center just doesn’t do what unsteady on her feet, filled with a traditional local headgear it justice. merry mix of New Year cheer and local Equipped with a large bagful of taro liquor, she points in our direction. from our generous hosts, we head back towards our transport. An “She says she wants you to join her for a drink and some food.”

Stomachs aching from the earlier hike, we happily oblige. Tables evening haze has settled, and the prospect of taking a mountain road are swiftly set out outside, and a large bowlful of taro is prepared. The drive in feeble headlights is not an attractive one. But I’ll be sure to grandmother brings over a large, transparent canister and sets it in return. Maolin is a tranquil getaway – a place of rich scenery, history, and an even richer cup of coffee.  front of us.

real chinese

guī

mì

Guimi Bestie

Did you ever have a friend who would come into your room without knocking and help themselves to whatever was in the refrigerator?

In China, that friend would have been your guimi – “bestie,” a term used to describe female BFFs. With gui meaning “chamber” and mi meaning “honey,” guimi brings together sweetness and intimacy to describe the deepest kind of friendship between two women, in which everything is shared, from secrets to cosmetics.

Chinese psychologists studying the guimi phenomenon have attributed the often extreme level of intimacy in such relationships – which frequently exclude all other female friendships – to a higher preference for individual expression in a

64

safe, private environment. Typically, your guimi is the first friend to meet a romantic partner, and the first to find out when a relationship ends. A lack of directness in China’s high-context culture means many women depend on a guimi to tell them hard truths – something one is unlikely to hear from more casual friends, family members or colleagues. From body odor to weight problems to poor fashion choices – only one’s guimi can be relied on not to sugarcoat the facts.

Perhaps understandably, fallings-out are common between guimis, though more often than not these are quickly resolved, as interdependence often overrules hurt feelings. However, Chinese Internet bulletin boards are crammed with tragic tales of betrayal at the hands of a

guimi – indeed, many women seem to find this more distressing than the breakup of a relationship. A guimi who steals a partner, in particular, is singled out as the worst kind of back-stabber in many emotive posts. Such tales are typically accompanied by comments from readers that call one’s guimi one’s ultimate rival, as they know all the weaknesses in their bestie’s armor.

This phenomenon, seen by conservatives as a modern trend, has led some to encourage guimis to establish boundaries to prevent serious psychological trauma. Some Chinese women are even on the search for a “safer” male guimi, a trend that, if the bulletin boards are to be believed, has not found favor with a legion of insecure boyfriends.

NEWSCHINA I July 2014

flavor of the month

Courtly Chicken

By Sean Silbert

S

troll into any local Chinese takeaway and it’s a near guarantee they’ll have kung pao chicken on a long menu of deepfried, carmel-soaked pretensions to authenticity.

This dish, which perhaps has as many international variations as any single regional specialty, has been raised to a near mystic level in the Chinese culinary pantheon. Indeed, it is often among the first signatures of that great cuisine to be served to Americans abroad. Some even consider kung pao the litmus test of a chef’s ability to create real Chinese food.

Originally a Sichuanese recreation of a specialty from ethnically diverse and spice-loving Guizhou province, ask a Chinese chef – the type who actually grew up in China – to try a bite of the kung pao they’re serving at Panda Express, and at best you’ll get a grimace of confusion.

The gloopy, saccharine glaze coating strips of deep-fried chicken breast is completely unlike the piquant, toothsome sauce that drenches the diced chicken and peanuts that are the two signature ingredients of a classic kung pao. Even more damningly, the uniquely mouth-numbing aroma of Sichuan pepper, an essential component of the Chinese incarnation, is nowhere to be found.

For the better part of the twentieth century, Sichuan peppercorns (actually a citrus rather than a pepper) were banned from import to the United States out of fear they would spread a bacterial plant disease to native flora. Chefs made do without the signature tingling, numbing notes that define Sichuan cuisine on its home turf, and thus black Indian pepper, dried chili and even orange juice were employed in an attempt to recreate Sichuanese flavors in kung pao.

