March 2014 by China Newsweek Corporation

Long Overdue: Labor Camps Dismantled

SOCIETY

Grave Shortfall: China's Arlington

SCIENCE

Vaccine Queen: Controversial Virologist

Can China curb the appetites of its carefully nurtured State-owned enterprises without getting scratched?

$4.99 www.newschinamag.com

Volume No. 067 March 2014

SPECIAL REPORT

EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian

A sustainable social security system should start with limiting government power

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 March 2014

s a result of demographic changes in recent not necessary, as it is a common practice for governyears, China’s aging population has posed a ment employees to enjoy a more generous pension in great challenge to the current social security many countries, including the developed world.” system, even as huge deficits have come to light in the This argument, stressing the common problems national pension fund. faced by global governments, intentionally ignores the Yet nobody seems able to agree on how reform distinctiveness and historical context of China’s penmight address these conjoined issues. sion fund, over which, along with the wider economy, Political conservatives, inthe government has a level of concluding government officials trol unmatched by governments in By advocating later and associated think tanks, the West. Not only can the central retirement and wary of dismantling the existgovernment levy heavy taxes at higher social security ing social security system, arwhim while creaming vast sums of payments, the gue that the solution is to raise revenue from State-owned enterthe retirement age along with prises, the One Child Policy also government is ignoring associated taxes. For liberals gives it a degree of control over recalls for transparency and reformists, however, the productive rights. and fairness. government needs to address Traditionally, Chinese people the issue of fairness and transhave relied on family members to parency before it slaps yet another charge on an already take care of the elderly, which, when everyone was free financially overburdened population. to have unlimited numbers of children, was largely A major criticism of the current social security sys- possible. When the government launched the One tem is that people have different entitlements based on Child Policy 30 years ago, it promised that the governtheir social status. For example, government employment would step in to care for the elderly, freeing an ees, who do not pay social security taxes, enjoy an 80 ever-shrinking pool of young people from a potentially percent pension upon retirement, twice that afforded crippling financial burden. Now, it appears as if the to private sector employees. As deficits in provincial government is attempting to wriggle out of this pledge. pension funds have begun to appear, it has been alMoreover, the wealth of China’s powerful Stateleged that private sector workers have been defrauded owned enterprises stems not only from their monopoin order to bankroll retired civil servants. ly powers, but also their being freed from responsibility In rural areas, the social security network becomes to provide for retired employees. even more problematic. Not only is coverage limited, The current pension fund, established in the 1990s, pension payments, which can be as low as 50 yuan currently has to pay for retirees regardless of their con(US$9) a month, are so meager that it would be im- tribution, and yet China’s social security repayments, possible for elderly people to feed themselves without along with payroll taxes, are among the highest in Asia. To address this discrepancy, the responsibility for makadditional help. The high-profile reform guidelines published in ing up a shortfall in the pension fund rests with those late 2013 were murky on the future direction of so- who squandered the missing funds – government ofcial security reform. According to the guidelines, the ficials – not the people who have lawfully paid their government will “research and draft policies to gradu- payroll taxes. On the surface, the debate over social security is an ally increase the retirement age.” An additional pledge “to promote reform of the social security system for economic one. Beneath the surface, it is a political degovernment employees” and “integrate the rural and bate over limiting government power. By advocating later retirement and higher social security payments, urban social security systems” was equally vague. The apparent indecisiveness of the central leader- the government is ignoring calls for transparency and ship in this regard has failed to calm debate. A recent fairness. As long as the government holds on to its revenue, editorial published by the State mouthpiece the People’s Daily argued that reform to equalize the pensions of there will be resistance to any attempt to claw more government employees with private sector workers “is back from its citizens. 

Contents

GROWING PAINS

P12

Editorial

politics

Cover Story

society

01 A sustainable social security system should start with limiting government power 10 Anti-Corruption Drive: Out of the Shadows

12 SOE Reform: The Firstborns/Back in Action/ Huang Yong:”Low Efficiency is the Biggest Insecurity”

25 28 30 33

Political Cartoonists: Solidarity Through Satire Chen Hualan: The Virus Maker Babaoshan Cemetery: At Capacity One Child Policy: At What Cost?

P64

P30 NEWSCHINA I March 2014

Photo by CFP

Can Beijing bring its spoiled children - State-owned enterprises - to heel?

Contents

P60

P36 36 The Beidahuang System: Reaping the Benefits

visual report

special report

outside in

40 Extralegal Detention: No Endgame/Pushing the Limits environment

46 Finless Porpoise: Only One Chance economy

48 52

Outsourcing Agriculture: Feeding Demand Alipay: Who Needs Banks?

HISTORY

54 The One Child Policy: One for All

60 Giving Birth at 60 64 67

Wild Litang: Pony Trekking Flavor of the Month: Night Nibbles

Commentary

P57 P48

72 Fracking changes everything 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 53 China by numbers 66 real chinese 68 ESSAY 70 CULTURAL LISTINGS

culture

57 Tianjin Grand Theatre: Private Performance NEWSCHINA I March 2014

NewsChina Chinese Edition

China Economic Weekly

January 6, 2014

December 27, 2013

Director Dilemma

Muddy Waters

Despite unbridled criticism of its “shallowness” and poor narrative, the new comedy Personal Tailor, directed by one-time master of the genre Feng Xiaogang, had earned over US$82 million at the box office by the end of 2013. Feng’s general popularity proved a major draw, and Personal Tailor’s liberal use of product placement and mass marketing also secured major profits. It might be good news for shareholders but not for movie critics, who have bemoaned China’s increasing dependence on marketing, not talent, to sell movies. Feng Xiaogang is a classic example, having abandoned his gritty dramas such as Back to 1942 and Assembly, both of which are generally viewed as flawed artistic gems, for the family-friendly fare which earned him his fame. Caixin December 30, 2013

Vaccine Crisis A total of seven Chinese infants allegedly died after receiving domestically-produced hepatitis B vaccines since December 2013, casting a shadow on all the country’s infant inoculation programs. A Chinese national is now required to be vaccinated against 15 infectious diseases, with hepatitis B on the list since 1992. Although the compulsory vaccination has helped reduce China’s population of juvenile hepatitis B carriers by an estimated 19 million between 1992 and 2010, the growing number of reported harmful side effects of the vaccine, which in most developed nations is only administered to adults, has led to reluctance to participate among parents. Experts have attributed this crisis of confidence in well-documented poor quality control procedures and outdated manufacturing technology, blaming State monopolies for China’s laggard development of vaccines. Calls are now growing to introduce a third party into the supervision process, as well as to open the market to private and foreign competitors.

Despite millions of yuan in government investment, formerly scenic Taihu Lake in the Yangtze River Delta has remained heavily polluted since 2007 when the river was hit by a bloom of blue algae. The major source of the pollution is a mixture of fertilizer residue, livestock effluent and human waste from riverside communities which, due to their small scale, generally are not covered by national environmental protection regulations. Local governments have also complained that they are unable to afford the installation of unified pollution control systems for all communities, instead arguing for mechanized agriculture and organic farming as a solution to the problem. However, farmers have opposed this tack, as few could afford the associated costs. All eyes are now on the central government to rebalance China’s outmoded agriculture.

Oriental Outlook January 8, 2014

Salt Spat China’s food safety risk assessment lab recently published a report on dietary iodine intake in the international magazine Nutrition, concluding that the Chinese people should continue to eat iodized salt as part of a national policy implemented since 1994 after widespread iodine deficiencies were discovered throughout the general population, a problem criticized at the time by the UN and the WHO. The report came as part of a government investigation which sought to debunk claims that Chinese people were consuming excessive amounts of iodine as a result of the policy. Despite a rise in reported numbers of thyroidrelated diseases, often blamed on excessive iodine consumption, policy supporters argued that there is no strong medical evidence connecting iodine to thyroid complaints. While the iodine content of salt has been moderated and there is a certain degree of flexibility in the implementation of the policy, the government has stood by the State salt monopolies, and refused to roll it back entirely.

Southern Metropolis Weekly January 2, 2014

Moving in Circles Many Chinese people, young or old, are now keen to join various “circles,” online groups whose members share the same background, the same interest or the same values. Though born online, these organizations frequently meet in the real world, usually for dinners or tea parties. Sociologists point to a need to establish an identity in an increasingly faceless China, as well as the age-old need of the Chinese to establish “connections,” and form elite groups, such as golf circles for businesspeople. Nevertheless, the advent of “circles” has shaken China’s traditionally dominant family unit and offered strangers a chance to meet and connect – not to mention broadened the national dating pool. NEWSCHINA I March 2014

“Smog makes the Chinese people more equal, more unified and more humorous.”

“I like being an oddball, but I do not like to talk big to impress people. Don’t take this as a joke.” Chinese recycling magnate Chen Guangbiao during his ultimately unsuccessful bid to blow his fortune by buying the New York Times.

“I hardly read anything in 2013.” Nobel Prize for Literature laureate Mo Yan explaining how his win has kept him at public events and away from his books.

“Riches are snatched from risk. Most successful entrepreneurs are on the verge of insanity.” China’s richest man Wang Jianlin on the secret to his success.

“No one can keep the Chinese auntie from dancing.” Phoenix Satellite Television on the appearance of Chinese line dancing clubs for retirees, popular in China for decades, in the public squares of Europe.

NEWSCHINA I March 2014

Illustration by Wu Shangwen

China Central Television (CCTV) attempting to satirize the country’s worsening air pollution problem.

“It’s common sense that it is not easy to be a government employee. Why the fuss?” Critic Qian Yu on complaints from civil servants that the anti-corruption drive has further tightened their meager wages. “I believe the‘Chinese dream’is for every Chinese person to realize his or her own dream. I believe the culmination of over 30 years of reform is that the Chinese people no longer share the same dream.” Writer Yi Zhongtian offering a different take on the central government’s favorite buzzword. “Without supervision, and used to getting their own way, the heads of State-owned enterprises style themselves‘emperor.’” People’s Daily commentator Xie Qidong on the prosecution of some 20 heads of State companies in 2013. “My wife and I lived in hiding. I never met my children’s teachers, and they never knew my name. I had to keep a distance of 200 meters from my children when in public. My mistake has cast a shadow over their childhood.” Director Zhang Yimou after admitting to multiple violations of China’s One Child Policy resulting in fines of over one million US dollars. 5

Top Story

Games Console Ban Lifted

China’s State Council announced January 6 that foreign-funded enterprises are now allowed to produce and sell video game consoles in the Shanghai Free Trade Zone, marking the country’s formal lifting of a 13-year ban on the devices. Enthusiasm for video games among Chinese consumers began at the end of the 1980s when Nintendo’s globally-popular Famicom console entered the Chinese market. This new form of

entertainment soon had Chinese gamers hooked, with numerous domestic copycats of next-generation handheld consoles like Nintendo’s Game Boy quickly becoming a common fixture in Chinese homes. Gaming fever reached its peak when video arcades sprang up on streets nationwide, leading critics to call video games an “electronic heroin,” and call for controls on the “rampant” market which had “infatuated” a growing number of young people. In June 2000, just three months after the launch of Sony’s PlayStation 2, the Chinese government issued a ban on the sale of games consoles, and ordered a crackdown on amusement arcades, many of which, it alleged, were operating illegally. Some analysts believed that the recently loosened restrictions will re-open a “gold mine” for global video game giants like Sony, Nintendo and Microsoft. Others, however, are not so optimistic. Industry insiders told the media that the 2000 ban did not actually cover home-use consoles, while the true barriers preventing foreign manufacturers from dominating the Chinese market are the pirated and the smuggled games that have flooded the Chinese market in the wake of the ban. Aside from price and language, analysts believe that China’s censorship of imported games will ensure that pirated and smuggled games remain dominant. Since the Ministry of Culture would censor or ban games it deems unsuitable for mainland audiences (most likely violent or explicit games), many Chinese gamers have said they would rather turn to piracy than play an “emasculated” version of a game.

People

Loss of a Legend The Hong Kong film and TV mogul Sir Run Run Shaw passed away on January 7, 2014 at his home in Hong Kong. He was 107 years old. Born in 1907 in southern China’s Zhejiang Province, Shaw began his career in the film business with Shaw Brothers Studio, which he set up in the late 1950s after moving to Hong Kong. Despite the popularity of Western movies in Hong Kong at the time, Shaw Brothers made an array of films with distinctly Chinese themes, many of which featured kung fu, and made a significant impact on the Asian and Hollywood markets. When his movie studios began to decline,

Shaw shifted his focus to the TV industry. He co-founded Television Broadcasts Limited in 1967 and built it into the world’s largest producer of Chinese-language programming, paving the way for a great many international stars like Chow Yun-fat and Maggie Cheung. Shaw also earned a reputation as a philanthropist with his donations to education and scientific development both in Hong Kong and on the mainland. He created the Shaw Prize in 2003, granting US$1 million per winner every year for excellence in the fields of mathematics, life sciences, medicine and astronomy. NEWSCHINA I March 2014

International

Society

The Chinese police recently conducted a large-scale raid on the village of Boshe in Guangdong Province, which had been engaged in the production of illegal drugs since the early 2000s. The operation began at dawn on December 29, 2013 with a police-led force comprising 109 teams from the army, navy and air force storming

77 drug production centers in the village. A total of 18 criminal groups were detained, including several hundred suspects. The police also confiscated 2.9 tons of methamphetamine (commonly known as “crystal meth”), 260 kilograms of ketamine, over 100 tons of drug-making materials and a number of weapons. According to media reports, the crackdown centered on the Party secretary of the village Cai Dongjia, who allegedly not only manufactured drugs himself but also served as a protective umbrella for the drug production industry in his village. Media said nearly all of the 14,000 villagers, including children, were making a living from the drug business.

Despite being the world’s second biggest economy, China ranks a disappointing 87th in environmental competitiveness worldwide, according to the latest annual report on global environmental competitiveness issued by the Chinese Academy of Social Sciences on January 6. The report weighed the competitiveness of 133 countries on indices including environmental resources, environmental load capacity, pollution control and management, with Switzerland, Germany and Norway ranking in the top three. According to the report, China ranked next-to-last in air quality, a worsening problem that has worried the whole country. Han Jun, vice-director of the Development Research Center of the State Council warned at the press release conference that few large Chinese cities are up to WHO’s standards of air quality, exclaiming that “it is of great urgency” for the country to abandon its outdated economic development model. 17 out of the top 30 nations are developed countries, with the US and the UK listed 26th and ninth respectively.

Politics

Electoral Bribery in Hunan Over 500 deputies to the municipal people’s congress, the local legislature of Hengyang, Hunan Province, were recently exposed to have been involved in electoral bribery. According to Xinhua News Agency, the municipal legislature held a plenary meeting to elect provincial lawmakers from December 28, 2012 to January 3, 2013, during which 56 elected provincial deputies were found to have bought the votes of 518 municipal deputies and another 68 staff, with the money involved amounting to 110 million yuan (US$18m). Launched after a public complaint, the prelimi-

nary investigation lasted around one year, with the 56 vote-buying deputies disqualified at a plenary meeting of Hunan’s provincial people’s congress held on December 28, 2013. The municipal legislature has also accepted the resignations of the 512 deputies who took bribes. The case is now under further criminal investigation. Media reports warned that China’s legislative elections, due to a lack of supervision, have become a tool for furthering personal interests. They revealed that private businesspeople, who can benefit greatly from a government sinecure, now have too large a presence in legislative bodies.

Economy

Chinese Cities Earn Trillions by Selling Land

Land Transfer Fees: 2013 vs. 2012 (in US$bn)

China Index Academy, China’s biggest real estate research organization, revealed in early January that 300 Chinese cities had earned more than three trillion yuan (US$522bn) by selling land use rights in 2013, the main revenue source of most local governments, with the top 20 cities, mostly in eastern China, accounting for half of the total. Shanghai topped the list with land transfer income exceeding 220 billion yuan (US$37bn), over 128 percent higher than 2012. Beijing follows Shanghai with over 180 billion (US$30bn) in land sales, over 180 percent higher than 2012. Shenzhen, though kept out of the top 10 list, took the crown for annual growth, with over 330 percent more than 2012. Analysts believe that unless the central government provides more low-cost or low-rent apartments for ordinary people, especially in big cities, rocketing land prices will further raise China’s already high house prices.

600

NEWSCHINA I March 2014

40 35

500

400

25 20

300

Shenzhen

Beijing

10 Shanghai

Nationwide

100

Guangzhou

200

Photo Credit: Top, IC; Society, IC and CFP

China Ranks 87th in Environment

Drug Village Stormed

Angry

Poll the People

A policeman pulled his gun to dissuade villagers from stealing oranges that had spilled onto the highway from an overturned truck early January in Lanzhou, Gansu Province. Police attempted to maintain order as dozens of locals scrambled to gather the fruit. The total value of the oranges was estimated to be more than 200,000 yuan ($33,040).

Shocking

China plans to adopt a tiered pricing system based on monthly water consumption by 2015 to prevent water wastage. What do you think? Acceptable. But I hope the price of the lowest tier is reasonable. 35.87% 1,069 Acceptable. It could help prevent water waste. 31.74% 946 Not acceptable. It will cost me more. 30.6% 912

Amusing

None of the above. 1.78% 53 Source: www.weibo.com

Most Circulated Post Retweeted: 108,444

A six-year-old boy in Chongqing sustained only minor injuries after jumping from the window of his family’s six-floor apartment while imitating the Japanese cartoon superhero Ultraman – the boy was lucky enough to land on a plastic roof below the window, saving his life.

Wang Xun, an archeologist with Peking University, arranged the bones of a roast chicken in the shape of a human skeleton after he finished a meal in the school’s dining hall. Netizens quipped that Wang had archeology in his bones.

Bewildering A 74-year-old man surnamed Xie from Shenyang, Liaoning Province was duped out of 420,000 yuan (US$69,342), despite bank employees’ efforts to dissuade him. After trying to stop the man from wiring money to the account of a stranger under instructions he was receiving by cell phone, a common trick of fraudsters, staff locked Xie inside the bank and called the police to prevent him from sending the money through other banks. However, they could not stop him from making the transaction, which totaled 400,000 yuan (US$66,060) at another bank. It was only a day later that Xie realized that he had been cheated.

After Hong Kong entertainment mogul Run Run Shaw passed away early January, a map showing the more than 30,000 libraries and school buildings he donated to the Chinese mainland went viral online. NEWSCHINA I March 2014

WHO’S

Top Five Search Queries On

HOT? WHO’S NOT?

over the week ending January 15 Alipay leak 178,455 A staff member at Alipay, China largest third-party payment service, was detained for selling the account information of 30,000 users. 12306 breakdown 90,964 12306.cn, the train ticket booking website of the State railway system, broke down constantly over the Chinese New Year rush. Bai Zhongren 68,374 The president of China Railway Group, a State-owned engineering giant behind many of the country’s largest railway projects jumped to his death early January – the reason for his suicide is still unclear.

Crawling Professor

Xi Jinping’s Office 61,149 The president’s New Year speech was broadcast live, displaying his office, including two red phones connected via a secure and encrypted communications system and exclusive to senior leaders, as well as pictures of his family.

Top Blogger Profile Joe Wong Followers: 687,792

44-year-old Joe Wong is a ChineseAmerican comedian and a former chemical engineer. After building his name in the US by appearing on The Late Show with David Letterman and at the annual Radio and Television Correspondents’ Association dinner, Wong returned to China to host his own talk show program on State broadcaster CCTV. His show is now one of the most popular in China. NEWSCHINA I March 2014

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

Snow Dragon 68,285 The Chinese research ship broke free from ice after getting stuck while rescuing Russian ship passengers around the Antarctic.

Fan Zhongxin, a professor with Hangzhou Normal University, crawled on his belly for a distance of one kilometer as he had pledged to do if the central government failed to order public servants to publicize their assets before the end of 2013.

IOU Diner A village head from Ji’nan, Shandong Province claimed 89,174 yuan (US$14,740) worth of free meals at a local restaurant over the period from 2005 to 2011, eventually forcing the proprietor into bankruptcy.

Scholar Monks Longquansi Temple in northwest Beijing is staffed with a few top scientists, including a former biophysics PhD from the China Academy of Sciences, a former nuclear physicist from the Tsinghua University and a preeminent mathematician from Peking University.

Moralist Educator A middle school in Hohhot, Inner Mongolia divided its dining hall into two zones to prevent couples from feeding each other.

politics

Anti-Corruption Drive

Out of the Shadows With a new website and transparency pledge, the Party’s Central Commission for Discipline Inspection might just be growing teeth

Photo by Xinhua

By Wang Quanbao

Wang Qishan inspects the new CCID website, September 2, 2013

ince assuming power, China’s new leadership has made fighting allpervasive corruption within the Party the administration’s primary focus, openly acknowledging that the problem is so severe it threatens the Party itself. Promising to “place power in the cage of regulation” in early 2013, the leadership released various decrees to curb the extravagant government spending, but has also launched crackdowns on both “tigers and flies” – namely, both minor and top-level cadres. A total of 19 ministerial-level senior officials have either been punished or have fallen under investigation, almost five times the number in 2012. During the high-profile anti-graft drive, which received wall-to-wall coverage in the State media, Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC) has taken center stage. According the CCDI, more than 180,000 party cadres were punished for “violating relevant regulations” by the CCDI and its local

branches in 2013. In a Party meeting held earlier in 2013, Wang Qishan, one of the seven members of the Standing Committee of the Politburo and head of the CCDI, vowed that the Party will not only focus on “addressing the symptoms,” but will also strive to establish an effective, long-term anti-corruption mechanism. As the new leadership saw out its first year in power, many hoped that the newly beefedup CCDI would take a similar role as that of Hong Kong’s Independent Commission Against Corruption (ICAC). However, unlike the ICAC, the CCDI remains answerable to the Party’s top leaders.

Internet Power

Many political pundits within China argue that the problem inherent in the country’s anti-corruption institutions is that their resources are scattered and lack an integrated system, a problem which Wang Qishan and the CCDI have pledged to address.

