October 2011 by China Newsweek Corporation

Wenzhou Train Crash: Victims of the System MILITARY

Volume No. 038 October 2011

SPECIAL REPORT

Naval Expansion: Cut-Price Carrier POLITICS

Party Vitality: Winning Back the Masses

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NEWSCHINA I October 2011

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EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Directors: Liu Beixian, Zhou Jianming Editor-in-chief: Wang Xiaohui

Handing Over the Reins

or years, the massive administrative expendiIn a democratic country, government expenditure, ture of governmental agencies, especially ex- as drawn from the taxpayer, is determined by the legpenditure relating to official travel, personal islature. Although China’s constitution and other laws vehicles and hospitability, commonly known as stipulate that the National People’s Congress(NPC) sangong, or the “three official spends,” has enraged has budgetary powers, such power is very limited in the public. Yet despite widespread condemnation, reality. At all levels, budgets are typically set by those in many authorities continue to resist requests to open government, with the NPC and its local branches protheir accounts to the public. It is estimated that the viding the necessary rubber stamp. It therefore comes total combined yearly cost of administrative expen- as no surprise that official spending has risen rapidly diture may be as high as 900 billion yuan (US$140bn). In Beijing alone, there are over 700,000 official vehicles, Despite widespread condemnation, equivalent to 15 percent of all cars on the capital’s roads, all of which are paid many authorities continue to resist for by public funds. requests to open their accounts to the

The reason why expenditure relating public. to official travel, personal vehicles and hospitality is particularly controversial is the ease with which it can be abused, making it a hotbed of corruption. Responding to growing calls to crack down on government fraud, the State Council moved in recent years. earlier this year to request that all agencies of the cenNow, the State Council itself has finally promised tral and local government release information relating to reduce the amount of official spending. In March, to sangong spending by the end of June. However, as of it announced that it would refine the budget-making August, up to nine departments from a total of central process and strengthen supervision over its implemen98 agencies had yet to open their accounts, while those tation. By requiring the release of relevant information, that were disclosed offered little in the way of detail, it is hoped that external supervision can push governwith the vast majority providing only a broad spend- ment agencies to constrain their lavish appetite. Howing outline. ever, without the threat of legal reppercussions, govAs long as government agencies are able to deter- ernment agencies remain free to ignore criticism from mine what to release, and crucially what to withhold, the media and the public. efforts to promote transparency become ever more difTo solve the problem, the current budgetary frameficult. work needs to be fundamentally altered. All budgetary The public release of government information offers powers should be returned to the NPC and its brancha modicum of progress. However, such measures fail to es. If such a reform is too drastic, then at the very least, address the real reason behind bloated official spend- official spending related to travel, personal vehicles and ing, namely, a lack of external supervision. hospitality should be subject to public scrutiny. 

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Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Yang Yi Copy Editors: Stephen George, Jack Smith Lead Writer: Yu Xiaodong Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Li Jia First Reader: David Green Address: 5th Floor, 12 Baiwanzhuang South Street, Xi Cheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: readers@newschinamag.com http://www.newschinamag.com Art Department Art Director: Philip Jones Photo Director/Illustrator: Wu Shangwen 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 for China: Wang Chenbo Account Manager for China: Yu Miao Tel: 86-10-88395566 ext 178 Circulation Manager for China: Yu Lina Tel: 86-10-88395566 ext 143 Advertising Director for the US: Gao Weiwei Tel: 1-212-481-2510 Marketing Promoter for the US: Jerry Meng Tel: 1-212-481-2510 New York Office: Jing Xiaolin, Wei Xi, Sun Yuting Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Zhang Wei San Fransisco Office: Liu Dan 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

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CONTENTS

China’s Most Wanted

Photo by IC / cover Illustration by Wu Shangwen

On the trail of the country’s multi-million-dollar white-collar criminals

EDITORIAL

POLITICS

02 Handing Over the Reins 10 23

Varying Agendas: Answering the Call Xinjiang Attacks: The Bloody Weekend

COVER STORY

12 China’s Most Wanted: On The Run / Mission Unaccomplished

26 28 30 32

SOCIETY

Public Hearings: Familiar Farce, Familiar Face Forbidden City Scandals: Open Gates, Closed Books Union Reform: Trading Places

SPECIAL REPORT

Wenzhou Crash: Speed Kills / Derailing Change

NEWSCHINA I October 2011

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WORLD

38 Lumbini Project: Buying Buddha?

MILITARY

42 China’s First Carrier: Purchasing Power

46 48 50

ECONOMY

Fatal Flaws: A Creditor’s Crisis Courier Tax: Return to Sender Solar Power: Surface Heat

ENVIRONMENT

FEATURE

52 Desert Agriculture: Turning Sand into Gold 54 Conservationist Monk: A Sacred Responsibility

CULTURE

VISUAL REPORT

OUTSIDE IN

04 05 06 08 51 66 68 70 71 72

MEDIA FOCUS WHAT THEY SAY NEWS BRIEF NETIZEN WATCH CHINA BY NUMBERS REAL CHINESE ESSAY CULTURAL LISTINGS COMMERICAL LISTINGS COMMENTARY

58 Jin Dalu: Life Goes On 60 Last Look Back 64 67

Mount Wutai: A Taste of the Spiritual Flavor of the Month: Wriggling Eats and Candied Treats

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China Economic Weekly

NewsChina Chinese Edition

August 2, 2011

More Housing for Less?

Behind Chinese Offshore Companies The offshore affiliates of China-based companies in places such as the British Virgin Islands, Mauritius, the Cayman Island and Samoa are posing an increasing risk to China’s economy. Insider trading, tax evasion, and widespread fraud are just a few of the accusations currently being leveled at offshore companies. However, experts also think that offshore operations could in fact help Chinese companies go global, especially State-owned enterprises (SOEs) whose overseas expansion is often hampered by the political considerations of host countries. Success stories have already been pioneered by giants like Sinopec.

Globe August 16, 2011

Internet Privacy – Indefensible? Social networks like Facebook, Twitter and their counterparts in China are putting personal privacy at risk. With concepts such as private and public space becoming increasingly blurred, it has become difficult to identify privacy infringements under existing legal systems. In China, however, social networks have grown into an important means of supervising the actions of government and big business. Yet the line between privacy protection as a civil right and public scrutiny has yet to be fully defined, and as such, the exact role of social networks remains controversial.

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August 22, 2011

An announcement by the Ministry of Housing and Urban-Rural Development in May declaring that, “The construction of 10 million units of affordable housing is not only an economic task, but a political task,” has added renewed impetus to China’s sagging affordable housing program. As of January this year, ground had been broken on over 7 million units, with the majority of those currently under construction either redevelopments of preexisting poor-and low-quality housing, or so-called “economic housing,” new builds aimed at middle-and low-income groups. However, this new quasi-government housing intended for lowincome groups, has not been embraced by local governments, many of whom continue to rely heavily on revenues derived from the sale of land to developers. In order to help combat this, State-owned enterprises have been required to take responsibility in some cities, such as Chongqing. In other cities, including Beijing and Shanghai, developers have been ordered to provide affordable housing which will be purchased by local governments. But how that buy-back will be conducted has yet to be clarified.

Oriental Outlook August 15, 2011

China’s Journey to the Center of the Earth Driven by a rapid increase in demand for mineral resources, in 2008 China initiated a three billion yuan (US$470m) scientific project aimed at drilling deep below the earth’s surface. Teams of Chinese scientists have since led efforts to turn the mega-project into a reality. However, only now, almost three years after the project was first announced, is it attracting public attention, thanks largely to the news of a “super drill,” expected to tunnel a record 10,000 meters down. According to reports, China’s goal is to have a clear geological map of an area 4,000 meters below the surface. China currently lags far behind the US, Australia, Germany and the UK in the race to the “center of the earth.” The program, once completed successfully, will be a prelude to an even more ambitious project aimed at exploring the lithosphere. Xinmin Weekly August 22, 2011

Die Young Death rates among the under 50s have soared in big cities across China, with Shanghai topping the table for lethal diseases such as cancer. In Beijing, cancer is now the city’s biggest killer, claiming more lives per year than any other single cause. The increase in the number of young cancer patients is particularly alarming. Doctors and sociologists have attributed the rise to deteriorating health, environmental pollution and mounting work pressures. It is time for the country to choose between a hospital bed and a healthy lifestyle. Fast development, or a potential early death. NEWSCHINA I October 2011

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Illustration by Wu Shangwen

“How could I know whether or not we have carried out an environment test report? How can you call me directly? Is a bureau director so cheap that nobodies like you can just call them up?” Chen Guiguang, the Director of the Fujian Environment Bureau gives a curt response to a reporter enquiring about an environmental investigation into a local factory. “The Chinese are ashamed to talk about money and materialism, so money-grabbing comes coated with moral sugar and materialism is dressed up as acting in the public interest. This makes us, as a race, uniquely hypocritical.” Finance and economics professor of the China-Europe International Business School Xu Xiaonian, on his microblog.

“We all know how to be ‘loyal subjects,’ but this knowledge is rotten. Now, it is high time we learned how to be citizens.” Literary professor Yi Zhongtian calls for a more civil society in the Beijing-based magazine Famous.

“What a pity it is that a third-party investigation system has been the sleeping beauty in our Constitution for over 30 years.

Critic He Weifang adds his voice to calls for an independent inquiry into the Wenzhou train crash July 23.

“I have been to more than 60 countries.” Xu Jin, vice-mayor of Yibin, Sichuan Province in an interview with a local reporter. His remarks have triggered widespread calls for an inquiry into official expenses after doubts surfaced about the justification for his many overseas trips.

- “Where would you most like to visit?” - “The moon, because there are no people there.” Chinese basketball star Yao Ming, who recently announced his retirement, reveals what he’d most like to do with his free time.

“China should stop whichever policy it is that encourages ever-increasing reserves of foreign currency. This is one of the few lessons we can draw from the US bond crisis.”

“We should define specific criteria to judge whether inflation control is really effective. If a 10 or 20 percent success rate could somehow be considered effective, it would be a piece of cake.”

Former monetary policy director of the People’s Bank of China Yu Yongding in an interview with the British paper Financial Times, calls for a free flotation of the Chinese yuan to prevent “destructive losses” from its expanding investment in the greenback.

Economist Liang Xiaomin, interviewed in Southern People Weekly, struggles to agree with government assertions that China’s central bank has brought runaway inflation under control.

“Beijing’s ‘literary youth’ are now standardized – they’ve been on TV once, published one book, taken one trip to Tibet and believe in Jesus …. Actually, most don’t genuinely believe in Jesus, but just place Him alongside Hermès and Louis Vuitton.” Popular online critic Yao Bo on the growing trend towards Christianity among China’s young socialites. NEWSCHINA I October 2011

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Leading News

Biden in China US Vice-President Joe Biden, made his first visit to China this year from August 17 to 22, once again putting Sino-US relations in the spotlight. Following Standard & Poor’s downgrade of the US credit rating as a result of partisan politics stymieing fiscal policy in Washington, Biden’s trip was seen as an attempt to reassure its largest overseas creditor, as Biden emphasized in a speech at Sichuan University, that the US is confident it can revive its flagging economy. China’s State media ran a glut of editorials slamming the US for “debt addiction,” echoing outspoken US politicians in its calls for Washington to “live within its means.” Such calls stem from self-interest, with many prominent Chinese economists offering suggestions for offsetting any potential financial meltdown in China stemming from its overreliance on foreign currency. However, given that Biden’s trip came at the invitation of his opposite number in China, Xi Jinping, widely touted as Hu Jintao’s successor, many domestic analysts believe Biden’s ar-

rival is aimed at strengthening bilateral ties following saber-rattling over a series of issues such as continued US arms sales to Taiwan, trade imbalances and the value of the Chinese yuan. In the wake of the debt crisis and turmoil in the global marketplace, Obama’s approval rating has plunged, and Biden, a popular character in Washington, will likely be crucial to the President’s reelection campaign. While his visit was marred by scuffles between Chinese and for-

Business

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eign media during the Beijing press conference, and a fistfight between US and Chinese basketball players during a so-called goodwill game at Beijing’s National Stadium, the usually gaffe-prone Biden didn’t put a foot wrong in his efforts to charm his hosts. Qiu Feng, the US issues vice-director of the Chinese Academy of Social Sciences, believes that Biden’s aim has been to “show a responsible US” to the world’s second-largest economy.