In China, gongbao jiding, as it’s called in Mandarin, can be found everywhere from fine dining establishments to worker’s canteens. It’s name stands out on the mainland, where many formerly poetically-named dishes had their pretensions erased since the Revolution, making menus read like ingredients lists. Kung pao chicken has the rare honor of having its origin NEWSCHINA I July 2014

story reflected in its now-restored appellation, adding further spice to its heady aroma.

All accounts of the antecedents of kung pao chicken involve the former governor of Sichuan, Ding Baozhen (1820-1886). Yet exactly what he has to do with the dish isn’t clear. Some say his private chef brought it over from the governor’s home province of Guizhou. Other stories claim the dish was invented as a result of the governor’s bad teeth – typically, chicken in China is served on-the-bone, but in kung pao it is only present in the form of succulent chunks of gristleless meat.

My personal favorite yarn explains how a young, relatively poor Ding was saved from drowning by a stranger. According to the story, Ding later rose high enough in the Qing government to earn the title of a palace protector, a gong bao. He returned to his rescuer’s house to show gratitude and was served a sumptuous meal: marinated chicken cubes fried golden brown alongside crimson chilies, crunchy peanuts, and tongue-tickling Sichuan peppercorns. The crunch of the nuts blended effortlessly with the savory-spicy glaze. Unsurprisingly, he instantly became this treat’s biggest evangelist. He was such a devoted fan it became part of his legacy: hence the name, gong bao (kung pao) Chicken.

Unfortunately, as with so many Chinese dishes, there’s just not enough information to really know for sure how or why they came to be.

What can be verified is that Ding was one hell of a governor. He transformed Sichuan by overseeing a dredging and damming project to control disastrous flooding and irrigate the countryside.

He fought corruption and smuggling. Ding also reformed the monopolized salt industry, a big moneymaker at the time. There’s a statue of him in the town of Dujiangyan commemorating his influence. The eponymous chicken dish, however, is the most enduring aspect of his legacy.

Yet that positive association became dangerous during the tumultuous Cultural Revolution. Being named for a feudalist bureaucrat

was a huge liability even for a food item during a time when anything associated with “old China” was taboo. Gongbao jiding became “flash-fried chicken cubes” or “chicken cubes with seared chilies” until political sensitivities relaxed in the 1980s.

Eternally popular at home, the dish also flourished abroad to the extent that many in today’s China still see it as a food suited to foreign palates. It doesn’t help that the recipe demands either chicken breast or boned chicken thigh – cuts of meat typically sneered at by old-fashioned Chinese gourmands who enjoy the crunch of bone at the center of cuts of poultry. Nevertheless, this dish is a sure thing in most casual dining joints, and is thus found on homestyle bistro menus from Inner Mongolia to the wilds of Yunnan.

Of course this means it has evolved. Travel around China and you’ll see plenty of variations on kung pao chicken. Sweeter, drier, spicier, even with unorthodox additions such as celery, cashew nuts and almonds.

While most Chinese would direct you to Sichuan for the most authentic incarnation, in Beijing the hands-down kung pao kings are the Emei Jiujia restaurant chain. Each plate served up at this eternally-popular family restaurant offers sweet morsels of chicken fried up with peanuts and ample notes of garlic, chili and ginger. The restaurant also offers a deluxe version incorporating the aforementioned almonds and cashews for an even more powerful crunch and a rich, sweet finish. Gong bao prawns and noodles are also available for those who want a walk on the wild side.

Wherever you choose to have your first kung pao, it’s likely to be eye-opening. After all, this is the one Chinese dish that truly can be said to have conquered the world. 

65

essay

The Feet of Empire

By Alec Ash

66

The man persisted in talking about England, but was put off by the reluctance of this foreigner to engage

Illustration by Liu Xiaochao

Five years ago, Alec, a 23-year-old student of Chinese at Beijing’s Tsinghua University, put his feet up on the train seat in front of him. The hard seat carriage was almost empty, and Alec was exhausted after a week’s traveling in southern China. So he peeled back a corner of the blue seat covering across from him, and plopped a worn pair of shoes on the wood below. It felt great.