In early September, the CCDI launched its new website - www.ccdi.gov.cn - which incorporates five existing websites under different anti-graft agencies, including the CCDI, the Ministry of Supervision and the National Bureau of Corruption Prevention. A key function of the new website is to act as a center for both reporting on corruption and carrying official statements on the officials being investigated. On September 2, the date of its unveiling, Cui Shaopeng, secretary general of the CCDI pledged that every report filed through the website “will be taken seriously.” “Each case will have a unique case number, allowing the person who filed it to check its progress,” Cui said in an official webcast. He also pledged that the agency would “protect online whistleblowers from retribution and attacks.” Within one month, the website had attracted more than 30 million visitors, a figure unparalleled by websites belonging to any other government agency, though far behind even the daily numbers of visitors to China’s leading microblog platforms. During the same period of time, about 24,800 reports were filed through the website, more than 800 a day. Although it remains unclear whether any of these reports will result in actual disciplinary action, the CCDI is certainly going to great lengths to prove its commitment to fight corruption. “In the past, anti-corruption campaigns are more like temporary and reactionary measures,” Professor Ma Huaide, vice-director of the China University of Political Science and Law, told NewsChina. “Now, they have become more proactive and systematic.” In recent months, whistleblowers using China’s social media have directly secured the NEWSCHINA I March 2014

punishment of a number of high-level officials. Liu Tienan, former deputy head of the National Development and Reform Commission (NDRC), China’s top macroeconomic agency and one of the wealthiest branches of the government, was investigated after a journalist disclosed allegations of embezzlement on Weibo, China’ leading microblog platform. In early 2013, Yi Junqing, head of the Central Compilation and Translation Bureau, was removed after a woman who claimed to be his mistress posted a 120,000-word diary documenting her 17 sexual encounters with him. In another case, Yang Dacai, former head of Shaanxi provincial work safety administration, was sentenced to 14 years in prison for taking bribes. His corruption was exposed after netizens posted a photograph of him smiling at the scene of a fatal road accident, followed by a viral series of photos showing him wearing various luxury watches. The fact that these cases were exposed by private citizens acting under their own initiative has put the government on the defensive, embarrassing officials and making the CCDI in particular appear not fit for purpose. With its own answer to Weibo, the CCDI is hoping to steal some of its thunder. By providing an online platform to allow for a certain degree of Party-approved online whistleblowing, an option seen as far preferable to leaving China’s hyperactive social media loose, the CCDI is seeking to minimize embarrassment caused to the Party and the government by the routine exposure of official misconduct by ordinary members of the public. To increase the platform’s scope, Cui Shaopeng, the CCDI’s secretary general, said in an online interview that the CCDI will open an official microblog account as well as a Wechat profile “when the situation is ripe.”

Transparency

The recent measures taken by the CCDI, while par for the course in Europe and America, are quite unusual in China. The CCDI is one of the most mysterious of the Chinese government’s famously opaque organs of state. Besides its existence and its leaders, the public knows little about it. “Established when the Communist Party was still an underground party, the CCDI has maintained its mysterious working style, which makes it more like a secret agency,” Li NEWSCHINA I March 2014

Yongzhong, vice-director of the China Discipline Inspection and Supervision Institute told NewsChina. Li said that when he was recruited by the CCDI in the 1990s, he could not even find his office as the building was not marked by any sign to indicate its purpose. On its new website, the CCDI has revealed what it claims to be its institutional structure to the public for the first time. To make this platform more credible, the CCDI has also made efforts to increase “interaction” with the public. 15 CCDI officials participated in carefully vetted online question and answer sessions in the website’s forums in the first two months after its launch. The agency and its local branches in various cities have even launched “open days” to allow experts and ordinary citizens to visit. If its own pronouncements are to be believed, the new website is only the first step in the CCDI’s plan to overhaul how the Party regulates the behavior of its members. According to keynote documents released after the Party’s Third Plenum held in November 2013, the CCDI will send supervisory teams into all central Party and government agencies. In the meantime, rotating inspection mechanisms will be established at both central and provincial level to “cover all local governments and State-owned enterprises.” The CCDI is expected to obtain the power to nominate and appoint local disciplinary officials from provincial Party committees to prevent local officials from turning a blind eye to the misdemeanors of their peers. On December 25, 2013, the Party released its five-year plan on “the establishment of a comprehensive system of preventing and punishing corruption,” which promised to “promote the institutional and procedural establishment.” Analysts believe that China’s new leadership is aiming to concentrate anti-corruption powers within the hands of the CCDI through both vertical and horizontal integration. Most importantly, the message has clearly been sent that the CCDI can no longer operate entirely in the shadows.

‘Double Designations’

According to Professor Jiang Ming’an from Peking University, a senior consultant of the Supreme People’s Procuratorate (SPP), China’s top prosecuting agency charged with

determining which cases go to trial, the SPP is coordinating with the CCDI to streamline their working procedures and establish an integrated procedure for investigating fallen officials, which would minimize the use of the controversial practice of shuanggui. Literally meaning “double designations,” shuanggui is the covert and confidential interrogation of suspect cadres at an undisclosed location, out of sight of regular law enforcement or legal representatives. The practice has long been under criticism. It deprives fallen officials of legal rights, and several deaths have occurred during interrogations. However, many ordinary citizens are more concerned that its secretive nature allows officials to escape punishment. Anti-graft experts see the government’s discomfort with openness as the primary reason for the general public perception of all anticorruption drives as smoke and mirrors. As the authorities often announce that an official has fallen under investigation weeks or even months after the same official has been detained, backroom dealings and bargaining are, for observers, a foregone conclusion. According to Professor Jiang, in the future, investigations into officials will have to be conducted by the procuratorate and in accordance with legal procedures, with the shuanggui system confined only to “extremely complicated cases.” Starting late 2013, the CCDI announced the fall of more than 20 senior officials via its website. Most of these were handed over to law enforcement, rather than inner-Party agencies. The exceptions were four ministerial-level officials, including Li Dongsheng, vice-minister of the Ministry of Public Security, and Yang Gang, deputy director of the committee for economic affairs at the nation’s top political advisory body, the Chinese People’s Political Consultative Committee, who were reported to be “under the Party’s investigation for suspected serious law and discipline violations.” According to Professor Ma Huaide, these recent moves, though limited in scope, mark a new phase in the current anti-corruption campaign. “It shows that the Party has started to take a strategic and systematic approach towards curbing corruption,” he continued. “This thinking will underline the country’s anti-corruption efforts in the next five years.”

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Workers from a subsidiary of Sinopec survey an oil well in Henan Province, central China, December 7, 2012

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SOE Reform

The Firstborns

Growing up has never been easy for Chinese State-owned enterprises, the “children of the government” By Li Jia

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Photo by IC

ife seldom goes as planned – but for decades, this was not true for staff at State-owned enterprises in China. In 1980, Li, at the age of 18, entered a Beijing-based State-owned optical instrument factory. For 10 years, he worked alongside his parents, married a colleague, and enjoyed free, albeit low quality, housing and health care. “Everyone was poor, but no-one had anything to worry about. I still feel nostalgic for that simple life,” he told NewsChina. This simplicity disappeared along with the planned economy itself. The factory began to falter in the late 1980s, and Li became a self-employed taxi driver in 1992 but kept his position at the SOE, unpaid. Three years later, another SOE acquired his factory and asked him to go back. He refused, and had to give up his status as an SOE employee, something that had symbolized a stable life, welfare and dignity. “The salary they offered was just one-tenth of what I earned driving a taxi, and was not enough to support my family,” he said. Tens of millions of SOE staff lost their jobs in the following years. If Li experienced the decline of SOEs, then Yin participated in their resurgence. After graduating from college, he joined a logistics SOE under the central government in 2000 when SOEs began to get back on their feet, participated in its Hong Kong IPO, and

witnessed the rapid rise of SOE power on the market. He provided consultancy services on business strategy for a number of SOE giants for two years. At the end of 2013, at the age of 34 he quit his job as a senior manager with a construction SOE. He was disappointed to have found little improvement on the part of SOEs in reducing bureaucracy even years after they were supposedly rebuilt according to the standards of modern companies. He planned to follow his friends’ advice and go to the prosperous coastal southeastern area to feel the “entrepreneurial atmosphere” there, he told NewsChina. While he chose to leave, numerous young college graduates are now competing relentlessly for jobs at SOEs. Their stories reflect the ebb and flow of China’s SOEs over the past half-century. However, something that has never changed is that SOE reforms have always been a crucial part of the evolution of China’s market economy.

Treated as Adults

SOEs have long been described as the “children of the State” in China, more beloved than private companies – the State’s “adopted” children. There were 49,600 SOEs in 1957 and 83,700 in 1978. They had their own children, and even grandchildren. In this large extended family the central government played

the role of a loving mother, nursing them from cradle to grave, while simultaneously playing the bossy father dictating everything to the finest detail. However, the “children” were unhappy about this arrangement. In 1984, 55 factory directors in Fujian Province in the southeast petitioned, in an open letter to the provincial government, for a “relaxation of the constraints” depriving them of managerial autonomy. As one of them later complained to media, they needed approval from the government even for a plan to build staff bathrooms. The State was not a happy parent, either, as it found that its children had no incentive or pressure to improve their performance. After all the previous efforts of devolution of power of managing SOEs from the central government to the local level between 1957 and 1978 led to chaos, the central government shifted to give more power directly to SOEs. The Communist Party Central Committee resolution on systemic economic reform in 1984 identified the enterprises’ autonomy as the “vital issue” to be addressed if SOEs were ever to get motivated. For the first time, it vowed to practice the separation of ownership from managerial power, the core principal of modern corporate governance, to guarantee both the owners’ interests and managerial autonomy. From 1979 to the early 1990s, the central government stepped up such efforts. In the beginning, SOEs were allowed to keep a certain share of their increased profits brought about through improving efficiency. The policy was replaced by a corporate tax in 1983. The fashion in the following years till early 1990 was a contract-responsibility system which was copied from rural reform. Contractors, in most cases SOE officials or workers, gave a certain amount of revenue to the government and kept the rest. In this way, factory directors, or managers, whatever they were called, got much more power than their counterparts in developed markets. These frequent changes only proved that no policy worked for very long. Star contractors rose and fell in the blink of an eye. Between 1978 and 1990, SOEs’ losses grew much faster than their profits. The total loss in 1990 was more than eight times as much as that in 1978, while pre-tax profit less than doubled, according to the National Bureau of Statistics (NBS). Worse still, too much power vested in managers also resulted in severe corruption and unfair treatment of workers.

A Smaller Family

The State was displeased to see its defiant children doing such a bad job. After tests on managerial autonomy failed, new attempts were focused on ownership. This would not be possible without the fun-

Photo by cfp

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Workers dismantle spindles at Shenqin Textile, China’s oldest textile manufacturer, following the plant’s closure, January 23, 1998

damental ideological changes in 1993 when the CPC finally accepted something called “market economy.” SOEs, as an important part of this plan, were required to be transformed into joint-stock companies, that is, open to private investors. SOEs were treated in different ways in the new round of reform, depending on their size and sector. The textiles sector, for example, was identified as the standard-bearer. SOEs swiftly and systematically withdrew from this field. The same happened in other consumer product sectors, such as home appliances. The vacancy was immediately filled by private investors. Many coal mines and steel plants were also closed. This is now seen as one of the periods where private and State-owned companies genuinely compete with one another. Under a strategy of “keeping the large and letting go of the small,” small- and medium-sized SOEs were privatized and their workers fired in droves. The movement gained momentum when net losses NEWSCHINA I March 2014

Photo by cfp

Bitter Memory

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Laid-off SOE workers make their living by collecting cables in Liaoning Province in 2002

Laid-off middle-aged SOE workers grabbed for admission tickets to a recruitment fair in Nanjing, Jiangsu Province, October 27, 2002

for SOEs as a whole were recorded for the first time in years in 1996, and were found to have worsened. The central government declared the following year that it would take three years to get big SOEs out of trouble, a further encouragement to dump smaller ones. NBS figures shows that by 2001, the number of SOEs was only 35 percent of what it was in 1997. The strategy seems to have worked. At a press conference in January 2001, Sheng Huaren, Director of the State Economic and Trade Commission (which ceased to exist in 2003), declared that SOEs reported 185 percent more profit growth in the first 11 months of 2000 than they had experienced in the whole year of 1997, and SOEs in most sectors had stopped losing money. Meanwhile, the government encouraged the growth of the private sector to make up for the lost jobs and growth. The private sector seized the opportunity. NEWSCHINA I March 2014

This was a relentless process. Sheng disclosed that 21 million SOE workers were laid off in the three years leading up to 2000. Without a labor negotiation mechanism, workers did not have a say in who would lose their jobs, and how much compensation should be given. Low-skilled middle-aged workers were the first to be dumped by their SOE employers and the last to be offered any job on the market. It was not rare for organized workers to require higher authorities to give better compensation. In 2002, tens of thousands of workers from several big State-owned oil fields petitioned for the renegotiation of what they saw as unfair compensation. The tension, a legacy of the reform, has lingered. In 2009, Chen Guojun was appointed by private steel maker Jianlong Group as the general manager of the Stateowned Shougang Tonggang Group in northeastern Jilin Province. On his first day in the office, Chen was beaten to death by workers, mostly retired ones, furious about the acquisition by a private company, believing it threatened their pensions. Management buy-out (MBO), a deal in which senior managers buy out their employers, is a normal market practice. In China, the problem was that sales of SOEs during that period were made through backdoor bargaining between local governments and potential buyers, in most cases former SOE managers. There was overwhelming criticism against corruption and selling State-owned assets at unreasonable discounts, a process which was compared to creating oligarchs in Russia’s transitional period. These voices fueled the already strong resistance to the idea of reducing State ownership in the economy. All of these have made the road of SOE reform very controversial, and the architect of the whole project Zhu Rongji, China’s premier from 1993 and 2003, to this day remains one of the most divisive Chinese leaders. Even Zhu himself refused to label the reform strategy either as privatization or “keeping the large and letting go of the small,” though both happened, and the latter at least was written explicitly in the CPC document. Imperfect design provided powerful ammunition to the forces against reform.

Firstborns

Favorite children rarely lose their privileges, and the government gave any support they could not only to rescue, but to restructure the biggest ones, and to make them stronger. Again, size and sector mattered. In 2004, when MBOs began to expand into larger SOEs, even fiercer debates than had raged before on the ownership diversification of SOEs were triggered among highprofile economists. Besides, the growing wealth divide partly due to previous SOE reforms led to doubt and frustration over the whole

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Share of publicly-owned institution employment in total urban employment

Source: China National Bureau of Statistics

market-oriented reform principle in society. The newly established State-owned Assets Supervision and Administration Commission of the State Council (SASAC) prohibited management buy-outs in large SOEs. At the same time, mergers and acquisitions within the family were encouraged. The number of non-financial SOEs under the central government reduced to 113 in 2013 from 190 in 2003. The total number of SOEs in 2011 was basically similar to that in 2003, but the number of big ones had increased by nearly 200 percent, according to the SASAC. In 1999, the CPC Central Committee made it clear in its resolution on SOE reform that SOEs would be concentrated in sectors which constituted “lifelines” for the national economy, rather than scattering them across nearly every part of the economy. Specifically, the document says, “lifeline” sectors were those engaged in national security, public utilities and services, and hi-tech, as well as pillar sectors which have changed over time. As a result, the current 113 nonfinancial SOEs under the central government are focused on energy, transport, communication, power, steel, real estate, logistics and minerals. The finance sector is dominated by State-owned banks. Since the mid-1980s, bank loans replaced budget funds as the source of SOEs’ projects. This led to a heavy burden of badly performing loans upon banks. As Zhu recognized at a meeting in 1994, SOEs did not think it was necessary to honor their obligations. It was not rare for the government to order banks to grant what were dubbed as “dumpling loans” to struggling SOEs at the end of a year so that their staff could afford dumplings, the traditional food of Chinese New Year. According to Sheng Huaren, by the end of 2000, SOEs were relieved of more than US$80 billion of loans by write-offs on bank books or transfers of loans into shares in asset management companies specifically established to dispose of SOEs’ bad loans. Besides,

further billions in treasury bonds and government-subsidized bank loans were mobilized to better deploy technical facilities for SOEs. Regardless, bank loans or budget funds were insufficient, particularly for an economy that had yet to take off. The central government began to seek bigger sources. Since 2000, central SOEs began to list their best assets on the Hong Kong Stock Exchange, with Wall Street investment bankers as the main underwriters. Foreign banks, such as HSBC and the Royal Bank of Scotland, became shareholders in all China’s major State-owned banks. By doing this, the parents also hoped that the pressure and participation of international investors would bring both discipline and good experience. To meet the listing standards on the international capital market, for example, SOEs had to sort out their messy books and have everything required by modern corporate governance in place, such as a board of directors and a board of supervisors. It seems that all these efforts were worth it. SOEs’ assets in 2012 were four times what they were in 2003. In 2013, 44 central SOEs are in the Fortune Global 500. The days of begging father for dumplings are history. Central SOEs proudly call themselves the country’s “firstborns.” However, with lower land and capital costs, and exclusive or wider market access to the business they are in, it is hard to persuade anyone that SOEs’ power today is based more on their progress or competence than on State support. To name just a few, SOEs produce nearly all China’s crude oil, natural gas, basic telecom services, more than 50 percent of power generation, more than 60 percent of high end steel products, and more than 70 percent of equipment for hydraulic and coal fired power plants. Besides, the old bugbears of corruption and efficiency are yet to be tackled, a necessity if the interests of shareholders, the Chinese people, are to be protected. It is time for the firstborns to become adults. NEWSCHINA I March 2014

Photo by Xinhua

A worker with CNR Corporation Limited, one of China’s leading State-owned rolling stock companies, works on a high-speed train in Changchun, capital of Jilin Province, January 23, 2013

SOE Reform

Back in Action After stagnating for 10 years, China’s SOE reform has fired up once again. Is this the beginning of something special? By Li Jia

number of high-ranking corrupt officials, or “tigers,” have been caught since the new Chinese Communist Party leadership waged high-profile crackdown on corruption a year ago. Among them, more than 30 are former senior officials from State-owned enterprises (SOEs). The annual survey on criminal cases involving Chinese entrepreneurs by JCRB.com under the Supreme People’s Procuratorate found that, as in previous years, bribe-taking, graft and embezzlement of public funds remained the most common crimes committed by SOE executives. This has not helped SOEs improve their already unpopular image. In the first 11 months of 2013, the profits of SOEs with more than US$3.3 million annual revenue from their main business grew by 8.4 NEWSCHINA I March 2014

percent on the same period of 2012, well below the 16.3 percent and 15.7 percent for Chinese private companies and foreign-funded companies in the same category respectively. Meanwhile, the total net profits of the top 500 Chinese private companies in 2012 were just 65 percent that of the four State-owned banks. There are far more SOEs than private companies on the Fortune 500 global list. While this looks good for SOEs on paper, the accolades have attracted more criticism than applause from the Chinese public. As the Party mouthpiece the People’s Daily noted in an article in April 2013, “SOEs can do nothing right” in the eyes of the public, who are effectively their shareholders. They are accused of poor ef-

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Photo by IC

ficiency if they lose money, monopoly if they make money, lacking competitiveness if they lag behind private companies, squeezing private investment if they become industrial leaders, using public money to bolster their own reputation if they engage in philanthropy, and lacking social responsibility if they donate too little to charity. Long-anticipated SOE reform was finally resumed in the last month of 2013. On December 18, Shanghai, which accounted for

Automobiles line up to refuel at a gas station run by Sinopec, October 8, 2011

one-ninth of total SOE assets at the provincial level, became the first to announce its campaign. The next day, the State Assets Supervision and Administration Commission (SASAC) unveiled the national roadmap. A number of local governments announced they would follow suit.

No Debate, Action!

Indeed the commitment to secure the “dominance” of public ownership has made the part on SOE reform one of the most confusing and disappointing sections of the economic reform package set by the CPC at the high-profile Third Plenum of its 18th Central Committee, which concluded in November 2013. Somewhat unexpectedly, action was taken just one month after the meeting, and started with the most sensitive topic: ownership. The measures that have been specified so far follow exactly what was dictated in the decision. “Mixed ownership,” the introduction of private investment into SOEs, has immediately been put at the top of the agenda in this round of reform. Huang Shuhe, vice minister of the SASAC, made it clear at a press conference on December 19 that the State’s shares in SOEs would be reduced. The massive privatization of SOEs in the 1990s and early 2000s

engendered widespread criticism of the policy of “State retreat and private advancement,” which to a large extent led to the stagnation of the SOE reform in the following years. The trend had reversed since 2008, when the huge stimulus to deal with the global financial crisis further consolidated SOEs, a move generally considered to have undermined the private sector and market competition. Concerns over “State advancement and private retreat” refused to die down. The “mixed ownership” written into the Third Plenum document triggered yet another debate on who would retreat and who would advance this time. Policymakers don’t like getting caught in these tangles. At a meeting in December 2013, Zhang Yi, the newly appointed SASAC minister, called for stopping such debates to move to “advancement of both.” This idea seems to be shared by economists and the market. At a forum in November, Professor Li Yi’ning at Peking University, who was one of the first advocates for private investment in SOEs in the 1980s and who tutored China’s incumbent premier Li Keqiang in his PhD studies, said that the purpose of reform was now “win-win” for both SOEs and private companies. In December, five private equity companies together took 20 percent of shares in the Shanghai-based property giant Greenland, bringing its State-owned shares down to 47 percent. Giant SOEs are expected to go on the market. To prepare for that, the securities regulators have recently resumed listings which had been suspended for more than one year. SASAC issued a document in early January 2014 stressing transparency and no restrictions on buyer qualifications in transactions at State asset exchanges. The concept of mixed ownership in SOEs is nothing new. Even most central SOEs are indeed joint-stock companies after years of reform towards diversified shareholding structures. However, SOEs generally hold stakes in one another. Overseas investors, for example, buy and sell 25 percent shares of the Hong Kong-listed Industrial and Commercial Bank of China (ICBC). The purpose of the reform this time is to reduce the dominance of State ownership in SOEs. Besides private institutional investors, SOE staff will also be encouraged to hold their company’s shares and more non-tradable State shares, with preferential dividends offered to individual investors. The benefit, explained Huang, the SASAC official, is to improve their corporate governance by reducing the common practice of direct government intervention in SOE operation, another chronic problem for SOEs. Zhang Yuliang, chairman of the SOE Greenland, said in his speech at a forum in Shanghai recently that market-oriented interests of private investors can balance those of government appointed managers who care more about pleasing their superiors than market performance. The SASAC, which is supposed to represent shareholders, will also change its method of supervision to reduce direct intervention in corporate operation. State-owned investment companies will be estabNEWSCHINA I March 2014

Two Hands

Another major problem of corporate governance cannot be solved just by reducing government intervention. The success of any modern big company practicing the separation of ownership from control largely depends on how to motivate and discipline managers. This is because senior employees do not fully converge with owners on interests, but do have the advantage of holding more detailed information on the company than owners – they may pursue their own short-term interests at the cost of owners’ long-term interests. Economists urging ownership reform have always argued that this problem may be particularly severe in SOEs where no-one can really represent all owners in monitoring senior managers. This is even more challenging when those executives are government officials with political interests. On one hand, Chinese SOE executives are paid much less than their counterparts in the private sector. In 2009, the Obama administration imposed a US$500,000 pay cap on financial companies that received the taxpayer-funded bailout. The Financial Times found that American and European bank bosses earned US$9.7 million on average, even at the peak of the financial crisis in 2010. A survey released recently by Beijing Normal University showed that the average income of listed companies in the financial sector which is dominated by SOEs was US$380,000 in 2013. Currently, the record highest salary for any SOE official is reportedly less than US$2 million. Like other government officials, they are required to retire at the age of 60 or 65. On the other hand, Chinese SOE executives have excessive, unfettered power within their organizations. They are much less constrained in using money than government officials are in using budget funds. Worse still, the chairperson of the board and the CEO of an SOE are often the same person, making it impossible for the board to do its duty in supervising managers, and even the most frivolous travel and entertainment expenses can easily be written off. Since 2010, the Ministry of Finance began to release the budgets of central SOEs. However, the information does not include details about how they use their money. As a result, Chinese SOE executives have less incentive to take market risks for corporate interests, but more freedom in spending, or even embezzling, shareholders’ money. Over the years several government agencies, led by the Ministry of Finance, have had to issue one document after another prohibiting SOE officials from spending company funds on things like luxurious offices, fitness club cards, or “family expenses.”

