November 2012

INTERNATIONAL

Traffic Boom: Triads in Africa

POLITICS Balancing the Books: Local Government Debt

ROAD RAGE

Why are death tolls piling up on China’s highways?

$4.99 www.newschinamag.com

Red Terror: China's Cola Wars

Volume No. 051 November 2012

ECONOMY

EDITORIAL

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

CN11-5826/G2

NEWSCHINA I November 2012

Poster Campaigns are not Law Enforcement

C

hina has long maintained a poor safety precisely what is lacking under China’s current sysrecord. This year is no exception. On Au- tem. One fatal road accident in late August that killed gust 24, a highway 12, for example, was caused bridge in Harbin, Heilongjiby an unregistered minivan. ang Province, built less than The fact that this vehicle An official preference one year ago collapsed, killing could drive recklessly on a toll for campaign-style law three and injuring another highway staffed by traffic poenforcement betrays five as several heavy goods lice is evidence of just how lax a lack of actual and vehicles plummeted to earth. law enforcement in certain equitable legal authority.

Two days later on August 26, areas has become. a collision between a sleeper As a pattern develops bus and a fuel tanker left 36 whereby a campaign and topeople burned alive. ken crackdown is followed According to official data with little or no genuine acreleased by the State Administration of Work Safety, tion, the credibility and authority of so-called “enthere were 135,853 workplace accidents in the first forcers” is eroded to the point that more people behalf of 2012 in China, resulting in 28,349 deaths. come violators of the law, simply because they can.

The majority, it has been claimed, were caused by Considering the vast size of China’s civil service, the violation of various laws and regulations. Death and apparent lack of utility of street-level personnel seems injury dogs China’s industrial chain, from mining to preposterous. According to Professor Zhou Tianyong manufacturing, so frequently that nowadays only the from the Central Party School, in 2007, 57 percent bloodiest images make headlines. of government revenue was spent on personnel, alIronically, every major accident causing great loss most double the amount spent on the services these of life is usually followed by a high-profile safety personnel are supposed to provide. campaign from the authorities. After the bridge colThe Chinese government long advocated the lapse in Harbin, for example, the central government principle of rule of law. However, for such a core tenet launched a nationwide road safety campaign. Follow- of a developed sociopolitical system to be established, ing the lethal Yan’an bus crash, the authorities reacted the authorities must anchor themselves around the with a ban on overnight sleeper buses. law and its effective and just enforcement. A bloated These politically motivated campaigns have be- government, rich with public money and above accome so frequent that they have spawned their own countability, has led both individual officials and govpolitical lexicon. “Centralized reshaping,” “specialized ernment agencies as a whole to indulge themselves in management,” “serious crackdown,” “severe punish- a struggle for personal gain and departmental interment,” “clearing and streamlining,” and “month (or ests, underpinning China’s corruption problem. As it year) of crackdowns” have, however, failed to make is this culture which has bred a cavalier approach to a dent in the number of accidents, leading to an al- public safety, the authorities can only respond with most universal loss of public faith in the authorities’ campaigns, themselves undertaken out of political willingness to enforce the laws and regulations they expediency rather than a genuine commitment to tackling the problem in question. so widely espouse.

To achieve the rule of law and the safety of the More seriously, an official preference for campaignstyle law enforcement betrays a lack of actual and populace it governs, the authorities must steer leaderequitable legal authority. Consistent enforcement of ship away from “maintaining stability” and towards relevant laws and regulations is all that will guarantee the unequivocal rule of law. How else can one expect the health and safety of ordinary citizens, and this is society to remain stable?

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Contents

Highway to Hell

Photo by CFP

We investigate how shocking road death stats, poorly-regulated infrastructure and an auto industry made profitable through corner-cutting mean that China’s millions of road users continue to pay a heavy toll for greater mobility Editorial

01 Poster Campaigns are not Law Enforcement international

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12

Diaoyu Dispute : Purchasing Power Diaoyu Controversy : A Different Perspective

Cover Story

politics

society

14 Highway to Hell :

Fast and Furious/Safety Second

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26

Health System : Under the Knife Local Government Finances : Straighten Up and Fly Right

28 Earthquake :

Schoolhouse Ruins

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P10

P28 NEWSCHINA I November 2012

Contents

P56

P30 30 Orphan Parents :

Tragic Figures economy

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36

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42

44

Stock Market : Plan B Cell Phone Market : Outsmarted Branding War : Tea Thieves?

Shipping Crisis : Titanic Losses Microcredit : No Bank for the Broke

ENVIRONMENT

50 Chinese Mafia :

Development’s Dirty Side special report

42 Nuclear Restart :

Willing, Yet Unable

NEWSCHINA I November 2012

P60

culture

53

56

Modern Chinese Dictionary : Letters of the Law Fashion : Our Time Is Coming

visual report

60 COPYCAT TOWNS outside in

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67

Mentougou by Motorcycle : Uneasy Riders Flavor of the Month : Fly Me to the Moon

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

P53 3

NewsChina Chinese Edition

China Economic Weekly

September 3, 2012

September 4, 2012

Feng Shui Fortunes

Shark Fin Boycott

Though lambasted as superstition in the last century, interest in feng shui among mainland Chinese is now at a record high, especially among the rich and powerful, with many drawing on ancient geomantic practices when selecting homes, managing their businesses and securing investments. Lured by huge potential profits, feng shui training centers are springing up nationwide, ranging from the genuinely accredited to the unregistered. Many trainees complain that costly courses are confusing or seemingly at odds with mainstream practice. Media reports revealed that true feng shui masters prefer to choose apprentices personally, with few selecting from such boot camps. Concerns are growing of a vast, unlicensed and unregulated industry which could corrupt the understanding of this unusual, ancient profession.

Xinmin Weekly

Shark fins, a popular gourmet delicacy in China, are seeing massive drops in sales as a shark fin boycott campaign led by NGOs has spread awareness across the country. Following a June ban from the State Council outlawing the use of shark fin in government banqueting halls, a growing number of restaurants in coastal cities such as Shanghai, Hangzhou and Qingdao, previously shark fin hotspots, have announced their own bans on this controversial foodstuff. Although China’s business-oriented Seafood Commission argues that sharks will inevitably continue to be caught and killed by trawlers, making the ban on shark’s fin meaningless, experts warn that most major species of shark have already been fished to the point of extinction due to intensive trawling.

Century Weekly September 10, 2012

Seriously sick? Look elsewhere.

Following a growing number of cases whereby Chinese families have been run into heavy debt by medical expenses, China’s Ministry of Health issued a document at the end of August pledging that in addition to basic healthcare insurance, the State would provide 50 percent of a secondary reimbursement for the patients’ out-of-pocket payments for treating serious diseases.

Meanwhile, the government encourages commercial providers to play an active role in the government welfare system, blaming China’s aging population and the increased cost of medical care for a three-year limit on this latest extension.

Insurers, however, are reluctant to get involved with healthcare provision for fear of potential losses, with some suggesting that both insurers and the government should determine the cost of care.

September 5, 2012

Beggars Blamed In late August Shanghai subway police published a list of the transit system’s best-known beggars punished for “violation of regulations,” only to find public anger directed back at the police for “impairing the poor’s right to earn a living.” Police spokespeople attempted to manage the fallout, claiming that they intended to inform the Shanghai public of “the link between begging and organized crime,” and that begging is a “profession which earns money for nothing.” Police also claimed that commuter complaints led to the naming and shaming campaign, with some reporting that beggars would harass them until they offered some money. State media have called for a crackdown on beggars who harass travelers, stating that the individual’s right to personal security trumps the right to beg.

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Oriental Outlook September 10, 2012

Foreign-controlled Oil Pressured by a second hike in the price of edible oil, Chinese regulatory authorities demanded that the country’s five top domestic suppliers regularly report the wholesale and retail prices of edible oil to allow improved supervision. Insiders attributed the price hikes to China’s over-reliance on imported soybeans, revealing that foreign grain enterprises account for 60 percent of China’s edible oil production. The government now plans to help balance the price by supporting domestic edible oil producers. On August 23, China’s Grain Reserve Corporation, a Stateowned company charged with purchasing and stockpiling strategic grain reservess, launched its own blended edible oil product, declaring an intention to capture 15 percent of the domestic market (sales of 1.2 million tons annually) in five years.

NEWSCHINA I November 2012

“During my several dozen years in the real estate industry, I have witnessed the demise of many developers, not due to hunger, but due to overfeeding.”

“Government bureaucracy has a natural impulse to expand and extend its power. If government leaders have no philosophy or theories, government power will spread like a cancer we cannot fight.”

Zhang Weiying, an economics professor of Peking University, talking about his new book What Changes China?

“How would Americans feel, and what would American [sic] do, if Japan announced that Hawaii was its territory?”

Renowned Chinese philanthropist Chen Guangbiao placed a half-page ad in the New York Times, in both English and Chinese, in an attempt to convince Americans of China’s claim to the disputed Diaoyu Islands.

“We are not real professional athletes who play for the love of the game. China’s system requires that we play for the country.”

Lin Dan, men’s badminton singles champion at the London Olympic Games, in an interview with Southern People’s Weekly.

“Many poets don’t care about social injustice, and just sit around playing with words. Their works do not reflect the zeitgeist, and this is why they will never be great poets.”

Writer and poet Ye Fu on a poet’s responsibilities.

NEWSCHINA I November 2012

Illustration by Wu Shangwen

Pan Shiyi, president of China’s leading real estate company SOHO China, attributing the bankruptcy of Chinese housing developers to their hoarding habits.

“Those ‘angry youth’who have been destroying Japanese goods will not be considered for membership to our organization.”

Ke Hua, spokesman for the Hong Kong Action Committee for Defending the Diaoyu Islands, talking about their requirements for members.

“You could call me a blind patriot. I am the one who weeps for the raising of the national flag at Tian’anmen Square, and wells up when he hears the national anthem played at the Olympics. I will never allow China’s social problems to affect my love for my mother county.”

Guo Jingming, a popular young writer, responding to attacks on patriotism from Chinese netizens.

“I was surprised that my graduation piece had won one of the world’s top design prizes, and even more surprised to learn that it was credited to someone else.”

Hu Sumei, an arts graduate from Hubei University of Technology, upon realizing that her professor, Shi Yuanwu, had copied her work when it received the prestigious Red Dot Award.

“China has entered an era of disbelief - people believe in public opinion, not the government; people believe microblogs, not the evening news; people believe rumors, not propaganda; people believe in their own judgment, not mainstream media.”

Economist Han Zhiguo, on the loss of the government’s credibility.

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Top Story

Wang Lijun Sentenced Former Chongqing police chief Wang Lijun, whose attempt to defect to the US in February 2012 sparked the downfall of former Chongqing Party Secretary Bo Xilai and his wife Gu Kailai, who was recently convicted of murder, was sentenced to 15 years in prison on September 24. Wang is accused of a number of crimes, including obstruction of justice, treason and abuse of power – all of which are capital crimes in China. Like Gu before him, Wang pleaded guilty to all charges in court and, as he is claimed to have cooperated fully with the ongoing investigation into Bo Xilai and Gu Kailai, he received a reduced sentence in accordance with China’s Criminal Law.

The Charges: Bending the Law for Selfish Ends: Wang led the cover-up of the murder of British businessman Neil Heywood by Gu Kailai.

Treason: Wang entered the US Consulate General in Chengdu, Sichuan Province, “without authorization” on February 6, and requested political asylum.

Wang Lijun December 26, 1959: Born in Inner Mongolia February 1992-June 2008: Serves as police chief of three cities in Liaoning Province in succession 2007: Introduced to Bo Xilai, then a rising star in the Party and the mayor of Dalian, Liaoning Province June 2008: Inaugurated as Chongqing’s police chief May 2011: Given a seat on Chongqing’s Municipal Party Committee January 2012: Made vice-mayor of Chongqing

November 12, 2011: On the orders of Gu Kailai, Wang has Heywood monitored as a suspected drug trafficker.

November 13, 2011: Gu murders Heywood with cyanide in Chongqing.

November 14, 2011: Gu confesses her crime to Wang, who secretly recorded the conversation. Wang promises to help Gu cover up the murder.

November 15-December 16, 2011: Four of Wang’s subordinates “investigate” Heywood’s death and record a verdict of death by alcohol poisoning.

November 18, 2011: Heywood’s body is cremated.

December 2011: Gu allegedly destroys evidence while threatening witnesses and launching her own investigations into Wang’s staff.

Abuse of Power: Wang authorized the use of unspecified “illegal technical detection methods” in his role as police chief.

January 28, 2012: Wang “slapped in the face” by an unnamed “then leading official of the Chongqing Party Committee” (likely Bo Xilai) while revealing Gu’s crime to him.

Corruption: In April 2009, Wang accepted two apartments in Beijing valued at 2.85 million yuan (US$409,500) in exchange for releasing four criminal suspects. In September 2008 and December 2009, Wang took bribes valued at 200,000 yuan (US$31,700) in exchange for another suspected criminal’s freedom.

February 2, 2012: Wang is sidelined in a Party-initiated personnel reshuffle. More of his staff are investigated.

January 29, 2012: Wang re-opens the inquest into Heywood’s death.

2:31pm, February 6, 2012: Wang enters the US Consulate General in Chengdu “without authorization,” where he makes a formal application for political asylum.

11:35pm, February 7, 2012: Wang leaves the consulate under the “persuasive influence of relevant government departments.”

Since February 8, 2012: Wang is arrested and provides investigators with evidence implicating Gu Kailai.

Economy

A Chinese Regatta?

Shandong Heavy Industry Group - Weichai Group, a 75 percent stakeholder in Italian yacht manufacturer Ferretti, recently announced its intention to tap the huge potential of China’s super-rich. By establishing an assembly plant in Qingdao, Shandong Province and employing Weichai’s well-established sales network across the country, Ferretti will cater to local demand and expects comparatively rapid growth in China in five

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to 10 years’ time, according to Tan Xuguang, chairman of Ferretti and its majority holder, though he declined to give specific revenue projections.

Before Weichai’s 374 million euro ($299m) debt-to-equity lifted Ferretti out of financial distress, the yacht maker sold most of its luxury products to Europe and North America. Its new Chinese owner is currently the country’s largest heavy-duty engine producer.

NEWSCHINA I November 2012

Publication

Society

The Beijing-based International Institute for Urban Development, China’s oldest urban NGO, publicized on September 14 its first report on social management, warning that China’s income gap is approaching a breaking point.

According to the report, China’s Gini Coefficient index, a measure of income distribution, was 0.275 in the early 1980s, a figure which had almost doubled to 0.438 in 2010. Although not included in official statistical data, China’s Gini Coefficient index has grown at

Income gap between urban and rural residents 3.3 times

Income gap between most and least profitable industries 15 times

a rate of 0.1 every year since the late 1990s, according to the book.

The report concludes that this means urban income in China is 2.3 times higher than in rural areas, making China’s rural-urban income divide a third higher than the world’s next most unequal nation. This gap widens further when top officials working for State-owned enterprises are factored in, with their average income 17 times higher than that of their departments’ grassroots workers, and 128 times the national average.

Income gap between top officials of Stateowned enterprises and grassroots workers 18 times Income gap between top officials of State-owned enterprises and social average 128 times

Source: International Institute for Urban Development

Wealth Distribution: 1% families: 41.4% 99% families: 58.6% Source: World Bank ( in 2010)

Food Security

GM Rice under Fire “Golden Rice,” a US-engineered GMO designed to provide undernourished children with supplementary Vitamin A, has come under fire since Greenpeace accused Tufts University of testing the grain on 72 Chinese school students before it had been certified as safe for human consumption.

According to the August 30 Greenpeace report, in 2008 Tufts University asked 24 elementary school students in Heng-

NEWSCHINA I November 2012

yang, Hunan Province, to eat 60g of “Golden Rice” at lunch over a period of 21 days before testing their levels of Vitamin A. The Hengyang government quickly denied the allegations, saying that the experiment they joined in was but a national program launched by China’s Center for Disease Control and Prevention to test Vitamin A content in vegetables, and only used locally-produced foodstuffs. However, on September 5, authorities published the preliminary results of an investigation, revealing that spinach used in the test was allegedly provided by Tufts.

At press time, neither Tufts nor the Hengyang government has confirmed or denied the use of uncertified GM rice in testing on those children. The case is still under investigation.

Elevator Accident in Wuhan The main cable of an overloaded elevator on a construction site of Wuhan, Hubei Province, snapped September 13, causing the elevator to plunge from 100 meters above the ground, killing all 19 workers inside.

According to witnesses, the elevator suddenly seemed to go into overdrive, rising “uncontrollably” to the top floor of the building under construction, before crashing to the ground. Six workers, were thrown or jumped from the housing before impact, but there were no survivors.

Media reports have attributed the disaster to overloading and overuse, revealing that the registration plate on the elevator wreckage indicates that the elevator, which had a maximum capacity of 12, should have been decommissioned in June.

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Photos by CFP

Income Crisis

What’s Making China Angry ?

Poll the People In May last year, an 18-year-old girl surnamed Xuan went to stay for the night at the home of a middleaged man she met at Guangzhou railway station, as she could not afford a hotel after missing the last train. When the man attempted to rape her, she stabbed him to death with a knife. The girl was sentenced to four years in prison. What do you think of the case?

Respondents:14,977

10.7% 13.1% 65.4%

Local police in Hainan Province detained a suspect in a sexual assault case on Qixi Festival, or Chinese Valentine’s Day, in late August. China’s Miao and Li ethnic groups traditionally celebrate the holiday with a giant water-fight. During this year’s festivities, pictures circulating on Weibo, China’s Twitter, showed female participants being sexually harassed by male participants.

3.3% 7.5%

No comment, because I don’t know all the facts. 1,603

What’s Amusing China ?

To avoid confusion on their first day at elementary school, Tan Chaoyun, from Shenzhen, shaved her quadruplets’ hair into the numbers 1 to 4, according to their birth sequence. This only got them more attention.

What’s Shocking China ?

Wang Aiguo, from Xi’an, Shaanxi Province, found his surgeon had inserted three steel needles into his left foot late May this year, while his fractured right foot was left untreated.

The local hospital admitted their mistake, and agreed to try again.

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The sentence is too heavy. 1,956 I don’t know. 501 Unjustifiable self-defense, so the sentence is reasonable. 1,119 Justifiable self-defense, the girl should walk free. 9,798

Source: www.weibo.com

Most Circulated Post Retweeted 132,768 times The post, by journalist Li Wei’ao of Caijing magazine, described how a drunk military officer assaulted a flight attendant on August 29.

Fang Daguo, political commissar for the Armed Forces Department of Yuexiu district, Guangzhou, attacked a female attendant on China Southern Airlines flight CZ 3874 from Hefei to Guangzhou, due to a spat over luggage arrangement.

NEWSCHINA I November 2012

WHO’S

Top Five Search Queries On

HOT? WHO’S NOT?

Over the week ending September 16 iPhone 5 Shipping Date 211,026 Chinese Apple fans can’t wait any longer for the new smartphone.

Yan Fang 149,461 A 52-year-old self-proclaimed tai-chi master was found to be a swindler, and a viral video, in which she knocked students off their feet with a half-hearted strike, turned out to be staged.

Broken-leg Bro

CCTV Suspends Advertising of Japanese Brands 90,412 Three of the State broadcaster’s channels joined the three-day boycott in support of China’s claim to the Diaoyu Islands.

49-year-old Huang Xiaorong from Hangzhou, Zhejiang Province, jumped off a five-meter high embankment and dove into the river to rescue a drowning girl, despite a shattered heel bone.

National Day Holiday 40,495 The Chinese take eight consecutive days off for the National Day and the Mid-Autumn Festival from September 30 to October 7.

Top Blogger Profile Sun Jie: Grassroots Hero Followers: 3,780,718 by September 18 A virtual nobody before he registered his Sina microblog account with the username “Workbook,” Sun Jie, a member of the post-80s generation from Qingdao, Shandong Province, has attracted millions of followers with his darkly humorous grassroots take on current affairs. He describes himself as a “senior good-boy” and a “famous neurotic.” His posts, most of them original, resonate with other young men, and regularly rack up more than 10,000 re-tweets.

NEWSCHINA I November 2012

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

Lift Fall in Wuhan 40,943 A lift carrying 19 construction workers fell from the 30th floor of an unfinished building, killing all on board, including four married couples.

Jack-knife Looters An entire truckload of grapes worth 300,000 yuan (US$47,500) were pilfered by locals after a freight truck overturned on an expressway in Lanzhou, Gansu Province.

Dedicated Driver A bus driver surnamed Chen from Nanjing, Jiangsu Province, would offer the driver’s seat to pregnant passengers if no-one else offered theirs.

Sun Jie playing a vagrant in the movie Beijing Blues

Yang Dacai The head of the Shaanxi Provincial Work Safety Administration was photographed smiling at the scene of a traffic accident that killed 36 in late August. Later, netizens dug out more than 10 pictures showing Yang wearing various luxury watches he could not possibly afford on a civil servant’s income.

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international

Diaoyu Dispute

Purchasing

Power

Conflict escalation on both sides of the East China Sea has left little room for diplomatic compromise

By Yu Xiaodong

F

ollowing months of dispute over ownership of the Diaoyu Islands (known as the Senkaku in Japan), a group of uninhabited islets in the East China Sea administered by Japan but claimed by China, heated bilateral exchanges broke out when Japan officially “nationalized” the islands, signing a contract to purchase them from a private owner on September 10 and 11.

Escalation

The purchase was made one day after a warning from Chinese President Hu Jintao, who told Japan’s Prime Minister Yoshihiko Noda that Japan should fully comprehend the severity and sensitivity of the issue and avoid a “wrong decision,” during the 21st annual gathering of APEC leaders in Vladivostok on September 9.

Japan’s decision to “nationalize” the islands immediately provoked strong reactions from Beijing. The State Council, the National People’s Congress and the military all voiced their condemnation in the following days.

A harshly worded editorial published September 11 in the Liberation Army Daily, the official newspaper of China’s military, warned that Japan would have to “swallow the bitter fruit” if it did not reverse the purchase.

“China is no longer the China that fought the Sino-Japanese War [in 1894-1895 when the islands were seized by Japan], nor the one

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Anti-Japanese protests in Hong Kong on September 11, 2012

that was invaded by imperial Japan [during World War II],” warned the editorial.

On September 13, six Chinese maritime patrol vessels, an unprecedented number, entered waters around the islands to “enforce China’s sovereignty,” and exchanged warnings with Japanese Coast Guard vessels. Earlier in July, two similar vessels had entered the waters in protest against the purchase, followed by two separate landings made by nationalist activists from both countries in mid-August.

On September 16, China’s State broadcaster CCTV reported that China’s East China Sea Fleet had launched a large-scale military drill, involving “dozens of ships” and “firing over 40 missiles of different types.”

‘Two-Man Act’?

Tokyo has claimed that the purchase aimed to “ensure long-term stability on the islands, as well as the overall relationship between Japan and China.” It suggested that nationalizing the islands would allow it to keep its own nationalist activists under control. The issue was first ignited by Tokyo Governor Shintaro Ishihara, known for his right-wing views, who began a campaign to buy the islands in April. The Japanese government responded that it would negotiate with the owners of the islands to nationalize them.

To appease China, Yoshihiko Noda pledged that Japan would continue to outlaw all unau-

thorized landings and refrain from commencing any construction on the islands.

However, Noda’s government’s attempt to prosecute a Chinese fishing boat captain detained in 2010, considered an effort to change the status quo by making Chinese nationals apprehended in the region subject to Japanese laws, has left many in China unconvinced.

“It is a two-man act [between Noda and Ishihara], setting a trap for China,” Gao Hong, vice director of the Institute of Japanese Studies under the China Academy of Social Sciences (CASS) told NewsChina. According to Gao, the Japanese government “shares the same goals as its right-wing activists,” namely to consolidate, legalize and perpetuate its control over the islands.