The only problem was, the train wasn’t moving. An early snowfall had held it up on the outskirts of Zhengzhou, Henan, for the last eight hours. Daylight was disappearing, and Alec thought with irritation that he could be back in Beijing by now.

Despite the fresh snow outside, the inside of the carriage was stuffy. All the windows were locked shut, “for the passengers’ comfort and safety.” The carpeted floor was encrusted with seed shells, which made the carriage smell of cereal. And there were enough passengers to add the scent of body odor to whatever was wafting in from the toilets at either end. Everyone was getting restless.

Alec buried his head in a book, to avoid conversation. He could feel, in his peripheral vision, a Chinese man staring at him from the other end of the carriage. He risked a glance, and two things happened. First, Alec realized that the man had been waiting for eye contact as a pretext to get up and start a conversation with the foreigner. Second, the man did exactly that.

“Niiii haaow!” the man shouted, as if talking to a deaf two-year-old, then laughed loudly as if it were a wisecrack. He was bald, middle-aged and clearly a migrant worker, with crooked yellow teeth, knock-out bad breath, and lines on his forehead which crumpled when he spoke.

Alec wasn’t in the mood for conversation. He didn’t want to give this man a chance to sit opposite him, so he kept his feet up. The man batted at Alec’s shoes.

“Excuse me,” Alec said. “I’m reading a book.”

The man gasped theatrically. “You – can – speak – Chinese!”

Alec saw his error at once, and knew he was in for the long haul. The usual questions flew.

Where was he from? Did he like England more or China more? Did everyone own two cars in England? Does it snow in England too?

Alec’s answers were curt, and delivered with the defensiveness of someone whose Mandarin isn’t yet comfortable – not “Yes” but “Of course!”

He over-emphasized his tones. The man’s reaction was unvarying – “Your Chinese is so good!”

– yet he still spoke slowly, fearful of not being understood. Alec was irritated by the hollow compliment.

Everyone in the carriage was watching the conversation by now. The man persisted in talking about England, but was put off by the reluctance of this foreigner to engage. He was losing face in front of his friends, and beginning to look

like an idiot. He pulled out his trump card.

“England was a colonialist country. The English were colonialists.”

He looked back to check that the crowd had heard him, his remarks as much for them as for Alec. He had a point to prove now, and was no longer just killing time.

“You’re a colonialist!”

It was delivered more like a joke than an insult, the way you might rib a friend. Perhaps the man thought Alec wouldn’t understand the word, that he could make the joke at the foreigner’s expense without being caught.

But Alec had learnt zhiminzhe at his school just last month. He wasn’t offended. It was ridiculous and funny to be called a colonialist.

He could already picture how he would tell this story to his friends in Beijing. But he too had sensed the crowd forming, and wanted to show them that he did understand, that he could hold his own.

Mister, Alec started, mispronouncing the word. A colonialist? How silly. Colonialism was a system that existed in the British Empire during the 18th and 19th centuries – his new vocabulary was coming in useful – so how could he be a colonialist?

The crowd snickered, but the man started to point and shout. He accused England of invading America and India. He took Alec’s book and wrote, in the back, “Why do English jobless people come to make money in China?” Alec realized that he had been condescending, and that he was the pain in the ass, not this man. He could sense the crowd was against him now.

They must have been getting loud, because a train attendant arrived and led the man away. The train started moving again, and the situation was defused. But back in Beijing, Alec couldn’t stop thinking about it, and realized how obvious his privilege must have appeared to the man’s relative poverty. He never put his feet up on a train journey again. NEWSCHINA I July 2014

A Colorful Affair

By Kenneth Kagan

NEWSCHINA I July 2014

I paused to catch my breath and defog my visor. It’s only paint, I thought. But if I’m hurt, what then

Illustration by Liu Xiaochao

I started the game inspecting my gun. I’d seen one before, so I knew the general principles of how to shoot: pull the trigger, paintball goes out.

Paintball’s a game of speed and accuracy, not brains. But just to be completely clear, the skinny Chinese kid working the course tried his best to teach us how to use our weapons.