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In Shanghai, it is stated clearly in the reform plan that local SOEs, at least in competitive sectors, will have a different chairperson and CEO. More managerial positions will be available in the job market, and incentives like corporate options will be given to managers.

How Real?

The planned reform on ownership and executives appears to have touched the core of SOE privilege, and has thus gained much applause. However, both have been tried before and, based on previous results, there are justified concerns over how much serious positive change the renewed efforts will bring. According to the SASAC data, more than half of central SOEs and their subsidiaries have already received private investment. The capital market is regarded as the main way for SOEs to have more private investment. However, China’s stock market is neither fair nor well-regulated. Some analysts have pointed out that this shows that fewer State-owned shares in a company does not necessarily lead to less State control in an environment of weak property rights protection and a strong government. If those problems are not solved, the old issue of SOEs accepting private investors’ money but not their opinions could raise its head again. For State-owned investment companies to be established, their operation should also be independent from the government. Many

Photo by Xinhua

lished to stand between SASAC and the SOEs in its charge. SASAC will only keep an eye on the asset value changes on the books of these companies, which for their part will make industrial or portfolio investment in a range of sectors, explained Li Jin, chief researcher with the China Enterprise Research Institute, to NewsChina.

A Sinopec refinery situated in Xinjiang

analysts liken this model to that of Temasek, the investment company fully owned by the Singapore government. However, Li Jin warned “not to be too optimistic” about their autonomy in China. Since at least 2000, the central and some local governments, including Shanghai and Guangdong, have tried several times not to

cover story Return on assets of Chinese industrial enterprises, by ownership type

Non-state-owned

All firms

State-owned

Source: GavekalDragonomics

give administrative titles to SOE executives, but all have failed. In Shanghai’s trial, no deputy managerial positions will have administrative titles. This is a concrete step forward, but it is always the top boss who has the final say in SOEs. It seems that general managers and chairpersons will continue to be senior civil servants and at the same time represent the different rights and interests of operation and ownership. Over the past few years, SASAC has imposed complicated, tough economic indicators to assess SOE executives. However, in many cases an SOE’s performance partly relies on changes in government policy such as subsidies, market access, price controls, not market competition, and it may have other political responsibilities, like food or oil supply security, disaster relief, and refraining from cutting jobs in order to maintain social stability during economic downturn. It is hardly possible to distinguish whether losses or profits should be attributed to market or policy changes, or what Justin Yifu Lin, former World Bank chief economist, called “policy burdens” in his long-time research on China’s SOEs. Besides, SASAC at the ministerial level has little power to decide the political career of SOE leaders who are also government ministers. It is even harder for shareholders to do so. Even though the assessment system is fully feasible, it may not be the most important factor for an official’s career. After China Ocean Shipping (Group) Co. (COSCO) incurred huge losses and faced de-listing on China’s stock market, Wei Jiafu, former chairman of COSCO, responded to shareholders that there was “no problem” as long as the central government understood its plight.

New Label

Even if these measures work well, the effect will be most evident on SOEs in competitive sectors where the State holds the minority share

or is prepared to do so, as it did in the late 1990s in sectors like consumer products manufacturing, retail, steel and wine. The SASAC has announced that the deployment of State assets will once again be “rearranged.” According to SASAC’s plan, the State will continue to fully own or be the holding party in any enterprise relating to national security, strategic industry and the hi-tech sector. This is not only the same as what was arranged in 1999, but is today’s reality. The progress lies in that the specific business, even in the same company, also matters. The Third Plenum resolution makes it clear that competitive business, even in sectors dominated by the State, should be open to private operators. At the end of December 2013, 11 private companies providing ecommerce, electronic consumer products, retail, and Internet domain registration services, received telecom service licenses. Analysts believe similar relaxation will follow in other sectors. For example, it is widely expected that oil exploration will remain in the hands of the State, but the refining and selling of oil, as well as oil pipeline operation, will be comparatively open. In addition, the State Council has decided to purchase some public services from the market. This means the privileges of market access, easy bank loans and price controls will be redistributed among SOEs and between SOEs and private companies. Every SOE will be classified according to the new standard, which is yet to be published, according to the SASAC. Those classified as being in competitive fields will not only face the prospect of greatly reduced (if any) privilege, but also less room to argue that its losses are attributable to policy. Li Jin has repeatedly noted that interest distribution is the core of the SOE reform. How their business will be classified will not only reshape the SOEs themselves, but the structure of market competition – this, in turn, will frame the success of reform. NEWSCHINA I March 2014

SOE Reform

Huang Yong: “Low Efficiency is the Biggest Insecurity” The Anti-monopoly Law needs to be called upon to uphold market competition

NEWSCHINA I March 2014

Professor Huang Yong

Photo by IC

By Li Jia

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hen competition was introduced into China’s economy in the 1980s, State-owned enterprises found themselves in a tough game they had no idea how to play. Many were eliminated. But today, nearly all of China’s basic market resources and opportunities are in the hands of those who survived and thrived. They are feared, but not admired – and for the sake of the market, they must be changed. Can the Anti-monopoly Law, supposedly the magic wand for upholding market competition, be wielded to any effect? Professor Huang Yong with the University of International Business and Economics (UIBE) is Executive Vice Chair of the Expert Advisory Board of the State Council Anti-monopoly Commission, and participated in drafting the legislation. NewsChina: SOEs are rivals. For example, staff at State-owned telecom operators have been cutting each other’s optical cables, and have even ended up in fistfights. There are often several different banks on a city street. Does monopoly hinder competition? Huang Yong: We need to look at the market where the SOEs operate. There are two standards for determining whether or not it is a real market where fair competition is possible. Firstly, market access. Is it subject to policy restrictions with little consideration of competition or law-based equal qualifications to all? In the banking sector, for example, privately funded banks are not allowed. Foreign banks face restrictions on shareholding in joint ventures and certain types of business. There are a lot of banks competing with each other, but none of them would go bankrupt if they failed, as happens every day in a real market. Second, price control. Caps, ceilings or floating bands are imposed on a series of prices, including oil, gas, on-grid power, some bank services, as well as commissions for securities companies, according to the Price Law and other regulations, not supply and demand. This guarantees monopolies’ profits, so they rely on it, in many cases at the cost of consumer welfare. A bank can enjoy a high interest spread without worrying that its competitors might offer better terms for clients. Therefore, the number of competitors does not count. Real competition only happens when everyone, no matter whether they’re public, private or foreign, enters and exits a market in line with the same conditions set by the law, is regulated equally by relevant laws – such as the securities, energy and banking laws – and competes with market-oriented prices. By these standards, there is no real market in those restricted sectors. The result is that we are charged unreasonably for many products and services necessary for our lives and businesses: water, power, oil, transportation, phone calls, and so on. By the same standards, some SOEs are on an open market – construction materials, LCD panels and spirits, for example, and they do have significant competition pressure. However, they have privileged access to key market resources, like land and bank loans, giving them an unfair advantage over their private competitors. NC: Those controls on access and prices are not challenged by Chi-

na’s Anti-monopoly Law (AML). What can the law do with Statebacked monopolies? HY: Antitrust law is regarded as the “economic constitution” in a developed market economy. But this can only be possible when competition policy, of which the antitrust law is the most important tool, stands as a top priority of national strategy. This is not the case in China. Industrial policy takes priority and there are access and price controls based on other laws and regulations. Given this, it is true that the AML has a much more limited role here, but downplaying its role could do even more harm. The law is neither meant nor expressed in a way that grants immunity to any category of sector or enterprise, regardless of its ownership, size or business type. The only immunity is for some conduct in agriculture. Indeed, all three behaviors targeted by the AML are clearly applicable to SOEs, either when they play within their enclosure or outside of it. Firstly, where there are price controls, in oil and power, for example, it is a breach of the law for these monopolies to impose higher prices on consumers through conspiracy, a typical monopolistic agreement reached between competitors.

Modern sculpture and other artwork appear alongside Mao-era slogans in a gallery at 798 Art District in Beijing, formerly the site of State-owned factories. NEWSCHINA I March 2014

SOEs in open markets, particularly the giants in any given sector, should pay special attention not to propose any price manipulation agreements through guilds with their competitors or with their upstream and downstream partners. Secondly, it is not rare for SOEs in restricted sectors to abuse their power of market dominance, such as through price discrimination, unreasonable conditions on transactions or bundled selling. Thirdly, some SOEs have failed to file their mergers and acquisitions deals for monopolistic reviews when the deals are big enough to require them to do so. They thought, incorrectly, that the law did not apply to them. The idea is further consolidated particularly when the deals are brokered by the government.

Photo by IC

NC: How have SOEs responded to the law? HY: There has been some positive change. The UIBE China Institute of Competition Policy invited SOEs for international seminars during the legislation process. None of them turned up, but a few came after the law was promulgated. Most have now realized that the law does apply to them. Some have installed internal procedures and departments for legal compliance. Even some giants not under investigation have

NEWSCHINA I March 2014

launched internal legal training programs. NC: What has forced these changes? HY: SOE reforms to promote competition have been going on at the initiative of the central government over the decades. There used to be only one telecom company, and it has split and been restructured several times since the 1990s. Now we have three. The same thing happened with oil. However, market demand, public opinion and the legal pressure have contributed more. The strongest force is law enforcement. China Telecom and China Unicom have been under investigation since 2011 for price discrimination against broadband wholesalers who also compete with them. Moutai and Wuliangye, two State-owned liquor manufacturers, have been fined heavily for price manipulation. SOEs have been ordered to file their M&A deals according to standards set by the law. These actions have not only attracted public attention, but prompted decision makers to rethink the rationale behind the monopoly system. There are already discussions in the media questioning why 12306.cn is the only online rail ticketing platform. Privately produced solar power is now permitted to be on the State grid. Interestingly, the turf war among SOEs has also contributed. Local SOEs are not happy with the monopolies of central SOEs. Cable TV operators want to enter the market monopolized by telecoms giants. They have realized, to some extent, that the law is a better method of arbitration than fights between interest groups. The State-backed monopolies are powerful enough to resist law enforcement. Though the two telecom giants have promised, under legal pressure, to bring down prices and improve the level of interconnectivity, the conclusion on whether they have breached the law and should be punished is yet to be made. NC: Does the enforcement system in which the administrative and judicial procedures go side by side also weaken the AML? HY: The dual track itself is not a big problem. It is also in force in the EU. In the past year the number of court cases rose faster than that of administrative ones. This is progress because judicial settlements should be final, and most verdicts, as far as I have observed, are well-grounded. However, the court steps in only when someone files a lawsuit. Administrative agencies act wherever necessary, and are more efficient and experienced in dealing with certain types of case. The Ministry of Commerce (MOFCOM) has reviewed more than 800 M&A deals. In addition, there are checks and balances between the two tracks. The real problem in the system now lies in the insufficient independence and authority of the administrative enforcement institutions. Price manipulations, abuses of market dominance and M&A are subject to offices under three separate ministries, respectively the National Development and Reform Commission (NDRC), the State Administration of Industry and Commerce and MOFCOM. These offices are not even the most important within their own ministries. The competition department at the NDRC is outweighed by industrial ones, and MOFCOM focuses more on international trade and

cover story

investment. The three must be integrated into one, and upgraded to the ministerial level. Another problem, yet to be encountered in China but which has been seen in developed markets, is what happens if an administrative settlement is not accepted by the parties in question, or if it is different from a court judgement on the same case. NC: Can the articles concerning administrative monopoly, which are rarely seen in antitrust laws in developed markets, effectively challenge the policies and rules on which SOE monopoly is founded? HY: The law says that administrative agencies and other public affair organizations should not formulate policies restricting or excluding competition. However, antitrust enforcement agencies are only given the power to “advise” the higher authorities to reassess those policies. The absence of legal responsibilities has triggered wide criticism that it is toothless and thus meaningless. I think this is a realistic, feasible option. You can’t just sit and wait till everything is ready. With this provision, investigations can be launched in the first place, which results in possible conclusions on law breaches, which in turn justifies advice to remove the policies in question. Governments in China are assessed by performance. If a government agency often has a record of law-breaking, its leaders certainly face a high risk for their political careers. In 2011, the government in Heyuan Iity, Guangdong Province appointed one GPS company to collect traffic data. Other operators complained. The provincial government ordered the local government to stop the practice on the basis of the investigation and advice from the industry and commerce department. NC: Has technological progress also boosted deregulation? HY: Yes, and this is also something special in China. Emerging sectors, typically the Internet, grow quickly not only due to technological progress, but market competition resulting from deregulation. Our Internet companies are internationally competitive. There is no SOE leader, and SOEs have failed when they have tried to enter, such as the search engine project of [State-owned newspaper] the People’s Daily. The private champions have even encroached on the domain of SOEs. Users of [messaging app] WeChat far outnumber those of a similar service operated by China Mobile. Alipay has challenged the dominance of China UnionPay. This has shown how their long history of protection has made SOEs so vulnerable to real competition. However, the power of technological progress on deregulation has to be endorsed by the State. There is no technical barrier for the integration of telecoms, Internet and TV services. No progress has been made in more than ten years simply because of the resistance of the operators and ministries behind these services. Chinese consumers have to own separate cell phones for numbers run by different operators, and install several lines to access different services. The knee-jerk reaction of SOEs towards external competition is to resort to State power, for example lobbying for fees to be imposed on WeChat or including taxi apps into a government developed system. Will State grids or State banks and bank card organizations abuse

their dominance by refusing private generators or dealers, or imposing discriminative conditions? If they do, will the AML be activated to stop them? Those questions are crucial for China’s reform. The potential of the law is yet to be further exploited, even under the existing situation. NC: Recently some telecom and health care services have been opened to private operators. Does this mean that the AML will govern more areas? HY: Definitely. There is no need for any such law in a planned economy. Its role grows with the market. If SOEs are less protected by price and access controls, they will have to try anything possible for higher profits. Then regulators should make sure the new freedom and pressure would not result in conspiracy among competitors, or voluntary or compulsory value chain coordination to manipulate prices. I believe more public utility services and infrastructure should be open to private investment, and subject to scrutiny from both the AML and special sectorial rules. This is why China’s AML has another role to play: boosting market openness. Firstly, short-term, biased industrial policies must be cut to make way for competition policies. In cases where an industrial policy is needed to give fiscal support to certain enterprises or sectors, its effect on market competition must be considered. This means both budget and market reviews when such a policy is proposed, drafted and implemented. The AML states clearly that the State Council Anti-monopoly Commission (SCAC) has the responsibility of assessing market competition. So far no such report has been made, five years after the SCAC was established. Solar panel enterprises would not have been motivated more by fiscal support than by market prospect to make investments if fair competition had been factored in when designing the policy. Government protection or support in the name of market order or national security in most restricted sectors only leads to low efficiency, which is the biggest insecurity. NC: Some Chinese solar panel companies have even faced antitrust lawsuits in the US. Why was that? HY: This is an issue that Chinese enterprises can no longer afford to ignore as China expands its foreign trade and investment globally. Several Chinese vitamin C producers were sued in antitrust cases in the US. There are many antitrust reviews on M&A deals involving Chinese companies on the overseas market. Chinese SOEs must bear in mind that they do not have any favorable treatment under foreign antitrust laws. Worse still, host countries, out of concerns for national security and market competition, normally put foreign SOEs under stricter scrutiny than domestic or private entities. As most countries are stepping up their antitrust law enforcement, the cost of breaching it is huge. In the US, antitrust proceedings can lead to corporate executives being put under criminal charges. Chinese companies, including SOEs, are increasingly using M&A to expand their overseas presence. Filing for legally-required antitrust reviews is important. Serious effort towards antitrust law compliance in host countries is the first thing for Chinese SOEs going abroad. NEWSCHINA I March 2014

society

Political Cartoonists

Solidarity Through Satire An unusual married couple, both of them political cartoonists, have caught the attention of the authorities they spend their lives lampooning

Courtesy of Li Qing’ai

By Ma Duosi and Du Guodong

Cartoonist Chen Yuli (left) and his wife Li Qing’ai pose in front of one of their artworks in Qiu County, Hebei Province

rtist Chen Yuli and his wife Li Qing’ai kept a low profile after hearing that their political cartoons had been praised by Wang Qishan, head of the anti-corruption wing of the Communist Party of China (CPC). Wang ordered his staff to “widely use” Chen and Li’s works to promote clean government. The artists themselves, however, are more concerned about whether or not they will receive royalties. In August, more than 100 cartoons by the Frog Cartoon Group, which was founded by Chen and Li, were posted on the website NEWSCHINA I March 2014

of the Ministry of Supervision, catching the eye of Wang Qishan, head of China’s Central Commission for Disciplinary Inspection. Based in Qiu County, Hebei Province, the Frogs found fame overnight. “It was the local government that handed our works over to the higher authorities,” Li told NewsChina. They had to wait for remuneration until the end of November, when a meager sum arrived that they divided between the members of the group.

Stubborn

Born in 1934, Chen Yuli has suffered from

a dislocated hip, which he couldn’t afford to have treated. Consequently, he adopted the nickname “Lame Chen.” Living in a rural area, he had failed to find work as a farmhand, instead becoming a figure of ridicule. He hid away behind his books, and was admitted at the age of 17 to a local college to study art. After graduation, he landed a job as a “barefoot teacher” spread between several local schools. Soft-spoken and shy, Chen was unable to control his rowdy classes, and soon abandoned teaching to return home and pursue his dream of being an artist.

Courtesy of Li Qing’ai

society

Senior members of the Frog Cartoon Group work on their paintings

In 1958, when the Communist Party launched the Great Leap Forward, an ambitious and ultimately catastrophic attempt to mechanize China’s agriculture by mobilizing the entire rural population, Chen set up a sixmember cartoon collective, which included his future wife Li Qing’ai. The team’s slogan was “turning streets into art galleries,” and they devoted themselves to creating propaganda glorifying the Great Leap Forward. In 1960, Chen and Li were both enrolled in the Tianjin Academy of Fine Arts with the aim of improving their skills. Chen studied architecture, while Li pursued painting. After graduation, Li was assigned to work as head of the women’s affairs bureau of Qiu County at a time when college graduates were highly sought after. Her main job was to ensure locals handed all grain surpluses over to the State. Aged 22, and having secured a job for life, Li was a highly regarded member of the community. But her conscience soon got the better of her, and she resigned from her post, unable to continue to appropriate the only food of farmers who could not feed themselves or their families. “It was the last thing I wanted to do,” Li told NewsChina. “The farmers were really starving. Many people suffered from gastrointestinal disease and women were collapsing with uterine prolapse,” Li said. “But the grain yield statistics were exaggerated and, to fill the actual

shortfall, local cadres had to shake people down.”

Nightmares

Chen and Li married in 1963. They worked in the fields during the day and drew cartoons on their few days off. Occasionally, their works were published in the People’s Daily, mouthpiece of the Communist Party, under the pen names “Chen and Li.” They enjoyed relative peace and quiet until 1968, when a campaign to “trap hidden Kuomintang [Nationalist] Party members,” who the Party claimed had continued to infiltrate the Chinese mainland after the previous government’s flight to Taiwan following the civil war. The movement was led by the local revolutionary committee, a temporary organization charged with smoking out Kuomintang agents and consisting of workers, farmers and student representatives, and given strict quotas. From early 1968 to March 1969, 3,835 local residents were declared to be Kuomintang members, and 523 family estates were confiscated. 1,316 locals were maimed during interrogations and 734 were tortured to death in Qiu County alone, according to local records. Chen and Li were also implicated. Because Li was born into a wealthy rural family, a head of the revolutionary committee de-

clared that she was a top-level spy who joined the Kuomintang at the age of eight and had married Chen as a cover-up. Eventually, Li and her second child Chou’er, less than two years old, ended up in a prison. While Li was in prison being tortured, her husband Chen Yuli was relentlessly persecuted. Their eldest daughter, Ji, then aged five, was bullied for her “bad background,” with her teachers encouraging her peers to attack her. Once, when Ji was bringing a meal to her imprisoned mother, she was bitten by one of the revolutionary committee’s guard dogs. She had to wait for her father to come back home at night to bind her wound. Nobody else, including her own relatives, would get involved for fear of attracting the attention of the committee’s powerful members. From June to October 1968, Li Qing’ai was confined to her prison cell, and slowly began to give up hope of leaving alive. However, one day, a military official came to the village to investigate the unpopular campaign. His damning report resulted in the prosecution of the campaign’s leaders, and the release of all prisoners, along with compensation, including Li. Thin, desperately ill and scarred from weeks of torture, Li was sent to a hospital in Shijiazhuang, Hebei Province.

Second Life

In the early 1970s, Li and Chen, both physically disabled, lived by selling paintings for 2.5 yuan (40 US cents) a piece. The paintings cost 1.7 yuan (28 US cents) to produce. However, slowly, their lives improved. By 1979, the couple was virtually rehabilitated. They were invited to paint for the Qiu County Cultural Center. Two years later, they once again threw themselves into the creation of their “Chen and Li” cartoons. In 1982, they made the acquaintance of Hua Junwu and Fang Cheng, two nationally renowned artists. Hua encouraged them to set up in their village and “seek inspiration from the masses.” Fang, however, suggested NEWSCHINA I March 2014

NEWSCHINA I March 2014

Courtesy of Li Qing’ai

they set up a working group to train more rural artists. The next year, the Frog Cartoon Group was born. Li said she named the group after a frog because they can “devour pests and sing for the harvest,” making frogs good companions for farmers, just as the artists themselves hoped to be. More than 1,000 farmers studied with the group. They worked in the fields during the day and doodled at night. Their efforts eventually paid off with works frequently published in the State media. Some artists even became contract cartoonists for the official Xinhua News Agency. “We created based on our lives, and life enriched our creation,” Chen said. Their creations gradually reoriented them away from socialist-realist propaganda and towards highlighting social injustice, a stark contrast to their previous works. Among the tens of thousands of cartoons the group created, Li estimated some 40 percent were satirical. While corruption was occasionally a theme, however, the group was more interested in issues specific to rural areas. “As long as there is a good idea, we turn it into a cartoon,” Li told NewsChina. “We only follow our inspiration.” The couple retired simultaneously with a combined annual pension of 7,000 yuan (US$1,153). Of their four children, one works in the United States and another works for the government. Qiu County has set up a cartoon museum dedicated to the Frogs. Every month about 50 members meet to share experiences and discuss new ideas, as well as conducting outreach in local schools. Li Qing’ai told our reporter that as she has grown older, the horrors of her experiences in jail have continued to haunt her. She remains both fascinated and appalled at how neighbors and friends can turn into merciless monsters when given a little political power. Now, Li says she wishes to document her experiences and share them with the young. In her view, only by exchanging these horrific stories can China avoid repeating its recent, bloody past.