With frequent changes in the Japanese cabinet, it is concerned that any concession or compromise made by China may be seen as a sign of weakness, and taken as the starting point for Japan’s next government. Noda’s Democratic Party of Japan (DPJ) is currently facing a serious challenge from the opposition, the Liberal Democratic Party (LDP), which was in power for 54 years until three years ago. Both parties have expressed their support for a firm stance on the islands.

‘Islands of Nationalism’

On September 10, China announced the boundaries of its territory around the Diaoyu NEWSCHINA I November 2012

Photo by CNS

Photo by AP

Students at the Hebei University of Technology sign a banner that reads “Little Japan! Out of Diaoyu Islands!“ on September 11, 2012

Islands. “In defining boundaries, China has the legal basis for its jurisdiction of the waters surrounding the Diaoyu Islands, in line with domestic and international law,” Deng Zhonghua, head of the Department of Boundaries and Maritime Affairs with the Ministry of Foreign Affairs, told CCTV. “It is a legal countermeasure, as Japan’s ‘nationalization’ of the islands was a provocation to China in the form of legalization of its own control,” Professor Qu Xing, director of the China Institute of International Studies, told NewsChina.

In the legal sense, the announcement also means that China no longer acknowledges any dispute regarding the sovereignty of the islands.

The move is also deemed a response to repeated assertions by DPJ leaders that the islands are undisputed Japanese territory, a shift from the position of earlier Japanese governments.

The Diaoyu Islands, annexed as “unclaimed territory” by Japan in 1895, are considered by China to be a part of Taiwan and should have been returned to China after World War II. China protested when the US, which seized the islands during World War II, transferred their administration to Japan in 1971, but agreed to put aside the dispute when normalizing diplomatic relations with Japan in 1972.

For many, Japan’s move reflects the change in the landscape of the region’s geopolitics.

“China’s rapid rise, especially its replacement NEWSCHINA I November 2012

of Japan as the world’s second largest economy in 2010, has led to a shift in the geopolitics in the region,” Chen Fengying, director of the Institute of World Economic Studies under the China Institutes of Contemporary International Relations told NewsChina. “Unprepared to face a rising neighbor and struggling with a troubled economy, Japan’s national psyche has experienced a twist, leading to the rise of rightwing nationalist forces.”

“On the Japanese side, there is growing anxiety over China’s increasing economic and military prowess… and some nationalists would like to ‘settle’ the matter in Japan’s favor as soon as possible,” said Wenran Jiang, a professor of political science at the University of Alberta and a senior fellow of the Asia Pacific Foundation of Canada, in an article published in China’s Caijing magazine, titled “Islands of Nationalism.”

According to Professor Jiang, territorial squabbles with other countries in the South China Sea and America’s foreign policy “pivot” to Asia, viewed by many Chinese as an effort to contain China’s rise, has fueled “a siege mentality” among Chinese nationalists.

Japan’s purchase inflamed nationalist sentiment in China, resulting in violent anti-Japan protests across the country over the weekend of September 16. Protesters clashed with paramilitary police outside the Japanese embassy in Beijing, while in Xi’an and several other cities,

roaming mobs destroyed Japanese-made cars and set fire to Japanese restaurants and shops.

In Shanghai, several Japanese nationals were reported to have been attacked. “[Since the purchase,] the Japanese government can no longer claim that it cannot take action against non-governmental right-wing activists, and the contest will be conducted directly between the two governments in the future, with no civilian veils,” Professor Su Hao, director of the Center for Strategic and Conflict Management at China Foreign Affairs told our reporter.

On September 19, the Japanese media reported that 14 Chinese government vessels had sailed into waters close to the islands, followed by a report the following day that two Chinese warships had appeared 100 miles northwest of the islands. It is predicted that the confrontation will soon begin to affect economic and trade links between the two countries.

However, most observers believe that the tension will not necessarily lead to armed conflict. “Constrained by complicated relationships between the big powers [in the region], the two countries would prefer not to resort to a military solution,” commented Xue Litai in the Singapore-based based newspaper Lianhe Zaobao. “But as there is no room for compromise between the two countries, the volatile tension will remain a chronic problem for the foreseeable future,” he added.

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International

Diaoyu Controversy

A Different Very few prominent Japanese have sided with China in the Diaoyu Islands dispute.

Tadayoshi Murata is one of these few

By Sun Ran

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Photo by Sun Ran

T

adayoshi Murata, 66, stands out in many ways from mainstream Japanese society. Most recently, he has publicly espoused a viewpoint which has set him at odds with almost Japan’s entire academic community – that the Diaoyu Islands, called the Senkaku in Japanese, belong to China.

Born into a rural family, Murata gained entry to the University of Tokyo during one of its most vibrant eras in the late 1960s, quickly becoming involved in student activism, opposing the Japan-US Security Treaty with demonstrations and strikes.

One of Murata’s strongest inspirations was a contemporary event happening across the East China Sea – Mao Zedong’s Cultural Revolution (1966-1976), which at the time was seen the world over as a genuine proletarian assault on “old ideas.” Murata reached into the writings of Mao Zedong for a Tadayoshi Murata solution to what he saw as Japan’s social and political problems.

In 1971, he became an editor of the monthly magazine Mao Zedong Thought, which aimed to spread Maoism in Japan. In December of that year, he paid a visit to China, still in the grip of the Cultural Revolution, traveling to Guangzhou, Beijing Shanghai and some rural areas.

Murata even labored alongside peasants in the Shatianyu model village, where Party cadres claimed a good harvest was secured against overwhelming odds due to the farmers having been “armed with Mao

Zedong thought.”

After returning to Japan, Murata established himself as his homeland’s leading advocate for China.

When the Sino-Japanese ties were normalized (1972), Murata aimed to spread Chinese culture through public screenings of Chinese movies such as Li Shuangshuang, February and Street Angel.

Claiming that he needed to “learn from the workers and peasants” according to Maoist principles, Murata worked on the factory floor of a printing house before returning to the University of Tokyo as a Master’s student, and then a doctoral candidate specializing in Chinese philosophy, graduating in early 1986.

Murata eventually became Japan’s leading expert on the history of the Communist Party of China and Mao Zedong thought. Today, Murata is one of Japan’s only homegrown scholars of Mao Zedong thought and the history of the Communist Party of China.

Research

Murata has recently waded into the ongoing diplomatic row over the ownership of the Diaoyu Islands – on China’s side. In his endeavor he discovered an ally in the late Professor Kiyo Inoue (1913-2001), a historian from the University of Kyoto, who 40 years ago wrote a thesis entitled The History of the Senkaku [Diaoyu] Islands and Their Ownership.

Murata had worked with Inoue for a brief period of time in his youth, and had been inspired to conduct his own research into the history of NEWSCHINA I November 2012

the ownership of the Diaoyu Islands. In 2004, Murata published his that unsettled questions need to be “carefully unraveled,” but that Ishibook The Disputes Over the Senkaku-Diaoyu Islands, which concluded hara’s statements had had the opposite effect. based on historical precedent and international postwar treaties that “Ishihara as a local government official with no means to settle territhe Diaoyu Islands belong to China. Murata’s argument is essentially torial disputes… knew clearly this would negatively impact the governrooted in the same one that Inoue made in ment’s foreign policy; showing nothing but the 1970s.

Ishihara’s total lack of a sense of responsibilAccording to Inoue, China had hisity,” says the editorial. torical sovereignty over the Penghu Islands Yet, few Japanese criticized Ishihara’s sover“On this issue, we should learn (Pescadores) and Taiwan, along with the eignty claim. Ukeru Magosaki, a former senior from Premier Zhou Enlai and nearby Diaoyu Islands, before losing them official of the Japanese Foreign Ministry, said Mr Deng Xiaoping,” Murata to Japan during the 1894 Sino-Japanese in his signed article in Yomiuri Shimbun in July told our reporter. “At the same War, which saw the Qing fleet annihilated that the Japanese should consider the Diaoyu a time, we should be aware that

by Japan’s navy. Japan brought these anplace whose ownership remains unsettled rathwe have not surpassed their nexed territories under the jurisdiction of er than Japan’s inherent territory. His remarks Okinawa Prefecture, where they remained made quite a stir because such unorthodox political wisdom. For a scholar, until the Empire of Japan was defeated by views are rarely heard in the country. truth comes before national the Allies in 1945.

Tadayoshi Murata, meanwhile, has been interests.”

The Cairo Declaration, designed to demarginalized in Japanese academic circles termine the legal and ethical terms of the since he published his Diaoyu treatise eight Allied military campaign against Japan and years ago, labeled an “ultra-leftist” and “traisigned by China, Great Britain and the tor” and denied media coverage, in Japan, at United States in December 1943, stated least, for his views. that all former Chinese territories annexed Murata has thus turned to his professorship

by Japan since 1894, including Manchuria at the University of Yokohama to spread his (now the northeastern provinces of Liaoning, Jilin and Heilongjiang), ideas, chairing forums for Japanese and visiting Chinese students to deTaiwan (Formosa) and the Penghu (Pescadores) should be returned to bate the Diaoyu issue before retiring this year.

China, then under the control of Chiang Kai-shek’s Kuomintang.

The Potsdam Declaration determining the terms of Japan’s surrender Second Book Now, at the height of the diplomatic furor, Murata is writing a second signed by the Allies in July 1945, reiterated as binding the terms set in Cairo. In Professor Inoue’s view, the Diaoyu Islands should automati- book on the Diaoyu. He claims that the escalation of the disputes over the islands has already wrought damage to Sino-Japanese relations at cally have been restored to China.

In his book, Murata theorizes that as ancient Chinese records and a time the two countries should celebrate the 40th anniversary of the maps have included the Diaoyu Islands in Chinese territory since the establishment of their diplomatic relations (1972). He believes that the Ming Dynasty (1368-1644), that they are as historically integral to best approach at present is to shelve the feuds, provided that the disChina as Taiwan or Manchuria. Murata also uses geology to further putes cannot be resolved for the time being. Meanwhile, in his view, it is emphasize China’s claim, stating that as Taiwan and the Diaoyu Islands advisable for Chinese and Japanese academics to share historical records are linked underwater by the East Asian continental shelf, the two are in their possession and find a reasonable solution to the issue.

Murata holds that China and Japan are indispensable to each other physically integrated.

Therefore, Murata concluded in his book that the Japanese occupa- and the two sides should continue to promote their strategic ties. When territorial disputes arise, he claims, both sides should “maintain a sober tion of Diaoyu Islands in 1895 was nothing but a “robbery.”

In April this year, Shintaro Ishihara, governor of Tokyo and a right- mind” and resolve their differences in a peaceful way.

“Fanning the flames of petty nationalism masquerading as patriowing politician, made remarks in Washington that the Diaoyu Islands would be purchased from their Japanese owners by the Tokyo govern- tism,” in Murata’s view, should be “avoided at all costs.”

In this respect, Murata has more in common with former Chinese ment. Then the Japanese government stepped in and officially “nationalized” the islands on September 10-11 by signing a contract to pur- premier Zhou Enlai, and late Chinese President Deng Xiaoping, both chase them from a private owner, sparking a wave of protests in China. of whom advocated shelving territorial disputes in order to promote In its April 18 editorial, conservative newspaper Yomiuri Shimbun healthy bilateral relations between the two former enemies of China criticized Ishihara for making “irresponsible remarks.” The article said and Japan. NEWSCHINA I November 2012

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HIGH Road Deaths

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NEWSCHINA I November 2012

GHWAY TO HELL NEWSCHINA I November 2012

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Road Deaths

Fast and Furious With tens of thousands of road deaths each year, and graphic news reportage of burnt-out buses and gory highway pile-ups on every channel, NewsChina looks into why official efforts to curb the carnage on China’s roads are failing to make a dent

By Yu Xiaodong

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NEWSCHINA I November 2012

Photo by CFP

Skeleton of a sleeper bus involved in a collision with a propane tanker in Yan’an, Shaanxi on August 26, 2012, which left 36 dead

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nly slightly more than a year after the now-infamous crash of one of China’s much-lauded high-speed trains in July 2011, an accident that killed 39 people, transport safety is once more making headlines.

At 2:40 AM on August 26, a double-decker sleeper bus collided with a fuel tanker on a highway near Yan’an in Shaanxi Province. Only three passengers managed to escape via the vehicle’s single exit, and all of them suffered severe burns. 36 passengers burned to death, and graphic news images showed the tanker had survived almost intact, while the bus had been reduced to a charred heap of twisted metal wrapped around its rear end.

The graphic images ignited long-standing concerns over the safety of sleeper buses – cramped, cheap conveyances favored by the rural poor for long-distance travel, which are known for lax safety precautions and drivers who frequently are at the wheel for long hours.

Death Tolls

Though the Yan’an crash was one of the worst on China’s roads this year, similarly horrific accidents typically involving smaller vehicles occur on a daily basis on the country’s thousands of miles of highway. On the very same day as the fatal bus crash in Yan’an, another collision between a minivan and a truck in Sichuan province killed all 12 passengers in the

NEWSCHINA I November 2012

smaller vehicle. According to an incomplete list of so-called “mega road accidents [with a death toll higher than 10],” compiled by police authorities in Jiangxi Province, at least 11 such accidents have so far occurred in 2012, leaving 172 people dead across 10 provinces.

In 2011, 27 “mega accidents” killed a total 451, with the deadliest being a fire aboard a long-distance bus in Henan Province in July, 2011 which left 41 dead.

According to official data on road traffic fatalities released by the Ministry of Public Security, 62,387 people were killed in over 210,000 traffic accidents in 2011, equivalent to 171 deaths per day. 237,421 road-related injuries were also recorded. While comparable to road fatalities in other developing countries when adjusted for population size, these stats leave China far behind developed countries in terms of road safety.

The US recorded 32,310 road deaths in 2011, half of China’s total, despite having 240 million registered vehicles to China’s 106 million. In other words, the annual death toll on US roads is one-fourth of that in China.

The actual toll could be far worse than the official statistics claimed, according to research published in the World Health Organization’s Monthly Bulletin in January 2011, conducted by researchers from China’s Central South University and the Johns Hopkins School of Public Health.

Comparing death registration data released by the Ministry of Health

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Photo by CFP

Photo by CFP

with the number of reported million in road accidents, the research sug2011, an algested that the actual number of most sixfold increase in a people killed on China’s roads besingle decade. tween 2002 and 2006 have been Swaths of the population take more than double the number the wheel for the first time each officially reported by the police. year, with an average of 19.86 For example in 2007, when million new driver’s licenses ispolice claim a total of 81,649 sued annually from 2007 to died in road traffic accidents, 2011. By the end of 2011, 43 data from the Ministry of Health percent of all China’s 235 million shows that 221,135 deaths were authorized drivers had obtained registered by coroners as having The driver of an overloaded truck stops to rebalance his cargo in their license in the last five years.

Mei’an county, Jiangsu Province on October 28, 2008 been caused by road traffic acAs China leap-frogged the US cidents, almost three times as to become the world’s largest aumany. Researchers believe this tomaker as well as the largest car discrepancy could have been market, the automobile industry caused by differing definitions has joined infrastructure conas to what constitutes a “road struction as a principal engine of death,” as well as China’s houseGDP growth. As the whole nahold registration or hukou systion strives for greater economic tem, which is designed to limit development, road safety is often social mobility. Usually, when dismissed in favor of economic someone dies, their death is regpragmatism. istered in the province or area Driver’s licenses have become where their hukou is registered, one victim of this revolution. rather than in their actual place of Under the current system, a residence. As a result of this lack prospective driver has to attend of inter-departmental commua mandatory course in an authonication, the deaths of migrant rized driving school prior to takworkers or even vacationers may Passengers wait anxiously after local police pull over a sleeper bus for ing a driving test. With the cost overloading in Fujian Province on January 2, 2010 not be properly recorded. typically ranging from 3,000 As a result, while official death to 4,000 yuan ($475-630), the tolls show a steady decline in road fatalities from a peak of course has become a booming business with yearly revenue 109,000 in 2002 to less than 70,000 in 2011, many suspect over US$10 billion. the actual rate to be climbing. With powerful images, such as Since the police authorities are given the final say in authe torched skeleton of the sleeper bus circulating on social thorizing driving schools, they have a major stake in the inmedia, public anxiety over road safety has begun to transform dustry. Consequently, driving schools have come under fire into anger. for being profit-making enterprise rather than providing legitimate qualifications centered around road safety and key Deficiencies driving skills. The national driving test has become a hotbed For many, the blame for China’s high number of road deaths for corruption, with prospective drivers shaken down for adis the legacy of over-rapid motorization. According to the Naditional fees for a “guaranteed service,” and key lessons omittional Bureau of Statistics, the number of vehicles on the counted in return for a cash payment. Attempted crackdowns try’s roads increased from 18.02 million in 2001 to 105.78 are inevitably followed by a hike in prices as the few driving

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NEWSCHINA I November 2012

Photo by Li Yang

schools attempt to maintain their revenue streams while preserving their monopolies.

As a result, new and often under-trained drivers take to China’s equally new highways and roads with little more than a basic awareness of how to drive, competing for space with more traditional modes of transportation and, particularly on major intercity highways, heavy freight trucks. In 2011, speeding alone accounted for 14 percent of all road deaths.

Despite being faced with spiraling problems of traffic congestion, reckless driving and continually high death tolls, however, legislative and regulatory frameworks regarding road safety, as well as traffic policing, have remained resistant to adaptation.

A collision involving a makeshift schoolbus and a freight truck in November 2011 killed 17 kindergarten children and two adults.

A public outcry, backed up with unfavorable comparisons with the tank-like resilience of US schoolbuses, exposed inadequate government investment in road safety, specifically the safety of children on China’s roads.

According to a 2007 survey conducted by the Chinese Center for Disease Control and Prevention, about 35,000 children between the ages of 5 and 14 are injured or killed in road accidents each year in China, most often during a school run, making road accidents the second leading cause of death for that age group (after drowning).

Careless driving is believed to account for 90 percent of these deaths.

Following the schoolbus accident, the State Council responded by issuing safety regulations for school buses on April 5, 2012, with some local governments purchasing robust school buses for certains schools.

However, it was recently reported that many schools had failed to obtain the required “operating permit” for these reinforced buses, as the authorities claimed that they “lack procedural guidance” to issue such a permit.

Money

Economic expansion has also made China’s industries a major contributor to road deaths, with heavy freight and construction vehicles often to blame for the most lethal accidents. According to the Ministry of Public Security, among road deaths reported in 2011, 37.8 percent were caused by commercial vehicles, which account for a mere 9.77 percent of all vehicles on China’s roads.

Cargo trucks were the most likely to be involved in an accident, accounting for 71.8 percent of the total, with the re-

NEWSCHINA I November 2012

Famers dry wheat on a road Zhangxian county, Gansu Province on August 27, 2012

mainder largely caused by passenger vehicles, particularly buses.

In the deadly accident on August 26, the sleeper bus operator was found to be in direct violation of a regulation that bans all long-distance buses from highways between 2 and 5 AM, as this is when collisions with heavy freight vehicles are most likely to occur. Following a number of gruesome road accidents involving long distance sleeper buses in recent years, the authorities have stepped up regulation of these vehicles, forbidding overloading, and making it mandatory to stop for a break after multiple hours of driving. Unfortunately, these rules are often ignored by bus companies struggling to make a profit from their typically rural clientele.

Following the August collision, road authorities in many localities have now suspended or banned all overnight long distance bus services. This follows a ban on the manufacture and sale of sleeper buses earlier in the year, with a view to phasing out this dangerous form of transport within five to six years.

However, the problems associated with heavy cargo trucks are more difficult to solve. Responsible for 27.1 percent of all road deaths in 2011, many accidents caused by cargo trucks are related to overloading, a chronic problem of road safety in China, where steep road tolls, among the highest in the world, have made overloading a necessity for trucking companies to turn a profit.

With highways a major source of revenue for local governments, China now boasts the world’s longest network of toll roads, and the world’s highest charges when average income is factored in. According to one estimate, China has 100,000 kilometers of toll roads, accounting for some 70 percent of the world’s total.

When the government increases fines for overloading, local police treat them as a source of extra income. In some localities, these fines are treated more as a tax, and in the most extreme cases of corruption police have produced a list of “monthly fines” which reads more like a rating system, fining trucks for overloading according to size and capacity.

So long as truck operators agree to pay the fine on time, they can overload their vehicles at will. This practice has become so prevalent that traffic authorities in Beijing, where crackdowns on overloading have been strictest, constantly complain that surrounding provinces’ failure to deal with the problem has flooded the capital’s roads with heavily overloaded trucks.

Measures

The government has made some inroads when it comes to controlling the behavior of civilian motorists. Most effective has been the crackdown that saw drunk driving criminalized on May 1, 2011, punishable by up to six months in jail, a heavy fine and a driving ban.

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Road Deaths in China (2001-2011) 120000

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0

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2011

Source: Ministry of Public Security Note: These figures are considered an underestimate, with data from the Ministry of Health showing a death toll up to 2 times higher

Road Deaths in 2011 (by type of vehicle)

Total: 62,387

27.1% Cargo Trucks 11.7% Buses and other commercial passenger vehicles 62.2% Others Source: Ministry of Public Security

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Police claim the campaign led to 1,787 arrests in 2011, reducing the number of deaths caused by drunk driving by 22.3 percent compared to the previous year.

However, as any visitor will attest, Chinese roads remain hazardous at the best of times. Seatbelts, mandatory under China’s road safety law, are almost universally ignored by mainland drivers, though similar laws in Hong Kong, Taiwan and Macau are rigorously enforced by these territories’ traffic cops.

Deng Fei, a senior transport specialist at the World Bank, wrote a recent editorial in the English-language State newspaper China Daily calling for a systematic road safety campaign and the establishment of a government body to oversee road safety. Road deaths in developed countries were reduced by government campaigns and broad pressure applied to the automotive industry, traffic police, government agencies, driving schools and individual drivers. Deng argued that China has focused sporadically on certain problems, but failed to come up with a comprehensive plan to significantly reduce road deaths in any lasting way.

“Though China has invested heavily in the physical construction of roads, it has paid less attention to ensuring that they are safe,” he commented.

Automobiles continue to roll off production lines, as millions of new drivers line up for their first car – still a definitive status symbol for most affluent Chinese. According to estimates from the Ministry of Industry and Information, there will be over 200 million registered vehicles in the country in 2020, almost twice the current total. Without swift and serious measures from all those invested in this multi-billion dollar industry, however, those behind the wheel on China’s roads will continue to be both dangerous and endangered.

NEWSCHINA I November 2012

Road Deaths

Safety Second Patchy safety standards, State-run testing centers invested in the auto industry, and inadequate consumer protection make Chinese-made cars more dangerous, but also help keep the domestic auto industry competitive. What to do?

By Sun Zhe

NEWSCHINA I November 2012

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L

i Duxian just bought his second car - a Great Wall SUV which, he proudly tells our reporter, offers him more “face” and convenience than his old Geely compact.

Li, a 43-year-old construction materials dealer from Hunan Province is proud that his new car is usually the first to escape a traffic jam since its elevated chassis enables it to negotiate the sidewalks. He also boasted to NewsChina about its “big power, fancy dashboard and roomy interior.”

“The car looks square and solid, so it must be crash-proof,” Li said. He added that he could not care less about the car’s performance in actual crash testing, apparently trusting in the seemingly safe outward appearance of this monster automobile.

Given that most Chinese people only recently traded in their bicycles, a majority of the country’s drivers are still on their first car and have little knowledge or interest in auto safety, as evidenced by their often jaw-dropping behavior on the highway.

Even if Chinese drivers were interested in automobile crash test performance, there would be no credible domestic source they could refer to.