He pointed to the left side of the rifle. “No.” He gestured to the right side. “OK.” This was not helpful training. We already signed some sort of waiver, so if an acrylic projectile flying only slightly faster than I can see it injures me that became solely my problem.

Luckily enough, someone better at being bilingual in our party manages to decode his instructions. He was talking about the rifle safety. The rest of the rules made more sense: don’t take off your mask. Never shoot someone less than six meters away. And please, please, please do not shoot anyone outside of the arena.

He wore an ill-fitting worker’s smock already suffering a few neon battle wounds. I hope he wasn’t speaking from experience.

We were paintballing for a bachelor party, as it was the most masculine thing the lucky man could imagine that didn’t require later trips to prison or the hospital. For extra bravado, we were all issued army fatigues to protect our clothes. They stank of bleach. The camouflage worked well enough to disguise us from the opposite team, though. Since everybody wore the same uniform, there wasn’t any chance we knew who we were shooting at.

In case of saboteurs, the staff issued one team a bandana to wear above a heavy, fog-inducing visor. This became less useful in selecting teams, as everybody that looked like they would finish a triathlon without panting ended up on one side.

I was not on that team. Our group comforted ourselves claiming they would make bigger targets. You know, with all their huge muscles.

Now, paintball isn’t totally unknown in China. Hardly. The country loves its guns, a trend

fostered by mandatory rifle drills at college and a diet of endless WWII dramas and magazines like Tank and Armored Vehicle on local newsstands. The problem is nobody gets to have guns except for the military and special police. So what do the martial-minded distract themselves with? Video games, like the popular shooter Counter-Strike. And afterwards, there’s paintball – advertised as “Real-Person Counter-Strike” at the course.

The grounds, too, felt like a video game map.

I could have darted through the entire course in about five minutes if I avoided the defense pillars or trenches haphazardly criss-crossing the

place. Our team had to tag the bachelor before he could weasel his way out of the grounds. We set up encampments and made our battle plans.

It was war.

Then shots rang out. We got into action as soon as the sappy Chinese pop music began. I scored an early hit, firing at someone’s foot when they thought they were safe. Early encouragement turned me into a commando, throwing meaningless hand signals to my fellow soldiers.

I kept low, ducking behind an overturned table, and saw a figure carefully scurrying in one of the trenches. A hit! And a win, as we found out: It was the bachelor. Match, our team.

Our guns were shoddy enough to see the bullets volleying over towards our faces. The poppop-pop had my heart racing. I paused to catch my breath and defog my visor. It’s only paint, I thought. But if I’m hurt, what then? We’re miles away from any city in this village. I don’t want to attend some backwater clinic.

My mind raced as I cautiously hid behind a turret, waiting for a figure to come into view. Instead, I saw a dot fly through the air toward me.

My fingers stung. I was a casualty.

And it was over, for me at least. The course only allowed us 40 pellets, so there was no chance to run and gun. We could only extend the game by buying additional expensive paintballs. By the end, we were under siege, giving our extra ammunition to our comrades as we passed on to the other side of the fence. The dead and I watched my team mates fire indiscriminately and use up their ammo. The staffers rolled their eyes.

Afterwards, the four-hour bus ride home saw us comparing war stories. Both teams bragged about our hits while admiring the bucolic villages we passed through. This was much better than real war. The biggest wound was a bruise on one thigh – a good price for a few minutes of combat. That was pretty manly. We followed it up with a good dose of baijiu later.

67

Cultural listings Cinema

Outside the Comfort Zone Three weeks after its release, The Great Hypnotist, directed by Leste Chen from Taiwan and starring mainland actor Xu Zheng and Taiwanese singer-actress Karen Mok, has taken 250 million yuan (US$40m) at the box office. Dubbed “the Chinese Inception” by some, the movie tells a story involving several layers of hypnosis between a hypnotist (Xu) and his patient (Mok). Fast-paced, well-structured and reflective of some of the emotional perplexity of modern urbanites, the movie is seen as bringing the thriller movie, a genre with which Chinese directors and audiences are typically uncomfortable, to a new level of production and market appeal. A relatively new director, Leste Chen, 33, has directed nine features and a number of short films, and is seen as one of China’s few directors adept at making both commercial and independent movies.