Chen Yuli and Li Qing’ai’s cartoon works lampooning (top to bottom): propaganda, hypocritical cadres and the frivolous use of government cars by officials

society

Chen Hualan

The Virus Maker

A Chinese scientist has drawn both plaudits and criticism from international virologists for pushing the boundaries of research ethics By An Ran

irologist Chen Hualan is not exactly an interviewer’s dream. Reticent and living in relative seclusion, Chen rose to fame after being named in prominent UK science journal Nature’s 2013 list of the year’s most important people. The magazine described Chen as a “front-line flu sleuth” for aiding China in quelling an outbreak of H7N9, a strain of avian flu that spread in China in early 2013, claiming many lives. As director of China’s National Avian Influenza Reference Laboratory at the Harbin Veterinary Research Institute, the only authorized institution in evaluating the influenza virus in China, Chen, 45, chose to keep a low profile, and shunned publicity. “You should care about avian flu, not about me,” she told NewsChina. Actually, Chen’s name was already well known to global virologists circle by early last year. In a bid to find new means with which to fight the flu pandemic, she engineered new hybrid strains of avian flu in the laboratory, which proved transmissible from human to human. Her research was published online by Science, another prominent journal, in May 2013, igniting controversy as scientists worried that with her new strains of bird flu, Chen may have opened up a can of worms.

Play with evil

Since the first case of human H5N1 infection was reported in Hong Kong in 1997, its death rate has averaged 60 percent – even deadlier than SARS. Fortunately, although the virus is lethal, it is not easily transmissible between humans. Chen was trying to find the reason behind this phenomenon, in the hope of uncovering new ways to cure the epidemic that had dealt significant damage to a number of countries. Chen’s research team created 127 hybrids – assortments of different viruses – by mixing gene segments from H5N1 and H1N1, the human avian influenza strain that swept the world in 2009, in every possible way. Five of the hybrids demonstrated airborne transmission between guinea pigs kept in neighboring cages. For Chen’s work, Ron Fouchier, a prominent virologist at Erasmus Medical Center in Rotterdam, said the 127 hybrids produced by

Chen constituted a heavy workload requiring a tremendous patience. The research was completed by 13 researchers who conducted a twoyear study on 250 guinea pigs, 1,000 mice and 27,000 infected eggs – a daunting task for scientists with their financial and time constraints, Fouchier said. Fouchier had conducted a similar experiment two years ago, albeit on a smaller scale, as had the world’s leading influenza scientist Yoshihiro Kawaoka of the University of Wisconsin at Madison. The two scientists submitted their papers to Nature and Science respectively in 2011 showing that a few mutations in H5N1 could become airborne, which had made the virus transmissible between ferrets. Due to the level of detail in the two papers, the US bio-security panel National Science Advisory Board for Biosecurity intervened in its publication due to concerns that core data could fall into the hands of terrorists. The incident sparked a worldwide debate on the ethics of such research, and it was not until 2012 that the two papers were published. However, Chen Hualan’s experiment went a step further, and consequently her findings engendered stronger controversy concerning bio-security and research ethics on a global scale. Chen received both praise and criticism, and was bombarded for synthesizing “deadly” influenza strains that could be lethal if not properly handled. Professor Simon Wain-Hobson, a well-known virologist at France’s Pasteur Institute, was enthusiastic about Chen’s findings. However, he called the research “dangerous” and questioned both its worth and Science’s decision to publish it. Another prominent figure in the academic circle, Lord May of Oxford University, former president of the UK’s Royal Society, has criticized Chen’s study for making what he called unnecessary and dangerous steps, and said global health could be at risk were her new strains were to be accidently released. “They claim they are doing this to help develop vaccines and the like. In fact, the real reason is that they are driven by blind ambition with no common sense whatsoever,” Lord May told the UK newspaper The Independent. He said the history of containment in laboratories like Chen’s was not reassuring, and called Chen’s work NEWSCHINA I March 2014

of creating dangerous human-to-human transmissible viruses “appallingly irresponsible”. Persistent and outspoken, Chen fought back to defend her academic reputation. “This is beyond the academic capacities of [Lord May], and I do not think he has a good understanding of the virus study,” she told NewsChina. “If the words had come from a virologist, I would probably be somewhat concerned.”

Low profile

The outbreak of SARS in 2003 proved a turning point in public health and disease control in China. Since then, great attention has been focused on the prevention of infectious diseases and fundamental research. Chen’s study on bird flu was given priority, entitling her to government backing while at the same time exposing her to mounting pressure. Chen’s laboratory, at “P3” level, the second highest security level in China, is hidden away in a quiet old building in the city of Harbin, in northeast China’s Heilongjiang Province. She spends nearly every day in the laboratory conducting experiments or tutoring her students. “Research and thesis publication fascinates me,” she said. “My main work, however, is to study epidemics, provide accurate evaluations and advise policymakers before determining prevention methods and making vaccines.” “It is still a sore point for me if the bird flu epidemic is not effectively controlled, regardless of whether or not I shot to fame after publishing some paper in an academic journal.” NEWSCHINA I March 2014

Like many other scientists who enrolled in higher education after the Cultural Revolution (1966-76), Chen’s entry into the world of virology research happened by sheer chance. She was admitted to study veterinary science after being rejected by the medical school at Gansu Agriculture University in Lanzhou. Born in rural Gansu Province, Chen cherished the belief that education and fate are inextricably linked, and realized that earning a college diploma was one of the few routes by which to scale the social ladder. She spent seven years in Lanzhou before getting her PhD at the Chinese Academy of Agricultural Sciences in Beijing in 1997. After spending two years at the Centers for Disease Control and Prevention in the US working on her post-doctoral research, she came back to China with her two-year-old son, leaving behind promising prospects and her husband, who was also engaged in post-doctoral studies. After landing a job at Harbin Veterinary Research Institute in 2002, she dove head-first into research on bird flu. In an interview with State broadcaster China Central Television on her motivation to come back, Chen answered without hesitation: “In the US it was only a job, but in China it is the work of a life-long obsession.” Early last month, there were another four human cases of H7N9 reported in China, and Chen’s group shifted their emphasis from H1N5 to H7N9. “It is much easier for human beings to be infected with H7N9 than H5N1, but we know less about H7N9.” Chen is speeding up her research on H7N9 – she said she is more than ready to meet doubts and challenges that loom ahead.

Courtesy of Chen Hualan

Chen Hualan

society

Babaoshan Cemetery

At Capacity Babaoshan Cemetery, Beijing’s answer to Arlington and the resting place for countless revolutionaries, has a long waiting list for new interments By Liu Ziqian and Du Guodong

t is the low season for burials at the Babaoshan Revolutionary Cemetery, the final resting place of thousands of Party cadres, located in western Beijing. A notice posted on the cemetery gates in October 2012 said that “those families who expect to inter the urns of relatives will have to wait until June 2014.” Workers are currently putting the finishing touches to a memorial wall with over 10,000 niches. Babaoshan, or “eight treasures mountain” cemetery, a place symbolic of power and position even in death, has continued to run out of space despite multiple expansions. The imbalance of supply and demand remains jarring, even after caskets belonging to dozens of former national leaders were disinterred for reburial in their hometowns. When families submit their applications for an interment in Babaoshan cemetery, they, just like patients at the local hospital, they are asked to take a number – they may

be in for a long wait.

Ranking Hierarchy

Cai Xiaoxin, 38, pays tribute to her late father Cai Changyuan at least twice every year. Her father was a major general decorated after the Korean War, whose ashes were interred at Babaoshan after his death in 1953. Cai’s urn shares space with 120 others, all of them emblazoned with a photograph of their occupant and decorated with flowers. Cai has made a habit of dusting her father’s urn during her visits, and when our reporter accompanied her, she also left a short printed biography behind. Pointing to the urn interred above her father’s, she told us that it occupied “the best place in the room.” The urn belongs to renowned revolutionary poet Ai Qing. Cai is in such illustrious company that his daughter has to show a specially issued permit before she can access the vault. Few

people with political status beneath that of mayor of a second-tier city or a division commander in the People’s Liberation Army (PLA) can hope for a place in the coveted Babaoshan vaults. Babaoshan cemetery was built on the site of a 14th-century Taoist temple in the 1950s under the guidance of former premier Zhou Enlai. Prior to its establishment, Beijing had a wealth of cemeteries outside the ancient city walls, along with dozens of grand tombs and burial places allocated to minority groups and foreign expat populations of the Qing and Republican eras. The Party sought somewhere new for its departed luminaries, and Babaoshan was the place. The first burial was of Ren Bishi, a prominent Party leader who died in 1950, and was honored with a 300-square meter vault. Other “celebrities” interred at Babaoshan include Bo Yibo, a revolutionary veteran and father of disgraced former NEWSCHINA I March 2014

Photo by IC

People lay tributes at the niches of relatives in a memorial wall at the Babaoshan Revolutionary Cemetery in Beijing

Chongqing Party chief Bo Xilai, and Xi Zhongxun, former vice-premier and father of China’s current President Xi Jinping. Over 10 hectares, Babaoshan also houses the urns of celebrities and “international friends” who embraced Communism and voiced support for the People’s Republic, including Jewish communist Israel Epstein, one of the few foreigners ever to receive Chinese citizenship, and Agnes Smedley, a US journalist and writer who wrote the first English-language biography of Marshal Zhu De, who is also buried at the cemetery. Aside from individual vaults, Babaoshan also has a number of long memorial walls for lower-ranking dignitaries. Cai told our reporter that eight of her relatives were buried in Babaoshan, with their plots selected according to their political rank. Her father’s urn was stored in the eastern vault, whereas her sister, officially honored as a revolutionary martyr, was interred in a memorial wall NEWSCHINA I March 2014

outside it. Her adoptive father, a general, earned the biggest plot – a space of over three square meters. “To be buried in the Babaoshan Revolutionary Cemetery is symbolic of high power and position,” said Zhang Lifan, a Party historian during an interview with the South China Morning Post. “That’s why people fight for a slot.”

Growing Demand

Chen Xi, 61, daughter of Major General Chen Yigui, still remembered the scene 20 years ago when her first family member was cremated at the cemetery where eight of her relatives were already interred. She told our reporter that when her fatherin-law’s urn was placed inside Room Three in the cemetery hall in January 1994, the room was empty and she could come and go as she pleased. However, three years later, when her father died, the room was full and her father’s

urn had to be placed in temporary storage. In 2003, when her mother died, her urn was placed in a niche in a cinerarium corridor, but two years later, when her mother-in-law passed away, there were no vacancies left. Only after several months was it moved into a niche in a memorial wall. To meet the growing need for space at Babaoshan, the Beijing Commission of Urban Planning published plans to build the north yard of the cemetery into a 620-meter-long corridor of 12,020 niches, which was slated for completion in June, 2014. Dong Libo, the cemetery’s deputy director, told China Daily that the cemetery faces pressing space problems as the number of burials and cremations in the cemetery is close to its maximum official capacity of 33,000. Predictably, the price of interments has soared as spaces have dwindled. In 2005, a niche in a memorial wall cost 3,000 yuan (US$496) for a 20 year lease. Eight years

Photo by IC

The grave of Hong Xuezhi, PLA general

Photo by IC

The tomb of Bo Yibo, a revolutionary veteran and father of disgraced Chongqing Party chief Bo Xilai

The tomb of calligrapher Shu Tong

Photo by IC

later, this price had climbed to 10,000 yuan (US$1,659). Every year, the cemetery receives roughly 1,000 applications. Non-Party members hoping to be interred at the People’s Cemetery one kilometer down the road, are expected to pay even more. An employee who asked not to be named told our reporter that the specific opening times and prices of niches in the new corridor remain top secret. “We have to wait for directives from the higher authorities,” he said. In recent years, a number of urns and caskets belonging to senior officials were relocated from Babaoshan to their occupants’ hometowns, including the ashes of Marshal Peng Dehuai, who was tortured to death during the Cultural Revolution (1966-76). His urn was reburied in his hometown of Xiangtan, Hunan Province in 1999. The same employee told NewsChina that most of those urns and caskets chosen for disinterment belonged to higher ranking politicians, and were relocated at the request of local governments seeking to boost the prestige of the former hometowns of famous figures. Any vacancies, however, were quickly snapped up. As early as April 2005, the Beijing Funeral Administration had planned to turn the Babaoshan Revolutionary Cemetery into a national tomb modeled on similar dedicated national burial places in the rest of the world. However, nine years later, the transition from “revolutionary” to “national” remains shaky. Social commentator Hu Xingdou with the Beijing Institute of Technology told NewsChina that because of its strong political overtones, Baobaoshan remains symbolic of political glory even in death. He added that the State Council, China’s cabinet, had even issued a notice in December last year to encourage government officials and Party members to promote “green funerals” in a bid to protect the environment. “It is a virtue for the dead not to grab land from the living. Put another way, Baobaoshan should not be the focus of our attention,” he said.

Photo by IC

society

Students pay tribute at the tomb of Ren Bishi, a prominent Party leader NEWSCHINA I March 2014

One Child Policy

At What Cost? The huge fine imposed on movie director Zhang Yimou for violations of the country’s stringent family planning law has led to increased scrutiny of the “social maintenance fees” used to punish those who flout the One Child Policy

Zhang YImou NEWSCHINA I March 2014

Photo by IC

By Wang Chen

society

No Transparency

Wu Youshui, a 49-year-old lawyer based in Hangzhou, Zhejiang, was among the first to investigate China’s social maintenance fee system. Starting on July 11, 2013, Wu sent 62 letters to finance bureaus and HFPCs in all 31 mainland provinces, regions and municipalities. Invoking the Government Information Publicity Regulations passed in 2008, which require government agencies to provide data relating to governance upon request, Wu asked for information on all fines relating to birth control policy violations collected in 2012, including the total amount and how the funds were ultimately spent. Under pressure from the media and the central government, all provincial-level authorities had responded to Wu’s request by the end of 2013. While 24 publicized the amount of fines collected, some 20 billion yuan (US$332m) in total, seven provincial authorities either refused to publicize the information, or claimed that they did not

Photo by IC

or much of 2013, renowned Chinese director Zhang Yimou, the man behind blockbusters Hero and House of Flying Daggers as well as the opening ceremonies of the 2008 Beijing Olympics, had remained uncharacteristically silent. Most attributed Zhang’s hastily adopted low profile to persistent reports that he had fathered a total of seven children with his two wives as well as with two other women. As China’s One Child Policy limits most urban couples to a single child but allows rural families a second if their firstborn is female, the allegation that Zhang was able to father multiple children with impunity immediately fueled public anger of the perceived double standard which allowed celebrities and the wealthy to flout social restrictions rigorously applied to the masses. With online expressions of anger reaching fever pitch, the authorities launched an official investigation. With mounting pressures from both the public and the authorities, Zhang finally responded to the allegations. In a late December 2013 interview with the State news agency Xinhua, Zhang announced that his partner Chen Ting gave birth to a son in 2001, a second son in 2004 and a daughter in 2006. The couple married in 2011. In the interview, Zhang apologized and denied any “abuse of privilege.” He also apologized to his children as he could not risk being seen together with them in public, which he said had “caused confusion and harm” to them. On January 9, the authorities in Wuxi, Jiangsu Province, where Zhang is officially domiciled, slapped the director with a “social maintenance fee” of 7.48 million yuan (US$1.23m), likely the largest fine ever imposed in the history of the One Child Policy. This belated action did little to stem the tide of criticism directed at both Zhang and the national Health and Family Planning Commission (HFPC), but it did shift focus away from the director’s misdeeds and toward the calculation, imposition and collection of social maintenance fees.

Zhang Yimou and his wife Chen Ting

have access to it. Not one of the authorities petitioned would provide information on how they spent the revenue collected through social maintenance fees. Birth control policy violation fines are justified by HFPC claims that additional children consume more public resources, and that society must be compensated. Following this rationale, local authorities, mostly county governments, are authorized to determine the amount of fines according to their particular economic circumstances. In most cases, the fines are calculated by multiplying the average annual income of a locality by three to ten times. Given the drastic difference in economic development levels and different multipliers adopted across regions, the fine can vary greatly between counties. For example, in Beijing’s Chaoyang district, location of the capital’s CBD, the fine for having an additional child stood at around 360,000 yuan (US$59,400) in 2012, 10 times the local average annual income. In Changping district in northern Beijing, a suburban area, this fine is halved. In Chongqing, a municipality in China’s southwest, the fine is only 14,600 yuan (US$2,410) in Youyang county, and 54,000 yuan (US$8,910) in nearby Zhong county. In Jiangsu Province, where Zhang Yimou is domiciled, when a couple’s income is more than twice the average income of local residents, the fine increases accordingly to account for the discrepancy between the couple’s combined annual income and their region’s average. As Zhang officially earned 3.57 million yuan (US$589,000) in the years since his additional children were born, his fine rocketed to 7.48 million yuan (US$1.23m).

Distortion

Wu Youshui, who has conducted a series of investigations throughout China concerning the collection of social maintenance fees, told NewsChina that, as local governments are able to retain at least 80 percent of the funds collected, there is a blatant economic incentive to enforce the One Child Policy as harshly as possible. NEWSCHINA I March 2014

Photo by Jin Ke

Wu Youshui

This has also led to a double standard in how the policy is applied to wealthy as opposed to middle-income and poorer citizens. For example, victims of forced sterilizations and abortions, officially illegal but frequently used methods for population control, are primarily poor, while the rich can, for the most part, easily shoulder the fines associated with multiple births. “In some localities, the fine is determined so arbitrarily that you can bargain with officials for the ‘best deal,’” said Wu, “In localities where fines are comparatively low, the authorities even use this fact as an incentive to migrants.” The authorities’ focus on the financial benefits of the One Child Policy, rather than population control, has severely dented its intended impact. In some localities, governments are intentionally lax about preventing unlawful births in order to raise revenue. Population growth targets are met simply by fudging the numbers reported to Beijing. This is reflected in the discrepancy in the statistics provided by two different agencies charged with monitoring birth rates in Guangdong province. According to Guangdong’s Health and Family Planning Commission, total fines collected in 2012 for birth control policy violations amounted to 1.46 billion yuan (US$241m). This amount was 44 percent lower than that published by the province’s Finance Bureau, which totaled 2.61 billion yuan (US$340m). According to Wu, as the provincial HFPC calculates the number of unlawful additional births according to the amount of fines collected, their low official figure indicates massive underreporting of One Child Policy violations.

Murky

In a 2011 interview, Ma Jiantang, director of the National Bureau of Statistics, admitted that the 2010 census showed that more than 13 million people were not accounted for in China’s hukou or household registration system. Those who violate the One Child Policy, along with their offspring, are routinely denied rights afforded to those reg-

NEWSCHINA I March 2014

istered in this system, which works partly to determine welfare provision as well as an internal visa restricting people’s right to work to their official birthplace. On paper, the Chinese laws stipulate that all children born to Chinese citizens are entitled to a hukou. This allows them to obtain a national ID card, passport, driver’s license and access to public services. In reality, however, parents can only have their child registered by either presenting a “birth permit,” a certificate issued by the family planning authorities allowing a couple to have another child, or paying up. With 13 million people, most of them from poor families, excluded from the hukou system at birth, the One Child Policy has effectively denied citizenship to one percent of the nation’s native-born population. In his interview with Xinhua, Zhang Yimou said that his children only obtained hukou in 2011, when the authorities in Jiangsu Province liberalized their household registration policies. Prior to that, Zhang claimed he had to pay a hefty fee in order to have his children enrolled in school. For millionaires like Zhang, school fees are a minor nuisance. To impoverished families, they can be ruinous. In one case in June, 2013, Cai Yanqiong, a 16-year-old girl born in violation of the One Child Policy to parents who could not afford to pay the social maintenance fee, attempted suicide after being denied access to any local high schools as she did not possess a hukou. For years, legal experts and human rights activists have called on the government to scrap the “legitimate birth” requirement of the hukou system. To date, only Fujian, Hebei, Jiangsu and Sichuan provinces have done so. “It is simply unlawful to deprive people of their basic rights to public services merely because their parents have violated the [family planning] law,” said Peking University professor Lu Jiehua. As the Chinese government approved the easing of the One Child Policy to allow couples where either parent is an only child to have two children in November 2013, calls grew for reform to the social maintenance fee system. On December 2, 2013, ten legal professionals submitted a petition to the State Council and the Ministry of the Public Security calling for the abolition of the birth permit system, standardization of fines and the supervision of authorities charged with collecting them. On December 23, the National Health and Family Planning Commission announced that provincial authorities would henceforth be allowed to implement the new policy based on “evaluation of the local demographic situation.” So far, however, no provincial government in China has revealed its own version of these new policies. As long as the power of policy-making and enforcing remains in the hands of local authorities, the fragmentation and abuse of China’s most despised social control policy will likely endure. 

society

State-owned Farms

Reaping the Benefits The State-owned farms who govern Beidahuang, Chinaâ&#x20AC;&#x2122;s largest grain production base, are engaged in a long-standing battle with the farmers whose land they reclaimed