False Test

The integrity of the China New Car Assessment Program (C-NCAP) has been under scrutiny ever since its introduction in 2006. In 2011, more than 60 percent of all 26 new models tested achieved the maximum fivestar rating, with a further 15 percent achieving a four-star rating, meaning three quarters of all tested cars scored four stars or above. Many have accused the C-NCAP testing centers of fudging test results or simply inventing scores to give domestic automakers an advertising boost. Either that, or Chinese-made cars are among the safest in the world.

With most domestic cars on the market given top marks for safety, few consumers can use this as a criterion for selecting their preferred model, according to independent auto industry analyst Zhong Shi. China’s Automobile Ownership Though the C-NCAP has upgraded its test speed from 56 to 64 million 120 kilometers per hour since July to bring it in line with its European 100 counterpart, and the number of five-star rated vehicles is expected to drop as a result, doubts remain over 80 the priorities of the agency and its subsidiaries.

60 The China Automotive Technology Research Center (CATRC), 40 the organization in charge of automobile safety testing, is a State20 owned research firm with interests in the auto industry as a whole.

0 In other words, the cars it tests are 2001 2002 2003 often those manufactured by the Source: Ministry of Public Security Center’s own industrial clients, in-

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centivizing the issue of a clean bill of health for all such vehicles, regardless of their performance in testing. Moreover, automakers have to pay top dollar to have their vehicles tested, and again to obtain the results of the test. For a single model, excluding the cost of the car itself, the center charges 490,000 yuan (US$77,000) for crash testing and data release.

“It is hard to believe that the CATRC offers even ground in crash testing to both clients and non-clients,” said Zhong.

Theoretically, automakers do not have to pay for the cars tested by the CATRC, but most automakers buy back crash-tested cars according to Zhang Jin, the chief engineer of a domestic automaker who preferred not to reveal the name of his employer. Thus, the CATRC has become China’s de facto authority on automotive safety, as well as a major player in the domestic car market.

“To curry favor with the CATRC, many homegrown brands have outsourced their safety design directly to the research center in the hope of a high score in future crash testing,” Zhong told our reporter. “The CATRC could make tens of millions of yuan in profit from a combination of testing and design services.”

Loose Standards

Even if the CATRC crash tests are conducted on a level playing field, the test results themselves say little about the actual safety of a vehicle in certain types of crash. Unlike European and American testing centers, the C-NCAP only demands testing for head-on and side collisions, while rearend and roll-over testing are not conducted, despite these accidents being the most likely to prove fatal.

Also, oil leakage prevention and pedestrian protection are not tested,

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with safety tests heavily weighted towards protecting the occupants of the vehicle. This seems counterintuitive, as most road fatalities in China are pedestrians and cyclists, who still make up the bulk of road hazards, particularly in urban areas.

Moreover, Chinese automakers have a direct hand in determining certain safety standards, particularly for passenger vehicles such as buses. Bus accidents, which account for about one tenth of the road fatalities in China, are frequently attributed to lax safety standards for manufacturers. Seatbelts are only mandatory for bus drivers and front-seat bus passengers, a regulation which is barely enforced

by China’s few traffic police. Buses rarely have more than one exit, and almost never have purpose-built emergency exits or escape hatches, and some coaches have been seen to crumple like paper even in low-speed collisions.

According to Xu Hui, an automobile engineer with Nissan China, the C-NCAP is less strict than its international counterparts because it needs to take into consideration the “technical level” of domestic brands.

“The quality control procedures of home-grown brands are in no way comparable with those of joint venture automakers, given their short development history,” said Xu. In other words, safety standards for domestic cars are automatically lowered to protect the industry rather than road users.

Zhong told our reporter that some Chinese vehicles rated five stars under C-NCAP safety standards might struggle to obtain a two-star rating in a US or European testing center, and that it has even been known for automakers to build special models for market entry testing while cutting corners for their sales models.

Few consumers expect any form of protection were they able to prove a defect, with the court system heavily geared towards manufacturers, many of which have close ties to the government.

Competition

Foreign-branded private cars first entered China in the 1980s by launching joint ventures with State-owned automakers who churned out freight trucks, or handcrafted limousines exclusively for the use of the country’s top officials.

China’s indigenous car brands, most of them privately-owned, only began to emerge in the late 1990s when private individuals emerged as a genuine market for mass-produced automobiles. However, few domestic brands have been able to compete with the prestige of joint ventures, with those able to afford it overwhelmingly preferring foreign-branded cars over domestic brands, which are still seen as a cut-price option for the middle class. Part of the appeal of foreign-branded cars is their perceived reliability, as most models have previously been tested overseas according to US or European standards.

However, keen to reduce costs, many of China’s joint venture automakers have cut corners in terms of the safety of their Chinese-made vehicles, confident of retaining their five-star rating while broadening their market share. For instance, tire pressure monitoring and electronic stability control NEWSCHINA I November 2012

systems, believed to reduce fatal accidents caused by skidding and blown tires, are a standard feature in most American and European vehicles, but only come as standard for imported and domestically made luxury cars in China.

Stricter safety standards would, however, hit China’s home-grown brands the hardest, as they can generally only compete with joint ventures on price. If indigenous brands were to invest as much as Volkswagen or Audi in safety features and crash testing, then price tags would likely equalize for Chinese-made models, sinking the domestic brands.

Few in China’s government want to reverse the domestic auto sales boom, one of the major driving forces behind growth in domestic consumption in the past few years, particularly as more and more Chinese people are frozen out of the housing market by sky-high prices. In early 2009, at the height of the global financial crisis, China offered generous tax breaks to domestic automakers and subsidies to buyers of subcompact cars, a sector dominated by Chinese brands, boosting consumption and providing a buffer against a slowdown in economic growth.

Domestic brands account for about four-fifths of the subcompact sector, with subcompact car sales representing more than 85 percent of revenues.

In 2009, as the US and Europe wallowed in recession, China’s passenger car sales grew more than half on the previous year, allowing the country to overtake the US to become the world’s largest automobile market.

Consumer Rights

Though car buyers in China are subject to a minimum 40 percent purchase tax, which rises to 140 percent for some imported models – it is unclear what these payments are in aid of, as both consumer rights protection for vehicle owners and even national safety standards are virtually non-existent.

More than half of the complaints about vehicles filed by Chinese courts in 2011 were related to safety problems, but the proposal of a lemon law on automobile replacement and repair has yet to be issued despite having been in committee for over a decade.

Since 2004, when China first introduced automobile recall regulations, until 2011, a total of 6 million Chinese-made vehicles were recalled due to safety concerns. In the same year, the US recalled 14.5 million cars, or more than twice of that recalled over the past seven years in China. Though the Chinese government has the power to demand a recall of any deficient model of car, no such recall has been enforced since the scheme was launched, with automakers voluntarily recalling defective vehicles themselves, usually due to public pressure.

According to the automobile engineer Zhang Jin, who himself drives a runabout from his own factory, Chinese consumers are usually more tolerant of defects in home-branded cars, as most expect them to be somewhat unsafe, accepting the risk as a trade-off for a much lower price tag. When encountering a real road crash in a domestically-branded car, the drivers, if they are fortunate enough to walk away from the situation, are unlikely to blame the vehicle.

“In such cases, you have no choice but to trust in fate,” said Zhang.

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Health System

Patients wait to see doctors outside Xiehe Hospital, Beijing on August 26, 2012

Photo by CFP

politics

Under the Knife As the public grows increasingly sick of the current medical system, the Ministry of Health has proposed the creation of a “super health ministry,” merging various existing agencies into one

By Yu Xiaodong

A

mong China’s many social problems, healthcare is a particularly sore nerve. Long gone is the planned economy era, with its cradle-to-grave social security system and virtually free urban medical care. Nowadays, public hospitals are generally profit-oriented, leading to an imbalance in the distribution of medical resources between urban and rural regions, soaring prescription and service fees, and frequent, often violent confrontations between the medical community and the public.

According to a survey conducted by Peking University professor Zhou Renqi, by 2005, the share of China’s medical spending shouldered by private individuals was 200 times the 1978 figure, a rate of increase roughly four times higher than the GDP growth rate. In the meantime, numbers of medical institutions and medical personnel have only increased by

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76 and 75 percent respectively.

In recent years, the Chinese government has made various efforts to reform the medical system, including enlarging the coverage of public medical insurance and enforcing a compulsory list of arbitrary low-priced basic drugs, all with limited success. More recently, the Ministry of Health (MOH) has offered its own proposal.

A Bigger MOH

At the China Heath Forum 2012, held in Beijing on August 18, the MOH released Healthy China 2020, a report on China’s health situation. Initiated in 2008, the drafting of the report was headed by Han Qide and Sang Guowei, vice-chairmen of the National People’s Congress Standing Committee, lending it significant clout in terms of official endorsement. A key section of the report pro-

poses to amalgamate various central agencies, including those governing health, medical insurance, family planning, environmental protection and sports, into a “super ministry” by 2020, for which the report suggests the name: “the Ministry of Health and Welfare.”

Chen Zhu, China’s health minister, said during the forum that one of the major obstacles to any effective reform in the medical system is that its various components fall under the jurisdiction of different central agencies, leading to overlapping, inefficiency and friction between those agencies.

Under the current institutional arrangement, the hospital system is managed by the MOH, the medical insurance system by the Ministry of Human Resources and Social Security, and pharmaceuticals by the State Food and Drug Administration (SFDA). Meanwhile, the National Development and Reform NEWSCHINA I November 2012

Commission also has a say in determining the price of medical services and pharmaceuticals.

According to Chen, merging these agencies into one super-size ministry would help to resolve conflicting interests between the different central bodies when it comes to orchestrating reform of the health system. During a speech in New York this March, Chen pledged that by 2015, the Chinese government would increase its share of medical expenditure to 33 percent from the current 28 percent, while lowering the share paid by individuals from 35 percent to 30 percent. As most government funding comes from the public medical insurance account, having direct control of that account appears essential to achieving this goal.

“As long as the public medical insurance account is administrated by the Ministry of Human Resources and Social Security, local health authorities have no incentive to curb medical expenses charged by hospitals, as increased expenses mean more reimbursement,” Liao Xinbo, vice-director of the Guangdong Provincial Health Bureau, told China Business News. “If both are under the administration of one ministry, that ministry could make better use of the account,” he added.

The idea of a bigger health ministry incorporating the medical system and the public medical insurance system can be traced back to the 17th Party Congress in 2007.

While discussions resulted in the transfer of the SFDA to the jurisdiction of the MOH in 2008, wider reform was postponed to the 18th Party Congress, which is expected to be held in Beijing this fall.

Compared with its earlier proposals, the MOH appears to have become radically more ambitious. It has proposed to incorporate three more ministry-level agencies, namely the National Population and Family Planning Commission, the Ministry of Environmental Protection and the General Administration of Sport, into the “super health ministry.”

According to Rao Keqin, Party secretary of the Chinese Medical Association, a government-backed professional association who participated in the drafting of the report, medical services only plays a 20-percent role in safeguarding the health of the general population. To improve this protection, the health NEWSCHINA I November 2012

ministry should also take a leading role in environmental protection and promoting sports among the population at large. Since medical service for women and children is currently linked to the family planning policy, especially in rural areas, authority over family planning should also be logically handed to the health ministry, in the view of advocates for ministry expansion.

While the idea of amalgamating the health system and the medical insurance system is widely supported, making environmental protection and sports affairs subordinate to the health ministry is considered unfeasible.

Many even warn of departmental interests behind these plans, with some central agencies seeking to expand their power and authority under the guise of reform.

According to Professor Liu Guo’en of Peking University, the problem with the MOH lies in its role as both competitor and regulator, overseeing the management of public hospitals which, to a large extent, monopolize China’s medical resources. It was not until 2009 that private capital was allowed into the medical sector, and as yet, it only constitutes a tiny portion of the market. The result of this monopoly is inefficiency and a distorted price system.

For example, in an effort to provide affordable medical services to the public, doctors’ salaries and prescription charges have been kept artificially low. To increase income, hospitals employ other means such as expensive medical check-ups and price gouging, leading to spiralling medical expenses, and public resentment.

Liu urges that the MOH resume its role as the sole regulator, focusing on providing a safe basic medical service, and formulating appropriate rules and standards, instead of involving itself directly in hospital management.

Super Ministries

For many analysts, the MOH’s report provides a mere glimpse of the political jockeying among central agencies in the run-up to the 18th National Congress, after which a new round of streamlining is expected. Since 1982, the central government has conducted six rounds of government “streamlining” (roughly once every five years), aimed at boosting efficiency by merging overlapping and redundant

government agencies. By 2008, the number of central ministerial-level agencies had been reduced to 29, from 100 in 1982. According to a draft on the organizational re-structuring of the State Council, China’s cabinet, the current 29 ministries will be reduced to 17 after the 18th Party Congress, with the establishment of several “super ministries.”

Besides the super health ministry, a super energy ministry and a super transport ministry have also been under consideration for some time. As with healthcare, the energy and transport sectors also fall under the overlapping administration of multiple agencies, leading to similar problems.

For example, within the energy sector, the coal industry and the electricity industry – both dominated by State-owned enterprises – are overseen by different agencies, and the conflict of interests between them has led to power shortages as coal prices continue to rise.

Similarly, competition between the overland transport, aviation and railroad sectors, and between the various agencies administering them, is also likely to become an obstacle to the smooth operation of the country’s transport network as a whole.

It is obvious that any attempt at change is bound to meet with resistance from the vested interests and agencies currently benefiting from the status quo. Many of them are very powerful, such as the National Development and Reform Commission, which holds the power to set the price of energy resources such as oil, coal and electricity, and the Ministry of Railways, which previously enjoyed privileged status with billions of dollars at its disposal.

“It will be a contest between the central agencies that have conflicting interests,” said Rao Keqin, author of the MOH report. It is perhaps for that reason that Rao and others involved in the drafting of the report have helped set the timetable for the creation of a super health ministry by 2020.

So far, the better part of the inter-agency tug-of-war is being waged behind closed doors. Since individual Politburo members are traditionally charged with responsibility for major ministries, the fate of these as-yet theoretical “super ministries” will remain a mystery until after the 18th Party Congress, when the new Politburo materializes.

25

Local Government Finances

Straighten Up and Fly Right Chinese local governments, the main force behind this round of economic stimulus, face both fiscal and disciplinary deficits

Wangjiang, a poor county in Anhui Province, was criticized for constructing an overlarge, lavish office complex while neglecting locals living in poverty

By Li Jia

S

ince 2008, economic policymakers worldwide have variously proclaimed austerity and expansion as the key to boosting investment in the real economy.

Not long ago, China had the means to stick to the latter. Recently, its local governments, the focus of current efforts to stimulate growth, are expected to do both.

These governments have just received approval for at least US$300 billion of megainvestment over the past few months. They have declared plans to spend some US$1.6 trillion in the next few years, covering nearly every industry imaginable, from old favorites like road construction to new ventures like cloud computing.

However, in reality, local governments are already in debt by just as much as they stand to receive, a stubborn hangover from the previous investment frenzy orchestrated by the central government in 2008. They have a stack of bills to pay, particularly for public services and operational costs. Given the recent slowdown in the growth of China’s fiscal revenue, the Ministry of Finance has warned local governments to prepare for spending cuts.

Meanwhile, cases of profligacy still abound.

26

The latest round of public outrage came at the news that students in an impoverished city in Hubei Province had to carry desks and chairs to school, while government offices described as “magnificent as the White House” stand in the city center. Similar reports have repeatedly riled the public over the years.

The tricky question is whether Chinese local governments are really short of money, or are simply misusing what they have. The answer may well be both.

Crybabies

Under the current fiscal system enacted in 1994, the central government takes the lion’s share of all major tax revenue, including valueadded tax, consumption taxes and corporate income taxes. According to figures from the Ministry of Finance, the central government holds 61 percent of the national tax revenue.

While tax revenue is increasingly centralized, responsibilities are devolving. “Local government revenue…is not commensurate with local government expenditure responsibilities,” says the China 2030 report issued by the World Bank and the Chinese State Council. “The situation at the county level, the bottom of the fiscal hierarchy, is particularly facing mounting

pressure to provide public services like pensions, health care and compulsory education,” said Professor Wang Yongjun, an expert in public finance with the Central University of Finance and Economics.

For years, local governments have concentrated more on paying their staff’s salaries than they have on providing public services or boosting the economy. A city official in comparatively undeveloped Gansu Province, who requested to remain anonymous, told NewsChina that it was not until 2002 that all their civil servants began to receive their full salaries on time. According to the Ministry of Finance, even by the end of 2009, more than one-third of some 2000 counties could hardly afford their daily operation. By 2011, this number had been reduced to 5 percent.

The improvement was thanks in large part to a redistribution mechanism by which the central government transfers a portion of revenue to local governments. The goals are to ease the local governments’ fiscal burden in absolute terms, and in relative terms, to reduce fiscal imbalances between different regions. This has seen moderate success. Central finance has funded 40 to 50 percent of the expenditure of local governments, says the World Bank report NEWSCHINA I November 2012

Photo by jiang sheng/cfp

politics

A large part of revenue transfer is earmarked on a project basis. Besides money, projects mean the possibility of high returns in the future. To get hold of these projects, local governments have to lobby ministers in the State Council, which is both expensive and time-consuming.

Occupancy rates of hotels around the National Development and Reform Commission (NDRC), for example, are even regarded as a fairly reliable indicator for China’s economy.

Those with particularly good lobbying skills, or who are well-connected with the right ministries, have the best chance of getting their hands on development cash. Analysts often say that when it comes to local governments, “the babies who cry the loudest get fed.”

Local governments also have to co-fund their projects. The more you want, the more you have to stump up. Consequently, some poor areas have ended up shredding their books, or giving up. “It is difficult for poor areas to decide whether to go ahead with these projects or not,” said the official in Gansu.

Off the Book, Off the Hook

Recently, several corruption cases have been exposed when officials were spotted wearing expensive belts and watches in public. Flimsy infrastructure, murky administrative accounts and the luxurious lifestyles of those in charge have caused widespread public discontent. Two major reasons can help explain this paradox between local fiscal difficulty and spendthrift officials.

Firstly, non-tax revenue, largely off-budget, provides extra fiscal resources. It accounts for about 40 percent of local fiscal revenue, according to Professor Wang, and is growing fast. For the first eight months of 2012, central non-tax revenue posted nearly zero growth due to the economic slowdown, while local non-tax revenue soared 26 percent.

Land and property are the two most important cash cows, since they are almost entirely under the thumbs of local governments, both on and off-budget. 38 percent of the total direct local government debts of US$1 trillion will be repaid by land sales. Land is often used as collateral for special purpose vehicles established by local governments to finance their investment projects. Corruption and abuses of power in land sales and acquisitions bring in illegal revenue.

Numerous other revenue sources, legal or ilNEWSCHINA I November 2012

Annual increase in China’s fiscal revenue First 8 months of 2012: 10.8% 35

30

25

20

15

10

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source : Ministry of Finance

Breakdown of transfer payments from central to local finance in 2011

Total:US$630 billion Tax returns: US$80bn 13% Transfer to balance regional gaps: US$289bn 46% Project-based transfer: US$261bn 41%

Source : Ministry of Finance

legal, have been created. Zhou Dewen, chairman of the Wenzhou SME Development Association, told NewsChina that the more than 70 fees charged by 39 separate government agencies are a heavy burden for enterprises. Many law enforcement agencies, including the police, abuse their power to impose fines. It is difficult even to identify all off-budget funds. They are a “black hole,” Professor Li Shuguang at China University of Political Science and Law told NewsChina.

Secondly, fiscal discipline is weak. Under increasing pressure from the public, ministries and some local governments have begun to disclose their expenditure on trips abroad, cars and catering. “This is progress, but these details are insufficient for the public to judge whether the spending is reasonable or not,” Professor Li said.

From 2011 onwards, all off-budget funds have been included on-budget, making the collection and use of all government revenue and expenditure subject to the scrutiny of legislators.

This is not as big of an improvement as it would appear. Hearings, inquiries and debates, procedures Professor Wang describes as “crucial for any budget making,” are still absent from the existing Budget Law and the recently released draft revision. Besides, a law without specific penalties makes no sense, argued Professor Li. There is consensus that both autonomy and discipline need to be increased when dealing with local public finances. Analysts are divided on methodology. For example, should local governments be allowed to issue bonds? How should administrative responsibilities be shared more specifically and reasonably among the bureaucracy?

These questions used to be considered highly technical issues – the reserve of experts. But the draft revision of the Budget Law has elicited more public feedback than any other law on which public opinion has been solicited. Public awareness is the only real ray of light shining into the muddy waters of local government finance.

27

society

Earthquake

Schoolhouse Ruins Despite years of supposed reinforcement efforts, school buildings in Yiliang County were shown to be defective and poorly-maintained when they came tumbling down in a recent earthquake

By Min Yunxiao in Yiliang, Yunnan Province

Severe earthquake damage at Maoping Primary School

“

The parents entrusted their children to me, but now three of them are gone. I’m very upset,” said Zhu Yinquan, the only teacher at Yunluo Elementary School nestled deep in the mountains of Yiliang, Yunnan Province. When the 5.7-strength earthquake struck on September 7, the rammed-earth walls of the school’s only two classrooms crumbled, killing three pupils.

Sorting through their schoolbags and stationary recovered from the ruins, Zhu, choked with sadness, said, “The semester had just begun and many of the pupils couldn’t write their own names yet.”

The Yunluo School was one of the 86 schools in Yiliang whose buildings collapsed in the earthquake. But the other 85 had sat empty, as they had either been dissolved or merged into other schools. Besides schoolhouses, the houses of many local residents also came crashing down in the earthquake.

According to Jiang Haikun, deputy director of the earthquake forecast section of the China Earthquake Network Center, the quake-stricken area was the economically backward northeast of Yunnan Province, and the houses in the area were generally of poor construction, unable to withstand a fairly high-magnitude earthquake.

Zhu Yinquan, the elementary school teacher, explained that his school was built in the 1970s when rammed earth was the chief construction material.

Not only the schoolhouses, but virtually all the local residences were built with rammed earth – the most affordable and convenient material in this

28

poverty-stricken area inhabited by farmers of the Yi and Miao minorities.

Reinforcement

According to Huang Pugang, director of the Yunnan Provincial Bureau of Seismology, a province-wide initiative to strengthen civilian residences’ protection against earthquakes, was launched in the wake of the 5.1 earthquake that struck Yanjin County in the same area, damaging many houses.

By the end of 2008, 43,000 earthquake-resistant houses had been completed (constructed, reinforced and upgraded) across the province.

Indicating the ruins, Chen Guoyong, commander of an engineering unit participating in the earthquake rescue, said: “A mere 5.7 earthquake has brought down so many houses. It shows that these houses were simply not up to the minimum earthquake resistance standard.”

Compared with the collapsed Yunluo Elementary School up the mountain, the Fada Elementary School at the foot of the mountain, with its brick-built classrooms, fared much better. However, cracks were seen in the walls of the school building, whose construction cost 1.89 million yuan (US$298,000) and which entered service just two years ago, provoking wide suspicion as to where the money was spent.

In another “earthquake-proof” school, the Maoping Elementary School, the NewsChina reporter saw wide cracks on the walls of the school building, which has now been declared “unsafe to enter.”

NEWSCHINA I November 2012

the construction and reinforcement of school buildings, there were still many risky and dilapidated ones due to a backlog of renovation work.

Yang Shunwu, an education official in charge of school construction, said that in 2009 it was verified that the total floor space of at-risk schoolhouses in the county was 156,200 square meters, and that so far 78,000 square meters had been reinforced or reconstructed, leaving the remaining 78,200 square meters still in a dilapidated state.