Law

CCTV Attacks Baidu China’s powerful State broadcaster, China Central Television (CCTV), has televised four days of programming criticizing the country’s leading search engine Baidu for allowing phony websites to advertise on its search results. Revealing a series of cases of online fraud such as phony ticket sellers, CCTV reports claimed that Baidu’s “Phoenix Nest” advertising system is engaging in profiteering, listing websites according to payment, not reliability or popularity. Baidu suffered a 3.67 percent drop in its stock price following the CCTV reports and soon claimed in an open apology that it had expelled the advertisers in question from their listings.

In the wake of the debt crisis Obama’s approval rating has plunged, and Biden will likely be crucial to the President’s reelection campaign

China to Revise Criminal Procedure

However, many netizens have called into question the motivation behind this attack, especially after some Sina microbloggers revealed that CCTV has secretly launched a beta version of its own heavily-censored search engine. Baidu’s supremacy may be undermined by its lack of ties to the central government, which has increased its incursions into lucrative Internet services formerly dominated by private enterprises.

The National People’s Congress, China’s highest legislative body, pledged in late August to “review” a new draft of the country’s Criminal Procedure statute. Following the first revision, made 15 years ago, it is the country’s second major revision of acceptable practices in the treatment of suspected criminals. One major change is the outlawing of using torture to extort confessions, as well as forcing guilty pleas on all suspects. However, the new draft also extends the right to tap phones to procuratorates, ostensibly to reduce police reliance on torture. The draft has also aroused concern by asserting that parents, children and spouses of any suspect will have the right to refuse to testify in court, a clean break with China’s support for “sacrificing blood ties to denounce family members,” a prominent feature of Chinese legal procedure since the establishment of the People’s Republic of China in 1949. NEWSCHINA I October 2011

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Society

Environment

Guangxi Cracks Down on Pyramid Schemes

After Typhoon Muifa swept across China’s east coast, resulting in widespread damage to coastal defenses, Dalian’s municipal government finally agreed to move its unpopular PX chemical plant following mass protests outside the local government headquarters, leaving the future of this billion-dollar concern in doubt. Typhoon Muifa broke a dam attached to the PX plant, causing seawater to back up into the site. Worrying that the 700,000-ton chemical tanks would leak under the typhoon, residents evacuated their homes and thronged outside government buildings demanding the plant’s removal. Despite the government’s promise to relocate the plant, a move which has been planned for some time, media reports said officials had failed to reveal any details of the move. With chemical industries booming in China,

chemical pollution from factories clustered along the coast and major inland waterways is a primary environmental threat. Just two months prior to the protests in Dalian, a chemical plant in Qujin, Yunnan Province, was revealed to have poured 5,000 tons of toxic chemical residue into a nearby riverbed, actions which may threaten the fertility of southern China’s Pearl River Delta.

Economy

China Issues GDP Quality Rating On August 1, China’s main State think tank, the Chinese Academy of Social Sciences, issued the country’s first assessment of GDP quality for its 31 provinces, municipalities and autonomous regions. Using five criteria including economic growth, social development, environmental protection, living standards and governance, the new rating system placed Beijing in the top spot, followed by Shanghai and affluent Zhejiang Province. In contrast to its GDP quality rating, Beijing ranked last in GDP growth for the first half of 2011, which experts have attributed to the local government’s crackdown on the real estate market and car ownership, formerly the capital’s growth engines. The city also plans to move steel conglomerate Shougang Group out of the city in order to reduce urban pollution. Experts said big cities like Beijing and Shanghai have shifted policy towards high-tech and service industries, while many other regions, especially those in China’s impoverished west such as Qinghai and Gansu, continue to struggle for improved GDP growth.

LEADING NEWS, ENVIRONMENT/CFP; BUSINESS/IC; SOCIETY/XINHUA; ANIMAL/FOTOE

In mid-August China’s Guangxi government rolled out a clampdown on pyramid schemes, leading to the implication of over 10,000 people and the arrest of 300 more. Located in southern China, close to the financial hubs of Hong Kong and Shenzhen, Guangxi has seen an explosion of pyramid schemes since the late 1990s. Orchestrators often lured in consumers by emphasizing the province’s status as part of the Sino-Asean Free Trade Region and Beibu Gulf. Meanwhile, rapid urban development also led local residents to rent idle apartment space out to traveling pyramid salesmen who were more likely to pay high rent than migrant construction workers. China’s lack of laws pertaining to pyramid and Ponzi schemes has left local lawmakers in a quandary over how to prosecute those arrested. Meanwhile, many more schemes may have passed under the police radar.

Dalian Chemical Project Forced Out

Animal

Doubts over Hunting Hunting has become a hot topic after an animal hunting committee authorized by the Forestry Ministry recently approved two applications by foreigners for hunting permits. According to the media, applicants plan to kill six bhara and four tibetan antelope in Qinghai Province, prompting an outcry from 70 animal rights organizations that view this preliminary approval as a sign that the government is looking to lift a five-year ban on international hunters. NEWSCHINA I October 2011

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Both applications are pending approval from the ministry. Wang Wei, a Chinese agency specializing in hunting applications, argued in a press conference that restricted hunting allows for better protection of China’s dwindling protected species, though animal rights activists claim that a resumption of international hunting is purely for commercial benefit. Many organizations have called for a public hearing concerning any future approvals, as well as the full disclosure of the details of each application.

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What’s Making China Angry? If Mark Twain was right when he said “Every time you stop a school, you will have to build a jail,” then Beijing city authorities will need to draw up plans for 24 new jails, to match the number of temporary schools for the children of migrant workers that were closed in August this year. Authorities claimed the schools lacked official credentials and were operating “illegally.” The closures have left more than 14,000 children with no access to education – just one of the many rights denied to migrant workers working in the capital. The school closures are part of an ongoing crackdown on unregistered migrant workers by Beijing’s municipal government, which began last year with a blanket ban on the renting out of basements, often used by migrant workers as cheap housing. After netizens responded angrily to the school closures, the city government issued a statement claiming the displaced students would be “channeled into official schools nearby.” What the statement didn’t mention was that most of these youngsters lack the documentation required to register in a public school. Five certificates are needed – including a temporary residence permit proving that at least one of the child’s parents is a legal Beijing resident, as well as documentation proving that the child has no alternative custodian in their hometown. Lacking such essential permits would have been the main reason these children were enrolled in migrant schools in the first place. Source: www.weibo.com

“The city is trying to reduce its population by depriving migrant children of the right to an education. This is evil and foolish. In the 1920s, Beijing’s universities, churches, even police stations, would build schools for the poor, as the whole of society benefits from their education” – Ye Kuangzheng, poet and scholar

What’s Shocking China? Xiao Zeng, a 20-year-old busboy from Hubei Province, had eight stitches removed from a sutured hand wound without anesthetic when, after completing the stitching, his surgeon discovered he couldn’t afford to pay his 1,830 yuan (US$286) bill.

The young man was forced to trawl the streets for a better deal, finally negotiating a bill of 800 yuan (US$125) for the same procedure at a different hospital. The incident has caused anger online at China’s profit-oriented healthcare system.

Most Circulated Post on Sina-Weibo 975,081 times between July 26 and August 18 After two-year-old Xiang Weiyi was found alive in the wreckage of one of the Wenzhou train cars after Ministry of Railways (MOR) officials had called off the search for survivors, Chen Lihao, president of a software company, posted July 26 that he will donate one yuan to Xiang each time someone retweeted his post. Xiang Weiyi was found 21 hours after the crash, which claimed 40 lives. She was discovered crushed under wreckage near the bodies of her dead parents by special

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What’s Amusing China?

unit officer Shao Yerong, who refused to stop searching for survivors despite an order from MOR officials to “speed up the cleanup.” Shao continued to search through the metal debris with his bare hands and found Xiang trapped crouching in a tiny space in the wreckage. Chen eventually donated 1,072,417.20 yuan (US$166,840) to mark the time when the girl was saved – 17:20, July 24. One million yuan (US$155,570) went directly to Xiang, with the rest given to Shao and his colleagues as a reward for their courage and integrity.

An adult Onesie, dubbed “the ball-holding costume” by Chinese netizens, was designed for performers at the opening ceremony of the Shenzhen Universiade to prevent their shirts from flapping upwards during dance performances and revealing bare flesh. Images of people wearing these unusual garments went viral overnight.

Poll the People 195,339 respondents

Are you satisfied with the Ministry of Railways’ handling of the Wenzhou train collision?

Very Much Almost Pah!

1,413 (0.7%) 3,096 (1.6%) 191,146 (97.7%)

Source: www.weibo.com NEWSCHINA I October 2011

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Yao Chen

W ho ’s Ho t?

TOP BLOGGER PROFILE Queen of the Micro-blog

Top Five Search Queries On

over the seven days to August 18

Lives of Omission: Recently aired Hong Kong TV action drama (564,906)

Yes or No: A Thai soap opera about a lesbian affair between college roommates (452,027)

Chinese Valentine’s Day: Blessings for China’s day of romance (lunar July 7) (445,577)

Typhoon Muifa: The super typhoon that swept East China (394,752)

People’s Square Murder: A 38-year-old man killed his 30-year-old girlfriend at a restaurant in a public square in Shanghai (231,139)

NEWSCHINA I October 2011

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Fangzheng County

Yu Shuhua A Chongqing nurse saved a drowning senior’s life by giving him emergency mouth-to-mouth resuscitation but vanished before passersby could speak to her. Microbloggers later discovered her identity and place of work – a nearby hospital.

The county government of this area of northeast China’s Heilongjiang Province

erected a stone monument to Japanese settlers who died during the Empire of Japan’s World War II occupation. Due to a vitriolic opposition campaign launched by netizens from the south of China, the authorities removed the monument August 6.

Wang Keqin An investigative journalist who launched a charity fund to treat more than one million sufferers of miner’s lung in western and central China, many of whom worked in mines without respirators or dust masks. With over 570,000 new cases of the disease reported every year, miner’s lung is China’s most prevalent work-related illness.

Zhao Zijun A government official from Chengdu, Sichuan province discharged from office after flirting with a young female microblogger on weibo. com, unaware that his messages were publicly visible.

W ho ’s No t?

Chinese actress and Internet personality Yao Chen has secured more than 10 million followers on popular microblog Weibo, only two million fewer followers than Lady Gaga’s Twitter account. When the number of Yao’s followers overtook that of TV personality Oprah Winfrey in January, webhost Sina crowned her “queen of the microblog.” Yao is the first nonTwitter-using microblogger among the world’s 10 mostfollowed celebrities, popular for her “honest” remarks, which Sina likened to “texts between old friends.” Yao is also the first honorary Chinese patron of the United Nations High Commissioner for Refugees.

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POLITICS Varying Agendas

Answering the Call Hu Jintao’s recent call for increased Party “vitality” has been met with a varied response, with some localities more eager than others By Li Jingrui

n a nationally broadcast speech in commemoration of the 90th anniversary of the Communist Party of China (CPC) on July 1, President Hu Jintao took the opportunity to outline what he termed “the four threats from within” currently facing the Party, namely decaying morale, regression of officials’ ability, remoteness from the masses and corruption. Hu urged Party officials to “grasp the focal issues of China’s development and make new theoretical development to maintain the Party’s vitality.”

Following Hu’s speech, Party leaders in a number of major provinces and municipalities launched different initiatives to address the issues raised in Hu’s speech.