Photo by CFP

By Xie Ying and Su Xiaoming

NEWSCHINA I March 2014

Photo by CFP

s the Chinese government to those who the central government draws up a long anticipated assigned to work on land under the program to allow farmers control of local State-owned farms. the freedom to transfer their land “The farms took full responsibility use rights, thousands of farmers in for profits and losses, and we earned an area in Heilongjiang Province fixed wages,” Yang Zhiguo, a farmer known as Beidahuang, “the great from Daxing Farm in Beidahuang, northeastern wilderness,” China’s told NewsChina. “It was like worklargest grain production base and its ing for a large State-owned enterprise biggest cluster of State-owned farms, [SOE] whose business was farming are fighting to reclaim their land. the land.” Yang is one of a group of Covering an area of 56,200 square 13 farmers who planned to hire a kilometers, Beidahuang now has Beijing lawyer to help reclaim their 43.2 million mu (6.9 million acres) land from the State. of farmland across 113 State-owned Workers Zhang Qimin (left) and Zhang Hongbo (right) rush to According to Yang Zhiguo, their farms, most of which were founded harvest waterlogged grain on a Beidahuang farm, September 27, status as State employees ended in by local farmers in the early 1980s at 2012 the early 1980s when the farms, their own expense. However, in the hit by the three-year famine (1959mid-1990s, local State-owned farms 1961) and the Cultural Revolution reclaimed the land under a program of “intensive farming,” requiring (1966-1976), were caught in so dire an economic crisis that they were the farmers to pay extortionate contract fees to work the same land on the verge of closure. Inspired by the household contract system, they had been farming for years. a rural reform program in action at the time, the farms encouraged In contrast to ordinary State-owned farms, which only impose their workers to support themselves by developing barren land at their charges on crops produced, the Beidahuang farms are an isolated own expense. community operating under a system similar to the “planned econWith their income stream cut off, swathes of farm workers like Yang omy” system that China began to abandon when it embarked on its Zhiguo piled all their remaining cash into the arduous task, working program of Reform and Opening-up in 1979. Endowed with its own day and night to cultivate barren land. Numerous domestic media social and political bureaucracy, the Beidahuang system has left farm- reports have revealed the difficulties these pioneers endured – farm ers with no control over their livelihoods: their farms. worker Jiang Baogui, for example, told our reporter that he and his Given that the farms insist that contract fees are necessary to cover peers had to daub grease all over their bodies to protect against swarms their own administrative costs, it seems that until the system is re- of mosquitoes. Due to the lack of drinking water, they were forced to formed, Beidahuang farmers may continue to suffer under a heavy quench their thirst from drainage gutters, causing widespread illness. burden from which farmers across China were released long ago. Many families lived in abject poverty for years, and were forced to survive on scraps. From State Workers to Independent Contractors According to media reports, between 1978 and 2010 the area of Though known as one of the world’s three largest areas of fertile farmland on the plain increased by around 10 million mu (1.7 milblack land, Beidahuang had remained entirely unexplored until the lion acres), with hundreds of household farms springing up. NowaCommunist Party of China founded the People’s Republic in 1949. days, Beidahuang is known as “China’s great granary,” producing over Responding to Chairman Mao’s call to develop the plain, millions 20 billion kilograms of grain per year, amounting to one thirtieth of of retired soldiers, college graduates, young intellectuals and farmers the country’s total. flocked into the wilderness, and began working to turn it into a masInitially, the farmers’ hard work was rewarded. Sun Guosheng, ansive expanse of fields. other Beidahuang farmer, told Southern Weekend that farmers could The campaign gave rise to a new term, “farm workers,” referring earn 30,000 yuan (US$4,760) per year by farming their own land in NEWSCHINA I March 2014

society

Rights Lost

Photo by cfp

the mid-1980s, a shocking figure compared to their former wage of around 480 yuan (US$76.20) per year. In 1994, the central government issued a new document on agricultural development, further encouraging self-funded cultivation by allowing them to transfer and inherit the right to use land they had cultivated. In 1995, the Heilongjiang Reclamation Bureau, the government body responsible for the administration of the Beidahuang farms, issued land use permits to farmers who had developed land themselves, and in an official document guaranteed these rights for no less than 20 years, a period that could be extended to 50 years at most. The following year, the farms took away these permits for “renewal,” but never replaced them. “We even paid 20 yuan (US$3.20) each for the new per- Workers from the Heilongjiang Production and Construction Corps mit, but they told us that the permits had been replaced with develop barren land in the Mao era an annual contract system,” Yang Zhiguo told NewsChina. Since then, farmers have been made to pay annual “contract fees” to work the land they cultivated themselves, which have Heilongjiang Province Reclamation Bureau, argued that all land in risen every year. According to Yang Zhiguo, he had to pay over 2,500 China is owned by the State, and that State-owned farms are obliged yuan (US$416) per acre of farmland, almost twice the price in 2009. to maintain and increase the value of their land. “The former [lower] Based on the old land use permit agreement, farmers only had to pay price was not in step with the current market rate, and much of the land that was outsourced [to the farmers] was done so without a uniaround 500 yuan (US$83) for an acre of self-cultivated land. “Including expenditure on seed, fertilizer, pesticides, electricity, fied standard,” he said. water and labor, I spent about 8,100 yuan [US$1,350] per acre of Due to the poor living conditions and remoteness from any neighland. Given that each acre yields 2,400 to 3,000 kilograms of grain, boring settlements on the State-owned farms in the Beidahuang area, which sells for 2.7 yuan [US$0.45] per kilogram, I earn very little, they were consolidated into a “half-enterprise, half-government” enand I lose money in poor harvest years,” Yang Zhiguo told News- tity equipped with its own health care, education, infrastructure and China, revealing that many Beidahuang farmers, including himself, public service facilities, with the nine farm administrations under the are heavily in debt. Heilongjiang Reclamation Bureau operating as a county-level govern“Even if [the farms] have the right to raise the contract fees on their ment. However, different from ordinary counties where expenditure own land, why also charge for the land we cultivated ourselves?” Yang on social functions is included in the State budget, Beidahuang farms added. According to the Heilongjiang Province Land Resources Bu- had to support themselves. This helps explain why Beidahuang farmers have since been forced reau, in 2001 the Daxing Farm where Yang works had 420,000 mu (69,190 acres) of farmland, 60,000 mu (9,884 acres) more than it to pay increasingly high contract fees, while all other farmers in China had in 1994. “That extra 60,000 mu was the land that we farmers had are exempt from agricultural tax and fees for working on the land asdeveloped ourselves. Why did they take it back without compensat- signed by their local collective (generally the authorities in the village ing us?” Yang asked. where a farmer lives). A bill shown to NewsChina by Zhang Guirong, another Beidahuang farmer who came to support Yang Zhiguo’s appeal, showed “Half Enterprise, Half Government” Addressing the farmers’ complaints, Liu Changyou, president of that besides contract fees, she had also been made to pay an array of Beidahuang Group, a publicly listed company controlled by the extras, including fees for water conservancy, paddy field construction,

NEWSCHINA I March 2014

road construction, public services, residential construction, forestation and even parking fees for agricultural machinery. In the name of “scale and intensive farming,” the farms also mandated that farmers buy heavily marked-up and often low-quality seed, fertilizer and farming machinery, all of which had to be purchased directly from the farms themselves. Farmers caught violating the farm’s regulations suffered heavy fines. The farms even took control of the farmers’ finances, borrowing money from banks on their behalf, but imposing their own fees before delivering the money to the farmers. “These were known as ‘prepaid contract costs,’ meaning we had no way to negotiate, even in case of a natural disaster,” said Yang Zhiguo. “Because it was first built by retired generals and soldiers, the Beidahuang area has always had a military-style ethos. Some of the management policies [in the area] are truly unreasonable,” an official from Heilongjiang Reclamation Bureau, who asked not to be named, told NewsChina. “But despite the [rising] contract fees, the farms still cannot afford the huge cost of employees’ social insurance [including that of farmers], and various social infrastructure and services,” he added. Since the late 1990s, however, various domestic media outlets and experts on the Beidahuang system, such as researcher Jiang Wei, have been investigating the methods by which annual contract fees are calculated, but officials have consistently refused to reveal any details. Although administrators argue that the contract fees are determined at staff representative meetings, Jiang Baogui, a member of the petition group of 13 farmers who also acts as one of these representatives, told our reporter that these meetings are entirely ceremonial – over half of those in attendance are government leaders. In recent years, the Beidahuang farms have once again come under fire for their huge expenditure on urbanization, forcing farmers to live in apartments built around farm headquarters, which are generally located far from their farmland. To enable them to access their farms in the area’s cold winters, many farmers have had to buy cars, putting themselves even deeper in debt.

Failed Reform

The increasing burden has provoked more and more farmers to join the group petitioning against the reclamation of their land and the unreasonable charges imposed on them. However, given that Beidahuang has its own independent public security and judicial systems, no department within the system has accepted their petition. When they attempt to take their complaints to higher-level government de-

NEWSCHINA I March 2014

partments or the State Council, they are usually intercepted on the way, and many are detained by the local police. Yang Zhiguo and the other 12 farmers of Daxing Farm thus changed tack, moving to sue the local government who authorized the farms to issue land use permits, in an attempt to circumvent the self-contained Beidahuang bureaucracy. In November last year the local court dismissed the case for the second time, and rejected the farmers’ appeal on the grounds of a lack of evidence, but Yang told NewsChina that he planned to continue appealing, since the land he cultivated is, in his own words, “more important than [his] life.” Yang is not alone. Bo Yi from Qixing Farm, for example, has been petitioning for 17 years, forcing him into bankruptcy and to divorce his wife. Yu Deqing from Longzhen Farm told researcher Jiang Wei that if he could not claim his land back, he would “jump off the Tian’anmen Gate.” According to Jiang Wei, those who refused to pay would be ordered to cease production or even removed from their farm’s employee list, leaving them with no State-recognized identity. “According to Beidahuang’s official website, they are centralizing scattered farmland and family farms for scale and intensive farming, but this does not mean that the [State-owned] farms have the right to ‘merge’ or seize the farmers’ land using their administrative power, as was the norm in the Planned Economy era,” wrote Jiang Wei in his investigative report into the Beidahuang farm system. In fact, as early as 2005, China’s national petition bureau had issued a document warning of the growing number of Beidahuang petitioners, concluding that: “Beidahuang farmers have been given neither the right to use collectively-owned land, nor the freedom to work as they please on the land they have contracted. This is authoritarian and coercive.” In the wake of several field investigations, the government made efforts to reform the system by stripping social functions from the farms and transferring them to neighboring counties, only to find that local governments complained that they could not afford the additional cost. An alternative method would be to reduce administrative bureaucracy by merging similar farms. However, since many farms are under the jurisdiction of different government departments, few are likely to relinquish their vested interests and rights. Now, the Beidahuang farm system remains a tough question, and will be an important test for China’s latest round of reform – two much-vaunted goals of which are the clarification of farmers’ land use rights and the restructuring of SOEs. Given the new leadership’s pledge to deepen reform, it may now be time to test their resolve.

SPECIAL REPORT

Extralegal Detention

No Endgame Since the recent abolition of China’s much-criticized “re-education through labor” camps, legal experts have been debating the impact on the country’s legal system

Inmates at a labor camp in Beijing, December, 2012

uring its bi-monthly session held on December 28, 2013, the Standing Committee of the National People’s Congress (NPC) adopted a resolution to abolish the laojiao, or “re-education through labor” system. The notorious system, which allowed police to sentence peo-

ple to up to four years in confinement without trial, has long been called a violation of human rights and the rule of law. According to the resolution, all legal laojiao penalties issued before the abolition of the system remain valid, though any unserved “sentences” will not be enforced after the abolition. NEWSCHINA I March 2014

Photo by CFP

By Hua Xuan

It guaranteed that those currently serving in laojiao camps will be set free, effective on December 28, 2013.

Abuses

Established in 1957, the laojiao system was originally established for the “re-education” of “rightists,” political dissidents deemed antagonistic to Communist Party rule. At its peak in 1960, as many as a half million people, mostly urban intellectuals, were serving in various rural labor camps throughout the country. After China launched its Reform and Opening-up policy in the late 1970s when the number of laojiao detainees had dropped to a few thousand, the State Council amended and expanded the system to cover petty criminals in an effort to crack down on rising crime rates. Since the network falls solely under the jurisdiction of the police, it has proven to be susceptible to egregious abuses. In recent years, as social stability has become a political priority for governments at all levels, the system has been increasingly employed to intercept and punish petitioners. The most infamous case was that of Tang Hui, a woman from Hunan Province who was sentenced to 18 months in a labor camp for demanding harsher punishments for the seven men convicted of abducting, raping and forcing her 11-yearold daughter into prostitution. Exposed in late 2012, Tang’s case, along with many others, has since led to strong public criticism over the system. As China’s new leadership vowed to conduct legal reform, Meng Jianzhu, the Minister for Public Security, pledged that the authorities would scrap the system before the end of 2013. Now, with the system finally abolished, the move has been heralded as a major step forward for judicial reform and the safeguarding of human rights. But many are concerned that extra-legal detention, especially of political dissidents, is still possible through other methods.

Loophole

Such concerns have been one of the key areas of contention in a heated public discussion among the domestic legal community on finding the proper “replacement” for the laojiao system. For a long time, the authorities have claimed that labor camps are designed to punish minor offenders whose offenses are not otherwise covered by the country’s criminal law. Following this rationale, it has been argued that the abolition of the system will create “a legal vacuum” that will make many minor offenders unpunishable. To deal with this so-called loophole, there have been calls to amend either the criminal law or the Public Security Administration Punishments Law, a law that regulates petty crimes,

NEWSCHINA I March 2014

or both, to define a wider range of actions and behaviors as crimes. Another much discussed solution is to expand the “community correction” system to handle minor offenders in place of the laojiao system. Introduced as a pilot program in 2003, the community correction system is now established nationwide. According to data released by the Ministry of Justice, a total of 1.67 million offenders had served sentences by the end of October 2013. An attempt to offer lesser punishments for minor offenders, the community correction network draws heavily from the experience of community service punishments in the developed world. Applying to those convicted but who serve their sentences outside prison or with a reprieve, as well as those on probation, offenders are required to report regularly to their local correction center and work on public projects for a certain number of hours. Advocates of the community correction system argue that by replacing labor camps with community correction centers, it would offer much more lenient punishments for petty criminals. However, many legal experts are concerned that the discussion in the aftermath of the scrapping of the laojiao system, which has focused largely on dealing with petty criminals rather than safeguarding of the legal rights of suspects, is misleading. Chen Weidong, a legal professor from Renmin University of China, stresses that the key aspect of laojiao reform is not how best to punish criminals, but how to place the law enforcement authorities under judicial oversight. Deng Zibin, a legal expert from the Chinese Academy of Social Sciences, for example, argued that it is a myth that abolishing the laojiao system would leave a large number of offenders unpunishable under the current legal system. “The fact is that the authorities have not released data on the detainees serving in the laojiao system,” Zhang told NewsChina. “We don’t know how many of them have actually committed a criminal offense, how many of them have violated executive regulations, or how many of them are innocent petitioners punished for political reasons.” According to Deng, instead of expanding the definition of crime, or setting up a new system to replace the “re-education” labor camps, the discussion should focus on establishing and following legal procedures. “If someone has committed an offense not against an established crime, then that person should not be punished, period,” said Wang Gongyi, chief editor at Justice of China magazine. So far, the Chinese government has apparently rejected the

SPECIAL REPORT

leadership so far appears to be adopting an approach of granting the judiciary more power in its legal reform. Professor Chen Weidong told NewsChina the new approach is to adopt the model of peace courts in developed countries. According to Chen, the Supreme People’s Court is now working to establish a set of summary procedures so that the judiciary can handle the influx of minor criminal cases, one expected consequence of scrapping the laojiao system. “It would allow the court to handle these cases in a more efficient and just way, so that the legal rights of suspects can be protected,” said Chen.

Photo by CFP

Rehab Centers

Mess hall at a labor camp for drug addicts, Heibei, June 2006

idea of employing the community correction system to replace the labor camp system. Earlier on November 29, Zhao Dacheng, vice-minister of the Justice Ministry told the media that the community correction system will only apply to those who have been tried and convicted. Ying Songnian, a professor from the China University of Political Science and Law told NewsChina that the authorities have been drafting a correction law for the last eight years to apply to petty criminals, a move that has been resisted by legal experts who argue that decisions regarding depriving a person’s freedom must be made by the judiciary. According to Professor Ying, there are signs that the legislation of such a law has been indefinitely suspended, perhaps since the new

However, despite all the progress made regarding the abolition of labor camps, there has been little mention of the extralegal detention of illicit drug users, who are believed to account for the majority of those detained in the camps. According to an estimate made by Zhang Jing, a law professor from Beijing University of Technology, by the end of 2008, there were 260,000 people serving in labor camps, 200,000 of whom were drug addicts. With laojiao officially abolished, many of China’s 350 former laojiao camps have been transformed into drug “rehabilitation” centers, especially in southwest China, where illicit drug abuse and trafficking pose a serious problem. Although the laojiao system has officially come to an end, drug users are still subject to extralegal detention. According to China’s Anti-Drug law passed in 2008, the authorities can incarcerate illicit drug users for up to two years without trial. Though law enforcement authorities insist that they have adopted more “people-oriented” procedures in drug treatment and rehabilitation, the procedures are still outside the oversight of the judiciary. According to Liu Renwen, a legal expert from the Chinese Academy of Social Sciences, there remain several systems which still authorize law enforcement to detain a person for a long period of time without going through the courts. For example, a regulation on prostitution passed in 1993 allows the police to put a prostitute or pimp under “confined education” for up to two years. Another regulation passed in 1982 by the Ministry of Public Security authorizes the police to detain underage criminals for up to three years. Moreover, the country’s involuntary treatment for the mentally ill has also been frequently abused in recent years by local authorities to punish petitioners. Liu argues that following the scrapping of laojiao, the Chinese government should move on to tackle these other practices of extralegal detention, which remain highly susceptible to abuse, in a more systematic way.  NEWSCHINA I March 2014

Extralegal Detention

Pushing the Limits A leading light of Chinese human rights law, Pu Zhiqiang has turned himself into China’s first celebrity lawyer By Sun Zhe and Min Jie

y his own admission, the year 2013 was among Pu Zhiqiang’s best, and worst. His adoptive mother passed away in July at the age of 89 after a seven-year battle with Alzheimer’s disease that had left her unaware of her son’s existence. At the same time, Pu was being lauded as one of China’s most successful and courageous defenders of human rights. Pu habitually posted his own experiences of his mother’s illness to microblogging platform Sina Weibo, China’s Twitter equivalent. She would repeatedly ask him his name, and became confused as to who he was, calling him “son” one day, and “nephew” the next. The youngest of five children, born in Luanxian, Hebei Province, Pu was adopted by his childless aunt and uncle. Devoted to his adoptive mother, Pu was compelled to have her admitted to a nursing home - an action seen in conservative China as tantamount to abandonment - as his work kept him constantly traveling and unable to care for her himself. NEWSCHINA I March 2014

Photo by IC

SPECIAL REPORT

Pu with client Tang Hui, a mother sent to a labor camp after repeatedly petitioning for justice for her daughter, a rape victim, July, 2013

Pu, 48, a prominent human rights lawyer, was feted with cover profiles and man-of-the-year honors after he took on several high-profile cases involving Chinese citizens illegally sentenced to hard labor that emerged after the country’s unpopular and extralegal labor camp system was abolished in late 2013. Standing at over six foot and weighing 243 pounds, Pu even featured on the cover of a fashion magazine.

Politically Astute

Six of the cases that earned Pu his fame occurred in 2012 in Chongqing. Pu was charged with bringing prosecutions against officials working under fallen Politburo member Bo Xilai after criticizing the former city Party chief’s “cracking down on organized crime and singing revolutionary red songs” campaign in the spring of that year. A primary way for Bo and his underlings to remove stub-

born critics without resorting to the law courts was the labor camp system, which became used so freely that it caught the attention of the central authorities. In some particularly egregious examples of abuse, Peng Hong, a Chongqing local, was jailed for two years without trial for commenting on a political cartoon. In another case, Fang Hong, a Chongqingbased blogger, was sentenced to a year’s hard labor for writing a poem mocking Bo Xilai. Both these sentences were decisions were overturned after Pu’s intercession, though by the time it became politically possible to initiate action against Bo Xilai’s clique, both men had already served their terms. Only after the Politburo secured Bo’s removal after bringing separate murder charges against his wife in early 2012 did it gradually open the way for the many victims of his Chongqing crackdown to seek compensation. “When I arrived in Chongqing, the worst was already over,” said Pu, who claims that his Chongqing cases paved the way for the abolition of the labor camp system. “The cases won in Chongqing were a body blow to the labor camp system.” The labor camp system, modeled on that of Stalin’s Soviet Union, was adopted by the People’s Republic in the 1950s. It allowed police to jail citizens for up to four years without trial, and was used liberally to silence political dissidents who hadn’t broken any specific laws. Its abolition was hailed as a major milestone towards the protection of human rights in China. Pu was chosen to head up the Chongqing cases as a result of his well-regarded work defending press freedom. In 2004, he won a landmark victory for China Reform magazine, defending the publication against false libel charges filed by a State-owned real estate developer. In the same year, he defended Chen Guidi and Wu Chuntao, husband and wife authors of An Investigation into China’s Peasants, a bestseller that exposed corruption and abuse of power among government officials. The Communist Party boss of the county covered in the book brought libel charges against the authors. Nine years later, the case remains unresolved. NEWSCHINA I March 2014

Fiery

Over the past decade, Pu has handled a number of cases of human rights abuses and infringement of freedom of expression, mostly unsuccessfully. When representing clients, he usually has to pay for accommodation and travel out of his own pocket. “You can’t expect to make money from such cases, which are usually exhausting. It takes naïvete to pick such cases,” Pu told Southern People Weekly magazine in early 2012. One thing Pu doesn’t lack is choice. Since most lawyers in China would not touch cases relating to human rights abuses or infringements on press freedom, he has a long waiting list of clients. “Cases that make money do not make me famous, but the fame I get from my human rights cases do help me make money.” Pu said. He has made millions from his commercial cases, and has kept his human rights actions a sideline, handling only a handful each year. “I tell most people who come to me for help not to tell me about their misfortunes, as there is always somebody worse off,” he told Southern People Weekly. “I don’t want to be held NEWSCHINA I March 2014

Photo by IC

During his college years, Pu took little interest in the law, a much-maligned profession in China, where lawyers are generally seen as low-level government employees. Instead, Pu wanted to become a teacher because his mother wanted him to have a stable income. “Her ideas were influenced by living through the planned economy era, thus she worried about my future,” he told our reporter. Pu was admitted to Nankai University’s history department, and qualified as a teacher. However, he chose to pursue a Master’s degree in law from the China University of Political Science and Law. After graduating, Pu took up his first job as a bookkeeper at a vegetable wholesale market in Beijing. Although financial pressure eventually pushed him to take the bar exam at 30, his experience working at the grassroots level stayed with him throughout his career.

Pu (right) with client Ren Jianyu (center) and his father. Ren was sent to a labor camp for criticizing then Chongqing Party chief Bo Xilai, November, 2012

hostage by public pressure - I need to choose my battles carefully.” “Most of my clients do not expect to win. A victory is always a surprise. But even a loss will generate publicity.” In court, Pu is flamboyant, physically imposing and a relentless cross-examiner. During a court case in October 2010, Pu happened to spot the procurator who had physically beaten his client during his interrogation sitting in the gallery. Furious, he stormed towards the man, intending to cross-examine him, only to be hauled away by court police. The incident soon caught the attention of the media. Many of Pu’s peers dislike his style, and have accused him of showboating and engaging in behavior beneath the dignity of the courts. “He usually researches cases from the angle of constitutionalism, politics and human rights.” Chi Susheng, who occasionally works alongside Pu. “This lends his rhetoric a sense of grandeur.” Despite the criticism, Pu maintains that only pragmatic selection of cases, a grandiose courtroom style and the relentless pursuit of publicity will ultimately change China’s skewed and self-serving justice system.

environment

Finless Porpoise

Only One Chance

Scientists and conservationists continue to struggle to save the critically endangered Yangtze finless porpoise By Xu Tian and Wang Yan

ome seven kilometers from the Wuhanbased Institute of Hydrobiology (IHB), Chinese Academy of Sciences (CAS), the dolphinarium built to house captive Yangtze River dolphins still remains. However, 11 years have gone by since Qi Qi, the world’s only captive Yangtze River dolphin (Lipotes vexillifer), known as the baiji in China, died on July 14, 2002. Since Qi Qi’s death, no living specimens of this unique species remained in captivity, nor have any verified sighting be made in the wild. “The Yangtze River dolphin was declared functionally extinct by scientists in 2006,” said Wang Ding, 55, a researcher with the IHB. Now, Wang and his research team are concentrating on preserving the only other cetacean found in China’s Yangtze River, the Yangtze finless porpoise. “We hope the tragic fate of the Yangtze River dolphin won’t be repeated.”