Photo by Liu Ranyang

Photo by Yang Zheng/CFp

Defective Structures

Children eat instant noodles outside tents at the Maoping Middle School, September 8

There are a total of 357 schools in Yiliang County, including 12 kindergartens and 322 elementary schools, housing 118,000 students. By September 9, the day after the earthquake, 240 classrooms had crumbled, and another 220,240 square meters of schoolrooms were listed as “at risk.” The total economic loss in this regard reached 582 million yuan (US$91.7m).

Zhang Dengshu, a senior education official in Yiliang County, told NewsChina that most of the schoolhouses that collapsed in the earthquake were old rammed-earth structures, and that, despite heavy investment in NEWSCHINA I November 2012

Aside from rammed-earth houses, another shoddy construction method, crushed stones cemented with lime mortar, also claimed a large number of human lives in the earthquake. 18-year-old Wang Aohua and her five-month-old baby were killed in one of these structures.

“At that time, the baby was crying fiercely and [Wang] took [her baby] into the house to put it to sleep. Several minutes later there came a deafening sound, and I ran outside,” recalled Yang Saixiu, Wang’s grandmother.

With the thick dust clouds from the collapsing building blocking her vision, she could see nothing. Later, when the dust had settled, the bodies of Wang and her baby were dug out from under the rubble, the mother still holding her child tightly.

Another phenomenon has also provoked concern – houses sitting upon goaves, hollowed-out underground areas resulting from coal mining.

For example, in the 4-kilometer distance between Luozehe, a village at the foot of a mountain, and the mountain top, there are four coal mines.

Dozens of houses in the area collapsed in the earthquake. Villager Xiong Fenghua said that the walls of many houses sitting on the goaves had already cracked before the earthquake. When the tremor struck, the vulnerable structures crumbled instantly.

Official statistics show that Yunnan Province has invested a total of 12.8 billion yuan (US$2bn) in upgrading and reinforcing at-risk schoolhouses since 2002, with the years of 2008 and 2009 seeing the peak of input – a combined 5.97 billion yuan (US$944m).

By State-mandated standards, school buildings are divided into four categories where safety is concerned. Grade A and B schoolhouses can remain in normal use, while those of grade C should be reinforced before use is continued. Grade D houses are deemed to have serious safety hazards, and must be not be used.

The province declared at the end of 2010 that 6.4 million square meters of grade D schoolhouses had all been upgraded or reinforced.

NewsChina learned that Yiliang County, which bore the brunt of the September 7 earthquake, had been a beneficiary of the school-building safety program, receiving financial aid from the province, the World Bank and various education-aid programs in the Chinese mainland and Hong Kong.

The fact that the county’s schoolhouses were revealed to be so delicate will no doubt provoke widespread accusations of graft, similar to those leveled at education authorities when an estimated 7,000 schoolhouses collapsed in the Wenchuan earthquake in 2008.

Wang Yihui, head of Yunluo village, told NewsChina that the Yunluo Elementary School recently underwent renovation in 2006 and the tiles, glass and concrete door and window frames were given by the Fada Elementary School at the foot of the mountain. The villagers themselves erected the rammed-earth walls. “Nobody expected that the schoolhouse would collapse so easily,” he said.

29

society

Orphan Parents

Tragic

By Yuan Ye

All photo by Yin Yafei

Figures

As the number of elderly people who have lost their only children to illness or accidents mounts, concerns grow over what is turning into a major social problem

30

A 64-year-old mother reads You Were Here. She wrote the book for her daughter, who died ofNEWSCHINA an illnessI November 2012

A

Chinese idiom has it that one of life’s greatest tragedies is when “the white-haired bid farewell to the black-haired” – premature deaths. The country’s One Child Policy has added an extra dimension to such tragedies in the last three decades, as couples who have lost their only child since the dismantling of China’s cradleto-grave welfare system in the 1980s, have also lost security in their old age.

According to Chinese media, more than 1 million Chinese families may be in this dire situation. The first generation of single child parents are now entering retirement en masse, unable to conceive and thus at risk should their child die or be incapacitated.

Experts estimate that this alarming figure is likely to hit the 10 million mark in the next 30 years as single children born over the past 30 years grow older and raise single-child families of their own. The problem has also been exacerbated by China’s aging society, with 12.5 percent of the population aged over 60 in 2010, a figure which is climbing each year.

The grief of losing one’s only child is, for retired Chinese parents, often compounded by the hopelessness of losing their only source of income and supportive care. Parents recently bereaved by disease may have run themselves into debt or even bankruptcy to pay hospital bills, only to find they are unable to support themselves.

Now, these “orphaned parents” are taking action.

Petition

On the morning of June 5, more than 100 bereaved parents from various parts of the

NEWSCHINA I November 2012

The loss of an only child leaves families both devastated and, frequently, destitute

country gathered at the gate of the petitioners’ reception room of the National Population and Family Planning Commission (NPFPC). They were delivering a “letter of appeal” to the commission, asking for compensation.

The group described themselves as “people with a shared fate.” Before losing their only children, many of them had suffered extreme poverty in the 1950s, political tumult in the 1960s and 1970s, the one-child cap in the 1980s and the massive lay-offs of State workers in the 1990s. Now, childless and without welfare, they found their golden years were anything but.

“When we entered middle and then old age, our children left us, to our great sorrow… It’s a cruel and fatal blow. Not only have we lost our children, but also the continuation of the family line, life support and sustenance of spirit,” ran the group’s 4,000word petition.

As have many other groups disenfranchised by China’s recent transformation,

these parents found, through the Internet, consensus as well as consolation. “We have made great sacrifices for the country’s population policy,” they told reporters. “Claiming compensation for the sacrifices we made is thus quite reasonable.”

More than 1,000 signatures were collected from parents who had lost their only children, with the petition offering a simple formula to calculate compensation: per capita disposable income of urban residents in the previous year multiplied by (average national life expectancy minus the age at which the child died) divided by two. “It’s the income a child would have shared with each of his or her parents if he or she were still alive,” explained one petitioner.

“Inevitably, families with only one child risk becoming families with no children.

There is always a percentage of such families,” said Mu Guangzong, a professor from the Institute for Population Research at Peking University.

Petitioners also estimate that in the past

31

society

30 years, the NPFPC has collected a huge amount of money in fines from parents who had “unsanctioned” births. Based on figures released by the National Bureau of Statistics (NBS), around 13 million Chinese hold no hukou, the household registration document used by the government to restrict the movement of the workforce. The petitioners claim that most of these people are “illegal” children.

“Conservatively, for one such child, his or her parents would be fined 20,000 yuan (US$3,174) which means the total revenue from fines would be some 260 billion yuan (US$41bn),” claimed the petition, suggesting that the compensation payments be sourced from this pool.

Mu Guangzong disagrees. In his opinion, the fines for unsanctioned births go towards “the expense of society’s fostering [of a child],” and equate to a fine for criminal behavior. “You can’t compensate one type of wrong-doing from another,” he said. “That only multiplies the error.”

Nonetheless, the petitioners proved insistent. Orphaned parents have repeatedly appealed to the Chinese government for support. In 2009, 29 parents sent a letter to related government departments appealing for official policies to assist orphaned parents.

In 2010, a letter signed by 684 parents was presented to the NPFPC. In August 2011, another letter signed by 1,084 parents was presented. Besides asking for compensation, these letters also proposed that the government provide them with low-cost housing, a demand backed up by relevant policies.

All these entreaties failed to receive any response from the government. Soon after the most recent round of petitions to the NPF-

32

Many parents keep mementoes of their lost children

A bereaved mother breaks down while describing her lost son

PC, police rushed to the scene and swiftly dispersed the petitioners.

More Bereaved

In September 1982, “strict family planning” was made a basic State policy at the 12th National Party Congress. Two months

later, it was written into the newly revised constitution, which formally enshrined the One Child Policy into Chinese law. Ever since, most Chinese families, especially those living in urban areas, have been limited to a single child. The government has refused to release data on how many only children are NEWSCHINA I November 2012

“The annual mortality rate of Chinese between 15 and 30 is no less than 40 per 100,000, which means at least 80,000 families in the country are losing their only child each year.”

currently alive in China, making it almost impossible to determine how many families have lost their only child and been unable to have another.

The only guideline has been reports on population growth from the National Bureau of Statistics, which claim that China’s population had reached 1.35 billion by 2011, of which, as suggested by earlier surveys, 21.2 percent or 286.2 million of whom were between the ages of 15 and 30. Meanwhile, according to the estimates of Liu Mingfu, a professor from the National Defense University, some 70 percent of China’s military personnel are only children. Rough calculations suggest therefore that approximately 200 million only children between the ages 15 and 30 are alive in China today.

Meanwhile, figures from the 2010 Health Statistics Yearbook issued by the Ministry of Health indicate that the annual mortality rate of Chinese between 15 and 30 is no less than 40 per 100,000, which means at least 80,000 families in the country are losing their only child each year.

In many cases, when only children between the ages of 15 and 30 have died, their mothers are already past childbearing age.

Many mothers in China are incentivized to be sterilized after the birth of their first child in order to avoid unwanted pregnancies in the future, further reducing the chances of having a second child following the death of a firstborn. Wang Guangzhou, a researcher from the Institute of Population and Labor Economics with the Chinese Academy of Social Sciences, defined these families as “endof-the-liners.”

“To Chinese parents, children are their hope as well as their old-age ‘insurance,’” said NEWSCHINA I November 2012

Mu Guangzong. “Their children are the center of their universe. The economic loss [of losing a child] would be difficult to recover from. Parents point fingers at each other which often leads to fierce family feuds. Also, overwhelming sorrow might greatly undermine the health of the parents. The family might therefore collapse.”

Necessary Assistance

Although the pension system and other social safety nets have existed in some form in China for many years, no welfare provision currently in place can adequately compensate for the loss of income which comes with the loss of a child of working age. In fact, both the Law on the Protection of the Rights and Interests of the Elderly and China’s Marriage Law decree that sons and daughters have a legal obligation to look after their parents in their old age. The Family Planning Law enforced in 2002 stipulates that “local governments should provide necessary aid to parents whose only children are accidentally disabled or die and who cannot give birth to or adopt a second child.”

However, no specifics have ever been given as to what constitutes “necessary aid.” In 2007, the NPFPC and the Ministry of Finance announced an “assistance fee” for families that had lost their only children for mothers aged over 49. Yet, the fee was set at “no less than 100 yuan (US$15.4) per month.” Five years later, the fee was raised to “no less than 135 yuan (US$21.4) per month.”

This paltry allowance offers little practical “assistance” to parents who cannot count on their child’s income for financial support.

Yuan Weixia, a member of the National Committee of the Chinese People’s Politi-

cal Consultative Conference (CPPCC), has submitted a proposal to the CPPCC for the last three years in a row calling for the formulation of “more favorable” policies towards these families.

According to Yuan’s research, about 90 percent of these parents are aged around 50.

About 50 percent of them suffer from chronic diseases such as hypertension and heart disease. About 15 percent suffer from serious diseases such as cancer and paralysis. She estimates 60 percent of them suffer from varying degrees of depression, of whom over half have displayed suicidal tendencies. Meanwhile, half of these families have a monthly income lower than 1,200 yuan (US$190). About 20 percent of these families are entirely reliant on welfare payments, and have found themselves marginalized in society.

In the absence of government support, these ostracized families have begun to reach out to one another, mostly online, where websites established by or for these parents facilitate communication and provide a voluntary source of aid.

The number of NGOs providing psychological and material help to these parents is also increasing across the country. In many places, Buddhist and Taoist temples have provided nursing services and accommodation to orphaned parents. In Zhenjiang City, Jiangsu Province, for example, a rest home built by a local temple houses some 170 elderly people, a large portion of whom are parents who have lost their only children.

Despite these steps forward, however, millions of Chinese seniors remain on the breadline, a breadline, they argue, that government policy has created, and thus is the government’s responsibility to eradicate.

33

economy

Plan B Stock Market

ChinahasfailedtomothballitsunperformingB-sharemarket despiteever-mountingpressuretoput“zombieinvestors”out oftheirmisery.What’sholdingregulatorsback?

By Li Jia

F

or more than 10 years, investor Zhan Haizhou has done nothing but follow the undulations of China’s stock markets. He used to keep a close eye on both his accounts - one for the country’s yuandenominated A-share market and the other for the foreign currency-denominated B-share market. However, he hasn’t looked at his B-share portfolio for so long he can no longer remember his PIN. The B-share market was launched in 1992 to allow foreign investors access to China’s heavily restricted capital market, and since 2001 allowed Chinese investors to invest in foreign currency holdings. When this change was made, most foreign investors withdrew, leaving the B-share market a dormant wasteland of “zombie accounts” held by Chinese investors like Zhan.

Jim Rogers, US billionaire and co-founder of Quantum Fund with George Soros, is one of the very few overseas investors who have retained both shares and confidence in one of the world’s most stagnant markets. In June, he used his blog to reiterate his commitment to bequeathing his Chinese portfolio to his grandchildren.

Ironically, optimistic comments from Rogers are often cited by hard-headed Chinese investors as evidence of just how unhealthy the Chinese stock market actually is.

The question of whether or not to finally put a bullet in the B-share market has been a topic of a decade-long debate among investors and analysts.

Regulators remained tight-lipped on the subject, allowing the market to struggle on despite mounting calls for its dissolution. When national regulators finally acted, however, it came as a shock.

Short applause

In the early 1990s, capital-thirsty China launched its own separate stock markets for domestic and overseas investors. The B-share market was ini-

34

tially embraced by international investors as a precursor to the full opening of Chinese investment opportunities to the rest of the world. Fascinated by the China growth story, “a number of foreign brokers had offices in China and there was lots of excitement about the (B-share) market,” Howie Fraser, co-author of Red Capitalism: The Fragile Foundation of China’s Extraordinary Rise, told NewsChina.

The shine soon came off the market. The total sums raised by share issuance on the B-market between 1992 and 2000 fell far below the capital raised through IPOs on the A-share market in 1997 alone.

“Today, Western pessimism toward China is so great that these B-shares have fallen 85 percent from their highs,” wrote Jim Rogers in 1999, explaining his decision to snap up a “bargain” B-share account in Shanghai.

The opening of the B-share market to Chinese citizens at the end of February 2001 was aimed at “utilizing the nearly US$80 billion held by Chinese citizens to explore a new investment channel,” explained former Chinese premier and champion of economic liberalization Zhu Rongji at a press conference in March 2001.

“Meanwhile,” he continued, “we also hope that more foreign investors will be attracted in this way to boost the B-share market.”

Zhu’s endorsement seemed superfluous at the time. B-share prices had been pushed ever-higher on a daily basis after the opening of the market to Chinese investors, leading to a feeding frenzy.

“The anxiety that haunted me every second during the week when I was lining up to open my B-share account is the only fresh memory I have of my investment,” Zhan recalled to our reporter. “When prices were soaring every day, nobody wanted to miss out.”

This boom lasted only a few months. “Foreigners simply used the opportunity to cash out of their shares and buy something else,” said Fraser.

For companies listed on both markets, their B-share prices are at best about half as valuable as their matching A-shares. In the past decade, market capitalization and trading turnover on the B-share market are all negligible relative to the booming A-share market.

To give a further sense of the stagnation of the B-share market, in the past ten years no more than US$500 million was approved through B-share issuance, one-sixth of it raised on ChiNext, the Chinese version of NASDAQ, in the first year of its launch in 2009.

In three years, 349 companies have been listed on ChiNExt, compared with 108 companies on the 20-year-old B-share market. Moreover, institutional investors are locked out of the market and as the overseas listing of Chinese companies en masse is impossible without a government green light, there’s little to recommend this relic of China’s early 90s economic reform.

Indeed, any flurry of activity in the B-share market usually coincides with rumors of government action, rumors usually followed up by a swift and unequivocal government denial of any planned change to the status quo, further depressing one of the world’s most depressed trading floors.

Several proposals for change have been submitted in the last decade, including integration with the A-share market, where most B-share companies are already listed, or relocation to Hong Kong, eliminating issues over foreign NEWSCHINA I November 2012

currency. Other pundits have suggested an attempt to “revitalize” B-shares by Capital of credibility resuming share issuance. However, regulators remain inscrutable.

The failure of the B-share market does not prove that the Chinese securi“I just forget my B-shares, because they have already been forgotten by ties market can do just fine without foreign capital, or a lack of overseas interregulators,” said Zhan. There are still more than 2.5 million theoretically ac- est in investment in Chinese businesses. It merely proves that such a poorlytive B-share accounts just like his, which remain locked in limbo by regula- regulated and restrictive market appears to be a bad investment, and is thus tory inaction. Many believe it is time to act, if only to put such investors out unattractive to investors. of their misery.

Chinese companies began to go public overseas in 1992 with the debut of “Protecting the rights and interests of investors does not mean guarantee- Brilliance Automobile on the NYSE. A surge in the listing of Chinese coming against loss; it means giving stable expectations – long absent from the panies or Chinese-controlled companies operating in Hong Kong began in B-share market,” said Gui Haoming, chief analyst with the Shanghai-based 1993. Most of China’s biggest State-owned enterprises are represented on the SWS Research. Gui believes a positive step would be for regulators to at least HKEx and in New York. acknowledge proposed alternatives to the current situation, which would reOn September 2, the whole B-share market was worth about US$22 bilassure investors that their money still matters. lion, one-tenth of the H-share capitalization of China Mobile.

Chinese regulators, however, are as fearful of sudden changes as they are According to data from the China Securities Regulatory Commission of stagnation, given their country’s short, turbulent history of stock trading. (CSRC), since 2002, Chinese companies raised more capital from overseas On July 7, the Shenzhen Stock Exchange announced a new delisting rule securities markets than from those onshore. which forced companies out of the market once their shares dropped below “Investing in B-shares is like being told to go dig in a desert when there’s a 1 yuan in value for 20 consecutive trading days. Companies listed only on goldmine right there,” said Lin Yixiang, director of the Securities Analysts and the B-share market were granted immunity while Investment Advisers Committee with the Securithe new rule wreaked havoc among businesses ties Association of China.

Number of accounts as of Sept 7, 2012 listed on both.

“Hong Kong and New York were markets B-share: 2,528, 800 Tsann Kuen (China) Enterprise Co., a manwhich international investors knew and had A-share: 56,262, 300 ufacturer of consumer electronics based in Fucomfort investing in,” Fraser told our reporter. jian Province, was one company on the firing Red Capitalism describes how Wall Street Capitalization: as of Aug 31, 2012 “played major roles” in introducing China’s “naline due to its low stock price, despite generally B-shares: US$22.4bn tional champions” to international institutional good performance in comparison with many H-share and Red Chips: US$1,054bn investors.

A-share companies. The seemingly arbitrary Tradable A shares: US$2,526bn In 2003, the A-share market was opened to 20-day rule became a major target of criticism foreign investors under a scheme called QualiGui is one of many analysts who argued that Number of listed companies: as of Aug fied Foreign Institutional Investors (QFII). The just by being on the B-share market, compa31, 2012 QFII list features big names like HSBC, Mornies have reduced access to financing and thus B-share: 108 gan Stanley, UBS, Goldman Sachs, Allianz, a naturally lower share price. Tsann Kuen and A-share: 2,369 Yale University and Stanford University. Early some other B-share companies applied for reH-share and Red Chip: 279 this year, pension funds from South Korea and financing a few years ago but received no reply.

Japan declared plans to invest in China’s A-share While some observers deny the policy was Sources: Shanghai Stock Exchange / Shenzhen market. No-one is talking about B-shares anyaimed specifically at shutting down B-share Stock Exchange / HKEx / China Securities Deposimore – as Lin put it, “nobody wants to take a companies by stealth, most agree that the policy tory and Clearing Corporation Limited side door when the gate is open.” wasn’t expected to have much impact, as most Chinese regulators have reflected this mothB-share companies are also listed on the A-share balling of the failed B-share market, increasing the market.

However, the market nosedived, putting more companies at risk of being QFII quota of A-share listings to promote rational, long-term investment in delisted, leading regulators to attempt to support the victims of the new poli- the speculation-heavy market.

“Foreign investors have a stronger sense of protecting their rights,” said Lin. cy by encouraging them to find ways to circumvent it. Finally, the Shenzhen Stock Exchange recognized in a statement that the policy had been driven by “It may help improve investor protection on our stock market.”

Warren Bailey, Professor of Finance with Samuel Curtis Johnson Gradu“special reasons for the low price of B-shares,” seen as a veiled reference to the ate School of Management, Cornell University, is one of the earliest interstagnation of the market.

Some companies had had enough of the situation. China International national researchers specializing in China’s B-share market. “The pressure of Marine Containers (CIMC) declared on July 30 that they would quit the professional foreign investors can only improve corporate quality in the counB-share market and move to Hong Kong, setting an example for other busi- try,” he told our reporter via email. “[It can] also pressure the government to reduce its interference with and corruption of the Chinese economy.” nesses immobilized by regulatory indecision.

While millions of B-shareholders like Zhan and Rogers may continue to However, Gui argues that case-by-case action by companies is not the solution. Economists and market watchdogs have been bleating about the be ignored by China’s all-powerful regulatory bodies, it is clear to analysts need for action for ten years, but the only power to take action remains in- that the Chinese government snubs the importance of investor confidence, represented by such figures, at its peril. vested entirely with the government.

NEWSCHINA I November 2012

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economy

Cell Phone Market

Outsmarted As China draws towards overtaking the US as the world’s largest smartphone market, manufacturers of China’s high-spec, lowcost cell phones are aiming to take their brands overseas

By Sun Zhe

D

ressed in a black polo shirt and jeans during an unveiling of his company’s latest market-storming cell phone in August, Lei Jun, CEO of Chinese phone manufacturer Xiaomi, struck a somewhat familiar image. In Chinese tech circles, he’s known as “Leibs,” a reference to his dutiful mimicry of his role model, the late Apple CEO Steve Jobs.

Comparisons between Lei and Jobs are not unwarranted. In the two years since his company was founded, Lei has made Xiaomi a formidable competitor in China’s booming cellphone market, packing his products with enough technology and cult cachet to rival Apple, as well as current handset market leader Samsung, in the domestic market.

As the scale of the Chinese smartphone market advances on its US equivalent, local brands are catching up with their foreign rivals, competing on the full range of cell phone purchase factors: price, quality, specs and even the elusive “cool factor.” In the second quarter of this year, international brands accounted for less than 40 percent of smartphone shipments in China.

creased at a much quicker pace, growing more than fivefold to total 25.6 million, according to research firm Canalys. A total of 160 million smartphones, or a quarter of the world’s total, are expected to ship for the Chinese market this year, 141 percent up from last year, overtaking the US as the world’s largest smartphone market, according to industry consultancy IHS iSuppli.

Sales statistics reveal that when it comes to smartphones, traditionally seen as a luxury product, China’s consumers remain particularly responsive to price. Over the second quarter of this year, smartphones priced below 2,000 yuan (US$314) made up about 70 percent of total sales in terms of units, according to research firm iiMedia Research. The low end of the market is largely ignored by international brands like Samsung and Apple, whose products are generally concentrated above 4,000 yuan (US$630).

Chinese handset manufacturers have been pumping out 3G smartphones priced under 1,000 yuan (US$157), or about half the price of their primary models a year ago. Aside from their increasing affordability, their close cooperation with carriers has also helped expand the market share taken up by homegrown smartphones.

Since last year, the country’s three telecom operators – China Mobile, China Telecom and China Unicom – have been offering generous subsidies to smartphone buyers in order to expand their base of 3G mobile service users. Chinese smartphone user numbers reached 290 million by the end of the second quarter, and the user base is expected to see average annual growth of about 26 percent over the next five years due to the expansion of budget handsets, according to market research firm IDC.

Rise of the Xiaomi

Of China’s domestic smartphone contenders, Xiaomi is undoubtedly the most promising – Lei Jun, a former angel investor and dotcom entrepreneur, recently became China’s newest billionaire, and Xiaomi is now valued at US$4 billion, about half the value of declining giant Nokia.