Music

Book

A Long Way to Prominence

Our Generation: Faces of the Young

After winning the first season of The Voice of China, a reality talent show that premiered in July 2012, Liang Bo seemed to be slow to launch his career. After a nearly two-year absence from China’s music scene, this 23-yearold pop-rock singer-songwriter has only recently released his self-titled debut album.

While in the past two years, singing reality talent shows have competed fiercely with each other, Liang remained almost entirely out of the public eye, polishing his first batch of work, as his fans believed. Liang wrote all the songs and lyrics for the album, which was produced in the US. For many critics, this was evidence of Liang staying true to the pursuit of his own voice, the melodies ranging between rock and pop, and the lyrics reflective of Liang himself. However, many listeners have found little of note on the release in terms of its creativity, arrangement or production. Yet critics believe that given time, this young, persistent singer-songwriter might have a few surprises in store.

68

By Xiao Quan

Exhibition

Fresh-faced Heroes Xin Wangjun, born in 1983, is known for his performance art, particularly a piece for which he walked the streets wearing a suit made of Chinese banknotes, with shackles on his hands and neck. On May 4th, Youth Day in China, however, an exhibition of his paintings opened at Beijing’s Taihe Art Space. These paintings, all roughly the size of a palm, were careful pencil portraits of famous figures from the Republic of China era (1912-1949).

Influential in politics, art, literature, philosophy and other domains, the subjects of the portraits have left a great legacy to today’s Chinese society, though many of them were heavily criticized and attacked in the first three decades after the founding of the People’s Republic of China in 1949.

According to the exhibition’s academic advisor Li Xianting, a famous curator and promoter of China’s contemporary arts, these portraits are not only careful representations of their subjects, but also a reflection on the Chinese youth’s persistence in discovering the truth of history.

Photographer Xiao Quan has shot portraits of nearly all the key figures in today’s Chinese art and cultural scenes. These include director Zhang Yimou and Chen Kaige, rocker Cui Jian and director and actor Jiang Wen among many others.

Impressively, Xiao managed to shoot all of these people in their youth, and often before their ascension to celebrity. Xiao has even been called the best portrait photographer in China. Our Generation, an album of his portraits, was in fact first published in 1996, but soon sold out, resulting in a rapid rise in the prices of second-hand copies in the following years.

The re-publication of the album has excited many readers and critics. The photos in the book are accompanied by a text of some 100,000 Chinese characters, introducing the stories behind the images.

NEWSCHINA I July 2014

NEWSCHINA I July 2014

69

Commentary

Another Shot in the Arm Stimulus can be helpful, as long as it buys more than time

By Li Jia

I

n the aftermath of the global financial crisis, analysts have made a fortune simply by studying the lessons of the Great Depression of the 1930s. Perhaps one of the most interesting things that economic historians of the future will observe in our crisis is the changing perception of the word “stimulus” – from a noble contingency plan, to an imperfect but necessary rescue measure, before finally becoming something of a dirty word, at least among Chinese economic policymakers.

The 7.4 percent GDP growth in the first quarter of 2014 is the third-lowest quarterly figure since 1994, when GDP became a barometer of growth. Key indicators, including fixed asset investment, consumption and industrial output were all lower than expected in April. The market’s most optimistic forecast for 2014 is 7.5 percent, the same as the target set by the Chinese government. By contrast, estimated and real growth in China have both exceeded government targets for the past 20 years.

The continued ill-effects of the Great Recession, mainly the continued weakness of overseas markets, have combined unfavorably with the impacts of domestic policy, mainly tightening controls on property prices. More attention, however, has been focused on what analysts and policymakers have defined as fundamental, long-term “structural changes” in China’s economy. The Analysis on the Prospect of China’s Economy 2014 by the Chinese Academy of Social Sciences highlights the continued reduction of the working age population, the increasing role of the tertiary sector compared to the manufacturing sector, and poorer returns from heavier investment. Though more tertiary industry is desirable, the bulk of growth has been in low-end services which have only 70 percent of the labor productivity of manufacturing.