Extinction

After inhabiting one of China’s two main waterways for over 25 million years, the Yangtze River dolphin has become one of the more high-profile casualties of China’s economic development. Massively increased river traffic, pollution, waterside development, damming and overfishing are all believed to have been primary contributors to the species’ demise. In January 1980, a male Yangtze River dolphin was caught by a fisherman in Hunan Province and was sent to the IHB. Chinese scientists named him Qi Qi, and hoped to use the

animal in an artificial breeding program. In the 1980s, it was believed that a population of around 400 Yangtze River dolphins inhabited the Yangtze River, yet most sightings in the subsequent years were of wounded or dying animals, often caught in nets. Conservation efforts came too late to save the population. In 1992, a national-level nature reserve at Tian’e Zhou (Swan Islet) was established in Hubei Province, but failed to stem the terminal decline of the tiny breeding population. Since 1997, a three-year monitoring program was launched and found 13 living Yangtze River dolphins in 1997. Only four were recorded alive in 1998. Then, a late 2006 expedition sponsored by the Ministry of Agriculture (MOA) and the Switzerland-based Baiji.org Foundation failed to find a single specimen, alive or dead. At the end of the expedition, a German scientist was reluctant to disembark from the research vessel. Wang Kexiong, researcher with the IHB, said that the specialist had remarked “once we disembark, it means… the end of a species.” Organizers declared the Yangtze River dolphin functionally extinct shortly afterward. August Pfluger, chief executive of the Baiji. org Foundation stated to the media, “The strategy of the Chinese government was a good one, but we didn't have time to put it into action.” In 2002, after surviving for over 22 years in the IHB’s dolphinarium, Qi Qi died of old age.

No female specimens had been introduced into the aquarium, making the breeding program a total failure. Following Qi Qi’s death, no human being would ever set eyes on a living specimen of this elusive cetacean again. “In the 1980s, we could easily spot Yangtze River dolphins in some areas. On one occasion, we even saw a pod of 17,” said Wang Ding. Wang, along with a few other scientists, continues to hold out hope that some surviving animals may have escaped the notice of conservationists and the scientific community. “Local fishermen keep reporting that they’ve seen live Yangtze River dolphins. While the population may not be sustainable, I feel there are definitely a few still alive,” Wang continued.

New Target

As conservationists gave up on their dream of saving the Yangtze River dolphin, attention was drawn to another critically endangered cetacean living in the same body of water – the Yangtze finless porpoise. In April 2012, the carcasses of some 12 finless porpoises were found beached on the shores of Dongting Lake in Hunan Province. Soon, a new campaign was growing, fueled by media interest in the story (see: “Fished Out,” NewsChina, July 2012, Vol. 48). From November to December 2013, the MOA and the IHB jointly launched a new expedition tour along the Yangtze River, documenting 1,040 finless porpoises in the river itself, along with two populations in Dongting and Poyang lakes. NEWSCHINA I March 2014

Photo by IC

lakes adjacent to the Yangtze proper, particularly in the Tian’e Zhou nature reserve which was set aside for their now-extinct dolphin cousins. Without any artificial interference, the waters in the Tian’e Zhou reserve have developed into a sound ecosystem remarkably similar to that of the A female Yangtze River Dolphin is found dead on the shore of Yangtze, minus the polPoyang Lake, with injuries to its tail and head, Jiangxi Province, lution and human activDecember 24, 2013 ity. Bucking the general trend, the population of finless porpoises in the reAccording to research statistics, from 1991 serve, a small pod of which were transplanted to 2006, the population of Yangtze finless por- in the early 1990s, has grown from five to over poises has declined by an annual average of 6.5 40 today. percent. In 2006, the total population stood at In 2013, Wang Ding led a group of experts around 1,800 animals, and the decline acceler- from the IHB, Nanchang University and ated to 13.7 percent that year. Without conser- the Jiangxi Provincial Aquaculture Science vation, scientists estimate that this species too Institute in the establishment of a cetacean will be functionally extinct within 15 years. preservation team. These biologists, zoolo“In my opinion, we should make immediate gists and conservationists conducted investiefforts to preserve, rather than merely ‘protect’ gations in Junshan Lake, Jiangxi Province and this species.” Wang Ding said. Wang is one of Hewangmiao Oxbow Lake straddling Hubei many scientists who oppose the idea that the and Hunan provinces. Both bodies of water, only way to rescue critically endangered ani- larger than Tian’e Zhou, were declared suitable mals is simply to place them in captivity, reduc- habitats for the Yangtze finless porpoise. Both ing wild species to zoo attractions. He explained are expected to receive their first live specimens that among the three internationally acknowl- in 2014. edged conservation strategies – namely, in situ, “For species conservation, we cannot put all ex situ and captive artificial breeding, in situ our eggs in one basket,” Wang Ding told our conservation is seen as the ideal. reporter, stressing the importance of genetic diHowever, as with most endangered Chinese versity in guaranteeing the survival of a species. species, conservation, when it impacts on the “We have communicated with local governeconomy, is a hard sell. ments on related issues and they are all very “We’ve tried to visit different counties along supportive. The tragedy that befell the Yangtze the Yangtze River to modify fishing habits, and River dolphin has added a sense of urgency.” campaigned through various media for a ten- Greater media coverage since 2012 has also year fishing ban on the Yangtze River,” Wang helped galvanize the authorities into action, he told NewsChina. “However these attempts were added. not successful and now we have to resort to ex “If we give up, the species has no hope. We situ conservation.” are the last and only group of people fighting Ex situ conservation relocates endangered for the protection of finless porpoises.” species to areas where they are less threatened “People easily blame us for our failure to reby human activity. According to Wang, the best vive the Yangtze River dolphin,” Wang Kexiong ex situ conservation location for Yangtze finless said. “But the conservation of a species is comporpoises is in waters like those in the oxbow plicated, systematic work.” NEWSCHINA I March 2014

Dilemma

Despite the attention given to wildlife conservation in the mainstream Chinese media, however, the interests of economics rarely coincide with those of the country’s myriad endangered species. For example, the proposed Hewangmiao Nature Reserve, once set up, will result in the local abandonment of fish traps, seriously threatening the livelihoods of fishermen living on or near the reserve. Government subsidies for the reserve, Wang Ding admits, would never stretch to cover compensation. “Honestly speaking, as a scientist, it is true that I can answer questions addressing why these aquatic animals are endangered and what measures we can take to prevent them from dying,” said Wang. “But we cannot represent the government and neither can we determine the attitudes and actions of local people.” However, while opposition is undeniable, some communities have welcomed efforts to protect endangered local species. According to Wang, in November 2012 his expedition team received a warm welcome from locals in newlynamed “Finless Porpoise Bay” in Ezhou, Hubei Province. Local people there spontaneously formed a conservation team to guard their handful of porpoises. “Despite the low temperatures, people stood outside to wave us ashore.” Wang is optimistic that such grassroots support could offer an alternative to less enduring government-led initiatives. In July 2013, the Yangtze finless porpoise, the world’s only freshwater porpoise, was upgraded from Endangered to Critically Endangered on the IUCN Red List of Threatened Species. Analysis of data obtained from 279 specimens stranded on shorelines in the middle and lower reaches of the Yangtze River from 1978 onwards revealed that the population is experiencing an accelerating decline, with an 80 percent population loss predicted within three generations. Despite the gloomy outlook for this lone survivor, Wang Ding remains optimistic about the future of the Yangtze finless porpoise. “We have learned lessons from the Yangtze River dolphin and know how to preserve a dying species. If we start right now, the species could be saved.”

economy

Outsourcing Agriculture

Feeding Demand As urbanization accelerates, it is gobbling up China’s farmland, polluting what hasn’t been built upon. A nation that once prided itself on self-sufficiency in agriculture is now looking to others to help feed its massive population By Zhou Zhenghua and Wang Yan

n the past two years, Zhang Renwu has purchased two ranches in Utah for the sole purpose of growing alfalfa, a forage crop which can be turned into animal feed. Zhang, a native of Inner Mongolia, has been working in agriculture for over two decades. As the founder of Lu Tian Yuan (Green Pasture) Ecological Farm Co. in Beijing, one of the biggest suppliers of alfalfa products in China, Zhang was among the first to spot that his home country was no longer able to meet its domestic demand for the crop, used principally to feed dairy herds. Zhang, and many others, sought wide open spaces elsewhere. After paying over US$10 million for his first 8,900-hectare (22,000 acre) ranch in northern Utah in 2011, Zhang said that his US operation is already far more profitable than his ranches in Inner Mongolia, citing more sunshine, rich soil and clean water resources as the main factors. Zhang Renwu is not alone. Chinese agricultural enterprises, both private and State-owned, are following suit. In mid-2013, Legend Holdings, the parent company of global PC giant Lenovo, had its subsidiary company Joyvio invest in five vast orchards in Chile. The company has also announced its intention to “build partnerships” in Southeast Asia, Australia and later in the US and Europe. In September 2013, Xinjiang Production and Construction Corps signed an agreement with Ukrainian agricultural firm KSG Agro on a 50-year lease of some 100,000 hectares principally for growing crops and raising pigs for the Chinese market. The Chinese authorities have encouraged domestic enterprises to

NEWSCHINA I March 2014

“go out” since the early 2000s, particularly businesses involved in manufacturing, natural resource exploitation and mining. Some hightech industries have also launched overseas investment and development projects. Agricultural enterprises were latecomers to this outbound investment boom. However, the looming specter of food shortages, a litany of domestic food safety scares and ever-worsening pollution of the country’s dwindling land and water resources have all provided the proverbial shove out of the door.

Insufficient

Zhang Hongyu, director of the industry policy and regulation department of the China Ministry of Agriculture (MoA), is among many officials who believe China faces potential future food shortages. Despite being home to a fifth of the global population, China only has jurisdiction over nine percent of global land resources. Much of this land is either urban or industrial, unsuitable for agriculture or, increasingly, too polluted to be of use. Demand for food is rising along with incomes, but harvest yields are remaining stagnant or, in some areas, worsening. Unlike countries with mechanized agriculture and abundant land resources such as the US and Australia, China’s agricultural land, mostly concentrated on the east coast and along the country’s main waterways, is threatened by industrial and urban encroachment and environmental pollution, a problem not helped by widespread underdevelopment of farming practices, despite a heavily industrialized processing chain. It is estimated that the daily calorie intake of a rural resident increases by 20 percent upon moving to an urban area. With a massive urbanization program in full swing, demand for food is expected to soar. “In the perceivable future, the influx of rural people into cities in the hundreds of millions will be the major force propelling food consumption,” Zhang said. While it has abandoned its formerly intractable claims of self-sufficiency, the Chinese government has set a target to product 95 percent of its grain. In the mid-1990s, official figures gave a rate of 100.5 percent, and until 2004, China remained a net grain exporter. By 2011, this trend had reversed alarmingly, turning China into the world’s largest grain importer, with official figures stating that the country was 97.7 percent self-sufficient in grain. “Total grain production amounted to over 600 million tons in 2013, 12.4 million tons more than the previous year,” Zhang Hongyu told NewsChina. “Despite this, the NEWSCHINA I March 2014

tenth consecutive year of higher yields, we are still facing a potential threat of food shortage.” Zhang added that, in 2012 alone, China imported over 70 million tons of soybeans, corn, wheat and rice. In an interview with the Farmers’ Daily, Jiang Changyun, a researcher with China’s top macroeconomic planning agency the National Development and Reform Commission (NDRC), provided data proving that China imported 2.31 million tons of rice, 3.69 million tons of wheat, and 5.21 million tons of corn in 2012. This accounted for 6 percent, 4.4 percent and 3.6 percent of the global trade in each commodity respectively. Because the global market price “Our agriculture of imported grain products is lower can no longer meet than that of domestic alternatives, the the demands of increase in grain imports seems inindustrialization.” exorable. China’s low productivity in relation to fully industrialized nations is not helping matters. In a research report on China’s agricultural mechanization released by the Chinese Academy of Sciences in 2012, scientists claimed that in 2008, the country’s agricultural labor productivity was less than 10 percent of the rate recorded by industrial enterprises. The report also claimed that China was 150 years behind the UK, 108 years behind the US and 36 years behind South Korea in terms of agricultural modernization. Yet little progress has been made in terms of bringing China’s inefficient farms up to date. Yang Yiyong of the NDRC told NewsChina that there are major bureaucratic and practical hurdles to be overcome if the country’s farmers are to mechanize. Above all, Yang argues that the impossibility of free market economics and the privatization of farmland precludes any substantive improvement in productivity (see: “Why Privatized Farmland is not the Solution,” NewsChina, June 2011, Vol.34). Li Zhizhong, deputy general manager of the Ping An Smart Fortune Investment Company, agrees with this assessment, adding that there are three other major obstacles for agriculture development, namely: the fragmentation of the supply chain; inadequate and nonexistent branding; and plummeting market and consumer confidence in Chinese agricultural products. “Our agriculture can no longer meet the demands of industrialization,” Li Zhizhong said. He went on to state that, without improving efficiency in the agricultural sector, China’s urbanization, industrialization and even national economic security will be threatened. The issue of food security is frequently raised at national-level Party conferences. Zhang Hongyu admitted that China’s self-sufficiency in grain dropped below 90 percent last year, a commonly-acknowledged safe bottom line to ensure food security. Other than a handful of Af-

economy

Total grain production (2003-2013) Unit: 100 million tons

800 700 600 500 400 rican nations, few countries worldwide are recording such significant shortfalls in supply.

Experimentation

China’s outbound agricultural investment began in the early 1950s and was concentrated in the Soviet Union, the Eastern Bloc and in some neighboring Asian countries friendly to the People’s Republic. In the 1970s, as China’s international standing rose and its economy began to recover from the famines of the 1950s and economic stagnation during the Cultural Revolution (1966-1976), the investment expanded to the Middle East, African and South America. After relations were reestablished with the US in the 1980s alongside the launch of Reform and Opening-up, overseas agricultural investment continued to expand. In March 2006, the central government formally set up its outward strategy in agriculture, encouraging domestic companies to engage in foreign investment and international economic cooperation programs. In the following years, favorable polices including financial subsidies appeared in support of this strategy. For example, according to a joint document issued in 2011 by the ministries of finance and commerce, enterprises conducting overseas investment in the fields of agriculture, forestry, fishing or mining were eligible for annual subsidies of as much as 30 million yuan (US$4.96m). In March 2013, the State Council announced support for top agricultural companies to boost capacity through issuing shares and listing on overseas markets. Some State-owned companies such as the Beidahuang Group, China’s largest agricultural concern, were among the first to look outwards. As early as 2011, this Heilongjiang-based giant signed cooperation deals with the government of Argentina’s Rio Negro Province, pledging a US$1.5 billion investment over a decade in leasing and developing farms on some 300,000 hectares of land to produce wheat, corn, soybeans, fruit, vegetables and wine grapes for exclusive export to China. Sensing rich business opportunities, more private enterprises joined the outbound investment movement. Countries with advanced agriculture, favorable environmental conditions and abundant land resources, particularly the US, Chile, Argentina and Australia, became the top choices. Legend Holdings restructured its subordinate agriculture invest-

300 200 100 0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Ministry of Agriculture

ment department and set up Joyvio Group in 2012 precisely to exploit the opportunities offered by overseas expansion. The company adopted strategies focusing on three key elements, namely, full production line operations, global sourcing and comprehensive traceability systems. Joyvio has so far formed strategic partnerships with Chilean fruit company Subsole along with Perfection Fresh - Australia’s biggest fruit and vegetable producer. “Global sourcing is intended to diversify our high quality fruit resources,” said Liu Dan, Joyvio’s deputy managing director, who also revealed a forthcoming agreement with the Chilean government allowing his company to establish orchards in the country. According to Liu Dan, unlike China’s labor-intensive agriculture, Chilean farms structure production around quantitative analysis and quality control. High-tech measures are widely used, including GPS, digital monitoring of sunlight and temperature, mechanized irrigation and chemical analysis of soil and water resources. Zhang Renwu, Chairman of Lu Tian Yuan Ecological Farm Co., is also full of praise for US farming practices. Zhang runs his Escalante Ranch with only four farmhands. In China, he told NewsChina, for a ranch of the same size, he would need to employ between 200 and 300 people. “The level of agricultural modernization in the US is beyond our imagination,” said Zhang. He went on to detail the complex process of establishing his Utah operation. Before Zhang could plant a single stalk of alfalfa, soil samples from NEWSCHINA I March 2014

Total agriculture product import and export (2001-2011) Unit: US$ 100 million

1000 800 600 400 200 0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Unit: US$100 million Unit: US$100 million

Source: Ministry of Agriculture

different areas of the ranch had to be tested by professional agriculture consulting companies to establish its chemical composition. The result would determine how much fertilizer Zhang would be permitted to use, with the data transferred to the onboard computer of his GPS-equipped spraying truck, capable of covering almost 500 acres in a single day. In China, said Zhang, dozens of farmhands would indiscriminately spray fertilizer across all plots entirely by hand. Unless China can make 100 years of progress in agricultural development in the next few years, Zhang is unlikely to see demand fall for his product. “It is important to provide high-quality alfalfa for cows in China to ensure the quality of dairy products,” said Zhang. “It’s a big mission, and one I want to continue.”

Reality Check

While food security worries may be contributing to the wave of outbound agricultural investment emerging from China, the demands of the increasingly savvy and discerning domestic consumer are likely to be the determining factor in sustaining it. Shaken by a series of embarrassing food safety scandals exposing vast traceability gaps in its production chain, the government has reaffirmed its pledge to guarantee the nation’s food security “from a global perspective.” “We will continue to base solving the problem of feeding our nation through domestic resources,” said Minister for Agriculture Han Changfu at a press conference in December 2013. “At the same time, NEWSCHINA I March 2014

we will moderately explore the international market.” Compared to Japan, one of the world’s largest food importers which saw many of its agricultural enterprises relocate operations to Southeast Asia as early as the 1940s and now owns over 12 million hectares of overseas farmland, China, the world’s largest net food importer, has a long road ahead. So far, Chinese firms have set up overseas agricultural investment and cooperation initiatives in some 90 countries. According to statistics released by the Ministry of Commerce, by May 2012, a total of 598 Chinese agricultural concerns were operating abroad, of which 354 were in Asia, 78 in Africa, 80 in Europe, 34 in Oceania, 30 in North America and 20 in South America. Yet the production line is far from seamless, or secure. One harsh reality faced by China’s overseas farmers is increasingly strict policies regarding the purchase of land by overseas nationals. Domestic pressure from farmers and the public in former havens for inbound agricultural investment has seen a gradual shift in attitudes, particularly in South America. In 2011, the Brazilian government inked a new land law to further limit the purchase of rural land by foreigners or by Brazilian firms controlled by foreigners. Now, in Brazil, foreign companies cannot own more than 25 percent of any municipality or more than 50 “modules” of land - the size of which varies, from 250 to 5,000 hectares depending on the region. Argentina also initiated a similar process the same year, banning individual foreigners from owning more than 1,000 hectares of Argentinian land and limiting aggregate foreign ownership to 20 percent of Argentina’s total rural land resources. The newly imposed ceilings on land ownership resulted in the obstruction of some Chinese investment projects. In 2010, the Chongqing Grain Group tried to negotiate the purchase of 100,000 hectares of farmland in Bahia, Brazil to produce soybeans for the Chinese market. The company was forced to change tack after the new law came into force. Demand, however, is not falling. Zhang Renwu is one of the many beneficiaries of the insatiable hunger of his compatriots for imported agricultural products. “Chinese agriculture must seek greater development opportunities,” said Zhang. He is currently fulfilling the purchase of a new 20,000-hectare ranch in Utah. Few, it seems, would disagree. 

economy

Alipay

Who Needs Banks? Alipay is hoping to change the way the finance game is played in China By Sun Zhe

Photo by CNS

he charismatic founder of Chinese e-commerce giant Alibaba, Jack Ma, vowed five years ago that if China’s banks didn’t change, Alibaba would change the banks. Now, he looks close to achieving his goal. Half a year after launching Yu E Bao, or “leftover treasure,” a service allowing customers using Alipay (an online payment system similar to PayPal) to convert cash into highlyliquid investment products with much higher yields than bank deposits, many Chinese banks have attempted to follow suit. By the end of 2013, Yu E Bao had gathered a user base of 43 million, with combined deposits of 185 billion yuan (US$30.6bn), making it the second largest single wealth management fund in China. Since June 2013, when Yu E Bao was launched, its annual returns rose from 4.3 percent to about 6.5 percent by early January 2014. Considering the tightening liquidity in China’s money market towards the end of 2013, this meant the platform offered more than double the ROI of a benchmark one-

Alipay CEO Peng Lei

year fixed-term deposit, and 20 times the interest of a regular checking account. Predictably, State bankers expressed concerns that Yu E Bao was chipping away at their deposit base. Unlike their international counterparts who mainly profit from investment, Chinese banks, most of them Staterun, rely on the State-controlled interest rate margin for the majority of their profits.

Yao Jingyuan, former chief economist with the National Bureau of Statistics, even mocked the banks’ inefficiency and reliance on preferential treatment, joking that they could “appoint dogs as their presidents and still make the same amount of money.” As a result, Minsheng Bank, for example, one of China’s few privately-owned banks, unveiled a product that allowed clients to automatically invest money from deposit accounts into funds and promise a return of five percent, while the money could still be withdrawn at any time, an obvious competitor for Yu E Bao. However, Alipay has retained an edge simply through its liquidity advantage, an area in which State banks struggle to compete. Money can be transferred in real time to an Alipay account for all sorts of payments enabled by the platform – online purchases, taxi fares, water bills and even the public welfare lottery. Within two hours, money can be transferred from an Alipay account back into a deposit account, whereas most banks freeze any invested deposit for months or NEWSCHINA I March 2014

china

even years, charging considerable fees for unscheduled withdrawals. In addition, Yu E Bao sets no investment limit, allowing customers to invest any amount from 1 yuan (US$0.17) upwards. The average State bank investment product necessitates a minimum investment of 50,000 yuan (US$8,260).