The MiOne (MI), Xiaomi’s first model, sold for 1,999 yuan (US$316), less than half the price of its international-branded rival models of similar specs, and has sold over 3 million units since it was introduced a year ago, with 200,000 orders taken in its first half hour on the market.

Smart Boom “The handset caters to smartphone enthusiasts on low budShipments of Apple, ranked first or second in almost all gets,” said Kevin Wang, an industry analyst with IHS iSuppli. other regional markets, placed a disappointing seventh among The biggest selling point of the MI2, Xiaomi’s latest model smartphone brands in the first half of this year in China, lag- unveiled this August, also priced at 1,999 yuan (US$310), is ging behind local brands Lenovo, Coolpad, Huawei and ZTE. its 2GHz quad-core Qualcomm processor, the fastest ever adNokia came in fifth, while Samsung held onto its top spot. opted on a smartphone.

While shipments of international-branded smartphones saw A self-confessed Apple imitator, it comes as no surprise that significant growth, totaling 16.7 million units in the second Lei Jun plans to take Xiaomi global. He announced earlier this year, for a 67migrant percentbirds, rise, the those of domestic year his ambition to introduce devices into overseas markets in Intertidal mudflats are aquarter crucial this stopover main source of brands food forinresident waders and a major seasonal cash cow for local shellfish harvesters

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NEWSCHINA I November 2012

Photo by Li Yang

Steve Jobs’ Chinese disciple Lei Jun at the unveiling of the new Xiaomi handset, August 16, Beijing

the second half of this year, with India and Russia as its first destinations.

However, Lei will need more than a black polo shirt and a pair of blue jeans to repeat his success outside of China. Xiaomi has yet to sell a single device in any foreign country, according to the company’s spokesperson Liu Fei, who declined to elaborate on Xiaomi’s expansion plans with regard to other markets.

Rumors circulating on various tech blogs point to a push into Europe as early as 2013.

“Lei’s fame might have earned him a crowd of Chinese fans, but Indians and Russians would have no idea who he is,” said Wang, the industry analyst.

Going Global

Other Chinese tech brands are also gearing up to expand their smartphone presence in overseas markets. However, when it comes to smartphones, foreign consumers are particularly brand-conscious.

Lenovo, the Chinese company that builds 14.9 percent of the world’s PCs, said late August that it plans to move its smartphones into India, the Philippines and Indonesia. But while it took the second-biggest share of the domestic handset market in terms of units in the second quarter, the Lenovo smartphone brand remains unknown outside of China.

NEWSCHINA I November 2012

Huawei, a world-leading Chinese telecommunications equipment maker, has already unveiled multiple cell phones in the US market, and has enjoyed moderate success with low-cost handsets sold through major carriers, such as its Impulse model, which sold for US$29 with AT&T. However, Huawei is struggling to shake off its reputation as a manufacturer of carrierbranded phones for Western operators and establish itself as a brand in its own right.

“Stepping out from underneath the carriers will require significant investment on branding and marketing, meaning a heavier burden on their already suffering margins,” said C.K. Lu, an analyst with Gartner, a tech research firm, in an email exchange with NewsChina.

Legal and patent threats will also be a major risk for Chinese brands once they build a significant presence overseas, according to Lu. Apple’s recent patent lawsuit victory over Samsung should strike a chord with China’s phone makers, many of whose products bear more than a passing resemblance to some Samsung phones.

Lu believes that ZTE, Huawei, Coolpad and Lenovo all have the potential to be significant players in the global smartphone market in terms of unit sales. “But if we look at profit margin and innovation, I don’t think they can reach the level of Apple and Samsung anytime soon,” Lu added.

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economy

Branding War

Tea Thiev “

This red can of herbal tea has been renamed “Jiaduobao [JDB].” We still offer you the familiar taste with the same formula.”

This commercial has become one of China’s mostplayed since the country’s best-selling domestic soft drink brand, Wong Lo Kat herbal tea, known locally as

38

NEWSCHINA I November 2012

ves?

Wanglaoji, was forced to rebrand.

The dispute which resulted in the unwanted name change came after a court order issued on May 9 by the China International Economic and Trade Arbitration Committee, which demanded that JDB, a soft drink company under the Hong Kong Hung To Group, immediately drop the trademark “Wong Lo Kat,” which it stated was the property of State-owned Guangzhou Pharmaceutical Corp. (GPC).

JDB had leased the “Wong Lo Kat” trademark from GPC in 1995 in a deal not scheduled to expire until 2020 after negotiations led to the signing of two supplementary agreements between the two sides in 2002.

Since then, with Wong Lo Kat becoming China’s top-selling domestic soft drink, outselling even Coca-Cola, GPC began to grumble that the agreements were “null and void,” as they had been signed “under the influence of bribery.”

The arbitration committee’s verdict, siding with the State-owned company, was an effort to draw a line under the conflict. But both sides have subsequently locked horns over the ownership of the distinctive red and yellow packaging synonymous with the nowrebranded beverage, packaging arguably as familiar to consumers as the product name.

The feud has become so intense that both sides have seen negotiators and salespeople quite literally come NEWSCHINA I November 2012

A private herbal tea manufacturer has gone head-to-head with a State-owned drug company in China’s biggest ever trademark war. Is it a storm in a teacup?

By Xie Ying and Chen Jiying

to blows.

“The ruling merely meant that GPC reappropriated its trademark. Now, the struggle for the bigger market share is on,” commented State broadcaster CCTV.

Brainchild

GPC have now launched their own Wong Lo Kat, making full use of their proprietary rights, in both green Tetra-Pak cartons and, more controversially, an eerily familiar red can. In stores, GPC’s red cans are often placed alongside both the rebranded JDB beverage, still in its red cans, and existing, pre-rebranding stock of Wong Lo Kat. To consumers, it appeared that a single herbal tea had somehow split into four varieties, with no indication as to what distinguished one from another.

“The JDB Company has spent 17 years building ‘Wong Lo Kat’ into a valuable brand. The ruling was a huge blow to us.

How weak a private company [on the mainland] is,” Wang Yuegui, JDB’s brand director, told a press conference in the wake of the arbitration committee’s verdict. The red cans were as ubiquitous as Coca-Cola in many areas, and a popular choice in restaurants serving rich and spicy food, partly due to the brand’s claims that their product would counteract the “internal heat” associated with the consumption of heavily-spiced foods.

“Many diners habitually order Wong Lo Kat, but I know they want JDB,” Gao Rui, a Beijing restaurant owner, told NewsChina, adding that he believes the popularity of

JDB’s herbal tea is sufficient to withstand the name change.

Consumers we spoke to had a similar verdict. According to a survey by sina.com.cn, over 60 percent of respondents claimed that they would stick to JDB, regardless of the widely criticized name change.

“I don’t care what the product is called.

What I care about is the taste which I have been familiar with for years,” Shi Qing, a supermarket customer, told our reporter, placing several cans of JDB herbal tea into her shopping basket.

Wong Lo Kat’s humble fortunes were turned around in the 1990s when venture capitalist Chan Hung To, president of the Hong Kong Hung To Group, declared that the beverage was effective at reducing internal heat within the body. Poaching top Chinese marketing professionals from PepsiCola Corp., Chan launched a China-wide ad campaign with the simple slogan “Afraid of the heat? Drink Wong Lo Kat!” Sales of Wong Lo Kat subsequently went through the roof, with the brand allegedly realizing 180 million yuan (US$28.9m) in sales volume in 2002, a figure which rose to 600 million yuan (US$95.2m) in 2003, and to 18 billion yuan (US$2.9bn) in 2011.

Since 2008, Wong Lo Kat has outsold CocaCola on the China market. In a GPC statement issued in 2010, they claimed to have valued the Wong Lo Kat trademark at 108 billion yuan (US$17bn), the highest-valued Chinese brand after electrical appliance manufacturer Haier (US$15.3bn).

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economy

Milestones of Trademark War 1997: GPC signs Wong Lo Kat trademark lease with JDB 2000: Agreement extended until May 2, 2010 2001-2003: GPC claims former boss Li Yimin took US$390,000 in bribes to extend lease until 2020 2008: GPC claims losses of State property due to supplementary agreements, an accusation JDB rejects 2010: GPC sends a lawyer’s letter to JDB unilaterally terminating supplementary agreements April 2011: GPC appeals to China International Economic and Trade Arbitration Committee May 9, 2012: China International Economic and Trade Arbitration Committee annuls 2001 and 2003 agreements and instructs JDB to stop using the Wong Lo Kat trademark May 17, 2012: JDB appeals against the ruling in a Beijing court June 3, 2012: GPC launches its own red can packaging July 6, 2012: JDB files a lawsuit against GPC for IP infringement (unresolved) July 13, 2012: The court rejects JDB’s May 17 appeal July 31, 2012: JDB produces a third lease agreement and demands re-opening of the case

“We have nurtured Wong Lo Kat as if it were our own child,” one JDB manager, speaking on condition of anonymity, told NewsChina.

Seizing State Property

In GPC’s eyes, however, JDB had, in the words of vice general manager Ni Yidong, “over-valued the importance of brand promotion.” Ni rejects the notion that Wong Lo Kat attained its market position through its recent marketing campaign. “The high value of the brand lies largely in the fact that Wong Lo Kat is an age-old brand,” he told NewsChina.

40

In 1956, when the Chinese Communist Party launched the “socialist transformation campaign,” forcibly nationalizing the country’s remaining private businesses, Wong Lo Kat’s private Guangzhou operations, a fixture of the southern trading entrepot since 1828, were nationalized and handed over to GPC. The company’s business in Hong Kong, then a British colony, remained owned and operated by the Wong family, who also retained the formula for manufacturing their trademark tea, smuggled out of China before the Communist takeover. This state of affairs ultimately led to Hung To Group, authorized by the Hong Kong branch of Wong Lo Kat,

having to lease the brand name for their own product from GPC in order to market it on the mainland.

Conflict erupted over agreements signed in 2002 which gave JDB righ ts to the Wong Lo Kat brandname on the Chinese mainland until 2020 for a fee of five million yuan (US$790,000) a year. However, GPC argued that the agreements were signed by GPC’s former vice-president Li Yimin, who had subsequently been sentenced to life imprisonment for corruption in 2005. China’s State media claim that Li Yimin asked JDB executives for bribes of over three million Hong Kong dollars (US$390,000) in exchange for his signature.

GPC has ruthlessly defended its actions against a consumer backlash. “According to Chinese laws, a trademark cannot be renewed for a period exceeding 10 years. Furthermore, the trademark usage fee stated in the agreements is far lower than international standards,” Ni Yidong told NewsChina.

“Wong Lo Kat was a century-old State brand. So JDB was stealing State property,” he added.

Brand War

Critics of GPC’s actions claim the deal was spurred by profit-seeking, with GPC attempting to lay the blame for the wrongdoing of its own former executives at JDB’s door. GPC seemed to have planned for years to retake Wong Lo Kat when the brand name’s value peaked, a possibility even GPC’s executives don’t seem eager to conceal.

According to Ni Yidong, GPC had previously tried to block JDB’s attempts to “control” the Wong Lo Kat brand by blocking any attempts to purchase the rights in perpetuity. An anonymous insider told NewsChina that JDB had tried to purchase the brand for 100 million yuan (US$15.8m), but the offer NEWSCHINA I November 2012

Branding Over Bluster

GPC launched its own Wong Lo Kat herbal tea in a green Tetra-Pak, only to find that sales volume lagged far behind the familiar red can. In 2011, the “green” Wong Lo Kat herbal tea notched up two billion yuan in sales (US$3.2bn), one ninth of JDB’s red cans.

Despite JDB’s loss of the Wong Lo Kat brand name, the Chinese public, including many media outlets, have favored JDB

NEWSCHINA I November 2012

Photo by cfp

had been rejected.

JDB seemed to have no illusions about the ultimate outcome of the dispute. The JDB name was gradually introduced to Wong Lo Kat packaging from 2011, in an attempt to mitigate the damage caused by what executives saw as an inevitable seizure of the brand by the trademark holder.

However, the anonymous manager of JDB told NewsChina that what worried them was not leasing their brand, but GPC’s plan to “diversify” it. According to GPC’s 12th fiveyear plan (2011-2015), GPC aims to brand other products with the well-known Wong Lo Kat brand, including vegetable-based beverages, food items, “medicinal” liquor and cosmetics.

“We plan to make Wong Lo Kat the sole leading brand of Chinese herbal tea, but GPC is going in the opposite direction,” said Wang Yuegui, JDB’s brand director. “They are diluting the value of the Wong Lo Kat brand, which makes it hard for us to continue cooperation, even if we could.”

On July 31, JDB announced that the arbitration committee has accepted their appeal, offering to produce a third signed agreement between JDB and GPC which proves that JDB has the right to use the Wong Lo Kat trademark till January 19, 2013. GPC claims the document is a forgery.

GPC ostentatiously launches its rival red can, Beijing, June 3, 2012

over GPC, with a slew of netizen-made videos mourning the “death” of China’s most-beloved soft drink name, claiming that the “new” Wong Lo Kat is doomed without JDB’s formula and marketing team.

GPC has responded by announcing an ambitious sales target of 50 billion yuan (US$7.9bn) by 2015, despite admitting the company has insufficient production capacity.

“We did not replenish our stock until July,” a salesperson surnamed Pang working for GPC told NewsChina. “At present, we sell about 20,000 crates of Wong Lo Kat herbal tea per month. If the supply meets demand, sales volume could rise to 30,000 crates.”

“Our stock is not enough to meet explosive sales growth, but it is a periodical problem which we will overcome by OEM and building new production bases.” Wu Changhai, the president of Dajiankang Medicine, a subsidiary of GPC which was set up in March to take charge of Wong Lo Kat-related business, told NewsChina.

More challenges lie ahead. Chen Weilan, one of GPC’s marketing team, revealed to NewsChina that JDB is trying every means to squeeze out GPC by luring caterers into exclusive contracts with the company.

“We have no budget for the promotion of exclusive sales, while JDB funnels big money into promotion,” Wu said.

JDB has indeed multiplied their marketing budget in 2012 to overcome the barriers

thrown up by the court ruling. During the London Olympic Games alone, they reportedly spent 1.6 billion yuan (US$254m) on advertising. Commercials for JDB are among the most-played on all State TV channels on the Chinese mainland.

“Given that we still hold the formula and the core marketing team, we are confident of creating another ‘Wong Lo Kat,’” claimed Wang Yugui, the brand director.

GPC, unable to compete with JDB’s slick marketing and loyal customer base, is meanwhile leaning on the clout wielded within the State enterprises. Ni Yidong revealed that State petrochemical giant Sinopec had signed an agreement with GPC in August to introduce Wong Lo Kat herbal tea into nearly 2,000 gas stations operating under its Guangdong wing, with plans to place the beverage in a further 20,000 gas stations nationwide.

In June, GPC launched its own red cans, along with their new slogan, a direct challenge to their rival. While JDB now claims to “offer authentic herbal tea,” GPC’s new slogan is “we are the propagator of herbal tea culture.”

“Given similar product quality, similar sales channels, similar marketing modes and similar pricing, GPC and JDB will definitely be locked in increasingly fierce competition, which may cause a shrinkage of profits on both sides,” analyst Chen Zhimin told NewsChina.

“It is hard to say who will win,” he added.

41

economy

Shipping Crisis

Titanic Losses Shareholders in Chinese shipping concerns are seeking reassurances that an economic slowdown isn’t going to sink their profits

By Wang Jinghui and Li Jia

Photo by cfp

R

ecently, China COSCO Holdings, one of the world’s largest shipping and logistics service providers, apologized to shareholders for huge losses, an effective SOS in the eyes of the central government. China’s embattled shipping industry had hit the proverbial iceberg.

COSCO, listed both in Hong Kong and Shanghai, reported about US$770 million profit losses for the first half of 2012, a year-onyear drop of 76.7 percent. Most of COSCO’s ledger was inked in red even before the company posted this record loss. With US$1.6 billion of assets vanishing in 2011, the company was labeled as the “king of losses” by stock market investors in the Chinese mainland. On September

A China COSCO Holdings container ship

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NEWSCHINA I November 2012

10, COSCO was excluded from the Hang Seng China Enterprise Index, which includes major mainland enterprises listed in Hong Kong.

The prospects do not look bright. “The shipping industry will face a tough time in the third quarter and a future long winter,” said COSCO chairman Wei Jiafu at a press conference in Hong Kong at the end of August. If losses are reported again this year, COSCO’s stocks will be downgraded to junk on the Shanghai Stock Exchange. If the company cannot return to profit in 2013, it will be delisted altogether.

In an industry highly exposed to fluctuations in economic cycles, COSCO has continued to blame a rocky financial sector for its poor performance. As a State-owned company, it also has no qualms about asking for a government bailout, however, more public money injected into a failing public company could deepen COSCO’s problems.

Stranded

With its assets tied to the value of commodities like iron ore, oil and coal, dry bulk shipping is regarded as a key bellwether for the state of global macro-economics. In the context of the troubled global economy, the Baltic Dry Index (BDI) released daily by the London–based Baltic Exchange, and a leading indicator for maritime trade, fell 44 percent in 2011. The same index averaged at about 943 points in the first half of 2012, its lowest ebb since the index was first published in 1985, reflecting the extent of the Great Recession and its aftermath.

The interim report of China COSCO Holdings shows that revenues from international dry bulk shipping were down by 34 percent in the first half of 2012 over the same period in 2011, while revenues from other major businesses continued to experience mild swelling.

Container shipping and related business, the largest source of revenue for the company, has been hit hard by the declining demand for Chinese imports in the US and the European Union, the country’s largest trading partners and foremost destination for its exports. Revenues from all COSCO’s international routes also fell in 2011.

Adding to COSCO’s problems has been rising operating costs, pushed ever-higher by increasing fuel prices coupled with falling freight rates due to the excessive supply of container NEWSCHINA I November 2012

ships. This situation means a 2011 increase in revenue did not result in a corresponding profit bump for COSCO. It suffered a negative 1.2 percent profit margin for its whole operation in the first half of 2012, compared with a positive 2.8 percent in the same period of last year.

Nine of the 13 listed Chinese carriers reported losses in the first half of 2012. Their competitors on overseas markets faced similarly choppy waters. 25 international shipping companies shut down or were restructured after liquidation.

Many others suffered record losses.

“A rebound in demand for dry bulk shipping will scarcely be possible in the second half of 2012 without the recovery of China’s infrastructure construction and industrial production in the rest of the world,” Fan Qianlei, an analyst with the Huatai United Securities, told NewsChina.

Qu Hongbin, HSBC Greater China’s chief economist, thinks China’s GDP growth will be subdued in 2012. Clarkson, the world’s leading integrated shipping service provider, forecasted weak demand for container shipping due to the ongoing eurozone debt crisis.

Some are more optimistic. Soren Skou, CEO of Maersk Line, the world’s largest container carrier, told NewsChina that the market would rebound after hitting rock bottom in Q3 2012.

Morgan Stanley expects a rebound of BDI after the third quarter would bring profits back for China COSCO Holdings.

Life Preservers

Wei Jiafu, who prefers to be called “Captain,” told media that a report about the difficulties faced by the shipping industry had already been submitted to the Chinese central government, and related ministries were considering a rescue plan.

Though no details of this plan have been disclosed, sources from the China Shipowners’ Association told NewsChina that they are trying to lobby for the removal of oceanic cleaning fees imposed on oil tankers. They argue that this is not a common international practice, with China’s fees disproportionately high even among countries that still levy such charges.

Other choices that have been reportedly proposed include shortening the compulsory life cycle of ships to reduce excessive capacity. Some analysts have also called for policies which would

force big Chinese clients, such as Baosteel, to use Chinese shipping companies, rather than leasing foreign ships as is the norm.

However, some blame COSCO’s overconfidence in the good times and failure to prepare for the bad for its inability to function when world markets take a tumble. This is particularly important for a business highly exposed to unpredictable fluctuations in global trade, yet COSCO appears to have been caught completely off guard by the scale of the global recession.

When it was crowned the “king of losses” last year, Chinese and foreign media criticized the tendency of companies such as COSCO to engage in “gambling.” In COSCO’s case, critics accused the company of entering into risky, long-term and hugely expensive chartered ship contracts with foreign shipowners while failing to mitigate against any downturn in the market.

Just after COSCO analysts predicted an ongoing boom in shipping, prices plummeted as the market was hit hard by the global financial crisis.

In 2011, COSCO was accused of payment default by Greek and Swiss shipowners.

COSCO is not the only central SOE that has reported huge losses from its overseas operation since the financial crisis. In 2011, the National Audit Office announced multi-million dollar losses from overseas investment by central SOEs. Imprudence and accounting irregularities were also uncovered.

In 2009, the State-owned Assets Supervision and Administration Commission recognized about US$1.8 billion net losses in overseas financial derivative transactions by central SOEs which had failed to execute due diligence and mitigate against risk prior to signing valuable contracts. By the end of 2011, more than 5800 operations had been established in 158 countries and regions worldwide by 100 central SOEs, and many have recently run into trouble.

Unlike private companies, these mammoth losses of SOEs are paid for by Chinese taxpayers, and each recorded loss erodes confidence in China’s powerful State sector. However, SOEs remain tight-lipped about both the scale and risk of their overseas occupations, and, without a realignment of priorities from individual to public interest, it is likely the Chinese taxpayers will continue to foot the bill for future shipwrecks of the State’s own making.

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economy

Microcredit

No Bank for the Broke Globally acclaimed microfinance bank Grameen has run into difficulty in China, with tight government controls hampering its efforts. Will China ever find a way to lend money to the poorest in society?

Photo by Xinhua

By Yang Zhenglian in Guangzhou

A man leafs through microfinance literature, Shigatse, Tibet

I

n financial circles, 72-year-old Bangladeshi economist Muhammad Yunus is known as “banker to the world’s poor.”

Having had a hand in helping people in some of the world’s poorest regions lift themselves out of poverty, his microcredit model has been copied across the globe. However, things haven’t been so easy in China.

At a press conference in Guangzhou in early August, Yunus said that China’s finance system is in grave need of reform if loans to those on the bottom rung of society are ever to become feasible. Yunus, who won the Nobel Peace Prize in 2006 for the Grameen Bank, a microcredit initiative he launched in the late 1970s, said that the disadvantaged need capital to start handicraft workshops and small enterprises, but that this kind of

44

financial support was basically unavailable in China.

Despite the warm reception and lavish praise extended to him by Chinese officials on his every visit to China, expansion of his model in the country has been a constant headache.

He Daofeng, deputy director of the China Foundation for Poverty Alleviation, an NGO, began to copy the model in China in 1995. If proof were needed that Yunus’s model is workable in the world’s most populous country, He’s efforts have yielded convincing results – so far, the microcredit fund he runs has provided 130,000 families with loans totaling 1.4 billion yuan (US$220m).

The bad loan rate at He’s fund was only 0.69 percent, very close to that of the Gra-

meen Bank. But in spite of his clean record, He’s fund is yet to be granted a business license.

“Though we have the support and approval of the government, we’re still operating illegally,” he said.

As is the case with many other microfinance enterprises, the Chinese government is so timid towards He’s efforts that a business license seems an unlikely prospect. To make matters even more complicated, in 2008 the country’s banking regulator made it illegal for microfinance enterprises to accept deposits, limiting their funding sources to shareholders, donors and a legal maximum of two banks.

For non-banking enterprises, accepting deposits remains illegal in China, largely because of government concerns that defaults might cause large-scale unrest.

Without depositors, Yunus said that Chinese microcredit enterprises are “walking with only one leg.” He believes that a good system would allow these companies to generate enough profit to sustain their operations so they are able to operate by themselves, instead of relying on donations.