It is not controversial to say that structural reform, not stimulus, is the correct response to these structural challenges. A reform blueprint was set a few months ago so that industrial upgrading, development of the higher value-added service sector and well-functioning capital markets could improve labor and money efficiency, and peo-

70

ple’s livelihoods. However, it will take a long time for this plan to translate into enforceable policy, and even longer to implement said policies and see visible effects. The controversy is whether and how to alleviate “transitional pain” today while also facilitating, rather than derailing, reform.

Between April and May, a number of measures were unveiled to approach the dilemma from three fronts. Firstly, the government decided to sponsor mega projects, mainly railroads and the renovation of shanty towns. Secondly, market players – politically marginalized, but economically important – will be given special attention. This mainly includes longer, more extensive tax rebates for cottage industries, preferable treatment for rural financial institutions and easier access to capital markets for small and medium-sized enterprises (SMEs) with high growth potential. Thirdly, efforts are to be made to build a fairer, more efficient marketplace. An ongoing tax reform is expanded to benefit more service providers. The customs declaration process will be streamlined. Companies will not need approval from regulators to go public. Private investors are to be invited into restricted sectors, such as infrastructure, banking and healthcare. State-owned enterprises (SOEs) are ordered to turn over a higher share of their profits to the public coffers.

Analysts immediately labeled the measures a “micro-stimulus” package, compared with the much bigger one released in 2008 and the more direct “mini-stimulus” in 2012. Alarmed at being associated with the two previous quick-fixes, which left behind massive local government debt and overcapacity, the central government, via Stateowned Xinhua News Agency, swiftly dismissed any idea of “doping.”

Monetary easing has been explicitly prohibited. The new package was referred to as a “growth stability measure” by major official media.

A closer look at the new package reveals that measures with specific schedules are both expected to boost not only growth, but the reform agenda. Better transportation in China’s less developed mid-west, and better accommodation for low-income urbanites are expected to help narrow the growth and wealth gaps. The clarification that no adminisNEWSCHINA I July 2014

“Perhaps one of the most interesting things that economic historians of the future will observe in our crisis is the changing perception of the word ‘stimulus’”

trative approval is needed for private equity projects calmed regulatory uncertainty, providing an investment option other than property, wealth management products and stock markets, and more accessible funds for promising SMEs. Struggling cottage industries will have more chance of surviving and thriving. Support for service providers will boost a further shift towards tertiary industry in the economy.

Some of these measures should be made permanent and more inclusive. More cottage industries mean job opportunities for farmers on their doorstep. In the 1990s, these contributed greatly to China’s exports. Today they still have the potential to help ease the increasing pressure that China faces from low-cost developing countries.

Tax rebates for them are good, but should expand to all SMEs. In addition, the burden of non-tax fees, fines and costs for all businesses must be relaxed. For example, highway tolls must be reduced drastically and immediately.

Many measures are no more than reaffirmation of either what is already included in the reform agenda, or what has been urged by market analysts for years. One example is the plan to replace the approval system with registration for IPOs. After such protracted debate, the market needs much more than a vision. Substantial moves should be specified, such as the timetable and rules to be adjusted.

Though it will take time to implement, clear roadmaps and schedules help improve confidence now, paying dividends later.

Another measure that can be implemented immediately is to improve livelihoods and career prospects. People save money for their old age, healthcare, and their children’s education. Standards for pensions and publicly-funded healthcare payments should be increased for the main domestic consumers, including the rural and urban poor, and the middle income group. As only one-third of young migrant workers born after 1980 graduated high school, it is necessary to provide more skills-based training to migrant workNEWSCHINA I July 2014

ers. Better job prospects could not only prepare quality workers for an economy moving up the global value chain, but encourage them to consume.