‘Common Prosperity’ vs ‘Social Construction’

Efforts by two provincial-level leaders, Guangdong Party Secretary Wang Yang and Chongqing Party Secretary Bo Xilai, have been particularly attention-grabbing. Even before Hu’s July 1 speech, the Chongqing municipal authorities had already sponsored a well-publicized seminar entitled “common prosperity and socialism with Chinese characteristics,” headed by none other than Chongqing Party secretary Bo Xilai. On July 20, the concept of “common prosperity” was officially launched during a Party meeting in Chongqing. Based on the idea, the Chongqing municipal government pledged to narrow the “three different types of income gap,” those between the rich and the poor, between urban and rural residents, and between different regions. To achieve this, the Chongqing government pledged to implement a host of wideranging and seemingly ambitious initiatives, some more achievable than others, including raising the average income across all sectors,

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lowering the Gini Coefficient – an income disparity index, to 0.35 from 0.42, reducing the ratio between urban and rural incomes to 2.5, limiting the income ratio between Chongqing’s economic center and peripheral areas to 2:1 and placing 30 percent of all residents with mid- or low-level income in government-subsidized housing. “If the government exclusively focuses on economic development, and is indifferent to people’s woes, we’ll run into a dead end,” said Bo upon the release of these targets, echoing Hu’s speech. Unlike its earlier controversial drive to promote revolutionary songs, Chongqing’s initiative of “common prosperity” has won considerable support among local residents, as well as numerous experts. Income disparity is one of the most serious social problems facing China. Wang Weiguan, vice-president of the Chinese Academy of Social Sciences, for example, urged that all parts of the country follow Chongqing’s example in redressing the wealth gap. Bo’s concept of common prosperity has been developed in part from his earlier assertion that “fairness in sharing the cake is more important than making the cake bigger,” referring to the relationship between social justice and economic development. However, Guangdong Party Secretary Wang Yang seems to have a different opinion. In a local Party meeting on July 10, Wang said that the government’s focus should remain on “making the cake bigger.” “How to divide the cake is not our chief concern at present,” Wang said. Instead of “common prosperity,” the Guangdong government placed “social construction” at the center of its agenda, indicating that government powers should be largely delegated to social (non-governmental) organizations, therefore helping create a “limited govern-

“Fairness in sharing the cake is more important than making the cake bigger.”

ment” and in turn, a “larger society.” According to Professor Xiao Bin from the Institute of Political and Public Administration at Sun Yat-sen University, both the Guangdong and Chongqing approaches can be traced back to ideas first put forward by Deng Xiaoping, the architect of China’s reform and opening up. When much-needed reform of China’s economy was impeded by Leftist ideology in the late 1970s and early 1980s, Deng responded by stating that the country should allow “Some people to get rich first,” and let the wealth we generated trickle down, thereby ending the ideological wrangling that had stymied China’s attempts at reform. Deng’s ideas later became the guiding principle of the Party. “While the Guangdong approach still focuses on the first half of Deng’s assertion, the Chongqing approach focuses on the latter half,” said Professor Xiao. “Both approaches reflect efforts to initiate reform within the current political framework. Currently, the top leadership has not shown a definite preference for either of the approaches. It will not be clear which approach is the most approach until after the 18th Party Congress is convened in 2012.” Xiao also told NewsChina that the policies developed in Guangdong and Chongqing are by no means surprising. In Guangdong, NEWSCHINA I October 2011

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Photo by She Ying/CFP

Chongqing residents line up to apply for subsidized houses on February 12, 2011

where labor-intensive industries have come under pressure due to increasing costs and a stronger Chinese yuan, the government has struggled to maintain a healthy economy. In Chongqing, a mountain-encircled and relatively economically backward municipality, it remains near impossible to compete economically with the country’s costal areas such as Guangdong and Shanghai. According to Professor Xiao, this has resulted in Chongqing having to choose its own unique approach in order to “stand out.”

Party Class

In addition to Guangdong and Chongqing, other provinces and municipalities have also looked to develop their own responses. In Shanghai, Party Secretary Yu Zhengsheng chose to give a special “Party class” to more than 5,000 college students and faculty, who were either Party members or aspired to join, NEWSCHINA I October 2011

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at Shanghai Jiaotong University. In a widely reported speech, Yu offered his interpretation of the success and problems of the Party in its development over the decades while also discussing Western political systems and addressing a range of sensitive topics such as the Cultural Revolution and the evaluation of the late Chairman Mao Zedong. Although Yu’s points of view did not deviate too far from the Party line, the fact that he openly talked about sensitive issues indicates that the Party may have to face up to its own history in order to remain “vital.” “The Party will have a bright future if the Party is strong and can redress its own mistakes; if the Party is weak, it has no future,” Yu said in answering a question on the Party’s future. According to Yu, the future lies in “seeking a breakthrough in the institutional framework in which the Party is subject to the supervision of the people and society.”

Some local Party leaders, but appeared less ideology-driven, also provided their own answers to Hu’s call for maintaining the Party’s vitality. In Wuhan, capital of central China’s Hubei Province, for example, Party Secretary Ruan Chengfa launched an “anti-mediocrity” campaign, aimed at shaping Wuhan into the country’s “most efficient and cost-effective city with the least red-tape.” In Hunan Province, central China, 29 high-ranking officials were removed from their posts for negligence or inefficiency in an apparent effort to make the Party more accountable to the public. According to Professor Wang Yukai, vicepresident of Chinese Public Administration and Reform Society, preference for different approaches among local governments has relied largely on the personality of powerful local officials. “But the consensus is that reform has become imperative to prevent major upheaval in China,” Wang told NewsChina. 

8/25/11 5:29 PM

COVER STORY

12 P12-23Oct2011.indd 12

NEWSCHINA I October 2011

8/25/11 5:29 PM

While the repatriation of Chinaâ&#x20AC;&#x2122;s number one fugitive Lai Chanxing has given anti-corruption hawks something to crow about, thousands more are absconding with billions in embezzled public funds every year. NewsChina exposes the scale of this white collar exodus, and asks if the nature of its governance means that China has already lost the war on corruption

NEWSCHINA I October 2011

P12-23Oct2011.indd 13

13 8/25/11 5:30 PM

COVER STORY China’s Most Wanted

ONTHERUN

Lai Changxing’s repatriation to China has renewed public interest in the growing number of so-called“runaway officials,”corrupt businessmen and government officials who flee the country with millions in public funds By Xie Ying and Yu Xiaodong

14 P12-23Oct2011.indd 14

NEWSCHINA I October 2011

8/25/11 5:30 PM

Photo by CFP

NEWSCHINA I October 2011

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fter 12 years on the lam, Lai Changxing, China’s most infamous fugitive, was at last returned to the country of his birth and into the hands of the Chinese authorities, after being officially repatriated by the Canadian government on July 23. As founder and chairman of Yuanhua International Corporation, Lai presided over an elaborate economic trading network that specialized in importing restricted foreign products such as cars and cigarettes. Such was the vastness of Lai’s empire, that at its height, the company is thought to have been responsible for up to one-sixth of China’s national oil imports, while its profits are believed to have totaled in excess of 50 billion yuan (US$7.7bn). Operating out of the company’s base in Xiamen, Lai, or “Fatty Lai” as he is occasionally known, is alleged to have avoided 30 billion yuan (US$4.6m) in tax. That sum, together with the company’s valuation, was equivalent to one-tenth of the country’s gross national revenue in 1999. Such huge figures alone are enough to have earned Lai the title “China’s most wanted fugitive,” but the sums involved represent only part of the case. Conservative estimates put the number of those implicated in Lai’s smuggling ring as high as 600, including 70 who have fled the country. Among them are scores of high-ranking government officials. Lai’s multi-million dollar seven-storey “Red Mansion” in the costal city of Xiamen, is so named due to its resemblance to a house in the classic Dream of the Red Chamber, and now serves as an anti-corruption educational center. Here, Lai reportedly hosted over 2,000 government officials at various times during the mid to late 90s. Upon arriving at

the mansion, guests were treated to an array of vintage wines, expensive foods and sexually available hostesses: the higher an official’s title, the more extravagant the reception on offer. It is no surprise that even today, mention of Lai’s case is liable to create a stir in certain circles, as Lai himself has said, “[if I return] many government officials will not be able to sleep. Incidents will happen.” Yet that has not stopped the government from dubbing Lai’s return a victory for China’s anti-corruption campaign. “Lai’s arrest has conveyed the justice of law, and should ring the alarm for other economic criminals who have fled abroad,” exclaimed the Ministry of Public Security. Not that this is the first case of its kind. As early as 2004, another “milestone” case was met with similar fanfare, only to fade quickly into relative obscurity. In the then highprofile case, Yu Zhendong, a former Bank of China district director, was turned over to Chinese authorities by the US and later sentenced to 12 years in prison for embezzling hundreds of millions of US dollars. “There is no safe harbor for fleeing officials,” commented the State-owned People’s Daily on announcing the verdict. However, despite claims to the contrary, China has witnessed a dramatic surge in the number of corrupt officials who have fled overseas during the last decade.

Endemic Corruption

In a July report advocating increased government efforts to help combat fugitive officials, the State-owned People’s Daily cited data from the Chinese Academy of Social Sciences (CASS) and the Disciplinary Commis-

8/25/11 5:30 PM

COVER STORY

Whoâ&#x20AC;&#x2122;s Getting Away With What: Province-by-Province Breakdown, 1992-2007 Beijing

225

Funds transfered (US$bn)

122

Provincial GDP in 2006 (US$bn)

Hebei

340

Shanxi

236

Number of officials who have fled abroad 367

56.1 3.1 1.7 61.3 11.7

Jilin

2.6 55.1 8.5

Heilongjiang

230 206

80.3 25

Shanghai

Jiangsu

313 142

8.6

Zhejiang

Anhui

3 79.4 36.5

Fujian

480 125 352

Jiangxi

2.6 60.6 15

Shandong

124 365

Henan

5 6

Hubei

300

Hunan Guangdong

1,640 217

175 144

Hainan Chongqing Sichuan

62.1 2.7 13.6 1.8 45.2 5 6

Yunnan

238 146 260

5.5

Guangxi

140

P12-23Oct2011.indd 16

1.4

Liaoning

117

Tianjin

2.5

Shaanxi Xinjiang

51.7 2.8 56.7 3 38.8 NEWSCHINA I October 2011

8/25/11 5:31 PM

007 100.1

150.2

61.3 119.6

80.3 133 278.4 202.2 79.4 97

60.6 282.3 161 96.9 96.8 155

62.1

111.6

NEWSCHINA I October 2011

P12-23Oct2011.indd 17

sion of the CPC, in which it was claimed that over 4,000 corrupt officials had fled abroad since 1980, taking with them a combined total of US$50 billion in public funds, or US$12.5 million per person. The report led to widespread public anger, later leading the newspaper to issue an open apology, claiming that the data was mistakenly drawn from an “unconfirmed online source.” However, the data was in fact widely available, having been originally revealed in 2004 in the Legal Evening newspaper, which credited the figures to the Ministry of Commerce. The ministry denied all knowledge of the data in 2010. The apology did little to quell the public mood, and instead acted to draw further attention to supposedly “erroneous” data, leading many to suspect that the number of fleeing officials was in fact far higher than the available data suggested. Two months ago, a report commissioned by the People’s Bank of China (PBC) into corruption-related financial issues appeared to corroborate such doubts. According to the report, an estimated 16,000 to 18,000 corrupt officials have fled abroad since 1992, taking 800 billion yuan (US$123bn) in public funds. Although the writer of the report made an open apology soon after the report was issued, claiming the data was collected online and never confirmed, a research team at Peking University reached a similar conclusion in 2009, this time placing the estimate at 10,000 fugitive officials, with a combined total of 650 billion yuan (US$100bn) in public funds since 2001. Although the government has neither confirmed any corruption-related data nor 335.5 publicized official statistics of its own, information drawn from provincial sources offers something of a glimpse into the true scale of the problem. For example, between 1992 to mid 2007, 1,640 officials absconded from prosperous Guangdong Province alone, taking with them a combined total of US$155 billion, almost half of Guangdong’s GDP in 2006. In Fujian, another prosperous coastal province, 480 officials fled during the same period, taking US$36.5 billion, almost 40 percent of the province’s GDP in 2006. The annual working reports of the Supreme People’s Procuratorate, the country’s highest legal agency, offer further proof. AcSource:Agencies cording to the reports, the annual num-

8/25/11 5:31 PM

COVER STORY ber of wanted officials has increased to over 1,200 in 2010 from several hundred in 2000, while stolen funds have increased from dozens of billion yuan from several hundred million yuan 10 years ago. A report issued in 2008 by the US-based Chinese language newspaper, The World Journal, claimed California police had revealed that China has provided US law enforcement agents with a list of over 1,000 corrupt Chinese officials currently in the US, most of whom had transferred more than US$10 million in assets into US accounts.