Currently, most microfinance companies in China are run by NGOs, as the ban on deposits leaves no room for profit. With no profit, the model remains sustainable – microfinance cannot expand beyond pilot projects, given the limited means of NGOs. One such microfinance nonprofit, US-based Wokai, announced in May 2012 that after five years of operations, it would begin “winding down and concluding” its efforts, according NEWSCHINA I November 2012

to a statement released on its website. Financing difficulties were prominent among the reasons given.

Some governments also offer microcredit, but they often misunderstand the needs of the poor, according to Yunus.

“Projects launched by governments usually offer loans at low or free interest rates,” said Yunus, “but if a project cannot break even, then it is unsustainable.”

Tough Expansion

Grameen itself has tried to expand its presence in China, launching pilot projects in Sichuan Province and Inner Mongolia. Yet the ban on deposits poses a significant problem, said H.I. Latifee, managing director of Grameen Trust, Grameen Bank’s sister organization.

“We can offer credit to more people in need if we can take deposits,” said Latifee. “Fortunately we have loans from commercial banks to fall back on, and the government and some other organizations are helping microfinance enterprises raise funds.”

Latifee’s team has initiated surveys in underdeveloped areas in Guangdong Province. In Yangshan, an impoverished mountainous county 170 kilometers northwest of the provincial capital Guangzhou, poverty-alleviation efforts currently amount to little more than aid handouts.

Wang Xiuming, Yangshan’s deputy county commissioner, said he hoped Grameen microcredit could support farmer-led initiatives to lift themselves out of poverty.

“The farmers themselves should take their share of the responsibility and launch their own businesses,” said Wang.

But when it comes down to the minutiae of how a microcredit project should be implemented, the local government clearly still harbors deep-set concerns. At a conference attended by multiple government departments on August 11, worries were expressed about microfinance, with officials questioning whether or not bank loans issued to microfinance funds would be repaid, and whether organized farmers could pose a risk to social stability.

While the microfinance model has proven effective in China, its proponents face such significant roadblocks that progress will be inconceivable without reform of the law that prevents them from making a profit. Until then, those looking to provide an alternative to handouts must continue to rely on donations.  NEWSCHINA I November 2012

china

bynumbers US$60,000

Liquid assests held by Chinese households by type

The average value of liquid assets held by Chinese households in 2011. 64% of respondents recorded wealth gains, while 23% reported losses.

Deposits: 87% Stocks: 66% Funds: 60% Bank wealth management products: 40%

Source: HSBC

0

20

40

60

80

100

59% The aggregate revenue of the top 500 Chinese mainland enterprises as a percentage of that of their US counterparts in 2011. The figure is up 9% on 2010.

29th

NPL/total loan ratio in various banking sectors, Q2, 2012

China’s ranking on the Global Competitiveness Index 2012-2013, down three places from last year.

Source: The World Economic Forum

US$11tn

0

20

40

60

80

The value of net sovereign assets of China in 2010, mainly comprising government tax revenue, international payment surplus and income from natural resources. The figure has been on the increase since 2000.

100

Source: China Enterprise Confederation / China Enterprise Directors Association

30% The increase in fixed asset investment in railways in China for August 2012, the largest since August 2011.

Source: Ministry of Railways of China

Source: Chinese Academy of Social Sciences

Changes in fixed asset investment in railways in China 70 60 50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 -70 -80

Aug 2011 Sept

Oct

Nov

Dec Jan 2012 Feb

Mar

April

May

June July

Aug

45

Photo by Cheng Hong/CFP

Emvironment

A shark meat processing factory in Puqi, coastal Zhejiang Province

I

Fisheries Depletion take notice of the need for consern early September, the vation, with international fisherannual International Seaies certification and seafood ecofood Summit, traditionlabeling together with strict quota ally held in Europe and North systems on vulnerable species in America since 2003, chose force around the world.

Hong Kong as its first Asian According to Zhao Xingwu, host venue, as well as the venue Director of the Bureau of Fishfor its 10th anniversary celebraeries from China’s Ministry of tions.

Agriculture, China exported 3.91 This annual summit is an million tons of seafood in 2011, event that professes to bring together the global seafood industry representing more than 25 percent of the world’s total aquaculand conservationists for in-depth ture production and US$10.2 discussions, presentations and billion in revenue. networking around the issue of

By Wang Yan in Hong Kong and Guangdong According to the FAO (Food sustainable seafood. and Agriculture Organization Sustainability of fisheries and of the United Nations), China aquaculture has been a global iscontributed 35% of the world’s sue for decades due to the welldocumented and universal decline of marine fish stocks. When once only seafood (mostly farmed) and consumed 34% of the global supply (mainly Greenpeace seemed to be taking action, now the market is beginning to wild) in 2010. Compared to other large seafood exporters, China has been

Net Worth Being the largest seafood exporter and a major consumer of wild fish products, China is facing a massive depletion of its fisheries. However, authorities seem reluctant to take firm action

46

NEWSCHINA I November 2012

criticized for a lack of action over sustainability.

“The holding of this year’s Seafood Summit in Hong Kong is probably a positive sign for the Chinese market,” said Fan Xubing, a Beijing-based seafood expert and the Managing Director for Beijing Seabridge Marketing and Consulting Co. Ltd. “It should arouse the domestic shareholders’ attention to get in line with the international community.”

Photo by Hong Wu/Getty Images

Photo by Hong Wu/Getty Images

especially around Zhejiang and Fujian provinces, the annual catch in China peaked at around 100,000 tons in the 1970s. However, since the population crashed due to overfishing, wild yellow croaker is rarely seen in modern Chinese wet markets, with its farmed equivalent now dominating.

Yvonne Sadowy, professor with the Swire Institute of Marine Science from the University of Hong Kong, points out that China is also the leadA Chinese fisherman cultivates sea cucumbers in Qingdao, China. ing market for luxury and rare seafood As marine fishery resources decline, cultivation has soared Depletion products, particularly shark fin, yellow Thomas Huxley, the then president croaker, humphead wrasse, sea horse of Britain’s Royal Society claimed in his and live reef fish. “Luxury markets in 1883 inaugural address to the Internaparticular can drive overfishing and tional Fisheries Exhibition in London threaten a species,” Sadowy told our that overfishing or “permanent exhausreporter. “People with money can push tion” was scientifically impossible, and species to extinction.” stated that probably “all the great sea Wild large yellow croaker can fetch fisheries are inexhaustible.” Even as he as much as US$600 per kilogram on spoke, however, industrial whaling and the open market, compared to US$6 fishing was already threatening previin the 1980s and 1990s. News reports ously abundant species. indicate that super large yellow croaker, In the 1970s, this depletion reached due to their scarcity, can be sold at exa tipping point, as fishermen across the tremely high prices. Early this year, a world started to notice a significant fall super large yellow croaker some 2 mein wild ocean fish stocks, and overfishters in length was caught by fishermen ing was suddenly an unpleasant reality, in Fujian Province and sold for 3 milwith species such as the bluefin tuna, lion yuan (US$475,000). Critics claim wild salmon and Atlantic cod facing that such remarkable and vulnerable extinction. fish should be beyond consideration A Chinese fisherman cleans crabs at a port in Qingdao. Due to the According to a CBC News report, depletion of fishing resources, even formerly rejected seafood is as a foodstuff, yet the market seems to about 300,000 ton of Atlantic cod were tapped as a source of income disagree. landed annually until the 1960s, when Today, the vast majority of yellow advances in technology enabled factory trawlers to take larger catches. By croaker on the Chinese market comes from fish farms, in themselves a 1968, catches peaked at 800,000 tonnes before a gradual decline set in. In controversial “solution” to unsustainable wild fisheries. While China may 2007, offshore cod stocks had fallen to one percent of their 1977 volume. have been one of the world’s earliest pioneers in both marine and freshwaConsequently, the Atlantic cod, once one of the most common sea fish ter aquaculture, it has fallen behind since the 19th century. Nevertheless, on European and American dining tables, is now labeled VU (vulnerable) according to the FAO, China is the only country in the world which proon the International Union for Conservation of Nature (IUCN) Red List duces more farmed than wild fish. of Threatened Species.

Being the top aquaculture producer in the world, total farmed seafood The Chinese equivalent of the Atlantic cod is the large yellow croaker production in China amounts to 54 million tons, however, intensive farm(larimichthys crocea), a common Pacific fish used widely in both Chinese ing has destroyed wild fish habitats, led to major problems with disease cuisine and traditional Chinese medicine, and once one of the four most and has destabilized the quality assurance of farmed fish. There is also no important fish species in coastal China along with small yellow croaker, evidence that more widespread fish farming reduces overfishing – wild fish hairtail and cuttlefish. are still caught in immense quantities simply to stock fish farms. In her The wild population of yellow croaker has collapsed since the 1970s, address to the Seafood Summit in Hong Kong, Yvonne Sadowy bluntly and the species is now listed as “threatened” by the IUCN. Originally con- told delegates that, in her opinion, “mariculture cannot solve the problem centrated in coastal East Asia from the Yellow Sea to the South China Sea, of overfishing.”

NEWSCHINA I November 2012

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Emvironment The tiger grouper, sold at US$40 per kilogram and listed as “threatened” on the IUCN Red List in 2012, is popular on China’s market

images by Wang Yan

Conservation

Through Huangsha Market in Guangzhou, one of the largest live seafood markets in China, many vulnerable species find their way onto restaurant menus

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Although being a widespread and abundant species, the black grouper is assessed as “near threatened” on the IUCN Red List due to its sharp population decline

Since the 1990s, the Chinese government put forward a management objective of “zero catch growth” in coastal marine fisheries and began to impose a “high season” moratorium in the Yellow, East China and South China Sea. In the early 2000s, a three-month moratorium was also imposed in some major inland rivers and lakes following the extinction of many freshwater fish and mammals including the Yangtze River dolphin, or the white porpoise. The rare finless porpoise, once abundant in China’s rivers, is now also facing extinction (see “Fished Out,” NewsChina July 2012).

Furthermore, according to Zhao Xingwu, China has adopted several conservation methods including the control of total vessel numbers and limits on the total horsepower of its motorized marine fishing fleet, relocating fishermen away from depleted marine fisheries, and also attempting to introduce captive-bred vulnerable species into the wild.

By the end of 2004, the government had invested nearly US$100 million, scrapped nearly 8000 vessels and relocated over 40,000 fishermen, with further cuts planned for the future.

Targets are one thing, but realizing them, especially against market forces, is another. “Fisheries [in China] are still overexploited,” said Fan Xubing. “As far as I know, the national catch remains steady, with species ratios variable. Now, cheaper fish are more commonly landed, while the catch of formerly common marine fish such as tailfish and yellow croaker declines along with stocks.”

Few of China’s well-heeled elites are interested in trading down from expensive wild-caught seafood to more common farmed varieties. A few inroads have been made – most notably a public information campaign fronted by former basketball star Yao Ming which had a significant impact on the market for one of China’s most controversial delicacies. The State Council, China’s cabinet, followed the campaign with a directive banning the serving of shark fin at State banquets.

However, sales of other endangered species continue to boom. The humphead wrasse, which first appeared on the IUCN list in 1996 and was listed as “endangered” in 2004, is still available on the market in parts of China, selling for as much as US$ 200 per kilogram.

Zhao Xingwu told our reporter that so far, the government has not yet set limits on catches, making other regulations aimed at reining in overfishing largely ineffectual.

Quotas

While the EU, United States, NEWSCHINA I November 2012

China’s fishery production (1950-2010) 80000 70000 60000

Canada, New Zealand have actively sought out international certification to assure consumers of the 50000 sustainability of their fish stocks, China’s seafood and aquaculture market has largely ignored international 40000 standards. Henry Demone, CEO of High Liner Foods told our reporter, “It is tough to get US and 30000 European consumers engaged in consuming certified sustainable seafood. It might be even harder to get the Chinese involved.”

20000 Globally, there is MSC (Marine Stewardship Council) certification for sustainable wild fishing and 10000 seafood traceability; BAP (Best Aquaculture Practices) Certification by ACC (Aquaculture Certification 0 Council) on aquaculture products; GlobalGAP and 1950 ASC (Aquaculture Stewardship Council) certificates for aquaculture.

So far there are only a few seafood processing companies in Dalian and Qingdao, two coastal cities in China, that have obtained MSC certification due to export-oriented business model. On the domestic market, Chinese consumers have no guarantees.

Han Han, program manager from the Chinese Tilapia Aquaculture Improvement Project (AIP) under Sustainable Fisheries Partnership Foundation (SFPF), believes that China’s aquaculture should not only join existing international frameworks, but also actively take part in designing a certification system suitable for its own needs.

“Existing criteria were developed mostly on very industrialized models,” Han told NewsChina. “In Asia, the majority of farms are small to mediumsized, and they operated in a very different way.”

Froukje Kruijssen from the World Fish Center told our reporter that current certification systems are confusing and that, so far, as no one standard can be applied in all countries, so fisheries need to pay multiple agencies for overlapping certifications.

Quotas have proven more effective in reducing the depletion of fish stocks, but only when rigorously enforced. The US, Canada and the UK have enacted catch quotas for different fish species specific to individual fishermen, with quotas adjusted to extensive marine survey data of fish stocks.

In Fan Xubing’s opinion, China urgently needs a quota system. “It normally takes 10 to 15 years for a depleted fish species to recover its populaNEWSCHINA I November 2012

1960

1970

1980

1990

2000

2010

China aquaculture production China wild fish production

Source: FAO Fishery Statistics

The humphead wrasse, listed as “endangered” on the IUCN Red List and in CITES (the Convention on International Trade in Endangered Species) Appendix II in 2004, is readily available from wet markets in southern China

tion. Now, without quotas, fishermen continue with business as usual.”

Cui He believes that a quota system applied to China would be too damaging for individual fishermen. “If a quota system were adopted, the dumping of surplus catches would become commonplace, destroying marine ecology in the long run,” he told our reporter.

Indeed, EU quotas have recently been blamed for the wholesale dumping of dead fish which don’t correspond to restrictions on size or gender by European fishing boats, a practice which also rapidly depletes fish stocks.

With little action being taken at the center, individual provinces, particularly those dependent on their maritime economies, have experimented with their own solutions to overfishing. Shandong Province, for example, injected over 300 million yuan (US$48m) in 2012 into releasing captivebred fry in the Bohai Bay region to replenish stocks.

The Hong Kong government has also issued a ban on trawling in Hong Kong waters to restore the area’s badly-eroded seabed and marine resources, as well as officially registering all boats engaged in commercial fishing in the territory.

“The trawling ban is significant, but it comes too late. There was no control of boats or fishermen for decades,” Yvonne Sadowy told NewsChina: “If you manage stocks well, taking just enough, the population will still recover, and your catch can even be improved. As things stand, the marine ecosystem [in Hong Kong] will take at least a decade to recover.”

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SPECIAL REPORT

Chinese Mafia

Development’s

Dirty Side

As Chinese gangsters have become an inconvenient social problem in Angola, specializing in prostitution, robbery, kidnapping and murder, China is being compelled to police its citizens overseas

By Wang Yan

“

We felt nothing but despair,” the haunted-looking girl, who went by the alias Li Mei, told reporters from the China Police Newspaper in late August.

“We were only offered two meager meals each day. Sometimes clients would give us food, but the boss would not allow us to eat it. They often beat us, and we lived in misery and endless fear.”

Li Mei, who was trafficked to Angola and held for 10 days before being freed by Chinese and local police, was just one of many women abducted, transported illegally to Africa and forced into prostitution by Chinese gangsters.

Li Mei, along with three other Chinese women, were freed on August 3 from a brothel where they were forced to provide sexual services to Chinese overseas workers, and repatriated to China on the 25th of the same month.

Sharing their chartered flight were another 11 female victims rescued from different brothels in Angola, and 37 suspected Chinese gangsters, charged with a litany of crimes including kidnapping, robbery, blackmail, human trafficking and forced prostitution, returning home to face

50

trial. This unusual plane journey was the culmination of a three-month long transnational investigation into Chinese organized crime attached to Chinese work camps in Angola.

Duped

Li Mei, 25, was born in Mianyang, Sichuan Province. In early 2012 she learned from a friend that a newly opened restaurant in Angola owned by a Chinese expatriate was hiring Chinese waitresses, offering a salary as high as US$1,000 per month. In China, Li Mei could hope to earn a paltry US$300 a month doing the same job, so she and many others jumped at the chance, arranging transport to Angola through an appointed middleman.

On July 18, Li Mei and her three compatriots flew from Beijing to Luanda, the Angolan capital. Soon after their arrival, they were taken by their boss to Lobito, Benguela, a town 400 kilometers south of Luanda on the country’s west coast. Their passports were confiscated by their “employer,” a Chinese man surnamed Gu, on the pretext that they were needed to “arrange accommodation.”

August 25, suspected human traffickers are deplaned at Beijing airport

NEWSCHINA I November 2012

Photo by Xinhua NEWSCHINA I November 2012

“We didn’t have any money and we didn’t speak the local language, so all we could do was what the boss told us to,” Li Mei said during an interview with China Police. “He threatened that if we did not hand over our passports, he would inform the Angolan immigration office and have us locked up as illegal immigrants.”

Gu started to order her and the other women to “work,” not as waitresses, but as prostitutes.

He threatened the young women, telling them that if they refused to work, their families back in China would become triad targets.

Li and the other young women were locked up in a dark room that was guarded around the clock

by Chinese and local African heavies armed with guns. They received clients from July 19 to August 3, with one particularly “popular” woman being forced to have sex with 10 people in a single day.

“After seeing advertisement, clients contacted the boss by phone call or text message, and in some cases the boss would send a car to take them to the brothel,” Chen Shiqu, director of the Ministry of Public Security’s anti-human trafficking office and the general coordinator of the Angola operation told NewsChina in a recent interview.

According to Chen, the boss allowed the women to use a mobile phone to contact their families back in China regularly, under Gu’s supervision, so as to avoid arousing the families’ suspicion.

One day, Li Mei managed to sneak a text message to her family, asking them to rescue her.

Her family passed this information on to the police force in Li’s hometown of Mianyang, who began a correspondence with Li. Ultimately they brought her plight to the attention of the Ministry of Public Security.

“When we got the report from the ministry on this case in late July, we were already in Angola undergoing a large scale investigation into Chinese crime,” Chen told NewsChina.

“Through Li Mei’s description of her surroundings, we pinpointed the brothel.”

In order to collect evidence, the Chinese police asked a local Chinese businessman to contact the brothel owner masquerading as a client.

When the boss sent a car to pick him up, the police followed the car to the house.

“Upon arrival, we found 11 Chinese men, all potential clients, waiting outside the room. Thus with clear evidence, we rescued the four women in the house and detained all the criminals in-

volved in this case,” Chen told our reporter.

“We found later that most of the cases of forced prostitution in Angola largely involved Chinese women who were lured to Angola with promises of well-paying jobs in Chinese restaurants,” Chen said, “Women need to be aware of the risks involved in working overseas.”

Chen Shiqu admitted that over 90 percent of Chinese prostitutes in African countries were tricked into working in brothels. A police source who chose to remain anonymous told our reporter that most of the customers were Chinese working in Angola.

The Mafia

Angola, the second largest source of crude oil exports to China after Saudi Arabia, is of great significance to the Chinese economy. China’s presence in Angola has greatly expanded since 2002 with the end of a 27-year civil war which had devastated the country.

In late 2010, the Chinese and Angolan governments officially forged a strategic partnership and, in the same year, total annual Chinese investment in Angola hit a record high of US$24.8 billion.

According to statistics from the Ministry of Commerce, Sino-Angolan bilateral trade accounted for US$19.9 billion in the first half of this year, a 50 percent increase compared with the same period in 2011. Angola is now one of China’s largest African trading partners.

In addition to government projects in infrastructure investment, private Chinese businesspeople are rushing to Angola to take advantage of opportunities in trade, construction, retail and other areas. Following in their wake have been thousands of workers, both legal and illegal, leading to the formation of considerable Chinese communities in many Angolan population centers. There are a total of 260,000 Chinese in Angola today. Crime has become a staple feature of these communities, many of which fall prey to organized criminal gangs.

Chen Shiqu and the Ministry of Public Security claim these organizations are “loose coalitions” of “burglars” who milk local Chinese businessmen for protection money. However, these organizations wield considerable firepower and have amassed sufficient funds to gain influence over many local businesspeople.

Chinese businessmen in Angola have reportedly begun to hire bodyguards, purchase

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SPECIAL REPORT

bullet-proof vehicles, build walled, guarded compounds as homes and even resort to going out in disguise.

Chinese gangs often hire local Africans, arm them with automatic weapons and then keep them as foot soldiers, paying them to carry out the kidnapping and blackmailing.

According to a grisly report by China Central Television (CCTV), those who have opposed these gangs have been set on fire or buried alive as an example to others. Ransom is the preferred method of extortion. A surviving victim surnamed Zhang who runs a construction company in Angola told CCTV that he was abducted twice during a two-year stay in Angola.

In June 2010, a gang of four Chinese pushed him inside a car and drove 30 kilometers out of town before demanding he pay them US$200,000 in ransom money. When Zhang claimed he did not have that amount of money, the gang beat him and knocked him on the ground before pouring gasoline on him and setting him on fire. Though he survived, Zhang paid his kidnappers US$70,000 to be released alive.

In 2011, a total of 14 Chinese businesspeople were kidnapped in Angola, five of whom were killed when no ransom was paid. Many businesses have left the capital Luanda, where organized crime is now a part of everyday life in the city’s Chinese communities.

“The ransoms rise from tens of thousands of dollars to as high as US$300,000,” Chen Shiqu told our reporter. “There was one case in which a ransom of US$500,000 was demanded.” Local police were generally powerless to respond, having little real jurisdiction in Chinese communities.

Chen told NewsChina that due to language barriers, the Angolan police are “virtually incapable” of solving gang cases. Even when suspects were detained, there was rarely sufficient evidence to pursue a case.

“Chinese crime in Angola has been on the increase since 2009, and some of the Chinese criminals now operating in Angola came from South Africa,” Chen said. “Since 2005, the ministry has dispatched two police envoys to South Africa for the purpose of offering protection to Chinese citizens.”

Crackdown

As the public security situation for the Chinese in Angola deteriorated at the beginning of

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this year, the Chinese Embassy in Angola sent a letter to the Ministry of Public Security in Beijing reporting a string of serious crimes perpetrated against Chinese nationals in Angola, asking for help from the domestic police.

In April 2012, during an official visit to China, the Angolan Minister of the Interior, Sebastian Jose Antonio Martins, urged the Chinese government to take part in the campaign against Chinese triads in Angola, later signing a cooperative agreement with the Chinese Ministry of Public Security to that effect.

On May 11, a working group comprised of four Chinese police officers was dispatched to Angola to conduct initial investigations into organized crime in the country. According to Chen Shiqu, the leader of the team, the investigations soon gathered solid evidence against a number of Chinese nationals who have been engaging in robbery, kidnappings, extortion, blackmail, prostitution and other crimes in Angola since 2009. The task force was soon increased to 37 police officers, and bolstered with senior Angolan police officers, including members of the president’s personal guard.

Finally, in early August, gang hideouts in the capital Luanda were raided by a joint task force, which claimed to have busted 12 criminal organizations and rescued a total of 14 abductees.

In Chen’s opinion, Angola, as one of the key African destinations for China’s “going-international” economic strategy, made the transnational crackdown particularly important in securing the steady flow of Chinese investment into Africa.

Dr Yoon Jung Park, presently a visiting Professor of African Studies at Howard University, has been conducting research on Africa’s emerging Chinatowns. She told our reporter that Angola and South Africa are two countries with a particularly high rate of crime specifically targeting Chinese workers.