Back to the Roots

“Finance used to seem mysterious and remote to the masses,” said Alipay CEO Peng Lei. “Now, however, buying and selling financial products is a way of life for most people. The Internet enables us to serve the grassroots.” Due to its convenience and lucrative yields, Yu E Bao has lured a great many customers away from the banks, especially young people. Four out of five Yu E Bao users are aged under 35, investing an average 4,300 yuan (US$710) into the fund, a fraction of the average for bank-held investment products, according to industry consultancy iResearch. Apart from Yu E Bao, Alibaba has also begun brokering financial products on Tmall, Alibaba’s business-to-customer online retailing portal, also the country’s largest. Other Internet giants such as social media icons Tencent, search giant Baidu and top webportal Netease, are all competing to offer suspiciously high yields ranging from 8 to even 11 percent. However, Alipay’s expansion in the finance sector has not gone altogether unchecked. In summer 2013, Alipay found it had to remove all its custom POS terminals given to retailers for what it called “reasons known to all” in a statement afterward. It is an open secret that China Unionpay, the State-controlled payment service which provides all the nation’s POS devices, was unhappy about losing its monopoly, and pressured the government into forcing Alipay out of the sector. Alibaba, and other dotcom companies who want to dip their toes into China’s hectic but hugely lucrative financial sector might still need to rely on the mercy of State banks, and their masters, if they are to continue to flourish in one of the world’s most tightly restricted financial markets. NEWSCHINA I March 2014

bynumbers US$3.4tn

No.1

China’s total government debt by the end of June, 2013, plus US$480bn in government-underwritten debt and US$1.1tn in debts deemed a default risk. Local government debts were reported at US$1.78tn.

The predicted global ranking of China’s total foreign trade in goods for 2013 China’s trade with major partners 15 12

Who has borrowed US$1.78tn in local government debt?

Financing platforms

Government agencies

Public-funded organizations

State-owned enterprises

-3

Public utilities

-6

Other

ASEAN

SOUTH CENTRAL AFRICA ASIA

JAPAN

Source: China General Administration of Customs

Source: China National Audit Office

0.10

Hectares of arable land per capita in China by the end of 2009, less than half the global average and down from 0.11 hectares in 1996. Source: Ministry of Land and Resources

1.4%

Monthly PPI in 2013

The year-on-year drop in the producer price index (PPI), measuring cost differentials for manufacturers as recorded in December 2013. China’s PPI has fallen for 22 consecutive months, indicating an economic slowdown. Source: China National Bureau of Statistics

-1.0

-1.5

-2.0

-2.5

-3.0 JAN

FEB

MAR

APR

MAY JUNE JULY

AUG

SEPT

OCT

NOV

DEC

US$1.8bn China’s net overseas financial assets by the end of September 2013 Structure of China’s foreign assets and liabilities, US$ Assets: 5.65tn Outward direct investment Outward portfolio investment

Liabilities: 3.85tn Inbound foreign direct investment

Foreign reserves

Inbound foreign portfolio investment

Others

history

The One Child Policy

One for All Despite being one of China’s longest-running national policies, the One Child Policy has been bitterly contested since it was first implemented in 1980. NewsChina looks into the policy’s inception, and how it has changed with the times By Xu Tian and Xie Ying

government has warned local decision makers of the potential pressure that could be brought about by a baby boom following the loosening of restrictions, experts believe the policy will not have a large impact on China’s total population, with many suggesting that the policy should be extended to all couples. “Based on our calculations, it would have been fine for the country to loosen the onechild limit five or six years ago. Delaying until now is cautious enough,” Xiao Zhenyu, former statistics director at the National Family Planning Commission, the government body tasked with managing the One Child Policy, told NewsChina.

Population Projections Photo by FOTOE

hinese local governments are currently busy with conferences and public hearings to establish local policy on allowing dandu couples (only one member of which has no siblings or half-siblings) to have two children, a long-awaited measure unveiled following the Third Plenary Session of the 18th CPC (Communist Party of China) Central Committee which concluded in mid-November 2013. The announcement, a landmark in the history of China’s controversial family planning policy, marks the first loosening since 2009, when the government decided to allow couples both of whom were only children to have a second baby. Experts have said the new measures will allow roughly 15-20 million people to have a second child. Although the central

A medical worker in Beijing persuades local women to have fewer children, 1975

China has called for population control since the end of the 1970s, at which time the government was anxious to boost the country’s economy, which had been badly damaged by the Cultural Revolution (1966NEWSCHINA I March 2014

NEWSCHINA I March 2014

could predict how different changes in policy might affect population size,” Yu Jingyuan, another engineer who participated in the population modelling, told NewsChina. In January 1980, Song Jian, Yu Jingyuan, Li Guangyuan (also a member of the leader group) and Tian Xueyuan (a population researcher with the Chinese Academy of Social Sciences) jointly delivered a report to the government, revealing the results from the model: If each couple were to have only one baby, China’s population would rise to 1.05 billion by 2000, rising to 1.22 or 1.42 billion if each couple were allowed to have two or three children respectively. Based on the analysis, Song Jian also presented a series of population projections for the next 100 years, warning that China’s population would reach an estimated 4 billion by 2050 if it did not take any measures to control the birth rate.

An Open Letter

Photo by FOTOE

1976). Thanks to China’s second population forum held in Finland in 1978, he brought explosion following the three-year famine back a new model of population projection (1959-1961), the country was home to over that he felt would reveal major challenges 800 million people at the end of the 1970s, ahead for China. over 30 percent of whom, however, were The group thus launched the governtrapped in abject poverty. Despite placing ment’s first attempt at population data 15th in global GDP rankings at the time, analysis. Based on the demographic statistics China’s GDP per capita was among the provided by the Ministry of Public Security, world’s lowest, only two-thirds that of neigh- they determined values like China’s birth boring India. and mortality rates, with a new term, “births “The central government was determined per woman” (now generally known as “total to change the country’s fate, so it promoted fertility rate” or TFR), being the key factor the slogan ‘Develop the economy while de- influencing policy. creasing population [growth],’” said Zhang “The term was pioneered by the internaMincai, then a member of the national fam- tional demography circle, and meant the toily planning leader group, in an interview tal number of babies a woman gives birth to with NewsChina in 2010. throughout her life. By altering this value, we The slogan soon found its way into legislation, as the Chinese government wrote the phrase “the State promotes family planning” into the third version of its constitution in March 1978. In June that year, the State Council set up the national family planning leader group, defining its aim as “to reduce China’s natural growth rate of population from 12.1 per thousand in 1977 to below 10 per thousand by 1981.” However, due to a lack of solid data, the group had no clear idea on how to achieve this target. “[At first] we tended to control birth rates using propaganda and education rather than with extreme measures,” recalled Xiao Zhenyu, also a member of the leader group. Song Jian, then a military engineer with China’s defense ministry, helped change the government’s attitude. After attending an One Child Policy propaganda in a county in Shaanxi Province, 1998 international engineering

By encouraging “later marriage, fewer children and a longer gap between two babies” in the 1970s, China had already seen a sharp drop in its TFR, from 5.44 in 1970 to 2.75 in 1979, according to national statistics. Song Jian’s frightening verdict, however, pushed the government to tighten its controls further. “We should no longer stand on the past birth rate. In order to prevent another population explosion, we should turn to encourage one child per couple in the next 30-40 years,” read a commentary in the Guangming Daily, a Party newspaper, following the publication of Song’s predictions. On September 25, 1980, the CPC Central Committee published an open letter call-

history

ing for a One Child Policy in order to “maintain the population below a threshold of 1.2 billion by the end of the 20th century.” “In theory, the population could have remained at around 1.22 billion in 2000 by allowing each couple to have a maximum of two children, but considering the implementation and the time lag needed to adjust population growth, the government preferred the One Child Policy,” explained Yu Jingyuan. At first, the government had proposed to tailor the policy’s implementation to specific conditions in different regions. However, by the time that birth rate control was made obligatory national policy and written into China’s fourth version of its constitution in 1982, the message was clear: No couple may have more than one baby. In order to improve their performance assessment statistics, local governments, especially those in rural areas where families hoped to have more children as a source of additional labor, dealt out incredibly harsh punishments for violations. Hundreds of women were forced to abort their second babies, no matter how long they had been pregnant. Thousands of rural families were dispossessed of their land and livestock for violating the policy. Violent conflicts between family planning officials and the public began to make headlines. Under pressure from the growing tension, the National Family Planning Commission in 1984 submitted a report to the government, proposing to loosen controls in rural areas by allowing some rural couples, such as those with only one daughter, to have a second baby. Seizing the opportunity, Liang Zhongtang, then a teacher at the Shanxi Provincial Party School who explicitly opposed the nationwide One Child Policy, got the government’s approval to make Yicheng County, Shanxi Province, a “secret pilot area” for the allowance of a second baby. However, the government was shaken by a random mini-census in 1987, which revealed that the TFR had rebounded to 2.59 from 2.2 in 1985. “Slightly loosened control has caused a

big rise in the birth rate. It is urgent to fully control population size,” claimed the family planning leader group in their report to the government. The report was passed by the first meeting of the National People’s Congress (NPC), China’s legislature, in 1988, where the nation’s leaders emphasized the need to “strictly implement the One Child Policy nationwide.” “The European demography circle at that time called us the ‘strict control’ school, but I did not accept this name. [The One-Child Policy] was not an academic school, but a national policy. We were the ‘national school,’ if anything,” Yu Jingyuan told NewsChina.

Time to Change

The “national school” was increasingly challenged, however, as the side effects that opponents of the One Child Policy had warned of, such as an aging population and labor shortages, began to show. In 2000, China launched its fifth census, and found for the first time that people over 60 years old exceeded 10 percent of the total population, the international standard for an aging population. At the end of 2000, the State think-tank, the Chinese Academy of Social Sciences (CASS), set up a study team to evaluate the impact of China’s family planning on the population, including several members of the former State Council’s family planning leader group like Yu Jingyuan and Xiao Zhenyu. By using a new population model, the study team concluded that since the One Child Policy was implemented in 1980, 270 million births had “been prevented.” “We have controlled the population over the past 20 years, but we also paid a high price…Many problems have arisen – a labor shortage, an aging population, and sharp conflict between [family planning] officials and the public,” Zhan Jie, a member of the CASS team, told NewsChina. Following several years of field investigation all over the country, the CASS team delivered a report to the State Council in 2006, calling for “a soft landing for family planning policy.”

“TFRs in 12 regions and provinces have dropped below 2, with a less than 10 per thousand natural growth rate of population…We believe it is time to lift the ban on having a second child in these 12 regions and provinces, the policy of which could be extended nationwide in 10 years,” said the report. The government did not accept the report, saying it did not comply with prevailing policy at the time. “The government actually heard our findings as early as in 2004. Although the officials present were too cautious to say anything at the time, I believe the meeting itself has sent a signal [that the government intends to adjust the One Child Policy],” said Zhan Jie. Calls to loosen the birth control continued, and reached critical mass in 2010, the 30th anniversary of the launch of China’s One-Child Policy. That year, China published the results of its sixth population census, revealing that China’s natural population growth rate between 2001 and 2010 had dropped to 5.7 per thousand, half that recorded between 1991 and 2000. Meanwhile, people over 60 years old had occupied 13.3 percent of the total, around 3 percent higher than in 2000. The figures were so alarming that many former supporters of the One Child Policy, including the policy’s architects Tian Xueyuan and Xiao Zhenyu, shifted their position and called for looser controls. “[Our] open letter had actually called to limit the One Child Policy to a period of 30 years, until population growth slows down. By now, it should have expired,” Hu An’gang, director of the Research Center for Contemporary China under Tsinghua University, claimed in Economic Information, a newspaper under the State-run Xinhua News Agency. Just 10 years earlier, Hu had still supported the One-Child Policy, worrying that looser controls would put too much pressure on China’s limited resources. “People are wondering why I supported the One-Child Policy in 1980, but now oppose it. The answer is the same: To keep pace with the times,” Xiao Zhenyu told NewsChina. NEWSCHINA I March 2014

culture

Tianjin Grand Theatre

Private Performance Hailed as a key figure in China’s high culture scene, Qian Cheng is the private businessman working to revive Tianjin’s Grand Theatre, and transform Tianjin into a “city of opera”

NEWSCHINA I March 2014

The Mariinsky Theater’s Swan Lake at the Tianjin Grand Theatre, October 3, 2013

Photo by CFP

By Ding Chenxin

Photo by CFP

culture

Qian Cheng, general manager of the Tianjin Grand Theatre

n October 2013, the Tianjin Grand Theatre presented what many consider to be one of the most important performances in China last year: Over 200 members of Russia’s world-class Mariinsky Theater’s Ballet and Symphony Orchestra made their first ever visit to China to perform the ballets Anna Karenina and Swan Lake. The performance by the 220-year-old Mariinsky also marked the Tianjin Grand Theatre’s ascension into the ranks of the country’s top theaters, signifying its ability to independently host world-class performances and, according to industry insiders, placing it alongside the National Centre for the Performing Arts in Beijing, the Shanghai Grand Theatre and the Guangzhou Opera House. The Tianjin Grand Theatre is a pioneer among China’s governmentfunded theaters. While it was built with local government funds, it is managed by a private company – the first time such a model has been attempted in China. Since its opening in April 2012, the theater has been at the forefront of the Chinese government’s experimentation with market-oriented high art operation.

City of Opera

Qian Cheng, the theater’s general manager, grew up in Tianjin, a city in north China known as the home of the art of cross-talk – a popular form of two-handed comedy repartee. Despite the city’s

Pinchas Zukerman and the National Arts Centre Orchestra of Canada at the Tianjin Grand Theatre, October 13, 2013

widely acknowledged cultural importance, ordinary Tianjin residents typically have little interest in high art, particularly opera. Before taking on the theater’s management, the last time Qian watched an opera was some thirty years ago. Having single-handedly revived a number of theaters, Qian Cheng has a knack for attracting audiences. During the early 1990s, a tough time for China’s performance industry, Qian contracted the struggling Beijing Concert Hall. The number of performances rose from 60 in Qian’s first year in charge to 162 in the second. Two years later, that number had doubled again. At the age of 37, Qian was picked out by State broadcaster China Central Television as a figure representing the development of China’s cultural industries in a documentary commemorating the 20th anniversary of China’s opening up to the world. However, a serious business failure hit Qian in 2007. He then returned to Tianjin, and took over management of the Tianjin Concert Hall, an institution mired in financial troubles. Qian reintroduced high art to the hall’s event programming, and with the help of his endeavor and experience, business began to pick up half a year later. In 2009, the hall was lauded by Music Weekly, one of China’s largest music newspapers, as the nation’s premier concert hall. The then freshly renovated Tianjin Concert Hall became a role model for its peers. Thanks to this success, in 2011 Qian Cheng’s private company NEWSCHINA I March 2014

Propel Culture Media stood out from its State-owned competition in the race to be selected by the city’s municipal government to run the Tianjin Grand Theatre, and was awarded the contract on a “zerosubsidiary, entirely market-oriented” basis. In the first year of Qian’s tenure, from April 29, 2012 to the end of that year, the Grand Theatre held a total of 141 performances, including performances from seven of the world’s top symphony orchestras. In 2013, the hall hosted a total of 310 performances. Most surprisingly, this number included eight operas, marking the theater as one of China’s top opera houses in terms of number and quality of performances, second only to Beijing’s National Centre for the Performing Arts.

Risky

With a construction investment of 1.5 billion yuan (US$238m), the Tianjin Grand Theatre has an area of 100,000 square meters, comprising four independent auditoria and 3,600 seats. The yearly operating costs are around 100 million yuan (US$15.9m). By the end of 2013, the theater had been running for some 600 days, and although it is currently making a loss, this was expected – on average, only half of the available tickets were sold for each performance. However, Qian insists that there is a market for high art in the city, and that education is the key to unlocking Tianjin’s potential cultural audience. In the prologue to the theater’s 2013 performance calendar, Qian wrote about his vision for the future of Tianjin: “A City of Opera.” Prior to that, Qian had researched Tianjin’s opera history, and found that the earliest performance may have been Le Dame aux Camellias in 1893 at the city’s German Club. 85 years later, in 1978, the Chinese National Opera came to Tianjin, and performed the same piece 40 times, to sold-out 2400-strong audiences each performance. However, since then, according to Qian’s research, not a single opera had been performed in Tianjin. After taking over the operation of the Tianjin Grand Theatre, Qian successfully persuaded the city’s municipal government to integrate available resources, allowing him to found the Tianjin Opera and hire with Tang Muhai, one of China’s most internationally recognized conductors, as artistic director and chief conductor. In early 2013, Qian and Tang planned a Complete Beethoven series, comprising ten performances with lectures and after-performance seminars. On the afternoon of March 3, the series’ second performance achieved 90 percent attendance.

Varied Funding

The Mariinsky’s performance of Swan Lake in Tianjin is the first example of government subsidiaries being used for cultural events since the city unveiled a policy for their provision in September 2013.

NEWSCHINA I March 2014

Thanks to government subsidies, prices for half of the tickets were kept below 300 yuan (US$48), which greatly boosted attendances for Anna Karenina and Swan Lake. Tianjin’s new cultural policies provide 10 million yuan (US$1.59m) each year to support high art performances, exhibitions and popular arts events, in order to “invite more people into theaters and exhibition centers to enjoy high art.” Qian says that this progress is the result of continued efforts. One of these efforts was the Chicago Symphony Orchestra’s visit to Beijing, Shanghai and Tianjin in February 2013 as part of its Asian Tour – the first time this world-renowned orchestra had performed in Tianjin. In advance of the opening night of the performance, only 40 percent of tickets had been sold. Qian Cheng told our reporter that he saw this not only as an economic loss for the theater, but also as an embarrassing indictment of artistic taste in this city of 15 million people. Qian sent SMS messages to the mayor and vice-mayor in charge of culture, expressing both his anxiety and his hope for support. The officials responded positively, saying that bills aimed at raising subsidiaries for high art performance were on the government’s agenda. In 2012, Tianjin Grand Theatre saw a bitter contrast between the high quality of its event programming and a cold response from the market. Qian said that cultural subsidies were a pressing issue. According to Qian, most of the world’s grand theaters serve three major basic functions, namely performance, artistic education and artistic creation. “Every grand theater in the world has these,” said Qian. Funding for theater operation comes from three sources: government subsidies, social sponsorship, and ticket sales and service provision. Qian told our reporter that theaters in Europe receive great amounts of government subsidies, while in the United States, the majority of funds come from social sponsorship and ticket sales. Having weathered hard times for nearly two years, the situation is gradually improving for the Tianjin Grand Theatre. The municipal government’s Publicity Department has found bank sponsorship for the theater, and will pay the theater’s 5 million yuan (US$79m) yearly energy bills. Another fund by a foreign sponsor is under negotiation. Currently, there are over 40 grand theaters nationwide, many of which would be glad to receive similar support to that provided by the Tianjin local government. For most theaters, staging as few as 50 performances per year is a difficult task. Qian is the first private manager of a major theater in China. Twenty years ago, art changed his life, and now, he believes he can use art to change the character of a city. While this is doubtless a daunting task, Qian claims there are signs that he is making a difference – he claims to have heard that a young vice-mayor of Tianjin recently suggested that Tianjin promote itself as a “city of opera.”

visual REPORT

NEWSCHINA I March 2014

Giving Birth at 60 C

hina is home to over a million shidu families – those who have lost their only child – and 76,000 families across the country lose their only child every year, according to the National Health and Family Planning Commission. Demographer Yi Fuxian estimated that in the near future, about 10 million new shidu families are expected in China, a country where parents traditionally depend on their children in old age. Four years ago, when Sheng Hailin, 60, lost her only daughter to accidental gas poisoning, she chose to try for another child, a bold act in stark contrast to most other shidu mothers, who tend to spend their twilight years in solitude after losing their only children. Previously, Sheng had to find solace by looking at pictures of her daughter, Tingting, who was born in 1980. On advice from friends and relatives, Sheng decided to try again, but being a doctor herself, she was also fully aware of the risk. After being refused by fertility experts and doctors at several hospitals in Beijing and Nanjing, she was admitted to the No 105 Hospital of the People’s Liberation Army in Hefei, Anhui Province, for artificial fertilization. After three months of nursing and injections, Sheng resumed ovulation and three fertilized eggs were transferred into her body, making her one of the oldest women ever to become pregnant in China. During the pregnancy, she suffered hemorrhages, continuous pain and discomfort. On May 25, 2010, she gave birth to twin sisters — Zhizhi, who weighed 1.85 kilograms, and Huihui, 1.45 kilograms.

NEWSCHINA I March 2014

visual REPORT

5 1. A wedding photo of Sheng Hailinâ&#x20AC;&#x2122;s daughter, who died of gas poisoning, and her husband 2. Sheng, more than seven months pregnant and in labor, is hospitalized in Hefei, Anhui province, May 2010 3. Sheng on her way to the delivery room 4. One of the twin baby girls, named Zhizhi and Huihui 5. Sheng and a doctor look after one of her daughters 6. Babysitters take care of the twins 7. Shengâ&#x20AC;&#x2122;s husband Wu Jingzhou rests with one of his twin daughters 8. Sheng plays with her daughter

NEWSCHINA I March 2014

6 NEWSCHINA I March 2014

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OUTSIDEIN perspectives from within China

Wild Litang

Pony Trekking Our writer saddles up for the Litang horse festival, one of the most exhilarating events in the Tibetan calendar By James Kingston

NEWSCHINA I March 2014

WHERE TO STAY: Litang has many hotels, ranging from mangy flophouses to the quite pleasant. Look out for the Potala hotel, a backpacker favorite and, if one discounts odd Belgians with gastroenteritis, a sure bet.