Getting “Naked”

The notion of a corrupt official fleeing the country has become so commonplace that a new term, luoguan or naked official – has been coined to describe the phenomenon. The tem refers to officials whose close family members have emigrated to other countries, and whose wealth has also been transferred (often illegally) overseas. By having their families legally emigrate to other countries and obtaining official residency status, officials are able to join their families should a sudden anti-corruption investigation occur, or when they simply feel that they have obtained enough wealth. “Faced with the lingering threat of potential repercussions at home, a foreign country is a safer place for corrupt officials to enjoy their ill-gotten wealth,” said the PBC report. Among the most high-profile corrupt officials to have fled the country is Jiang Jifang, the former director of the Henan Tobacco Bureau, who along with over 200 million yuan (US$30.8m) in public funds, joined his wife and daughter in the US after being tipped off about an upcoming investigation into illegal tobacco transactions. A more recent case is Yang Xianghong, the Party secretary of Lucheng district in Wenzhou, Zhejiang, who refused to return to China after an official trip to France in 2008, insisting that a medical condition prevented him from flying. Similar to Jiang, Yang is a typical “naked” official, whose daughter was granted permanent French residency two years before his arrival. In an effort to prevent naked officials from fleeing, the central government has issued several decrees over the past year, tightening travel controls for officials, and requiring certain high-ranking officials to periodically report the

P12-23Oct2011.indd 18

Ideal Locations

The destinations of choice for fleeing officials percentage of fugative officials who work in the financial sector, State-owned or governmentbacked enterprises Source: Chinese Academy of Social Sciences

whereabouts of their family members. However, few believe the measures will prove to be effective. “For the right money, anyone can fake an identity card or passport,” an anonymous businessman who has engaged in the sales of faked ID cards and travel certificates told NewsChina. “You can even get a real identity card or a passport under an assumed name so long as you have the right connections.” According to the PBC report, it is not uncommon among powerful Chinese officials to have several identity cards or passports. For example, Gao Yan, the former Party secretary of Yunnan Province who fled to Australia in 2002 to escape charges of corruption, was reportedly in possession of at least three different identity cards, four passports and one certificate granting entry to Hong Kong and Macao, while Chen Liangyu, the former Shanghai mayor who was sentenced to 18 years in prison for corruption in 2008, is alleged to have held as many as seven different Western nationalities. Fleeing officials will typically transfer huge funds overseas through numerous illegal trade routes and underground financial organizations. Xiao Yang, the former president of the Supreme People’s Court, revealed in his book Anti-Corruption Report that from 1988 to 2002, US$191 billion in public funds were transferred illegally out of China, equivalent to US$12.8 billion a year. Research carried out by the State Administration of Foreign Currency has indicated that about US$10 billion in public funds were illegally transferred abroad from 1997-1999, while Fan Gang, the director of the National Economy Research Institute gave a much higher figure, estimating that in 2000 alone, China lost US$48 billion, US$7.3 billion more than the total foreign investment that year.

The US, Canada, Australia and Europe: Owing to their combination of robust legal systems, high standards of living, multiple investment opportunities and a lack of formally recognized extradition treaties, Western countries have become the destination of choice for high-ranking officials keen to transfer large sums of money. Africa, Latin America and Eastern Europe: Lax visa policies, loose governmental regulations and a lack of any formally recognized extradition treaties, make smaller typically less developed countries ideal safe havens for fleeing criminals. Ecuador, Ukraine and Kenya are thought to be among the most popular destinations. Thailand, Myanmar, Singapore, Mongolia, Malaysia and Russia: Popular among low-ranking officials with smaller amounts of funds, neighboring countries offer easy access to visas and low living costs. British Virgin Islands, Cayman, Bermuda, Samoa, Hong Kong and Macao: Considered ideal transfer locations, off shore investment hubs provide feeling officials with a variety of money laundering options. Hong Kong residency offers the added advantage of lighter visa restrictions for British Commonwealth nations. Source: People’s Bank of China

According to the PBC report, most fleeing officials prefer to transfer their assets via Hong Kong or Macau. In 2002, the Hong Kong Independent Commission against Corruption smashed a cross-border underground money laundering group which had reportedly laundered a total of 50 billion Hong Kong dollars (US$6.2bn) in stolen or embezzled public funds between 1996 and 2002. “China is now home to roughly 1.18 million suspected ‘naked’ officials, over 30,000 per province,” Lin Zhe, a professor of the Party School of the CPC Central Committee told Global People magazine last year. “Worse still, few provinces have worked out effective measures to supervise them,” she added.  NEWSCHINA I October 2011

8/25/11 5:31 PM

China’s Most Wanted

MISSION UNACCOMPLISHED Despite several cases of high-profile economic criminals being successfully brought back to China to stand trial, the majority of fleeing officials, along with large sums of public money, remain at large, mostly in Western countries

Photo by Zhang Jianxin/Xinhua

By Yu Xiaodong

Lai Changxing is taken into custody after being repatriated from Canada, July 23, 2011 NEWSCHINA I October 2011

P12-23Oct2011.indd 19

ulti-million dollar properties, unrestrained gambling and long costly lunches of fresh abalone and shark fin soup -- such was the life of Lai Changxing during his initial few years in his adopted home of Canada. Like many of the economic criminals who have fled China in recent years, Lai’s lifestyle was extravagant to say the least. But, unlike the majority of fleeing officials and corrupt business people, Lai has been extradited back to China. Thousands more are still at large. Compared with China’s neighboring countries which usually attract lower-ranking officials that are on the run due to easier and quicker access, Western countries like the US and Canada remain the preferred destination for senior officials involved in large-scale corruption cases. In cities such New York, Los Angeles, Vancouver and Toronto, the number of disgraced Chinese officials and economic fugitives is so large that many have formed their own communities, heaving with well-heeled wives, mistresses, friends and family members. “I am surprised that there are so many rich Chinese children around me – they’re noticeable because they change their car each year,” Liu Juan, a Chinese student in Toronto told NewsChina. “I know many of them are from government families, though I have no clear idea whether or not their wealth was obtained legally.” “Boasting developed economies and totally different legal systems, Western countries provide a high-standard of living and su-

8/25/11 5:31 PM

COVER STORY superior consume options,” explained Huang Feng, an expert on international criminal law from Beijing Normal University. However, for China’s rich fugitives, one important reason to seek sanctuary in the West is their lack of formal extradition agreements with China. “Western countries have considerable misunderstandings, prejudice and distrust when it comes to China’s legal system,” said Professor Feng. The result is that these fugitives often portray themselves as victims of an allegedly unjust legal system to win sympathy from Western governments. The situation is perhaps best encapsulated by Lai, who after entering Canada on a tourist visa in 2000, applied for political asylum. Although the Canadian authorities denied his application and identified him as an illegal immigrant, Lai claimed that he would face torture and execution in China, and made repeated appeals for over a decade. In the process, the case became undeniably politicized, with neither side willing to back down.

Death Penalty

One major obstacle to any future extradition agreements between China and Western countries is the existence of the death penalty in China. Currently, all 27 EU member states as well as Canada, Australia and New Zealand do not practice capital punishment. To deal with this problem, China has long pledged to refrain from executing fugitives who are repatriated. In a high-profile case in 2004, Yu Zhendong, a former Bank of China branch director, was repatriated from the US on the understanding that China would not apply the death penalty. Yu was later given a jail term of 12 years, a rather light sentence by Chinese standards, given the sums of money involved (US$480m). Under China’s criminal law, an occupational crime involving amounts over 100,000 yuan (US$15,600) is subject to a minimum jail term of 10 years. Being one of the first repatriated fugitives from a Western country, it is believed that Yu’s case was intended to set a precedent, in order to help ease concerns in the West over the issue of capital punishment. In 2007, China signed an extradition deal with Spain, the first of its kind with a Western country, followed by later agreements with

P12-23Oct2011.indd 20

ILL-GOTTEN GAINS Fleeing Chinese Officials, by Numbers

Name

Former position

Age

Fle

Lai Changxing

Founder and chairman of Yuanhua Group, Xiamen

Can

Yang Rong Xiao Hongbin Yu Zhendong

President of the State-owned Huachen Group, Shanghai President of the State-owned Dadongjiang Industrial Co.,Ltd., Shanghai President of a Guangdong branch under the Bank of China

43 38

Aus US

Huang Qingzhou Gao Shan

Vice general manager of the Hong Kong branch under Guangdong International Investment Corp. President of a Helongjiang branch under the Bank of China

Tha

Can

Qian Hong

President of the State-owned Kangtai Group, Shanghai

Pan

Zhong Wujian

President of the wholsale market of Hainan

Can

Xu Xiaoxuan

Rubber Center Manager of the State-owned Bamin Eelectric

Aus

Chen Manxiong

Equipment for Communications Co., Ltd., Fujian General manager of the State-owned Zhongshan

Tha

Industrial Development Corp., Guangdong

Yang Xiuzhu

Vice-director of Zhejiang Construction Agency

Jiang Jifang

Director of Henan Tobacco Monopoly Administration

Ding Lan

Director of a Beijing branch under the

Tha

Bank of China

Yu Zhi’an Liu Zuoqing

President of the State-owned China Chang Jiang Energy Corp. General manager of the State-owned petroleum

Lu Haiying

company of Heilongjiang Province General manager of State-owned Yunnan

Security Agency

“Ph

NEWSCHINA I October 2011

8/26/11 12:23 PM

Fled to

Current status

Canada

repatriated

7,700

at large

1,076

Australia US

repatriated, sentenced to 15 years in prison repatriated, sentenced to 12 years in prison

760

Thailand

repatriated

166

Canada

at large

129

Panama

arrested overseas

Canada

at large

Australia

repatriated

Thailand

repatriated, sentenced

to life imprisonment

at large

Thailand

arrested in Thailand,

Embezzled Fund (US$m)

483

Lai Changxing

Gao Shan

Yu Zhendong

already exectuted

â&#x20AC;&#x153;Philippinesâ&#x20AC;?

at large

Yang Rong

Jiang Jifang

Yang Xiuzhu

Source: Chinese Academy of Social Sciences NEWSCHINA I October 2011

P12-23Oct2011.indd 21

Portugal, France, and Australia. In all the agreements, China has either pledged not to seek death penalty during trial, or not to apply it if one is metered out. However, these measures are controversial within China, with some arguing that unequal treatment between those caught at home and those repatriated not only violates the principle of equality under law, but may also encourage corrupt officials to flee abroad. Maintaining that priority should be given to bringing fugitives to justice, the authorities have further moved to reduce the number of executions at home. Last year, China moved to remove 13 crimes from the capital offense list, a move considered to pave the way towards dropping white-collar crimes from the list, a prospect public opinion remains overwhelmingly against.

Low Catch Rate

According to Zhu Wenqi, a professor with Renmin University and a former prosecutor at the International Criminal Tribunal for the Former Yugoslavia, China has also tried to promote other strategies in bringing them to justice, such as suing fugitives in their host countries via judicial cooperation with foreign governments. In May 2009, two of Chinaâ&#x20AC;&#x2122;s most wanted, former Bank of China executives Xu Chaofan and Xu Guojun, were convicted in the US of organized corruption and sentenced to 25 and 22 years in prison, respectively. They were also required to pay the Bank of China US$482 million in losses, while their wives were also sentenced to 8 years in prison. It is the first case in which China has asked for judicial assistance since the two countries signed an agreement on Mutual Legal Assistance on Criminal Matters in 2000. China also signed the United Nations Convention Against Corruption (UNCAC) in 2003 and strengthened its cooperation with Interpol. According to Professor Zhu, several major repatriation cases have been made possible through cooperation with Interpol. However, these occasional successes pale in comparison with the number of futigives currently on the run. There is no official data available relating to the number of crime suspects repatriated from foreign countries. The nearest to an official figure comes in the form of a report

8/25/11 5:34 PM

COVER STORY from the State-run media outlet, Xinhua, which claims that a total of 90 economic fugitives were repatriated from 2005 to 2006. However, not only is this number a tiny fraction of the identified fugitives (see graph on page 20-21), most of them listed were not repatriated from Western countries. In the past decade, around a dozen successful repatriation cases have been reported. Following Lai’s arrest, details of two more repatriation cases this year also emerged this year. One includes a former executive of a State-owned enterprise repatriated from Germany over allegations of embezzling upwards of US$235,000. The other, who is reported to have turned himself in after running out of money in an unspecified European country, is the driver of Yang Xiuzhu, a senior official, who was arrested by Dutch authorities in 2005. The small-fry status of both suspects betrays the weakness of the ongoing campaign. Moreover, if bringing fugitives back has proved difficult, returning assets and funds

22 P12-23Oct2011.indd 22

to China has been even harder. In Lai’s case, for example, little is known about the whereabouts of his wealth, alleged to total over 3 billion yuan (US$4.7 bn). “Fleeing officials will generally bring huge funds with them, which for their destination country means new investment. That’s part of the reason why these countries would rather turn a blind eye,” said Professor Huang. According to Professor Zhu, China is reluctant to file a civil lawsuit in foreign countries in the name of the Chinese government, as this would effectively mean abandoning the immunity granted to sovereign states and put China in the dock.