“Chinese investments and industrial projects are threatened by ever greater risks,” she told NewsChina, adding that “Chinese criminal activities, including poaching and trafficking in prohibited or controlled substances, gun smuggling and drug smuggling,” affect society as a whole.

“Chinese criminals in Angola are just a microcosm of organized crime in Africa,” ran a recent Global Times report which claimed that

in South Africa, Zambia and Ethiopia as well as other African nations, “Chinese organized crime hurts Chinese businesses overseas and tarnishes the country’s image.”

Chinese gangsters operating overseas, similarly to other organized crime syndicates, tend to form gangs based around regional identities.

Historically, China’s coastal Fujian, Guangdong, and Zhejiang provinces are the ancestral homes of the vast majority of the 30 million overseas Chinese scattered across the globe. The Futsing Association, a globally recognized Chinese triad from Fujian Province, was named as a major player targeted in the Angola sting operation.

Stemming the Source

In response to the threat of regional criminal gangs, China has tightened passport issuance regulations in certain areas of Fujian in order to check the “export” of potential criminals. Chen Ping, a 26-year-old man from Fuzhou, capital of Fujian Province, told our reporter that it is very hard for locals from Fuqing (the hometown of Futsing Association) and its adjacent Fuzhou region to apply for visas to travel abroad.

Public Security Minister Meng Jianzhu pointed out in early September that the protection of Chinese overseas nationals’ legal rights is the responsibility of Chinese security forces. He added that the Chinese police would continue their efforts in cracking down on Chinese criminals operating overseas, deepening and expanding bilateral and multilateral police cooperation with other countries.

Yet, Chen Shiqu admits that of all criminal activities in Africa, one of the hardest to monitor or to crack down upon is human trafficking and forced prostitution.

“We can make arrangements to apprehend gangsters and rescue victims only after we get a tipoff,” Chen told our reporter. “Many victims are too frightened or feel too ashamed to report their misfortune to the police.”

While they often try to escape in the early stages, women tricked into prostitution tend to give up hope and accept their fate eventually.

After being rescued by the Chinese police, Li Mei expressed to the media: “It was only after I went to Angola that I realized what a happy life I had led back in China. Those days [in Angola] were a waking nightmare. ” NEWSCHINA I November 2012

Modern Chinese Dictionary

Letters of the Law

The latest edition of the Modern Chinese Dictionary has been criticized for directly listing 239 commonly used English acronyms, leading to a backlash against“linguistic impurities”

By Tang Lei, Yang Zhenglian and Xie Ying

T

he sixth edition of the Modern Chinese Dictionary, China’s equivalent of Webster’s or the Oxford English Dictionary, has come under fire for including 239 English acronyms commonly used in China such as “NBA,” “ATM” and “GDP” in its main text. On August 27, a number of academics and journalists submitted a jointly signed letter to the General Administration of Press and Publications and the State Language Commission, claiming that the inclusion of English acronyms “violates the laws governing the use of the Chinese language.”

“China’s Law on Standard Spoken and Written Chinese Language prescribes that any publications, broadcasts, movies and TV shows in Chinese should use Mandarin and simplified Chinese NEWSCHINA I November 2012

characters. The Chinese Modern Dictionary is no exception,” ran the strongly worded letter.

“Though compiled by order of the State Council [China’s cabinet] as stated on its back cover, the dictionary also violates two regulations issued by the State Council that forbid English acronyms or abbreviations in Chinese publications and official documents,” continued the letter.

The editorial staff of the dictionary, however, rejects these accusations as spurious. “The letter quotes the law out of context,” Liu Zuochen, editorial director of the Commercial Press, the dictionary’s publisher, in a response to the media. “The law also allows for the inclusion of commonly-used acronyms if accompanied by Chinese translations, which is the precise purpose

of a comprehensive dictionary.”

Up to now, neither of the two government departments petitioned has offered comment on the accusations, while the accusers themselves have triggered a public debate on the very nature of the Chinese language.

Resistance

Wang Wenyuan, a researcher from the Beijing Academy of Social Sciences and an amateur linguist told our reporter that he “hurried to the bookstore” to buy the latest edition of the Modern Chinese Dictionary, only to be “infuriated by the jarring 239 English acronyms printed on page 750-755,” many of which were listed in the main text.

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culture “No matter how extensive globalization is, we should never allow foreign words to make a mess of our mother language,” he told NewsChina.

“This is a matter of cultural security.”

Wang scoured academic circles to find 100 people who shared his views, some of whom turned out to be well-known language researchers. They held 12 meetings studying the laws and regulations governing language use, and finally decided to submit their protest.

“By taking acronyms as part of its main body, the dictionary is actually telling its users that English words can replace Chinese characters,” Li Minsheng, one of these researchers, claimed at an academic forum on August 27.

“This represents the most serious damage to the Chinese writing system since it came under the influence of Latinization over 100 years ago.”

Such a strongly-worded criticism caught Jiang Lansheng, editor-in-chief of the dictionary, completely off guard, as she later told NewsChina. “If a small number of English acronyms can damage Chinese, it must be the world’s weakest language,” she said.

“The dictionary is not for advocacy, but for looking up the precise meaning of frequently used words and terms,” she added.

Her idea is shared by many other academics who viewed the accusations as “an overreaction.”

“Language is very democratic – people will use any word they believe best for the purposes of expression, free from the dictates or personal preferences of any ‘experts,’” Shi Dingxu, the Chineselanguage and bi-linguistic director of Hong Kong Polytechnic University, told NewsChina.

“I respect these experts’ good intentions, and efforts to protect the purity of their mother language, but I have no worries about the ‘pollution’ of the Chinese language with English acronyms,” Yang Xiaorong, chief-editor of the Beijing-based magazine Foreign Language Studies, told NewsChina. “Any language is capable of self-purging and assimilating exotic words – that is where the vitality of a language lies.”

Borrowed Words

According to Zhang Yufeng, a Chinese-language linguistics professor at the Shanghai-based Fudan University, the Chinese language has not been “pure” since the pre-Qin era (before 221 BC), having spent two thousand years absorbing vocabulary from all sorts of different languages.

Turkic, Mongolian, Uighur, Tibetan and Man-

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chu words and phrases entered common parlance, fusing with so-called “standard” Chinese until the modern era, and now only professional linguists are aware of their exotic origins.

With the Qing Empire’s defeat at the hands of foreign powers in the First Opium War (18401842), Europeans, Japanese and Americans arrived in China in unprecedented numbers, many of them founding the country’s first public schools, universities and professional academies.

More and more foreign words found their way into the Chinese vocabulary, such as “logic,” “economy,” “cadre,” “society,” and even “revolution.”

Today, mass media and the Internet as well as the popularity of studying abroad has led to even greater absorption of foreign words, particularly in the professional and business arenas.

“Exotic words always contribute a great deal to the evolution of a language,” Zhang told NewsChina. “Thus it is meaningless to criticize a frequently-used English acronym for ‘violating laws.’”

The whistleblowers, however, insist that an exotic word only becomes a part of the Chinese language when translated into Chinese characters, claiming their objection is to the use of foreign alphabets, not words.

“We welcome exotic words to enrich the Chinese vocabulary and we are not against using acronyms like NBA in daily life, but they definitely should not be included in a Chinese dictionary,” said Wang Wenyuan.

“The English language has also absorbed a

huge amount of exotic words, including many from Chinese, but can you find Chinese characters in an English dictionary?” asked Fu Zhenguo, one of the petitioners.

As a senior journalist who worked with State mouthpiece People’s Daily for years, Fu has been a self-described “purifier” of the Chinese language since 2009. He reportedly became exasperated that many Chinese magazines directly printed foreign words and abbreviations in the text, islands in a sea of Chinese characters. He has since sought to avert the evolution of what he calls “half-English, half-Chinese.”

Fu had to persevere until March 2010, when a number of high-ranking Party cadres ordered the issuance of an official document requiring Staterun media outlets to replace English acronyms like NBA, CBA (the China Basketball Association) and F1 with corresponding Chinese translations. “The greatest fruit is that CCTV now uses the Chinese acronym ‘meizhilan’ (‘America professional basketball’) instead of NBA,” Fu recalled.

However, Fu’s perceived victory has had virtually no impact on the living language, with the official Chinese translation only in common use among broadcasters and in official documents.

The latest edition of Modern Chinese Dictionary is further evidence of the adoption of nonChinese acronyms using the Latin alphabet into China’s linguistic landscape. Yu Dianli, general manager of the Commercial Press, claimed at a press conference to announce the publication of the sixth edition, “How strange it was that official media uses the awkward meizhilan instead of NEWSCHINA I November 2012

NBA. The dictionary has tried to accommodate people by including the English acronym ‘NBA.’ No more ‘meizhilan.’”

The purist camp were scandalized by Yu’s criticisms. “How could he [Yu] think Chinese pronunciation is awkward?” fumed Wang Wenyuan.

“We have translated all the exotic words before.

For example, we have translated ‘Bundesliga’ into [the Chinese acronym] ‘dejia’ [literally ‘German top’] and ‘FA’ into ‘yingchao’ [literally ‘English super’],” remarked Fu Zhenguo. “Why can we not now translate NBA?” “The dictionary has pushed people onto the wrong road,” he added.

Chinese in the Cold

Truth to be told, the sixth edition of the Modern Chinese Dictionary is not the first to include foreign-derived words. As early as in 1903, “Xguang” (X-ray) was included into the then popular Chinese dictionary Xin’erya, while in the latest edition of Modern Chinese Dictionary, the word is still listed in Chinese pinyin as “ai’kesi guang,” a closer, but lesser used transliteration.

The Modern Chinese Dictionary first included Latin characters in 1978, but it did not introduce its acronym section until nine years later. Although the latest edition marks the first time that the dictionary has included acronyms in the main body, other popular Chinese dictionaries have already done so. The highly-regarded Xinhua Dictionary collected 87 English acronyms for its 2001 edition, and the Cihai, China’s largest comprehensive dictionary first printed in 1915, collected 126 in NEWSCHINA I November 2012

Modern Chinese Dictionary (sixth edition)

its 1999 edition.

“The growing use of acronyms simply shows a tendency towards the simplification of language use in response to the influence of the Internet and digital technology. Many acronyms translated word-for-word form long rows of Chinese characters, making them both hard to understand and to memorize,” explained Gao Yongwei, vice-director of the Foreign Languages School of Shanghai’s Fudan University.

“The latest edition has collected less than onetenth of the roughly 3,000 or so frequently used English acronyms in Chinese life, which constitute 0.3 percent of the total entries, so it is really not so terrible,” argued Liu Danqing, an editor of the dictionary.

However, Fu Zhenguo has refused to back down. “The Modern Chinese Dictionary collected 39 acronyms in its third edition, 120 more in the fifth, and now 239 in the sixth...If we fail to stop this tendency, just imagine what the Chinese language will look like 100 years from now,” he said in an online interview on the People’s Daily website.

“Were we to turn a blind eye to the problem, will we one day find that a Chinese person cannot understand Chinese if he has not learned English?” he added.

Since 2009, Fu has petitioned the National People’s Congress, China’s top legislative body, to officially standardize the usage and teaching of the Chinese language, but has met with no success.

His failure to appeal to a broader audience could be partially due to China’s own linguistic diversity, with a range of pronunciations and semantic differences often present within the borders of a single province. “Standard” Mandarin Chinese, itself largely a product of the modern era, is consequently difficult to define outside the newsroom.

Many linguistic researchers concede that a growing number of Chinese prefer English to Chinese in certain contexts. Although Chinese people with a working knowledge of English make up a tiny portion of China’s huge population, they generally have a disproportionate influence on its culture, as they are typically well-off, college-educated young people.

The spread of English is in part due to the widespread official encouragement of English education, with English one of the only three compulsory school subjects along with mathematics and politics, required for entry to the national college entrance examination. Some argue that Chinese, particularly its classical literary form, has been left out in the cold.

In 2009, He Yang, director of the Chinese Literature School of Renmin University, launched a Chinese-language test targeting 319 graduates from Tsinghua University, Renmin University, Beijing Foreign Studies University and the Central Academy of Drama, some of China’s most prestigious academic institutions, only to find that 30 percent of examinees failed outright, with 68 percent scoring below 70 out of 100. In the survey conducted after the test, over 50 percent of failed examinees attributed their failure to “attaching importance to English learning at the expense of Chinese.”

“The major reason for the direct use of English acronyms is that English is a global language, while the Chinese language is far from widely exported due to a host of factors - economic, historical and linguistic,” said Gao Yongwei. “I think it’s perhaps better to discuss cooling down ‘English fever’ rather than just pick on a dictionary.”

“No matter which argument is more tenable, debate over the status of the Chinese language is no bad thing,” Jiang Yan, another Chinese language and bi-linguistics professor at Hong Kong Polytechnic University, told NewsChina. “The more people argue about it, the more important the Chinese language will become.” 

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culture

Our Time Is Coming

Courtesy of Wang Zaishi

Fashion

Dresses by Vega Zaishi Wang

As China’s fashion consumers become more savvy, independent designers are carving out a niche with their own brands

By Yuan Ye

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NEWSCHINA I November 2012

Courtesy of Wang Zaishi

I

n the depths of one of Beijing’s threadlike hutong alleyways, a black symbol composed of three inverted A’s is slightly illuminated against the gray exterior wall of a two-story courtyard building. Entering through the traditional Chinese red wooden gates, the same logo is applied discreetly on the curtains, sofa, and most importantly, on the clothing. The collection is the work of Wang Zaishi, or “Vega Zaishi Wang,” as it says on the label.

Wang, 27, returned from London four years ago. A graduate with a BA in fashion design from the prestigious Central Saint Martins College of Art and Design, Wang racked up internships with high-end labels such as Michiko Koshino, Alexander McQueen and Vivienne Westwood during her seven years in the UK. Her graduation collection – a series of battery-powered luminous dresses inspired by bioluminescent deep-sea creatures she saw on the BBC TV series Blue Planet – won the school’s award for creativity, and sound reviews from fashion critics.

Yet upon graduation, Wang made the decision to leave London and come back to China to work as an independent designer. With London being one of the world’s fashion centers, was it a wise choice?

“I’m more familiar with China. To start a career here would be easier,” she said. “The market is huge, new and developing fast.” A brave move, to say the least.

Just like Wang, many young designers in China are picking up the trend of independent fashion design.

While international fashion houses milk the colossal spending power in Beijing, Shanghai, Guangzhou and elsewhere, stores carrying work by young designers and small independent brands have seen a rapid growth in popularity among China’s young urban demographic. A number of small, creative brands have received considerable market recognition, and demand is heating up.

27-year-old independent designer Wang Zaishi has become a lifestyle media darling

Wild Rider

After returning to China, Wang Zaishi spent ten months in Xiamen, a picturesque coastal city in southeast China, to complete her first collection. When Wang came to Beijing to have her designs photographed, a stroke of luck brought Fan Bingbing, one of China’s top actresses, onto Wang’s shoot – Fan liked what she saw, and bought the entire collection. The young Wang, still relatively green in the fashion world, was astonished, and decided to move to the capital.

Now with a few years’ experience under her belt, Wang’s designs have taken on a decidedly wilder tilt.

Her 2012 autumn-winter collection Jaran Zagaan Aduu, Mongolian for “sixty white horses,” was inspired by an ancient folk song about the bravery of the country’s horsemen. The collection consists mostly of thick woolen overcoats and skirts.

“I like woolen textiles,” said Wang. “Their close, thick texture can shape a woman’s body tall and straight.”

Wang looks to express a feeling of wandering with the collection. “I was moving my studio while I was working on it…I felt like a nomad living in the modern world, moving and chasing after my dream,” she wrote on her microblog. “There are millions of others like me.”

Through refusing to be labeled a feminist, Wang has always emphasized the importance of feminine independence. She dislikes the social convention that Chinese women are better off marrying into comfort: “Women shouldn’t rely on things like men or money. They should have their own dreams and career,” she said.

While Wang’s pieces tie together simple, straight lines with a bold idea of independence, she continues to lead the cavalry charge in China’s growing fashion design industry. The market has the potential to be huge, “and there are not that many independent designers yet,” she said. “I’m riding in whatever direction I want.”

NEWSCHINA I November 2012

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culture

Affordable Classics

Photo by Qingche Studio, courtesy of the UCCA

A shoulder bag by Rfactory

Taihu Stone, a sponge sculpture by independent designer Sun Wentao

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In contrast, the team behind Rfactory is trekking a more deliberate path. A young brand established only eighteen months ago, they have carefully positioned themselves as a “modern-classic” purveyor of leather bags. “Quality and affordability are our core values,” said Wu Yingnan, founder and head designer at Rfactory.

In the brand’s official literature, Wu is identified by her English name, Ocean. “I liked the openness of it,” she explained. The same reasoning was behind her choice of the letter “R” in her brand name. “‘R’ could be anything,” she said. “Recreation, recycling, real, reach, retro or even revolution.”

As a former senior branding executive at a top fashion group, Wu began to travel the world in 2003, and gradually developed a habit that eventually re-shaped her career – collecting second-hand vintage bags. Fascinated with the exquisite quality and design of the pieces in her growing collection, Wu felt increasingly dissatisfied with the products on the market today. She wanted to make something different.

In late 2010, on a road trip in the US, Wu drew her first design draft – a medium-sized hinge bag. Without professional fashion design experience, it took her some time. But by the end of that year, the design of the first bag was complete.

Wu asserts that art and design are not necessarily superior to other undertakings.

She believes in her own natural aesthetic ability, and soon found herself involved in her creation. In a year and a half, Rfactory released nearly forty bags, of which about thirty were Wu’s own work.

The market is rewarding her endeavor. At Brand New China (BNC), a celebrity-owned design store in Beijing featuring works by more than 150 designers, several of Rfactory’s bags have become best sellers. Chinese media personalities, including TV hostess Yang Lan and actress Fan Bingbing, have all become Rfactory customers.

With an artistic temperament in a developing industry, it comes as no surprise that Wu’s strict quality and detailed requirements often put her at loggerheads with senior craftsmen at the factory she works with, a supplier to one of the world’s top bag brands. “The craftsmanship in China isn’t very developed,” she said.

Wang Zaishi faces the same trouble from time to time. “As the market is new, the industrial chain is yet to mature,” she said. “In practice, it’s often difficult for us to find suitable textile suppliers and manufacturers. In the past three years, we have spent a great amount of time and energy trying to build our production chain,” she said.

Our Time Is Coming

Still, the market is growing fast. Next to an exhibition showcasing a new series of Wang’s dresses at Beijing’s presNEWSCHINA I November 2012

NEWSCHINA I November 2012

Photo by Qingche Studio, courtesy of the UCCA

tigious Ullens Center for Contemporary Art (UCCA), stands UCCASTORE @ DESIGN, an affiliated 3,000-squarefoot store, opened at the end of this May. Working with more than 80 brands and 60 independent designers, the store has attracted an increasing number of customers in the market for original works by Chinese talent.

“The market is developing steadily,” said You Yang, assistant director at UCCA. In his opinion, economic development has naturally cultivated “a group of consumers requiring better, more interesting products,” a market being served by “increasing numbers of strong independent designers.”

There are more than 2,800 pieces on sale at the store, where Rfactory has been given a noticeably large space in the center.

“China’s potential for creative production is worthy of the world’s attention,” You Yang told NewsChina. “We considered inviting designs

by Vega Zaishi Wang into our store, but her prices were slightly out of our range.”

Rfactory, with its emphasis on affordability, is priced from about 500 to 5,000 yuan (US$79 to 794), but the majority of their range is around 1,000 yuan (US$158).

By contrast, Vega Zaishi Wang is placed squarely at the high-end, with spring collection skirts selling for 2,000 to 5,000 yuan (US$317 to 794) and winter coats for roughly double that price. Yet Wang said this is not a considered effort to be upmarket, but the natural result of her pursuit of excellent workmanship.

Nonetheless, both are doing well in their various distribution channels. Besides their own online stores, Vega Zaishi Wang is now sold at several high-end designer stores in Beijing, Shanghai, Dalian, Changsha and Guiyang, while Rfactory is sold at BNC and UCCASTORE @ DESIGN, two major designer stores in Beijing, and several other outlets in the city.

“Our time is coming,” said Wu Yingnan. She remains resolutely confident that as more and more Chinese enter the middle class, they will naturally become more savvy in the fashion market.

“In the past few years, many middle-class people have bought at least one product from a top international fashion brand. They’ve tasted that feeling,” she said. “However, they may have found that the quality and design of those products didn’t live up to expectations.”

“As people’s economic situations improve, their aesthetic requirements also naturally mature,” said Wang Zaishi.

Wang, Wu and their like hope that’s how things work out. But while consumers mature, can China produce enough designers to keep people buying local?

“China has become stronger. And it’s such a huge country. How could there be no good designers?” said Wang.

UCCASTORE @ DESIGN sells works by dozens of Chinese independent designers

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visual REPORT

A Ming Dynasty-style city reconstruction project in Datong, Shanxi Province

COPYCAT W

hen creativity is in short supply, copycats dominate.

A multi-billion dollar reconstruction project, initiated in 2008, has turned Datong, Shanxi Province, into a brand new Ming Dynasty (1368-1644) town. As its coal reserves begin to dry up, Datong is said to be facing possible economic decline.

The cloned version of Hallstatt, in Huizhou, Guangdong Province

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While China has no lack of copycat towns modeled on its own ancient architecture, China Minmetals Corporation’s real estate arm went so far as to clone the entire town of Hallstatt in Austria, a UNESCO World Heritage site believed by many to be one of the world’s most beautiful towns. The copycat town, a purely commerical housing project, is located in Huizhou, Guangdong Province.

NEWSCHINA I November 2012

Photos by CFP

TOWNS

NEWSCHINA I November 2012

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visual REPORT 1. Locals pass by the recontructed city wall in Datong, which was initiated in 2008 2. A finished section of the city wall reconstruction project 3. Shanxi city mayor Geng Yanbo inspects the construction site 4. Thousands of Buddhists gather in the newly reconstructed Huayan Temple 5. An unfinished traditional Chinese corner tower on the city wall

2

1 3

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4

NEWSCHINA I November 2012

5

6 7

10 8 6. The European-style town cost China Minmetals Corp. a total of 6 billion yuan and covers an area of 110 hectares 7. Inside one constructed building 8. A perfect clone of the entire town includes maintaining the precise distance between building 9. Workers arrange baskets and flower displays 10. Signposts with the name of the holding company for the real estate project

NEWSCHINA I November 2012

9

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OUTSIDEIN perspectives from within China

Mentougou by Motorcycle

Uneasy Riders

By Sean Silbert

I

saw the mountains for the first time. They were always there, of course, hidden behind a veil of fog, or what they told me was fog.

On clear days, a bumpy outline might appear on the horizon out beyond where the sun sets, but most days there was simply no horizon. Just an endless gray haze. But I was there, precariously squeezed into a motorcycle sidecar, careening around tight curves and verdant cliffs, the entire time in total disbelief that this was still Beijing.

Who needs to go out into the wilderness? Most Beijingers. It helps us get through those grim urban days. I am no exception. To call my life sedentary is only part of the truth: my main source of exercise is running for the bus. I was stuck in the concrete jungle for the foreseeable future, and thus was itching for something wild, something uncivilized.

Oh, and I didn’t have the time or the money to go on some fancypants expatriate vacation out to Southeast Asia, or Mongolia, or over oceans to camp out in Yellowstone.

Here’s where opportunity strikes. A friend of mine was revving up a motorcycle with a sidecar, a perk from his new job giving motorcycle tours up to the Great Wall. One of the local expat magazines had pub-

64

lished a cover feature promoting daytrips within the Beijing sphere, places close enough to get to and back before dark but still far enough away that being stuck in traffic is avoidable. Having a set of wheels is hardly something exotic, and although Beijing is not as moto-friendly as Southeast Asian metropolises, hearing the roar of a 150cc hog is common enough to be ignored by most.