Photo by CFP

NEWSCHINA I March 2014

was sure the pony could smell my fear. Aware of the grinning faces around me I took the reins in doubtful hand and set off across the grassland. Visions of conquest, of roaring armies and bloody charges filled my mind as I set forth across the green. Trot gave way to canter; canter to gallop; calm to terror. Desperately I held on to the animal, sliding slowly to the left as, chuckling, a wild-haired youth took the reins from me. I had, it seemed, gone no faster than a walk. It was neither my first nor my last failed attempt to prove my manly prowess among the nomads of Kham. Flat-footed, myopic, pink with sunburn, my first error had been purchasing the wrong costume. A fur-lined and embroidered jacket in what I took to be fittingly authentic style, it turned out to be entirely unsuited to the sunny weather, and was apparently special winter clothing, worn by none at the festival. Challenged nevertheless to arm wrestles with rangy Tibetan farmers, muscles stringy and hard under their shirts, I lost in quick and unbroken succession. Further humiliation came in the form of an impromptu grappling contest: Cast repeatedly to the floor by my competitor, a five-foot-six Tibetan of cheerful and drunk disposition, I was asked if I was making our impromptu grappling competition too easy. Yes, I said. Of course. I had come for the Litang horse festival. Located in the Kham region of old Tibet, Litang sits up a high plane in western Sichuan province, and a lung-straining 4,100 meters above sea level. The horse festival was difficult to track down, and involved several days traveling from one dismal market town to another. Seemingly few locals knew of events outside their home community â&#x20AC;&#x201C; most Han Chinese seemed surprised to hear such events even took place. Despite the dates confidently quoted on expensive adventure tour company websites, Tibetan event scheduling appears based upon the arbitrary whims of those two great powers, the heavens (meetings are scheduled around the movements of the moon and stars) and the Chinese government. With continuing restiveness amongst the Tibetan population, many horse festival have been banned or their numbers reduced, great congregations of Tibetans, often drunk, being seen as poten-

Photo by IC

HOW TO GET THERE: Take a bus from Kangding in Qinghai to Litang, or travel from Ganzi.

tially injurious to the harmony upon which China prides itself. Horses, however, are dear to the Tibetans, and provide their proudest entertainment â&#x20AC;&#x201C; smaller groups may thus still be found racing here in summer. The nomads had gathered on a plain outside the town, their white tents gleaming in the morning sun on what was by then the third day of the racing. Modern herdsmen, they appeared to take as much pride in their vehicles as their horses â&#x20AC;&#x201C; large SUVs, trucks, and motorbikes were everywhere in evidence. The crowd sat three or four deep either side of the racecourse. Older Tibetans, their faces darkened by the elements, spun prayer wheels, smoked, and chewed sunflower seeds in the sun, while amongst the younger generation could be seen the occasional sheen of an iPad held aloft for filming. Yellow-hatted monks sheltered in the shade of a tented pavilion, drinking iced tea and chatting amongst themselves, sitting attendance upon a grand personage: The local living Buddha, a dignitary whose photograph adorned many a tent pitched nearby. Here and there cyclists on tour from the lowlands mixed with the horsemen, their lycras and helmets in odd contrast to the Tibetan attire.

Litang Horse Festival

As befitting a major social event, all the Tibetans were bedecked in the finest plumage. They wore broadrimmed hats and chubas, loose coats of long and dangling arms. In the unpredictable climes of the mountain heights, this gives flexibility in face of the weather; when warm, one or both shoulders can be freed by wrapping the sleeves around the waist. Over their waists were long red belts of fabric, sashes of sallow silk wrapped around their shoulders, and gaudy waistcoats of reds, blues, and yellows. Straight-backed and elegant, the women were bedecked in ever greater finery: Their silken dresses shim-

travel

men’s running race, and a timed tent-building race. The latter was exuberantly chaotic, the competitors tying horses together, scattering equipment, whipping each other and their steeds in a bid to sow confusion, kicking down the other’s tents to roars of laughter from the crowd. Wandering about at the end of the racing, I found myself invited by a family into

Photo by IC

mered with embroidery, and ornate belts were fastened over colored aprons of woven cloth. Their hair, braided, was for some further decorated in headdresses of white and gold, reminiscent perhaps of the higher tiers of a wedding cake. The horses wore colourful saddles, and to their manes were tied bells and tassels. They came charging down the race course, galloping furiously as their riders, small and nimble, lowered themselves to the sides of their mounts, brushing the floor with their arms, teasing the ground with their hair in displays of daredevil virtuosity. There were shows of athletic prowess with bow and musket, the target disappearing in a brief plume of smoke to the cheers of the crowd. Load-grabbing competitions, where the gaily-colored riders leant down hands outstretched to grasp at colored silks laid out on the grass below, grabbing them to take up boxes of Coke and Sprite attached to the end – that, and chaotic charges by three, four or five horsemen for what seemed the sheer thrill of the ride, a medley of jingling, cheers, and yells. Feats of athleticism were not solely confined to the horses. Later competitions saw youths balancing on their hands atop saddles, leaning poised and delicate above trays of flour as they strived to bite their target, a lump of metal, without falling in; an old

A Tibetan woman in traditional costume at the Litang Horse Festival

a tent, and treated to the finest Tibetan fare: boiled yak meat, rich and dark on the bone; yak yogurt, creamy and sugared; hard breads, cheese, sun-flower seeds and butter tea. Speaking little Mandarin, the family were shy at first, but warmed to the situation, exchanging outfits and posing for photos. As the sun set over the mountains we moved outside, dancing energetic circles to the beat of some Tibetan pop tunes playing out from a boom-box. I awoke bleary eyed and furry tongued, my shirt stained red from a nosebleed. An attempt to outman my erstwhile wrestling partner via the means of drink had ended in no small ignominy at a local night club, where even the bar girls appeared to take delight in out-consuming the tall Westerner gasping too high above sea level. Returning to the camp, I found it suffused with that melancholy that comes at the end of party. Yaks picked at the grass and the remaining tents. Families were drifting off, packing their tents and driving away. Some had begun dancing once more. Facing each other under an overcast sky, the men and women moved with slow grace about the circle, their song rising and falling as each group called out to the other, in a cadence and a rhythm that neither time nor politics has yet been able to silence.

real chinese

diǎn

zàn

dianzan “Like”

If you approve of or enjoy a Tweet, post or picture, you “like” it - “dianzan” in China, literally meaning “click praise.” The term dianzan is now so widely used online in China that many people ignore the “thumbs up” icon designed to be clicked on, instead simply typing the term into the comments section below. Interestingly, dianzan’s superlative is “to give you 32 zans,” a seemingly arbitrary number whose origins lie in the popular imported reality show

Voice of China. One of the show’s celebrity judges, a singer named Yang Kun, often said that he wanted “to hold 32 concerts,” leading the audiences to dub him “Mr 32.” This number was paired with the phrase dianzan, popularized by songstress Li Yuchun, and thus the 32 zan phenomenon was born. Another term, dianzan zu, indicating a person or group who will “like” any post regardless of its content – even those detailing heartbreaking, tragic or violent incidents, has also been coined.

Dianzan and its associated terms have now reached critical mass. According to official statistics released by MySpace equivalent QQ Zone, in July 2013 alone, dianzan or a term relating to it appeared more than 200 million times in its forums and on profiles. Some sociologists claim the popularity of this term stems from the Internet’s culture of instant gratification, where anyone can add their mark to another’s work. NEWSCHINA I March 2014

flavor of the month

Night Nibbles By Stephy Chung

NEWSCHINA I March 2014

can get pretty much every favorite Taiwanese snack. For some, that's peanut-encrusted blood pudding on a stick. For others, its five-spice powder enrobing a deep-fried chicken cutlet. The oyster omelette is mine. Historically, its a poor man's meal - once made to pad out a poor protein supply. Quarter-sized oysters were collected off the coast and tossed in lightly beaten egg. A sweet potato or corn starch was whipped in, to make portions larger. The unique result of fleshy pockets of oyster and the texture of the goopier egg, create uneven craters that better serve to sop up the sweet chili sauce that smothers the dish. One of the more modern street snacks, are the hefty “big sausage wrapped in little sausage” creations. They are the perfect answer to the munchies, and presumably invented by an incorrigible glutton. The big sausage is in fact sticky rice molded into a sort of bun. It cradles a flavor-packed fatty pork sausage and is topped with pickled vegetables, cabbage, and onions. The oily mess is delicious, but will leave you feeling heavy and headed straight for a food coma. These guys put New York hotdog vendors to shame. Then, there's the wafting aroma of chelun bing, or wheel cakes, that suddenly tricks the belly into not feeling full. With the scent of fresh pancakes, these desserts are named after their round shape. The batter bakes like a waffle in circular molds, and is then filled with red bean paste. The two halves are pressed together, and handed over, hot and crispy on the outside, and with a rich and delectable middle. Other versions have stuffings like peanut butter, and chocolate. All washes down well with pearl milk tea, Taiwan's claim to fame in the beverage world. The drink was concocted in the late 1980s by a teahouse owner in Taichung, a city located in the center of the island. In a whimsical stroke of genius, she poured her tapioca pudding dessert into her iced tea, and bubble tea was born. You'll get something closer to the original version at the night market - and less of those perverse mutations containing coconut jellies and strawberry juice balls. Here, a simple hot one to go can be ordered with tiny, chewy, homemade tapioca balls, just milky black tea with a hint of sugar. Before serving, it’s shaken until there's a nice foam on top. While Taipei's night markets have lost a considerable amount of olde-worlde charm, there's a firm place for them in Taiwan's psyche. Open everyday into the wee hours of the night, this small island has over one hundred permanently established urban night markets, still going strong.  Photo by Xinhua

ormerly known to the Portuguese as Ilha Formosa, or “beautiful island,” Taiwan has a well-earned reputation as a tropical paradise. Located just over 100 miles off the southeastern coast of the Chinese mainland, those who visit immediately see and feel the stark contrast in the mountainous island's deeply preserved culture and snaillike pace of life. Drive along its Eastern coast, and you will pass traditional temple towns, white sandy beaches, lush valleys, and natural hot springs. While its easy to detoxify the body with locally-grown herbal teas, starfruit, and the other healthy bounty that paradise yields, to miss the junk food of the ye shi, or night markets, would be like skipping out on roast duck in Beijing. On a recent trip, I made the beeline toward the best of Taipei’s such joints. In Taiwan, night markets originally bloomed from the island's agrarian roots. With few places to shop, and a lack of convenient means of transportation, rural residents relied heavily on the wares of traveling merchants. With each visit, the salesmen, somewhat like carnies, would set up little ad-hoc markets selling foods, traditional Chinese medicines, and later, entertainment. The gatherings became integral to the social fabric for locals, so much so that there's a permanent night market culture found in Taiwan today. During the Song Dynasty, one of China's most culturally vibrant and prosperous epochs, these night markets were a different beast. They were synonymous with night life in urban centers, often open 24-hours and rife with brothels frequented by lewd businessmen. In the post-war 1950s, xiaochi, or “small eats” surfaced. Urban migrants began working the stalls, and made hometown favorites into tapas-like servings. The wealthier population and intellectually curious elite flocked to these markets to diversify their palates. As a kid, my mother fondly remembers getting to visit the markets once a week, after a trip to the movies. That's when she would enthusiastically gnaw away at her go-to grilled squid skewers. Recent decades of economic growth have yet again transformed the markets into more capitalistic engines of social mingling. Shilin Night Market in Taipei is one of the largest, groaning under neon signs, teenagers, tourists and stall after stall of cheap trinkets and counterfeit goods. When my mother and I visited the century-old market, which has since been renovated, she wasn't able to summon up one bit of nostalgia. “This is just different, it isn't at all what it used to be.” Because of the sheer noise and chaotic nature of it all, I wouldn't say Shilin Night Market is the best. But, it is the market where you

essay

Under the Weather By Niall O Murchadha

Looking at the horrendous weather reports from around the world, it’s like living in the eye of a storm.

Illustration by Wu Shangwen

When my sister and her new husband told me they were coming to visit me here in Beijing this winter, it was a pleasant surprise, but when my parents announced they would be coming too I was less than enthralled. Did they not know how cold it gets in Beijing? Would they be able to deal with the biting Siberian winds that occasionally wail down from the frigid North? Once the mission to dissuade my parents from coming at such an inhospitable time of year was accomplished, I outlined the various garments my sister and brother-in-law would need for their trip. Armed with the type of thermal protection designed for people who could be stranded in Alpine passes or on the Arctic shelf, they made their way over here. Upon their arrival, my brother-in-law told me the snow on the way to the airport in Dublin was so bad that only one lane of traffic was open on the highway. He informed me that he had never been out during a Code Red before. I was momentarily taken aback. Code Red? What did that mean? Was Ireland being invaded? Should we all get on a plane and return to Ireland to defend it from beach incursions? Were the British coming to finish what they started? Alas, this was just another example of Irish melodrama in the face of inclement weather. Of course, there were also some cold days during their trip to China, but the temperature began to rise during their stay over the Christmas, with layers being shed, jackets being left open, scarves hanging loose. Shortly after they left I found myself sitting outside with a friend on the first day of the year, the temperature rising to eleven degrees Celsius: ten degrees above the average high. We joked about climate change not being all bad, but there was no joy to be derived from the unseasonable warmth. Fifteen months ago saw record high precipitation in Beijing in one day, and

yet this winter has been dry as a desert (70 days without rain and counting), and is seemingly eager to make it into the record books. Looking at the horrendous weather reports from around the world, it’s like living in the eye of a storm. Everything has been turned on its head. I am rapidly approaching my fortieth birthday. The

natural order of things should see me feeling depressed at the waning years of my prime, yet I am filled with a profound sense of relief that, whatever happens, I can no longer be robbed of my youth by a global calamity of Roland Emmerich proportions. Like an alcoholic junkie on a bender, we humans stumble from one crisis to another, learning nothing, continuing on our glorious death spiral. We tinker with our ecosystem like toddlers stabbing power outlets with forks, and the only ones who are making a concerted effort to curb this behavior are the ones we call primitive savages, the ones that live in the rapidly diminishing islands of pristine nature in a sea of toxic waste. We are living through the Sixth Great Extinction Event, driving it forward, nursing it like a wildfire in the forest. During all of this reflection on our sorry state of affairs, I am constantly drawn back to a quote from the most unlikely of sources – Starship Troopers 2. In this movie, one of the heroic humans is possessed by one of the “Bug” alien antagonists, and the humans want to know why the bugs are attacking them. “Poor creatures. Why must we destroy you? I’ll tell you why. Order is the tide of creation. But yours is a species that worships the one over the many. You glorify your intelligence. Because it allows you to believe anything. That you have a destiny. That you have a right. That you have a cause. That you are special. That you are great. But in truth, you are born insane. And such misery cannot be allowed to spread!” I believe it is time to entertain the notion that we as a species are insane, and that we have institutionalized our insanity. Our species needs an intervention. But time is running out, if our 10-degree midwinter days in Beijing are any indication. And, as a wise man once said, there’s no Planet B. NEWSCHINA I March 2014

Linking in By Sean Silbert

NEWSCHINA I March 2014

No matter how far I master the language or immerse myself in the culture, I’ll always be the odd one out – but not on the Internet.

Illustration by Wu Shangwen

Here’s a glimpse of my morning routine: After getting up, going through the regular hygiene rituals and grabbing a bite of whatever’s around, I boot up my computer and check Facebook. The browser window usually stays open in the background as I go through my daily grind, get lunch, and inevitably slack off later in the day. This isn’t so unusual for other Millennials who can’t resist the allure of being plugged in, though my compulsion runs further than just scrolling through other people’s photos. The Internet takes on a particular importance when you live far away from home. Using social media is akin to opening up an almanac, a social directory and a postal service all at the same time. My mom views my photos of me and my friends here, just as I keep tabs on who’s dating whom 12 time zones eastwards. It’s as if I’m in a room where everyone, from old friends to former hostel roommates, is in a never-ending party together, and I’m bringing the punch. But surely this is old news: Isn’t the whole point of social media to foster connectivity? But surviving while immersed in different languages, social norms and (especially in China) government regulations is alienating by nature, a gap that social media is among the best ways to bridge. I am incessantly reminded that I am a foreigner, a laowai, someone who might as well have come from Pluto. No matter how well I master the language or how much I immerse myself in the culture, I’ll always be the odd one out – but not on the Internet. Of course, this assumes that the people on the other end of my newsfeed actually care. I’m not the type of person who posts all their vacation photos to boast how cultured and worldly they are. Whether or not the “over there” crowd care how spicy the bowl of noodles I had for lunch is a specious premise. You know the old adage: Facebook friends aren’t real friends. The poten-

tial for addiction in thinking they are is there, though I doubt you’ll ever see me beat someone over the head down a dark alley to get some spare change for my Internet bill. At the expense of productivity, I think I’ll risk it. So why continue to waste my time thinking about back home when I could be going out and experiencing a different country? Mind-

lessly browsing through terrible memes does allow me to stay in touch with my roots, in a sense. This way I keep my pulse on what’s hip in my native land as if I was on the ground, but indirectly, talking about movies, viral videos and weird links. These are people I know posting their two cents about what’s going on, traits not usually found on TV or in the paper. Seeing their thoughts is one constantly refreshing link to the past that’s comforting when plunged into a strange and unusual place. In some ways, it’s sad. Inducing homesickness with food porn or Instagrams of once-familiar skylines are hardly cheering. At times, seeing how little love my own accounts receive can make me feel like I’m on the losing end of a grade school breakup. It’s as much of a reminder of the distance I’ve traveled, and how much I’ve changed since buying that fateful one-way plane ticket years ago. Consider how I’ve even jumped into the Chinese web as evidence - though if you live here, how could you not? Anyone with a phone uses WeChat as much, if not more, than text or calling – or both. There are some sites that I won’t touch – you’d sooner see me walk on nails than engage in the emotional trial by fire of a Chinese dating site – but it does help me integrate somewhat better with my new home. It’s not terribly expensive to purchase the necessary software to keep Facebooked and Twittered to the eyeballs in China, but it’s enough of a wad to lay out to make one reflect on the necessity of logging on. It’s as much about keeping in touch with oneself as with one’s friends. The financial and emotional cover charge is something that I don’t mind paying. The one thing I will complain about, though, is my Internet speed. Censorship is one thing, but a full minute to download a single page? Come on, China!

Cultural listings Cinema

The Savior of Hong Kong Disaster movies are hardly the specialty of Chinese directors. Yet the recently released As the Light Goes Out, a movie about a fire threatening Hong Kong’s entire electricity grid, has stirred up interest among Chinese moviegoers. Directed by Derek Kwok Chi-kin, a Hong Kong director in his late 30s, the movie maintains a fast pace, with the storyline about a complicated relationship between firefighters urged along by impending disaster. Starring Hong Kong actors Nicholas Tse, Simon Yam and mainland actor Hu Jun, the movie has done well in both the Hong Kong and mainland markets, and critics have called it a good omen for Hong Kong’s declining movie industry.

Music

Book

The Next Great Song

Zhandui: A Chunk of Iron Finally Melts

National enthusiasm for the search for the perfect voice, initiated by TV talent show The Voice of China in 2012, has been on the wane due to a proliferation of copycat programs over the past year and a half. Yet this January, a search for songs, rather than singers, seems to have rekindled the reality-music TV show concept. Titled Sing My Song and produced by the team behind The Voice of China, the new show adopts a format nearly identical to The Voice, with singer-songwriters performing their selfpenned songs to judges who sit behind a screen on which lyrics are displayed, and make their decisions based on sound and lyrical content. The show’s premiere garnered the highest ratings of the night, and after several rounds, various hits have already been made. However, as most of these new songs are yet to be tested on the market, pessimists are worried how many surprises the program can come up with.

By A Lai

Exhibition

Art and Society After suffering from temporary partial blindness when she was 29, sculptor Li Xiuqin has been on an artistic journey with work related to blindness ever since, taking Braille as one of her most important modes of expression. Many of her works have two sides, one Braille and one visual. She often invites blind people to interact in her exhibition, touching and feeling both the Braille and the figures they represent, and even inviting them to create their own sculptures. Now in her 60s, a retrospect solo exhibition for Li, titled “Connecting Art and Society in Braille: 20 Years of Sculpture Works by Li Xiuqin,” is being held in Shanghai’s Baoshan International Folk Arts Exposition from January to April this year. As the discussion on art’s role in society has become a heated topic in China’s art scene since the turn of the millennium, Li’s works may well serve as an example of the interaction between the two.

Zhandui (now known as Xinlong), an ethnically Tibetan county in the west of Sichuan province, was occupied seven times by the Qing government’s forces from 1730 to 1896. During the Republic of China (1912-1949), Sichuan and Tibet periodically traded blows over the jurisdiction of the area. In 1950, the People’s Liberation Army finally took the county without firing a shot. For some 200 years, armies of the Qing government, local warlords, Tibet, the Kuomintang and even Britain had interfered in the area. A Lai, one of China’s most famous writers, was born in the Tibetan region of Sichuan. In this history of Zhandui, A Lai displays a unique and mysterious Tibetan legend. It is also a modern reflection on the history and current situation of Tibetans living in a region with a mix of strong Han Chinese and Tibetan cultures. NEWSCHINA I March 2014

NEWSCHINA I March 2014

Commentary

Fracking changes everything The shale gas revolution has implications for China By Erica S Downs

he implications of the shale energy revolution in the take to help ensure the uninterrupted flow of oil from the Persian United States, which has helped it surpass Russia to be- Gulf. come the world’s largest producer of natural gas in 2009 The US shale energy revolution has also been bad news for Rusand may result in the displacement of sia. Not only is demand for natural gas Saudi Arabia as the world’s largest oil growing slowly in its largest customer, producer by 2020, are already being felt the European Union, but Europeans China’s onshore oil industry in China. is dominated by the political now have alternatives to Russian pipeTen years ago, Chinese oil executives line gas in the form of liquefied natuinterests of two State-owned regarded the international mergers and ral gas (LNG) originally intended for behemoths acquisitions (M&A) landscape to be the United States. rather bleak. They felt disadvantaged by Consequently, China, where detheir relatively late arrival to cross-bormand for natural gas is surging, looms der M&A. In their view, the best assets ever larger as a source of future secuwere in the hands of foreign governments that did not allow foreign rity of demand for Russia, a fact not lost on the Chinese. China equity participation or the major international oil companies. and Russia have been negotiating a cross-border natural gas pipeline Consequently, they were largely left with higher-quality assets since the 1990s but have been deadlocked on the price for several in higher-risk countries or lower-quality assets in lower-risk coun- years. tries. As former CEO of China National Offshore Oil Corporation China has considerable shale gas resources – at least on paper. (CNOOC) Fu Chengyu observed in 2004, “It’s actually not easy According to the US Energy Information Administration, China’s for us to find projects. The world oil industry has a 100 year history. technically recoverable shale gas resources are the largest in the The good projects are already taken.” world (and almost 50 percent greater than those of the US), and Today, Chinese oil executives are singing a different tune for two its technically recoverable shale oil resources are the world’s third reasons. The US oil and natural gas boom has created investment largest (behind Russia and the US). Moreover, three of China’s geoopportunities in the United States for China’s national oil compa- logical basins appear to contain marine shale, which is more easily nies (NOCs). Since 2010, Chinese NOCs have spent more than fracked than non-marine shale. US$10 billion to acquire upstream assets in the US, most of which However, there are several above-ground challenges to the rapid has been spent on unconventional projects. development of China’s shale resources, the most formidable of The International Energy Agency’s World Energy Outlook 2012 which is the structure of China’s oil industry. The shale revolution shows that in 2035, the US will be importing just 100,000 barrels in the United States was launched by a large number of small inof oil per day from the Middle East, while China will be import- dependent operators driven by a desire to strike it rich. In contrast, ing 6.7 million. As a result, analysts in Beijing, like their counter- China’s onshore oil industry is dominated by the political interests parts in Washington and other world capitals, are debating whether of two State-owned behemoths, the China National Petroleum declining US oil imports from the Persian Gulf, combined with Corporation (CNPC) and Sinopec, which are motivated by politibudgetary woes, will prompt Washington to substantially reduce its cal factors beyond mere greed.  military commitment in the region. The Chinese have also started to think about what steps China (An extended version of this commentary first appeared in China and other major Asian buyers of Persian Gulf oil might eventually Newsweek, the Chinese edition of NewsChina, Vol. 645)

NEWSCHINA I March 2014