Domestic Measures the Key

Given China’s low success rate in both locating and securing the return of fleeing officials, many are now calling on the government to focus on more preventative-style measures. According to a 2003 Xinhua report, between September 30 and October 1 2003, a total of 51 fleeing officials were intercepted at

customs. In the following five days, an additional 64 fleeing officials were also intercepted, many of whom were carrying large sums of money. The result was achieved through temporarily swapping customs agents between different localities, suggesting that official corruption extends deep into the border control authorities. Professor Huang told NewsChina that he recently checked information relating to more than 200 economic fugitives from a single province. Only 10 of them are known to have left the country via an official border crossing, the whereabouts of the rest remain unknown. Huang suspects that many of them have fled the country. “The real number of fled officials is beyond comprehension,” said Huang. In recent years, the Chinese government has repeatedly stressed that it has been working on a network to prevent economic criminals from absconding. But in the absence of related statistics, the results of these efforts remain unclear. 

NEWSCHINA I October 2011

8/25/11 5:34 PM

POLITICS Xinjiang Attacks

The Bloody Weekend

Two gruesome attacks on civilians in Kashgar spread further unease in volatile Xinjiang

Photo by Cao Zhiheng/Xinhua

By Cheng Yongsun in Kashgar and Yu Xiaodong

The burned-out remains of a Hotian police station, Xinjiang after the attack, July 18, 2011

“I

thought it was a car accident,” �� re� marked Wang Wenhai, a resident of Kashgar in the �� far west of Xin� jiang. On July 30, he told our reporter he saw a truck smash into a real estate company’s sales office. “I realized it was something else when people started screaming for help and fleeing the scene.” According to State media, two Uyghur men hijacked a truck waiting at the lights and killed the driver. They then drove the truck into a crowd on the street, climbed out of the wrecked vehicles and began hacking at the survivors with knives. Six people were killed and 28 were injured in the attack. As police NEWSCHINA I October 2011

P12-23Oct2011.indd 23

and passersby attempted to subdue the at� tackers, one was killed and the other arrested. Located in the far-flung western region of Xinjiang,�� and close to the border with Paki� stan, Kashgar, an ancient outpost of the Silk Road, has become a flashpoint for violence between Uyghurs, Xinjiang’s largest ethnic group, and Han, China’s dominant ethnic group. Police investigators connected the attack with the explosion of a minivan two hours before which had taken place five miles away from the scene of the knife attack. State media only briefly reported the explosion, providing no details. But according to a report by Hong

Kong-based newspaper Ming Pao, explosives were found inside the minivan along with the body of�� a young�� Uyghur�� killed in the explo� sion. Two additional suspects had reportedly fled the scene, and were later named as coassailants in the knife attack. It is now believed that the attackers had originally planned a car bombing, but their explosive�� s had�� de�� to�� nated prematurely�� , lead� ing to the ill-conceived knife attack. While details of the knife attack were still emerging�� , local media reported another at� tack in the same city the following day, July 31. This time, the target was a small barbecue restaurant in downtown Kashgar, which

8/25/11 5:34 PM

was attacked by a group of men armed with knives at around 4:30 PM. When our NewsChina reporter �� arrived �� at the scene, �� blood� stains on the ground could still be seen behind the police cordon. Fan Chuncheng, a local �� storekeeper�� , wit� nessed the attack. “Every one of them wielded knives�� and they stabbed and hacked �� at every� �� one they could get hold of,” he told NewsChina. State news agency Xinhua later reported that�� the attack had �� involved �� 12 Uyghur sus� pects, who first hurled an explosive device into the restaurant before attacking staff, customers and passersby. Six people were reported killed and 12 were injured. Police then arrived at the scene and shot four of the attackers dead and arrested four others. The remaining four men fled the scene, and two were shot dead by pur� suing police the next day. The two surviving men remain at large. According to Xinhua, three police officers were reportedly injured in the attack. It was later announced that one of the�� detained�� sus� pects had died in hospital.

Serial Attacks?

After the second attack on July 31, the Xin� jiang authorities officially classified both in� cidents as “terrorist attacks.” An official state� ment claimed that the assailants involved in the first attack had been trained in Islamist extremist camps in neighboring Pakistan. According to State media, in an�� earlier at� tack on a police station in Hotan, 300 miles to the southeast of Kashgar on July 18, 18 attack� ers raided a local police station. After hurling explosives at the officers on duty, killing three and severely injuring two others, the suspects took six policemen and �� a group of �� local civil� ians hostage, �� refusing to surrender when se� curity forces arrived. Armed police later shot dead 14 attackers and captured the remaining

“The actions of radicals do not represent Kashgar’s residents, nor do they represent the Uyghur people, and these acts are intolerable.” 24 P12-23Oct2011.indd 24

Photo by China News Service

POLITICS

Policemen confront assaillants inside the police station, Hotian, Xinjiang, July 18, 2011

four. One police officer was killed in the c�� ross� fire and two more were injured. “By randomly killing innocent people, their purpose was to terrorize the local community,” said Pan Zhiping, director of the Institute of Central Asian Studies of the Xinjiang Acad� emy of Social Sciences. In Pan’s view, the twin Kashgar stabbings and the raid on the Hotan police station were masterminded by Uyghur separatists. Pan believes�� these attacks are the continua� tion of attacks carried out by militant groups in the last three decades which culminated in rioting in the provincial capital Urumqi on July 5, 2009, in which more than 200 people were killed, mostly Han Chinese. Despite ongoing tensions between ethnic Han and Uyghur Muslim communities in the region, local Uyghurs have tried to distance themselves from violent �� extremism. “�� The ac� tions of radicals do not represent Kashgar’s residents, nor do they represent the Uyghur people, and these acts are intolerable,” 60-yearold Mehmet Petimem told NewsChina. After Soviet troops�� withdrew from�� Afghani� stan in 1987 and with the independence of several former Central Asian Soviet republics in the following years, Xinjiang witnessed a spate of bombings and attacks launched by ex� �� tremists seeking independence from Chinese rule. It is estimated that more than 200 attacks on both civilian and military targets occurred in Xinjiang between 1990 and 2001, resulting in 162 deaths and hundreds of injuries.

A crackdown on extremism by the provin� cial government led to a lull in attacks between 2003 and 2006, but extremism resurfaced in the run-up to the Beijing Olympics in 2008. On August 4 of that year, a bomb attack on a border patrol unit of the armed police force killed 16 police officers and wounded another 16. Compared to the attacks in the 1990s, which usually targeted law enforcement and individual official families, recent attacks have been consciously aimed at both police and ci� vilians. “It may mark a change of strategy,” Pan Zhiping told NewsChina.

Ethnic Tension

A change of strategy has also been seen in the response of security forces to such attacks. During the July 5 riot in 2009, security forces were widely criticized for their slow and hesi� tant reaction in the initial phase of the rioting. Following the deadly July 5 riot came a bizarre spate of syringe stabbings targeting a total of 531 �� local residents�� , again mostly Han Chi� nese. This further enraged Han residents and led to large-scale demonstrations that finally forced Urumqi’s police chief Chen Zhuangwei and Party Secretary Zhu Lun to step down. The most recent attacks have seen a much more heavy-handed response from security forces, who are reported to have shot dead a total of 21 suspected terrorists. Following the recent attacks, security has been tightened in both Kashgar and Hotan, as well as in the NEWSCHINA I October 2011

8/25/11 5:35 PM

Photo by Xinhua

The police station after the attack, July 18, 2011

capital Urumqi. Law enforcement personnel were seen posted at checkpoints checking IDs while police vehicles patrolled the streets, urg� ing residents to return home before dark. Few believe, however, that a show of force by security personnel will solve the ethnic problem at the heart of Xinjiang�� ’s urban com� munities�� .�� Despite the rapid growth of Xin� jiang’s GDP in the last decade, the income gap between Han Chinese and ethnic Uy� ghurs has also widened. Many Uyghurs feel their traditional culture is being displaced by Han migration, and those without Chinese language skills are finding it increasingly diffi� cult to find work. A minority separatist move� ment, inspired in part by similar extremist cells in neighboring Pakistan and Afghanistan, has remained active in Xinjiang. According to Li Wei, an expert on terror� ism studies with �� the �� China Academy of Con� temporary International Relations, China has adopted a two-pronged strategy to combat extremism, attempting to tilt local economic policy in favor of the Uyghur majority and maintain pressure on known extremists. How� ever, there is no evidence as yet to show this strategy is working.

New Approaches

The bulk of economic development in Xin� �� jiang, particularly the expansion of mining and oil drilling, has benefited China’s east coast more than the local economy, with many Uyghurs alienated by the perceived�� exploita� NEWSCHINA I October 2011

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tion of the�� ir�� local resources, the increasing im� migration of Han Chinese into Xinjiang, and the widening income gap between impover� ished Uyghurs and generally more affluent Han Chinese. Following the 2009 Urumqi riots, which forced the resignation of Party Secretary and de facto governor Wang Lequan in April 2000 after a�� 14-year tenure, the Chinese govern� ment has made various efforts to redress these grievances through economics. A resource tax, for example, has been levied on the consumers of resources from Xinjiang, raising local gov� ernment oil revenues. In 2010, the Xinjiang government spent over 100 billion yuan (US$15.6bn) or 60 percent of its expenditure on establishing an effective welfare system, including unemploy� ment and pensions benefit, as well as a scheme to provide free medical care to local residents with middle- and low-level income. Accord� �� ing to official statistics, in 2010, the average personal income of rural Xinjiang residents increased by 15.9 percent, 5 percent above the national average. However, the Chinese government still has a long way to go to placate this restive region. Turvjan Tursun, associate professor at the �� Xin� jiang Academy of Social Sciences, for example, is critical of the so-called “high pressure” policy on extremists. “The policy tends to alienate common Uyghur people,” he told Caijing magazine, adding that the “mishandling of religious issues,” which often sees officials

equate Islam with extremism in anti-terrorism campaigns, may help recruit extremists to the separatist cause. Even with the government’s modifications to wealth distribution, many Uyghurs resent having to rely on handouts instead of being involved in the economic and political deci� sion-making in Xinjiang, which is officially one of China’s Autonomous Regions. Many academics�� ,�� both�� Uyghur and �� Han, �� have �� ad� vocated greater involvement of ethnic Uy� ghurs in cultural and political policy, to give the region’s ethnic majority a meaningful role in society. Several such initiatives are underway. It is reported that the Xinjiang government has started to appoint ethnic Uyghur officials as township chiefs, with the next step said to be allowing Uyghur officials to become county chiefs. In addition, the Xinjiang government will sponsor more religious schools, addressing a major complaint of Muslim communities. “Many of Xinjiang problems, despite being magnified by the region’s particular religious and ethnic diversity, echo throughout China, such as the redistribution of wealth and po� litical power, and the treatment of traditional values,” commented the Caijing report. However, according �� to Pan Zhiping, Xin� �� jiang remains volatile for the time being. “In the foreseeable future, large-scale attacks are unlikely, but smaller ones�� ,�� like the recent at� tacks�� ,�� remain �� highly possible,” he told our re� porter. 

8/25/11 5:35 PM

SOCIETY Public Hearings

Familiar Farce, Familiar Face 64-year-old Chengdu resident Hu Litian, whose prominent presence at a total of 23 public hearings as a “public representative” has already seen her labeled a government plant, has continued to frustrate netizens with her outspoken support of unpopular policies By Pang Qinghui in Chengdu

u Litian has yet to enjoy a quiet retirement. Her name has been drawn as a “citizens’ representative” for public hearings, a highly stage-managed government “listening exercise” that debates minor policy changes, a total of 18 times in seven years, casting doubt on the fairness of the “lottery” used to select candidates. These public doubts, coupled with Hu’s belligerent, pro-government hectoring at prominent public hearings, has swiftly drawn the ire of Internet critics. Called “a blatant stunt” and “a government con artist,” Hu is hardly a paragon of social justice. As one netizen wrote, “we don’t want to be represented by her,” adding that Hu’s frequent appearances are notable for her almost universally pro-government stance. Born in the late 1940s, Hu has known nothing but a Communist government, and is candid about subscribing to the view of Mao’s first generation that “people should follow the government because the government provides for them.” Hu claims to have been present at 23 hearings, also claiming neutrality in her views. “I absolutely do not ‘blindly’ support the government,” she said.

Addict

Hu remembers the details of each public hearing she has attended with remarkable clarity. She first heard of public hearings in January 2002, when the Chinese government called a national-level “listening exercise” to debate the price of railroad tickets. “It is interesting that ordinary people can argue with government officials over such affairs,” she said. She then applied to attend a local hearing on the cost of bus passes scheduled for the following year, but failed to be selected in the lottery.