I didn’t have anything packed. We didn’t even have a map. Not to say that this was some sort of Easy Rider journey of self-discovery.

There was a destination, a village we had picked out designated “Best for Explorers,” a little hideaway with rustic little villas and farmhouse scenery.

Beijing the province, rather than Beijing the city, covers an area of land comparable to most small European countries. Though it’s completely enveloped by surrounding Hebei, there’s a lot to be seen: farmland and plains down south, crumbling sections of the Great Wall still protecting villages frozen in time to the north and west.

Much is made of the capital’s impressive development, praise that is well deserved. Yet this overlooks the rambling miles of scenery that is more like the China that predated the iPad and the factory whistle.

NEWSCHINA I November 2012

Getting There: Motorcycles are hard to acquire for nonresidents – licenses are needed, and tire changes even more so. Try renting a cab for a day – you can negotiate prices with the driver (recommended), or call the company to rent a car. The driver should take you around to independent villages for a day for no more than 400 yuan (US$65).

Cabs cluster around bus terminuses and Beijing’s travel hubs, just come prepared to bargain.

Getting Around: Mentougou is on the side of Beijing that hasn’t caught up with the rest: no skyscrapers, and highways of variable reliability. There are bus routes that can be found online (check the Chinese-only website www.bjbus. com), but they aren’t designed for the casual tourist – renting a car or minivan is your best bet.

Accommodation: Guesthouses, mostly cheap and cheerful, dot the landscape, but it’s a good idea to settle on somewhere before you get sidetracked by exploration. Chinese language ability is, as with all rural areas in China, essential if you are negotiating a room. Prices can be absurdly low, just a few dollars, but, sadly, facilities are often basic in the extreme. However, it isn’t difficult to organize your day well enough to make sure you’re back in the city by nightfall.

Photo by Lu Gang/CFP

Swede who had been riding motorAnyone can get out to the Beijing cycles since his youth and regularly sticks on a public bus, or even by blazed out into the countryside on blue rental car. The open road merits a sky days, and a middle-aged American, motorcycle, though, and the power of who used his motorcycle as a personal our chosen conveyance infected our excuse to escape the city, and, he conminds – the two of us met up with fessed, his wife. another set of friends with sidecars, Tobias, the Swede, was a little bit and changed our plans as soon as the too close to the engine for our tastes. keys were in the engine.

While I was sitting in the sidecar en“I want to see mountains,” we joying the freedom of the rushing both collectively agreed. The village plan was tossed behind us as we fired breeze, I could see my partner struggling to maintain his speed. Tobias off onto the highway in a cardinal reveled in it, occasionally putting his direction opposite to where we had Preserved ruins in Liliqu village, Mentougou flip-flop close to the ground to feel the intended to go. road slipping by him under his feet.

There were three of us, wannabe Dennis Hoppers to a man. My friend and I had little experience of the Beijing’s cobweb-like network of highways was something that we rigors of long rides out in the wilderness frighteningly far from fire or could look behind as we passed the famous ring roads one by one, fuel. Our partners were far more rugged than us: a tall, bald-headed until clearing the city altogether.

NEWSCHINA I November 2012

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travel

Photo by Sean Silbert

You’ve left Beijing not when the buildings change but when the the ocean. traffic subsides. The transition is hardly stark, as the urban growth It took us three tries to find a restaurant we liked. From the roadseems to be endless – highways zip by cookie-cutter apartment build- side, the three bikes slowly creeped down one-lane alleys to the riverings again and again and again. The side, where shirtless Chinese men sat drone of repetition slides by until the around gossiping and watching the organs of the colossal city begin to sun cross the sky. This was the quintappear: a power plant with cooling essentially Chinese sight that greeted towers large enough to defy descripus at every village we passed through. tion. An iron smelter, rising high out While not dodging cars, I occaof a lattice of wrenched iron. Then, as sionally stuck my head over the edge you turn your head, the mountains in of the sidecar to snap a photo or peek Mentougou district break through the at one of the villages before it disaphorizon. peared into the distance behind us.

Far-flung Mentougou is a rural I began to notice that not only were place, with not much in between the we not the only foreigners around, forgettable hamlets that are its landbut we weren’t even the only motormarks. While a lot of literature has cade of misfits. Twice on our journey been written about the wonders of we chanced upon local motorcycle motorcycling the open road, the acclubs, puttering around on the twotual experience leaves any guidebook lane highways like Hell’s Angels. It in the dust. Beyond the very real seems the open road is now calling to possibility of getting lost, so much is a whole new civilization. left unsaid: the sheer terror of careenThat’s something I’m afraid of. ing around hairpin cliff bends, the Freewheeling on empty roads in Mentougou Mentougou will be invariably coloawe of dropping almost weightlessly nized by weekend-breaking tourists into deep valleys, and the unending that want the same thing as me, to discomfort of getting bugs in one’s get away from the weekend-breaking mouth. tourist. Signs were already beginning to show: families driving SUVs Plenty of villages have signs proffering homestyle cuisine, but we clogged parts of the road to catch a glimpse of an unpolluted sky learned the smart choice was to hold out for anywhere serving the bar- before heading back to their city apartments. The towering green hills becued trout topped with hot peppers that fight for control of your dominate the skyline, but remain unsung due to their obscure status sinuses. Many of these homestyle restaurants are found on the river- in the Beijing atlas. side: we found ours by a series of absolutely stunning ponds where What Mentougou and its highways offer is something Beijing, they caught to the order. The fish wasn’t big, but it was fresh, and that with all its cash and gumption, has failed to create in its urban spaces. makes all the difference in a city hundreds of kilometers away from Peaceful, quiet nothingness. real chinese

wéi

weiguan gawking Weiguan, literally meaning “crowding around to watch,” is used so frequently in the online community that even traditional media now use it to indicate that an incident has aroused public interest.

With wei meaning “to surround” and guan meaning “to watch,” weiguan was originally used to describe the common Chinese phenomenon whereby a crowd of onlookers will gather silently around an incident, usually an angry verbal dispute or traffic accident. Often, the word also pejoratively implies that a crowd of gawkers was reluctant to get involved, even

66

when help was needed, watching for fun or out of morbid curiosity.

As the word’s popularity grew on the Internet, however, it began to be used to describe reactions to talking points, rather than isolated real-world incidents. This January, for example, well-known blogger Han Han wrote a blog post claiming that reform was a better route to social change than revolution, causing thousands of forum threads and general online debate.

Han Han’s blog had caused the public to “weiguan.”

Different from real world rubberneckers, those

guān

who weiguan something or someone on the web do not stand aside silently, but involve themselves in the discussion or debate. Arguments are often so fierce that mainstream media have warned against venting rage online, with radical language and profanity, as a way for netizens to blow off steam. Media reports claim this tendency is abetted by online anonymity, and the government has recently been pushing for real-name registration on the Web, a move that has inevitably provoked a strong reaction from weiguan-ers.

NEWSCHINA I November 2012

flavor of the month

Fly Me to the Moon

By Stephy Chung

NEWSCHINA I November 2012

never acquired.

This year, I embarked on an hour-long mooncake hunt, equipped with a handy electronic dictionary. I carefully selected six different mooncakes, each priced at just over a dollar, from several bakeries (and one 7-Eleven).

My first stop was Beijing Daoxiangcun food emporium. Factorystyle workers wear masks and gloves, doling out cookies and cakes with concentrated precision. I was confronted with about a dozen varieties of mooncake, and purchased two – one filled with red bean paste, and the other pumpkin, both northern classics. Both achieved that fine balance of millimeter thin crust – moist but not crumbly, with a dense, compact filling. The red bean paste was delicious – kneaded with molasses, but not overly sweet. The pumpkin was disappointingly bland – but what can one expect from a low-calorie dessert?

Holiland, one of China’s largest bakery chains, boasted a signature rose-filled mooncake special. Petite at just 2 inches in diameter, and etched with a blooming rose, the cake looked as pretty on the outside as it did on the inside. However, the confetti within proved too perfumed. I preferred the “five-kernel” mooncake, which consisted of coarsely chopped black sesame, watermelon seeds, pumpkin seeds, walnuts and peanuts. The scrumptious stuffing was nutty and complex, with hints of cinnamon and cloves.

Marketed as “French-style” mooncakes, trendier fillings of coffee, cheesecake, and berries are whipped up by Golden Phoenix Bakery.

I settled on the dark chocolate, but the gooey filling had an unsettling wobble and an artificial tang, like Jello pudding. Non! I wasn’t expecting much from the 7-Eleven stop, and yet I reached for a puke-green colored option with geometric imprints. I’ll give the pit stop points for creativity – this one was flavored with Japanese matcha green tea. But, after one sickeningly sugary bite, I abandoned the taste test.

Feeling grossly full after my hunt, I found myself wishing that mooncakes were a lot less of a commitment. I could definitely cover more ground with a bite-sized pack.

Maybe next year.

Photo by CFP

Photo by Stephy Chung

T

he Mid-Autumn Festival, which falls on September 30th this year, is one of China’s most important holidays after the Lunar New Year. During this period the moon shines at its fullest, and gazing is best enjoyed with a mooncake cupped in your hand. If you cross your eyes and squint hard enough at its craters, you should just about make out the figure of a beautiful, lunar resident – China’s legendary Woman in the Moon.

Popular Chinese myth holds that Chang’e, a knockout damsel, either unwillingly or unknowingly swallowed an immortality pill reserved for her husband.

This enabled her to fly, but also totaled her marriage. In panic, she fled to the moon, only to cough up the precious pill, marooning her and her rabbit sidekick (yes, really). Only during the Mid-Autumn festival, when the moon burns at its brightest, can Chang’e return to earth, no doubt for a conjugal visit with her estranged spouse.

The origins of the mooncake are clouded, but this confection was apparently instrumental in helping the Chinese overthrow the Mongols in the 14th century. As organized gatherings were forbidden, an advisor to the Chinese rebel leader cleverly baked secret messages into the calorie-rich confection. “Kill the Mongols on the 15th day of the 8th month.” Ouch.

These days, tradition continues to fuel an industry, generating billions of dollars each year. Even Starbucks, Dairy Queen and Häagen-Dazs have joined in. I witnessed a rather unpersuasive mother steer her tubby son away from a 79 yuan (US$12.6) ice cream mooncake, her argument being that “you don’t like strawberry flavor.”

Expensive fillings such as Belgian chocolate, Madagascan vanilla cream or mascarpone and preserved rose petals are now in vogue as seasonal gifts to one’s social betters. On the other side of the fence, an employer who fails to provide a decent brand of mooncake to workers when the season rolls around will win few friends.

Stuffings vary by region, and the crust runs from unpalatably solid to inedibly flaky. The Shanghainese favor shredded pork and gravy stuffing, while the Cantonese fill the pastry with salted duck egg yolks, symbolic of wealth, and sweetened lotus paste, a taste I’ve

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essay

Long Distance Breakup I kissed another boy on Christmas Eve, the first unfamiliar kiss in four years. I don't remember the kiss so much as the smirk on his lips as he leaned forward, a smirk that knew all variables of the night would lead to this.

We were young, single, and let the jazz, wine and the bizarre ambience of Christmas in Beijing do the work for us. When finished, we eased back into conversation without missing a beat.

Maybe it was the apparent meaninglessness of this brief encounter that heightened my senses. I could really grasp the stem of the wine glass in my hand, feel the gravity of its curves, and savor the lingering taste of Australian Cabernet Sauvignon and Chinese cigarettes. I’d grown up.

I had ended that four year relationship just two days before Christmas Eve. Of my ex, I’d always said he was the type of guy I’d marry in a heartbeat if we’d met at thirty instead of twenty-one. Our first kiss was snuck under the staircase of our rowdy American college dorm, collapsing in a heap of laughter and not giving a thought to the drunken revelry around us. We kissed, as young people did, as if it were going out of fashion.

The breakup was more of an adult affair, carried out via Skype between Beijing and New York, words feeding into a cold and unresponsive microphone, making the whole thing seem scripted.

The Chinese-American in me said: “I guess you’re just more American than I could ever be.”

The Chinese-American in him said: “Well, it’s not as if there’s just a switch I can pull to become more Chinese.”

It was a conversation we’d had many times before—at college, before graduation, before moving together to New York City, on the train home to Brooklyn. I’d always gloss over the words with unbearable levity, “I’m moving to China one day! It’s my dream! Will you move with me?” He’d always respond with unwavering optimism. “We’ll find a way.”

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Illustration by Xiang Zhaohui

By Chen Qingqing

The breakup was more of an adult affair, carried out via Skype between Beijing and New York, words feeding into a cold and unresponsive microphone, making the whole thing seem scripted.

I’d wanted to be in New York for a year and no more, so by the time the third year rolled around, panic set in. “I have to move

to China.” My voice was small against New York’s rumbling subways, so much louder than the shiny new train cars in Beijing. The more I said it, the more remote China felt.

Up until seeing me off at the airport to Beijing, he’d often say out of the blue: “Don't forget me.” I’d laugh it off like it was the silliest statement in the world.

We had toast, eggs, and bacon, a classic American-style breakfast at the airport. I'm not actually sure we kissed. I only remember stepping back from his embrace, remember tracing the outline of his elegant figure, his eyes, nose, lips, memorizing features because we both knew it may well be the last time.

“Don’t forget me.” We blinked back tears and clung to promises. I was only going for a year, a year to get China out of my system, a year later we were going to travel the world together. A year and no more.

The first month in Beijing was a whirlwind of activity: new job, new friends, new apartment, new life, new work hours that usually ended in the AM. In the mornings, I’d carry him around on my laptop while flitting about—eat breakfast, put on makeup, or wail about how wonderful and horrible this new world was. In turn, he talked about a life in New York that sounded like a memory, that in a parallel universe, still fluttered with life, a life I’d leaped from like a moving train.

I forgot his birthday the second month in China. I’d burned holes in my project calendar and memorized deadlines by heart, but somehow couldn’t see meaning in the numbers that we’d celebrated for four years.

“So that’s it, then.”

By the fourth month, we knew the one year stint in China was unrealistic, a light at the end of a tunnel that we’d fashioned out of desperation. I was staying. He wasn’t coming.

“Well, I just want to say, thanks for four great years. Thanks so much.”

“That’s it,” proved as easy to say as it used to be to hop onto a train to Queens instead of Brooklyn. NEWSCHINA I November 2012

China Unplugged I remember that special day in 2004 when my employer, then a New York consulting firm, gave me my first Blackberry. What a feeling! Little old me - important enough to have their monthly phone bill paid by someone else From there, I became increasingly “plugged in” as my career took me to a string of different countries and industries. Remote access keys, a Bloomberg Anywhere token, the iPad. I thought I was as connected and mobile as a member of the modern economy could be.

Then I came to China. My Chinese business contacts declared the Blackberry a “dinosaur” and persistently ignored my emails.

Instead, they sent meeting requests by SMS and started work discussions on new social media platforms faster than I could sign up for free accounts.

Weibo (a Twitter-like website which, like its counterpart, keeps your verbiage down to a few dozen characters), Weixin (a chat app), and old-fashioned cellphone calls at any and all hours became my connections of choice.

It took me a year to fully plug in to working in China. I acquired an Android phone, created logins and passwords, learned a new language (Chinese web lingo), and adapted to the fast pace and brevity of the cybercommunications in the workplace.

Then, just as I was settling into this new work mode, I promptly unplugged myself.

After too many days spent juggling replies to constantly-refreshing interfaces that lay about my desk and endless threads of oneliner messages, I stopped to think. Was being more available making me more productive?

No, say the proponents of selective unplugging. Cal Newport, author of the “Study Hacks” blog wrote a piece called The Convenience Principle and the Destruction of American Productivity. In it, he says, “There are no shortage of strong arguments that living your day in your inbox prevents long, uninterrupted thought, which in turn greatly reduces the value of what you produce and the rate at NEWSCHINA I November 2012

Illustration by Xiang Zhaohui

By Zhai Qi

“It took me a year to get plugged into doing business in China. Then I promptly unplugged myself.” which your skills improve.”

In 2008, Nicholas Carr published “Is Google Making Us Stupid?” in The Atlantic, admitting “what the Net seems to be doing is chipping away my capacity for concentration and contemplation.”

It was Tim Ferriss, serial entrepreneur, Princeton graduate, Guinness Book of World Records holder (for most consecutive tango spins in one minute), sanshou (Chinese kickboxing) world champion, winner of Wired Magazine’s dubious title - the “Greatest SelfPromoter of All Time” – and author of The Four Hour Work Week who gave me concrete ideas on how to unplug. Tim sees email as the biggest obstacle to shorter and more productive days. Although he didn’t write about Weibo and Weixin, I’m pretty sure he would include these as email’s evil cousins.

Tim recommends limiting email to a few time slots per day. If this might upset your boss, talk to him first about giving this productivity improvement experiment a two-

week trial. If you’re not disciplined enough to unplug yourself, create an automatic email reply that informs people of your new habits with a number to call if it’s urgent.

I took Tim’s advice and designed my own experiment. For two weeks, I came to work at 8 AM and checked emails, social media, and mobile apps for twenty minutes. Then, I closed all browser tabs unrelated to my research topic at hand, silenced my phones, and hammered away at writing reports. At lunch, I emerged from my office to chat with colleagues and do another half hour of plugging in. In the afternoon, I did administrative work tasks off a to-do list created the night before and some reading.

It worked like a dream. Often, I had the bulk of my research writing done before my colleagues had finished their first cup of coffee. I also left the office at 5 PM with no guilt because I knew I had accomplished the tasks I set out in my to-do list.

The system wasn’t perfect. Sometimes my phone showed three consecutive missed calls from one business contact when I checked at lunch time. Friends complained that they could never reach me. I made do by telling white lies to the business contacts – I was at a meeting with important investors from the US, or having long teleconferences with the US – which had the unexpected benefit of making me seem more important. To friends I explained my rationale for unplugging, which led to interesting conversations.

Will I stay unplugged? I’d like to, but realistically I’ll have to modify my rigorous schedule. People won’t always be so understanding, and there is the occasional Chinese company scandal that requires immediate attention.

I’m lucky that my main job function as a researcher is an independent role that requires long uninterrupted work. A salesperson or a trader can’t really unplug. But I urge everyone who can disconnect, even for an hour, to give it a try. You’d be surprised at what you can do unplugged!

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Cultural listings Cinema

A Tricky Epic In 1997, White Deer Plain received the Mao Dun Award, one of China’s highest literature prizes. Written by Chen Zhongshi and published in 1993, the novel is one of the most influential pieces of writing in contemporary China, and has sold more than 1.6 million copies since its release. Now, two decades later, it has been adapted for the silver screen by director Wang Quan’an, and was released in Chinese cinemas mid-September. An epic story, White Deer Plain tells the fate of a large clan in a village in northwest China from the end of the Qing Dynasty (1636-1911) to the early days of the People’s Republic of China. In contrast to the novel’s complex storylines, the film trims the plot in order to focus on one leading character – a woman who marries into the village. Even after abridgement, the earliest uncut version ran over three and a half hours. Yet due to both commercial considerations and censorship, a further hour was omitted in the final version released on the mainland. Critics have expressed dissatisfaction towards the final work while Wang Quan’an has also admitted that it was “the most difficult film to direct.”

Music

Book

Jazz Mad

The 92 Generation

A cool autumn makes the perfect environment for a little smooth jazz. From mid-September to late October, three jazz festivals, namely Nine-Gates, JZ and Beishan, respectively took place in Beijing, Shanghai, and Zhuhai in Guangdong Province. All three festivals featured both internationally renowned jazz musicians and the cream of the local crop. At JZ in Shanghai, multiple Grammy-winning American trumpeter Roy Hargrove joined the international line-up, while in Beijing, 13-year-old Chinese pianist A-Bu caused a stir with his virtuoso performance.

By Chen Hai

Exhibition

Dialog Across Space and Time The Terracotta Army, built for the First Emperor of the Qin Dynasty, is one of China’s greatest archaeological wonders, and an important example of ancient Chinese craftsmanship and aesthetics. Now, 27 sculptors from EU countries have joined local sculptors to tour an exhibition, titled Dialogue with Emperor Qin, visiting 9 cities around China since early 2012. Emphasizing communication between not only cultures but also time periods, the exhibition has showcased diversity and meaningful interaction between modernity and tradition, nationality and ethnicity. As a touring exhibition, the fifth and latest event of the series was held in Wuhan, Hubei in mid-August.

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When Deng Xiaoping’s famous 1992 southern tour reasserted China’s agenda of Reform and Opening-up, a large group of institutional intellectuals and government officials left their civil posts to become businesspeople. A number of them have gone on to become the industrial leaders of the modern day. Yet, not only influential in the business domain, many of them are also active in expressing their opinions on public affairs and social development.

The book The 92 Generation by Chen Hai, a veteran writer specializing in business writing, describes the ideals and practices of the group of officials- and intellectualsturned-businesspeople in this era of transformation, and their profound influence on Chinese society.

NEWSCHINA I November 2012

NEWSCHINA I November 2012

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Commentary

Patriotism and the Weak-Country Mentality As China emerges to become a major world power, the Chinese people must be mature enough to overcome the “weak-country mentality”

By Qiu Feng

A

fter Japan’s decision to “nationalize” the Diaoyu Islands led to a deterioration in Sino-Japanese relations, anti-Japanese protests erupted in dozens of cities across China. While most of these protests were peaceful, many turned violent, with Japanese cars destroyed, and Japanese businesses vandalized and looted. It was reported that several Japanese nationals were attacked in a number of separate incidents.

Violent anti-Japanese protests are nothing new in China. One of the major reasons is that the mentality of many Chinese people is rooted in the late 19th and early 20th centuries, when China suffered at the hands of foreign powers, particularly imperial Japan. At a time when the government lacked the ability to defend against encroachment and invasion from Japan, Chinese patriots could do little but take to the streets, protesting imperialism and boycotting foreign goods – Japanese goods, in most cases. Over time, this nurtured a “weak-country mentality,” a mixed sense of crisis, victimization and anxiety. Throughout the 20th century, China strived to catch up with Western powers and Japan, experimenting with different approaches, often at a heavy price.

With the rapid economic growth of the past three decades, China now has emerged to become the world’s second largest economy.

Many countries that once caused anxiety in China, including former empires like Japan, are now anxious about China’s rise. In other words, China is no longer the Sick Man of Asia. The world has fully acknowledged this, and expects China to bear responsibility proportionate to its power.

As China becomes stronger, the Chinese people need to mature, especially regarding their perception of the relationships between

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China and other countries. More specifically, they should overcome their weak-country mentality, and move on from the occupation and colonization of the 19th and 20th centuries.

For many so-called “patriots,” the fact that China has become stronger means that it should now be quicker to “use” its power.

Such an attitude stems from the weak-country mentality, as people in a weak country tend to harbor resentment towards greater powers.

While expressing their patriotism, the Chinese people must adjust their mentality to cope with a rising China. The behavior witnessed during the recent protests, including wanton destruction of private property and accusations of “traitor” being thrown around, are the actions of the weak, and should be abandoned. Compared with colonial times, the Chinese government now has a wide range of options in dealing with international disputes, from diplomacy, to economic and military action.

As for boycotting Japanese products, this is an obsolete practice in a globalized world. It is now impossible to become independent of foreign-made goods, including those made by Japan, in everyday life. Many Japanese-branded products are actually made in China.

A territorial dispute should not impact people’s daily lives. Otherwise, “patriotic” behavior will only result in division and scars on the Chinese psyche, as well as damage to China’s international image. In a world where China is no longer a weak country, the people should now feel confident to leave international relations to professional diplomats and strategists, and carry on with their lives. (The author is a senior freelance commentator.)

NEWSCHINA I November 2012

NEWSCHINA I November 2012

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NEWSCHINA I November 2012