Probably hardest to pull off but also the most crucial part is market access in restricted sectors. At a press conference in April dealing with the China Business Climate Survey Report, Timothy Stratford, former chairman of the American Chamber of Commerce in China, said that American companies would “flood in” once China’s high value-added service sector was opened further. This is also true for medium and large Chinese private companies, who have no lack of money, but often find themselves without new business opportunities.

Quick and substantial opening up of China’s markets is hardly possible in highly monopolized industries, such as energy and railway. Even if invited, private investors would still hesitate as much as they do now. However, it is feasible to do so in sectors where, despite limited market access, there is already increasingly fierce competition, sound regulatory framework, strong demand and the small but visible presence of private players. For example, five private banks have recently been granted licenses by the central government. Detailed implementation instructions to let more in should be given to local governments and regulators, at least in more developed coastal provinces where many private companies hold the financial resources, expertise and desire to try their hand. The same is true for healthcare, education and high-tech manufacturing.

Given the size of China’s economy and the desire for an injection of new blood, a slightly opened door and small, concrete actions on building a rules-based environment could make big changes. This is what today’s economic historians have found in the China story, and hopefully what their successors will find when looking back. (The author is lead writer and senior editor with NewsChina)

71

Commentary

Common political ground can be worth its weight in gold Despite an economic slowdown, the shared aspirations of the BRICS nations can ensure the bloc’s survival

By Pang Xun

I

n recent decades, the rise of the so-called BRICS countries – internally, the BRICS countries have a different view of how such Brazil, Russia, India, China and South Africa – has been seen a world would work. as having major implications for the future direction of the What is beyond question, however, is that all BRICS countries’ world economy. Observers argue that if the BRICS countries can respective governments are discontent with their current positions sustain an upward trajectory, they may be in the world financial pecking order, able to reshape the global economic order. and thus have the political will to colBut as growth has slowed across the board lectively push for change.

Past BRIC and BRICS in the last couple of years, this enthusiasm However, concrete political coopsummits have produced has ebbed, casting doubt on the future eration among these five countries a glut of rhetoric but few of BRICS, still referred to as “Golden remains a minefield. Past BRIC and specific initiatives, which is Bricks” in Chinese, as a trading bloc, with BRICS summits have produced a glut the very reason why many some even mooting an imminent parting of rhetoric but few specific initiatives, are pessimistic about the of ways. which is the very reason why many Such doubts are rooted in the presumpare pessimistic about the future of the future of the bloc tion that the BRICS countries are bonded bloc. Coordinated action and policy solely out of economic convenience. It igremain possible so long as all five nanores that fact that the BRICS countries tions maintain aspirations to work share a common desire for a rebalancing together, but more needs to happen. of international economic norms away from Europe and North One major sticking point is the discrepancy in size of the various America. This common interest alone will keep the BRICS togeth- BRICS economies. The disproportionate scale of China’s economy, er for the foreseeable future. for example, has been touted as a future source of disagreement When direct political dialog between Brazil, Russia, India and that could potentially lead to a breakup. However, China’s partners China was initiated by Russia in 2006, it was based on the concept are in something of a bind – currently, Beijing is by far the biggest that the four countries, as representatives of emerging economies, financial contributor to the bloc. Discontent with being marginalcould give a voice to a developing world underrepresented in major ized in the international institutions dominated by Western powers, international financial institutions.

China will endeavor to make its most currently serviceable multilatThe political side to this bloc was particularly noticeable when eral platform sustainable.

China invited South Africa to join the table in 2010, despite the As an economic bloc, the shine may have come off the BRICS. latter’s economy being dwarfed by the four other existing members. However, as a roundtable for the rising economies likely to shape Clearly, the BRICS wanted an African nation on-side. the 21st century, it will remain an influential political force. All five BRICS nations are major regional powers with a significant interest in serving as the building blocks of a “post-American” (The author is an associate professor of international relations at Tsingworld. Although it remains to be seen if such a world will come hua University, and the vice-director of the Carnegie–Tsinghua Center about, and if it does, whether these five nations will “lead” it, and, for Global Policy)

72

NEWSCHINA I July 2014

NEWSCHINA I July 2014

73

74

NEWSCHINA I July 2014