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The next opportunity presented itself in 2004 when an organizer of public hearings found her personal information in the government database and invited her to attend a local hearing for a discussion over a ticket price rise for two local tourist sights. Since then, hearings have become Hu’s hobby. So far, she has applied to participate in more than 40 hearings and, rather surprisingly, been “randomly” selected to attend 23. “I love debate. I love everything that makes winners and losers,” she explained to NewsChina. Her time outside the debating hall is spent scouring the local media for details of future hearings. Initially, Hu did not own a cellphone and she stayed at home for days afraid she would miss any call notifying her of a hearing. She would watch the lottery draws closely, claiming her intention was to “ensure fairness.” “I won’t attend any hearing concerning an issue I know nothing about,” she told NewsChina. Once selected, Hu takes her homework seriously by reading local newspapers and noting down the quoted opinions of experts and local residents relating to whatever issue is up for discussion. When she fails to be chosen as an official representative, she approaches those selected beforehand, asking them to convey her opinions to the panel. Hu talks about hearings like a college student discussing varsity debating. “It is really thrilling for me to confer with the other representatives and launch counterattacks against the opposing side,” she told NewsChina.

National Level

Despite being a fixture at local public hearings, Hu’s sights were set much higher. In 2007, she applied online for a seat at a national hearing held in Beijing concerning an adjustment to the rate of compulsory insurance for traffic accidents.

Selected as an observer only, she had to spend three month’s State pension, 3,000 yuan(US$462), in order to travel to the venue in Beijing. “It was a high-level hearing,” she told NewsChina. “The debate was more intense than in Chengdu.” Having gained a high profile with the State media for both her tenacity and her pro-government stance, Hu was interviewed by over 10 reporters after the hearing finished, giving her a further chance to express her opinion. “I felt like a celebrity,” she said. Hu puts her disciplined conservatism down to a “Red” education – even in the sweltering summer heat, her spotless blouse was buttoned up to the throat while the hearing was in session. After it had concluded, she did not embark on a sightseeing tour of the capital for fear this would embarrass the organizers of the hearing. She sets her own parameters for each debate – unlike younger representatives, she doesn’t use strong language and limits her addresses to five minutes or less, carefully timing her speeches in advance. “Only strict self-discipline can ensure that I will have more chances to attend hearings in the future,” she said. Hu complains that the government does not organize enough hearings. She kept a close eye, for example, on recent personal income tax reforms, and believes the government should have held a national hearing about this highly controversial issue, only to find the government finally chose to solicit public opinion through a highly restricted online forum. She is now planning to improve her computer skills in order to take her voice onto the Internet, where the bulk of her public critics are currently based.

Controversy

China introduced its first official public hearNEWSCHINA I October 2011

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PHOTO BY IC

Hu Litian at a local hearing, Chengdu, April 13, 2010

ings as early as 1996. The Law on Administrative Punishment stated that anyone heavily fined or that has had his or her driving license revoked for a traffic violation may apply for a public hearing if they do not accept the penalty. Two years later, the Law on Pricing added a public hearing clause, requiring the government to hold a hearing prior to the pricing of public services and State monopoly goods. Official statistics show that over 2,000 hearings had been held in China by the end of 2005, including debates on education fees, a ban on fireworks, the price of plane tickets, and compensation for homeowners whose houses were forcibly demolished as part of State development plans. However, the fact that most all public hearings fail to have any impact at all on the policies they claim to be debating, they have been largely dismissed as a government publicity stunt, with the number of people applying to be public representatives experiencing a seemingly irreversible decline. Hu told the reporter many hearings now NEWSCHINA I October 2011

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have to select 8 public representatives from a pool of 9 or 10. Lower-level hearings have even fewer numbers of applicants. A recent hearing in Chengdu on traffic restrictions only drew 7 people. In contrast, online forums saw a surge of 265,000 posts discussing the same issue. “Public representatives used to be appointed or recommended by the local Consumer Commission (CC), and people complained that they often saw the same faces at different hearings,” a former director of the CC, who chose to remain anonymous, told NewsChina. “Now, the hearings are organized by other authorities, which select the representatives by lottery, but still we see the same familiar faces.” It is no surprise that Hu Litian, one of the most familiar, regularly comes under fire, especially when people know that she regularly sides with the government on issues as sensitive as price rises, which are almost uniformly opposed by the general public. “How could the organizers, in many cases

also the masterminds behind these bills, allow any real opposition?” questioned Beijing News critic Sheng Dali. Hu recalls voting in favor of commodities price rises five times. However, she claims her opinion is carefully considered. “For example, I agreed to increase the price of tickets to the Du Fu Memorial Hall as the price is far lower than those of Beijing’s historical sites,” Hu explained. “I know that people do not want to vent their resentment at me so much as towards the public hearings system,” she added. Liao Binghong, another “familiar face” who has attended 17 hearings, also claims that the opinions of public representatives are independently formed, but admits they lack public support. “Most people would rather post their comments online than spend time and energy attending a useless hearing,” he said. “Some hearings are, of course, a mere formality, but we shouldn’t abandon them just because of this,” he added.

8/25/11 5:44 PM

SOCIETY Forbidden City Scandals

Open Gates, Closed Books

A lack of managerial transparency keeps the Forbidden City’s most potent secrets away from public scrutiny. But how long can it remain impenetrable?

Photo by CFP

By Kong Lingyu, Wang Qiusi and Li Jia

Paramilitary police patrol the Forbidden City, Beijing, May 18, 2011

ighty-seven years have passed since the departure of the imperial household and the opening of the Forbidden City, their vast, 600-year-old Beijing residence, to the public. For the Chinese, who refer to the ancient structure simply as the Old Palace rather than its rebranded title “The Palace Museum,” the Forbidden City is both a potent symbol of Chinese civilization and a showroom for the excesses of its imperial past. While the complex’s vast collections have enjoyed almost a century of unrivaled prestige, the Palace Museum has recently been tainted by a series of embarrassing scandals concerning the security and care of its artifacts (see: Steal of the Century, August edition). These highly publicized incidents have raised a series of tough questions for the authorities. Is the once-forbidden palace complex really as “open” as it claims to be?

Robbery, Carelessness and Profiteering

In May, an opportunistic thief broke into an exhibition hall and stole a few items of jewelry

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on display, despite earlier boasting by museum authorities that their collections were protected by state-of-the-art security systems. As a mark of appreciation for the police’s efficiency in apprehending the suspect a few days later, the museum’s management presented the Beijing police with a banner. However, their confusion of two words with the same pronunciation changed the goodwill of “Defending the Country’s Prosperity” into “Shaking the Country’s Prosperity.” The literacy of those in charge of China’s most prestigious cultural institution was questioned by a scornful public. A few days later, it was disclosed that the Jianfu Palace in the Museum was to be opened as an exclusive “millionaire’s club” charging millions of yuan for a membership. The appropriation of a public building to make private profits triggered a further bout of public outcry. Two months later, State television reported that a priceless porcelain dish, fired in the Song Dynasty royal kilns between the 8th and 11th centuries AD, was accidentally broken by a

museum conservationist, with the incident withheld from the Palace Museum’s overseer, the Ministry of Culture. Again, museum officials were hauled before the press to face an angry public. Particularly notable was the way in which these scandals were broken - media or microblogs would broadcast initial reports; Palace Museum officials would deny them before being forced into a humiliating retreat through public pressure, issuing apology after apology for “negligence.” These unpopular and oldfashioned stonewalling tactics, according to analysts, are rooted in the Palace Museum’s traditional mode of operations.

Who Cares?

The Palace Museum, holding vice-Ministrylevel political status, has seen its staff team bloated from 9 divisions in the 1960s to 31, now comprising 3,000 members. However, that has failed to improve efficiency. Gao He, a retired museum official formerly in charge of artifact storage, told NewsChina that all muNEWSCHINA I October 2011

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Photo by CFP

“The Palace Museum remains a ‘Forbidden City’.”

Left: the broken porcelain dish on the museum website; Right: the broken dish as shown on CCTV

seum officials are directly appointed by and thus answerable only to higher authorities, with their career prospect unrelated to either their contribution to profitability or their conservation work. According to Gao, this model of “responsibility to superiors alone” means museum officials are unaware of their responsibility to the public. Rules exist only on paper when obeying them might conflict with “friendships” or the wishes of the higher ups. Gao still recalls the embarrassment he caused by insisting that visiting leaders refrain from touching any antiques. The museum also attributed the recent destruction of the Song Dynasty porcelain to a simple failure by conservation staff to follow procedure when handling ancient artifacts. The massive revenue from the Palace Museum’s ticket sales is funneled directly into China’s treasury and, consequently, this gigantic institution’s budget, including administrative and maintenance costs, comes from the public purse. But salaries here are far below the average income for Beijingers, while “Tens of millions of yuan are needed to pay for just a single minor maintenance project in this mega-complex and nothing can be done if we only rely on government funding,” said former curator Zhen Yuansen. Consequently, the management team gave some thought to putting the unique resources at their disposal to good use. A company affiliated with the museum was established in 1998 to run the complex’s commercial services, including food, advertising and retail. This commercial wing of the Palace Museum has come under attack for placing profit ahead of good taste, with a Starbucks opened in the Forbidden City in 2000 lasting just 7 years before NEWSCHINA I October 2011

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it was forced to close under public protest. In 2006, two souvenir stores within the complex refused entry to Chinese tourists in order to overcharge foreign visitors, further embarrassing the company. Despite these well-known scandals, however, the accounts of the museum’s commercial activities remain undisclosed.

All is Forbidden

The Palace Museum “remains a ‘Forbidden City’” said Chen Youhong, an associate professor of public management policy at Renmin University of China. The museum’s inscrutable bureaucracy has so far show little interest in engaging with the public it claims to serve. Analysts believe the Palace Museum needs to look overseas for examples of how to run such a prestigious institution. London’s British Museum, for example, is also publicly funded, but its curators are not governmentappointed, instead they are hand-picked by the Board of Trustees, a body of academics and dignitaries who assign top priority to the museum’s collections and its visitors. Cao Jie, a Chinese journalist based in London, is an advocate for a similar body at the Palace Museum, believing that only an independent governing body can ensure the museum’s collections are properly cared for. In Europe, public museums and cultural heritage sites also receive donations from charitable organizations, enterprises and individuals, as well as offering prestigious commercial spaces to paying clients. Before working for China’s Palace Museum, Zhen Ni worked for a cultural company in France that sometimes arranged private banquets or performances at famous chateaus. The accusations of “bad taste” which surface when similar events are staged in protected historic buildings in China

are, in Zhen’s view, the result of their concealment from the general public, making commercial use of public spaces appear a dirty little secret of the ruling elite. The failure of the Ministry of Culture to respond to recent scandals has further antagonized critics, many of whom believe it is protecting its own officials rather than the public interest. Transparency in accounting has become a favorite bugbear of the Palace Museum’s critics. On May 25, three doctorate law students at Peking University filed applications to the Ministry of Finance and the Palace Museum for full information disclosure of the museum’s tickets sales revenue and subsequent spending between 2008 and 2010. So far, the museum has not responded, but its book shows that total ticket sales revenue in 2010 exceeded US$92 million. While the government drags its feet over reforming China’s most famous museum, the private sector has stepped in to offer solutions. The Foundation for Relics Protection in the Palace Museum, a non-profit foundation, was established this year by eight business heavyweights to provide support for the museum’s academic research and public services. However, it remains unclear if the Ministry of Culture will welcome greater involvement of private individuals in the running of a prestigious public institution. Finally, in an interview with State media on August 19, Zheng Xinmiao, director of the Palace Museum, divulged details of recent scandals, adding that “some officials have been disciplined.” He also pledged to “restore and improve the image of the museum” through greater transparency. Perhaps the Forbidden City may yet open its account books to the public as willingly as it has opened its doors.

8/25/11 5:44 PM

SOCIETY Union Reform

Trading Places Through a combination of strike action and careful negotiation, workers at the Nanhai Honda plant have secured a pay rise and better working conditions. Can other workers follow suit? By Xu Zhihui in Guangdong

n June this year, celebrations broke out among workers at the Nanhai Honda plant in Foshan, Guangdong Province, after news was received that all employees would be entitled to a pay rise of 611 yuan (US$95). Not much, but a triumph nonetheless. For over 12 months, workers at the plant had been involved in a protracted pay dispute with company bosses.

The Strike

Twenty-one-year-old Li Xiaojuan, who acted as a workers’ representative during the negotiations, is now one of 13 newly installed trade union committee members at the Nanhai Honda plant, which specializes in manufacturing transmissions. As she explained during a recent interview with NewsChina, low pay was the chief factor behind the workers’ decision to begin strike action in May last year. “Most workers in the automobile production industry can make on average 3,500 yuan (US$548) per month, yet workers on the production lines in Nanhai were making no more than 1,500 yuan (US$235) per month. While the interns (technical school students hired by the factory as cheap labor), who made up onequarter of the work force, were making a mere 800 yuan (US$125),” explained Li. “Honda officials continually turned a deaf ear to our appeals for a pay rise, so we started a strike.” At around 8AM on May 17, 2010, several workers in the transmission workshop department pressed the button halting the manufacturing line, marking the beginning of the strike. One week into the strike, the Japanese em-

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Workers on the Nanhai Honda production line, Foshan, Guangdong Province

ployer proposed increasing workers’ monthly food subsidies from 60 yuan to 155 yuan (US$9 to 23), a significant reduction on the 800 yuan figure demanded by the striking workers. Frustration soon spread, and more workers joined the strike. This led to the involvement of the local government and the governmentsponsored trade union. On May 31, around 200 people wearing Shishan Township Trade Union badges arrived at the factory. The striking workers gathered in a workshop to listen to a man who alleged to be Nanhai Honda’s legal consultant. “Your strike is against the law,” he claimed. Another man, who looked like an official, followed up the threat by declaring that: “If you still want to work here, you should end the strike immediately.” Angered by the humiliating tone of the speakers, some workers tried to break out of

the workshop but were stopped by the men wearing trade-union badges. A skirmish erupted in which at least two workers were injured. The workers, however, were not so easily intimidated, and the strike escalated. In addition to the salary increase, they now also demanded an apology from the officials and compensation for those injured.

Legal Assistance

Unsurprisingly, the Shishan Township trade union soon lost the trust of the striking workers. However, without the benefit of official representation, the strike continued unabated, causing the entire Chinese Honda manufacturing chain to cease production. This lead to a total financial loss of over 2.5 billion yuan (US$390m) for the company. The lack of a potential resolution led to a change in tact. Realizing that an unobstructed NEWSCHINA I October 2011

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Photo by CFP

channel of negotiation was of equal importance to the issue itself, several workers put forward the idea of reforming the plant’s trade union. “Whenever labor-management disputes occur, the trade union will unfailingly stand on the side of the employer instead of the workers. All the members of the local union are either government officials or enterprise leaders. We have no idea how they were elected to represent the workers. We need a trade union that really takes cares for our wellbeing,” explained Li Xiaojuan. Li was introduced to Chang Kai, a professor from Renmin University and an expert on China’s Labor Contract Law. Li phoned Professor Chang and asked him to be the legal counsel for the workers in Nanhai. Chang Kai accepted the invitation and on June 4, he flew to Nanhai from Beijing to participate in the NEWSCHINA I October 2011

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negotiations. Chang told the workers that their strike action had been entirely justified, and that their demands should not be regarded as “illegal.” Having put many of the workers at ease, he then suggested that the 1,800 workers elect a small team of representatives to negotiate directly with company bosses. “When a thousand people speak all at once, nobody is able to make out what they are saying,” he told the workers. Thirty representatives were picked from among the 1,800 workers. “This was the first formal election I have experienced,” a worker representative later said. On the afternoon of June 4, 30 representatives met with five Honda executives in an attempt to resolve the dispute. Also present were Chang Kai, who served as the workers’ legal consultant, and Zeng Qinghong, general manager of Guangzhou Honda, who acted as notary. After six hours of negotiations, 25 out of the 30 workers’ representatives agreed with the 500 yuan (US$72) per month salary increase proposed by the company executives. After adding a clause stating that “the employer should not fire or retaliate against striking workers,” which was insisted on by Chang Kai, the first agreement was signed by the two sides. In Chang’s opinion, the agreement marked an important milestone in the history of workers’ rights in China. For the first time in the modern era, workers had organized independently of official channels, and in doing so forced their employer to meet their demands. However, one very important factor should not be ignored – the part played by Wang Yang, Party secretary of Guangdong Province, in resolving the disputes. “Maintenance of social stability” is very high on the government agenda, and strikes are regarded as a highly destabilizing factor in this context. However, Wang Yang, saw the event as a purely labormanagement dispute. Free of political connotations, the local trade union, which had originally planned to force the workers to resume work, backed down, allowing the workers to press ahead with their demands. Through ongoing negotiations, the workers have since received a pay rise of 611 yuan, a 32 percent increase on previous wage levels, in addition, they have also secured a promise that by 2013, employees who have worked at the factory for over three years will receive

“When a thousand people speak all at once, nobody is able to make out what they are saying.”

a monthly salary of 3,500 yuan, the average national salary level among workers in the automobile industry.

Calls for Legislation

Professor Chang believes the Nanhai Honda strike reflects the urgent need for a revision of the country’s Constitution. In 1982, the revised Constitution removed an article guaranteeing the right to strike, ignoring international conventions. According to Professor Chang, with China becoming an increasingly important part of the global production chain, the notion that striking is somehow “illegal” is itself unlawful, and lags behind international standards. “In 2010, there were a total of 300 strikes throughout China, but in not one of these cases, did local trade unions represent the interests or rights of the striking workers,” explained Professor Chang. Statistics from the Labor Resources and Social Security Ministry reveal that labor-management disputes have increased by 11 percent annually in the period between 2001 and 2008. During an interview with NewsChina, Lee Cheuk-yan, General Secretary of the Hong Kong Confederation of Trade Unions, said: “On the Chinese mainland, trade unions are made up of political figures and operate within the government system. This makes it hard for them to really represent workers. In order to safeguard workers’ rights, the trade unions need to make the transition toward political and economical independence.” Li Xiaojuan was lucky enough to have witnessed what may yet be the beginnings of such a transition. She has been now been admitted into Nanhua Business College, where she will specialize in labor relations this September. “Violation of workers’ rights is a common occurrence, but workers only begin to unite and resist such violations when they have exhausted all other options. We need organizations that really protect our rights.”

8/25/11 5:44 PM

SPECIAL REPORT Wenzhou Crash

Speed Kills Despite efforts to downplay the disaster, the deadly Wenzhou crash on July 23 has put rail safety squarely on the public agenda By Yang Di, Han Yong, Wu Fan and Yuan Ye

n July 23, two high-speed trains stopped at Yongjia station, a county under the jurisdiction of Wenzhou, a flourishing business center in Zhejiang Province. The D3115 coming from Hangzhou arrived at 7:51 PM and was scheduled to stop at the platform for one minute before continuing its journey. Instead, it departed 24 minutes late. The D301 from Beijing, another train not scheduled to stop in Yongjia, was also stranded on the platform next to the D3115. Bao Yongyuan was seated in the 10th car of the D3115. He glanced at the D301 standing in the rain outside the car window. This would not be the last time he saw it. Not long after the departure of the D3115, the other train also resumed its journey. Both were heading to Fuzhou, capital of Fujian Province, traveling on the same track. According to passengers, even after its delay in Yongjia, the D3115 was inexplicably crawling along at under 20 kilometers (12 miles) per hour, way below its top speed, while the D301 was traveling at a more usual 170 kilometers (106 miles) per hour. “The train seemed to be listing to one side,” Bao Yongyuan heard one fellow passenger say as the train crossed a viaduct at approximately 8:35 PM. Moments later, Bao was thrown from his seat to the floor. People panicked and screamed as the car rocked violently. Zhang Mingjie, a 20-year-old woman seated in the 6th car of the D3115, felt three impacts juddering through her seat. Bao and Zhang, though shaken, were unaware of the scale of the disaster. According to subsequent media reports, the D301 had rammed into the rear of the slow-moving D3115 at over 100 kilometers (62 miles) per hour. The 16th car of the D3115 bore the brunt of the impact. Eyewitnesses described how the car’s rear half was so badly flattened that it “looked like a piece of paper.” Both the 15th and 16th cars had been

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derailed, while the front section of the D301, after crushing the rear of the D3115, plunged from the viaduct into the ravine below, leaving a fourth car hanging in mid-air. There were 1,630 passengers and crew on the two trains when the accident happened. Early figures indicated more than 30 dead, with the official toll as of July 29 given as 40, with nearly 200 injured, though unconfirmed reports from independent media have suggested a much higher death toll. Regardless of the final figure, the disaster marks the worst loss of life on China’s railroads in years, and also the first major accident involving China’s trademark “Harmony Electric Multiple Units” (EMU) bullet trains first launched on April 18, 2007. As more details emerged, it became clear that serious operational failings played a major role in the catastrophe.

Volunteer Help

High-speed trains pass by Shuang’ao village in Wenzhou every day. Villager Cai Changzhong was chatting with his neighbors at the door of his house on the evening of July 23 as the thunderstorm raged outside. While watching the lights of the D3115 creeping cross the viaduct, Cai and the villagers were stunned by a noise far louder than a thunderclap, followed by an explosion on the viaduct. “A train accident!” came the cry as villagers poured from their homes and headed for the tracks. Thick silt beneath the viaduct forced them to wade towards the wrecked train cars. Cai was among the first batch of villagers to arrive at the scene. With other villagers, they started to rescue the injured. The quagmire below the viaduct was awash with twisted metal. Soon, wailing fire engines and ambulances started to flock around the crash site. In the city of Wenzhou 6 miles away, news of the accident soon spread. When Huang Xuemin, a prominent local blogger, heard the news

Regardless of the final figure, the disaster marks the worst loss of life on China’s railroads in years, and also the first major accident involving China’s trademark bullet trains launched on April 18, 2007 NEWSCHINA I October 2011

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Photo by CFP

barely minutes after the crash, he decided to go to the scene himself. One hour later, his car was stuck in a jam of fire engines, ambulances and private cars also rushing to the scene. Not being able to get in, Huang headed instead to the closest hospital, where the injured were being taken. In the hospital, dozens of beds had been set up in the lobby. Doctors and nurses were busy going about their business, many calling for plasma as supplies were running low. Huang visited two further hospitals, all of them swamped with injured passengers and all NEWSCHINA I October 2011

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running low on plasma. Family members who were separated in the accident were also looking for their relatives. In response, Huang posted a request for blood donations on the Internet. His posts began circulating instantly, leading hundreds of locals to rush to the cityâ&#x20AC;&#x2122;s hospitals to donate blood.

Doubts

On the morning of July 24, the second day of the train crash, many Chinese woke up to blog postings and Internet reports about the deadly

accident, and were able to follow the botched rescue attempts through amateur video, most of it captured on localsâ&#x20AC;&#x2122; cell phones. By contrast, State media attempted to play down the disaster, which only served to transform public sorrow to indignation and, eventually, outright anger, most of it directed at the Ministry of Railway (MOR), whose mishandled rescue attempt and refusal to issue an apology soon escalated into a national scandal. This disaster cut deep in a country whose people depend on the railroads to get around.

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SPECIAL REPORT

Despite worries that the rapid expansion of China’s new high-speed railroad (HSR) network placed speed over safety, media blackouts and the convenience of faster interprovincial travel meant that the public, by and large, retained their faith in the national network. This confidence was shattered on July 23, as horrific images of the disaster and details of the attempted cover-up spread through China’s powerful and all-pervasive blogosphere. Microblogs supplemented with amateur footage of the disaster, much of it contradicting information contained within official reports by State media, soon swamped cyberspace, outpacing State news agency Xinhua at every turn. The public outrage soon forced the MOR to acknowledge the scale of the disaster and pledge to uncover the reasons behind it. A major target of public rage was the MOR’s attempt to manipulate casualty figures and censor news reports, further tarnishing the image of a powerful institution which has long remained immune from criticism by State media. The earliest official explanation came from Shanghai’s regional MOR bureau on the night of July 23, which claimed that before the accident the D3115 lost power and stopped on the viaduct after being hit by lightning, causing the speeding D301 to ram it. However, witness accounts swiftly contradicted this statement. Both surviving passengers on the D3115, as well as nearby villagers, confirmed that the train was still running when it was struck. On July 27, the Southern Weekly ran a front-page story quoting a passenger on the D3115 who claimed he had heard the train’s engineer say that he “wasn’t responsible for the accident,” adding that he’d “been ordered to stop the train.” This report led to speculation that the accident had been caused by human error, perhaps by a signal engineer. Subsequent media reports began to pile up, claiming that there had been a fun-

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Left to right: A man lifts a picture of one of the crash victims to express his anger, South Railway Station, Wenzhou, July 27; A woman cries for the loss of her relative in a funeral parlor, Wenzhou, July 25; Two-year old survivor Xiang Weiyi recovers in hospital having lost her parents in the accident

damental breakdown in the command structure. One “dispatch record” circulated on the Internet detailed how when the D3115 left Yongjia station, dispatch instructed the train’s engineer to switch to manual controls and slow the train to 20 kilometers (12.4 miles) per hour if he saw a red light ahead. Lu Qingxiang, head conductor of Wenzhou South Railway Station told NewsChina that though the master control room could monitor the approximate positions of the trains, it wasn’t able to monitor their speed. One station staff member suggested that repairs being carried out due to a lightning strike could have led the engineer to slow the train down. Han Baoming, a professor at the School of Traffic and Transportation at Beijing Jiaotong University, told NewsChina that whatever the cause, the probability of such a crash occuring was “extremely low.” Several experts including Han pointed out that such an accident could only happen when a slew of accident prevention measures were violated or ignored, meaning the Wenzhou crash could only have been caused by a breakdown in communications at all levels. The Chinese railroad network has a threetier operational safety mechanism, involving CTCS (Chinese Train Control System), LKJ (Train Operation Control and Monitor Device) and manual dispatch. CTCS allows the railway control center to monitor train positions, the distances between them and their approximate speed. Each train is also installed with an ATP (Auto Train Protection) system that will auto-

matically calculate the distance between it and the train ahead and work out a safe speed, upon receiving instructions from the control center. At the same time, the train ahead will also create a “closed area” the train behind is not allowed to enter. The “closed area” is marked by red lights on the tracks. The ATP system can automatically adjust the distance between the two trains and even stop or slow them down if there is a danger of a collision. The LKJ system is an automated brake, activated if an engineer fails to respond to such an emergency. Manual dispatch is the final operational safety net, with observers ready to respond to problems detected by CTCS or ATP and inform engineers of any potential danger. Consequently, for the Wenzhou crash to occur, “there is only one possibility. All systems failed simultaneously,” a senior railroad employee, speaking on condition of anonymity, told NewsChina. The official investigation into the cause of the crash, supervised by the State Council, is still ongoing. However, calls for an independent investigation have been largely brushed aside by the powerful MOR, which, barely a week after the crash, instituted a State media blackout in order to keep further negative coverage of the disaster off the front pages and State television. Despite the silencing of mainstream voices, the wide reach of China’s blogosphere has shaken a nation’s confidence in the safety of a transport network previously held up as the pride of China. NEWSCHINA I October 2011

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Photo by He Beng/IC ; He Beng and Li Zhenyu/CFP

Wenzhou Crash

Derailing Change The failure of China’s heavily centralized railroad administration to take institutional reform seriously is now being translated into catastrophe on the tracks By Zhou Zhenghua

hen Minister of Railways Sheng Guangzu arrived at the scene of the horrific July 23 train crash in Wenzhou, he may have felt a certain sense of vindication. Since replacing his disgraced predecessor in February, Sheng has been an advocate for an overhaul of China’s antiquated railroad administration. However, the closed-door nature of toplevel decision making in the Ministry of Railroads (MOR) meant that Sheng’s call for change was only heard by a select group of officials. And, until the scale of public anger in the aftermath of the Wenzhou crash became apparent, few were listening. Sheng Guangzu took office when the mastermind behind China’s vast high-speed railroad (HSR) network and minister of railways since 2003, Liu Zhijun, was deposed and arrested on corruption charges in February. The central government hoped that Sheng would be the man to reform China’s railroads, weeding out corruption and corner-cutting. A source close to the NEWSCHINA I October 2011

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MOR told NewsChina that Sheng had expressed his intention to separate government from the enterprise aspect of transportation during a mid-March summit for top railroad officials. In a videoconference on May 17, Sheng further underlined the focal points of planned reforms, introducing a new accounts settlement model, abandoning a strict top-down administrative structure maintained for over 60 years. Neither of these meetings received much attention from the media, as the cloak of silence surrounding one of China’s most State institutions stayed firmly in place. What was visible to the public, however, were a series of glitches and accidents in the following months that seemed to have wrong-footed the MOR’s planned reforms. The Beijing-Shanghai HSR line, officially launched on June 30 as the poster child for the modernization of China’s railroad network at a rumored cost exceeding that of the Three Gorges Dam, encountered at least five serious operational mishaps in one month.

Electrical faults would bring trains to a complete halt and leave thousands of passengers stranded in darkness for hours, causing major delays. Then, on July 23, 40 people were killed and over 200 injured when a high-speed bullet train ploughed into the back of another near Wenzhou, Zhejiang Province. Attempts by State media to play down the disaster were swept aside by a hyperactive blogosphere and amateur coverage that fed public anger and forced the MOR to publicly acknowledge the scale of the tragedy. On June 24, Sheng Guangzu announced a comprehensive safety inspection of China’s entire railroad network, the second such investigation he has launched since taking office after a similar inquiry in February. Observers have speculated that major institutional reforms are unlikely while this investigation is in progress. However, the possibility of breaking up the ministry and establishing a supervisory body remain under discussion. “How can longer-term reform be carried out when the railroad system is confronted with

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SPECIAL REPORT urgent safety problems?” argued Yang Hongnian, ex-chief researcher from the Institute of Comprehensive Transportation (ICT) of the National Development and Reform Commission (NDRC). Yang told NewsChina that China’s railroad system, which enjoys dual status as an arm of government and a State-owned enterprise, must change, but that any such reform would need to be meticulously planned.

Liquidation

Sheng Guangzu’s speech in May indicated that reform might begin with the revision of profit sharing between the MOR and its local railroad bureaus. The Chinese railroad system has maintained a highly centralized management mode inherited from the planned economy era, concentrating absolute power over personnel, train dispatch and finance in the hands of the MOR. The ministry directly oversees the operation of 18 railroad bureaus whose operational areas combine to cover the whole country and two official railroad companies. These nominally “independent” companies, created to give a semblance of free enterprise, are in reality entirely subordinate to the MOR. Currently, only two of China’s hundreds of railroad lines – Datong-Qinhuangdao and Guangzhou-Shenzhen, are listed on the Shanghai Securities Exchange and are run as enterprises. A handful of other lines jointly invested by the MOR and local governments are also partly run on market principles. The remaining 90 percent of Chinese railroad lines still operate as they did under a planned economy, taking their orders directly from the ministry with no responsibility to the market. Local railroad bureaus turn all their income over to the MOR, which redistributes funding according to business volume and “managerial performance” in much the same way the central government redistributes tax revenue. This method, which uses profits from popular routes to subsidize smaller, less-efficient operations, is widely blamed for “dampening enthusiasm” for the development and reform of China’s most heavily-trafficked HSR routes as they fail to reap the financial benefits of their costly and labor-intensive operations. With little incentive to adhere to strict safety standards and operate efficiently, China’s most cutting-edge railroad lines are potentially the most dangerous. For this reason, among other things, the application of market principles to the construction and operation of new railroad lines has long been advocated by

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academics. However, such calls have been largely ignored by the MOR, perhaps because such a liquidation would remove the ministry’s primary function – the reallocation of profits. Among the unanswered questions of market reform is what would happen to railroad bureaus with smaller transportation volume and lower income once independent settlement is introduced. Would these bureaus go bankrupt? Would their bankruptcy disrupt the wider rail network? While similar reforms in China’s aviation industry in the 1990s were largely successful, China’s economy is far more dependent on the country’s extensive rail network than on aviation, with trains used both for freight and interprovincial travel by most of the population. With the immense financial interests of the powerful MOR directly threatened by greater liberalization, its hesitance is understandable. Any reform, therefore, is likely to be enacted on a micro level at best – sources at the MOR hinted that perhaps a small percentage of bureau income might be retained at a local level, with the rest turned over to the MOR as per traditional policy.

Special Interests Snowballing

The MOR’s highly centralized mode that merges government and enterprise makes it an unusually powerful institution in modern China, with its power and wealth augmented by considerable autonomy from the central government. As early as the late 1980s, the MOR experimented with a contract system alloweinglocal bureaus to take responsibility for their own finances. However, the central authorities forbade the MOR from allowing local bureaus to vary ticket prices which led to huge financial losses and the abandonment of the experiment. Between 1998 and 2003, the MOR rolled out a reform plan that allowed local bureaus to establish passenger transportation companies. While the reform was intended to introduce competition into the market, it failed because local bureaus could not gain recognition in law as legal entities. The ill-defined roles of these passenger transportation firms soon led to conflicts between the companies and railroad stations, with feuding spilling into the bureaus themselves. After 18 months, the scheme was abandoned. Other schemes were more successful. In 1998, for instance, to coincide with the government’s three-year reform of State-owned enterprises (SOEs), the MOR jettisoned the schools, hospitals and other redundant institutions affili-

“It’s too difficult to ask a special interest group to perform surgery on itself.”

ated to the railroad system. In 2000, five companies with monopolies in engineering projects, construction, rolling stock manufacture, communications and signaling equipment, and civil engineering, were delinked from the MOR. However, these partial reforms, while lucrative, did little to address the issue of centralization of power, and the failure to enact institutional change has proven the major stumbling block to reformers. According to figures from the MOR, the gross income of China’s railroad system in 2010 reached 685.7 billion yuan (US$106.8bn), surpassing that of State giants China Mobile and PetroChina. Besides, the MOR enjoys a mammoth capital-construction budget of hundreds of billions of yuan, most of which comes directly from State coffers. With astronomical sums of money under the control of a handful of officials, graft has become commonplace. Since 2010, eight top railroad officials, including former minister Liu Zhijun, deputy chief engineer Zhang Shuguang, director of Nanchang Railroad Bureau Shao Liping, director Lin Fenqiang and vice director Ma Junfei of the MOR’s Hohhot bureau, have been arrested on corruption charges. Unconfirmed reports allege that Zhang Shuguang alone maintains overseas bank accounts containing assets of some US$2.8 billion. Economist Xu Xiaonian calls the MOR a “gigantic special interest group” that “will try to block any reform” it perceives as harmful to its interests. The MOR’s immunity from 2008 reforms merging government departments into “super ministries” is, according to Xu, proof of this. In that year, the former Civil Aviation Administration and State Post Bureau were merged into a new Ministry of Transportation. Ironically the MOR, controller of China’s most vital transportation network, managed to escape reform, citing the “particularity of the management and construction of railroads in China.” NEWSCHINA I October 2011

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Photo by Xinhua and Zeng Hongge

MOR spokesperson Wang Yongping is surrounded by reporters during a press conference, July 24, 2011

“It’s too difficult to ask a special interest group to perform surgery on itself,” commented sources at the ministry. The inability to separate the functions of government from those of enterprise in the railroad system can only increase as business booms.

Split

The MOR has never been blind to the antagonism directed toward its privileged status, and around 2000, during the tenure of former minister of railways Fu Zhihuan, the debate over its potential future reorganization began to crystallize. Zhao Jian, an economics professor from Beijing Jiaotong University, proposed a “regrouping” plan in 2002 which would divide the network “vertically and horizontally” into three regional railroad companies: Northern, Southern and Central. These would be supported “vertically” by a number of passenger and freight transportation companies created in order to introduce NEWSCHINA I October 2011

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competition among authorities. “Reform was already an imperative back then,” Zhao Jian told NewsChina, adding that he never imagined that, over a decade later, institutional reform would still be at the debate stage. Counterarguments from opponents of liquidation, such as warnings that any split of the MOR would lead to a lack of coordination and a breakdown of the network have kept top officials from attempting to effect change. Researcher Yang Hongnian told our reporter that nobody would have the courage to take responsibility if a reform failed. In the meantime, accidents continue to happen in spite of rigid centralization. Since 2008, three serious crashes in Shandong, Chenzhou and Wenzhou have left 115 people dead and almost a thousand injured. The MOR has effectively silenced domestic media criticism, and improvements in both profitability and efficiency have failed to materialize. In 2010, China’s entire railroad network only

posted net profits of 15 million yuan (US$2.3m), compared to registered debts of 2 trillion yuan (US$310bn). Also, by the end of 2010, the total number of employees working directly under the MOR stood at nearly 2 million, yet turnover volume per capita was barely 5 percent that of the average US railroad employee, indicating widespread inefficiency. Wang Qingyun, former director-general of the Department of Transportation of the NDRC, said in a speech in 2005 that the underlying factor that blocked the development of China’s railroad system was its reluctance to reform. Like most critics, Wang sees separating the government and enterprise functions of the MOR, introducing market mechanisms and setting up a well-designed supervisory body as key to its future success as an institution. However, as with the mounting criticism that has followed in the wake of June’s deadly crash, it remains to be seen if this immensely powerful institution is of a mind to change its ways.

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WORLD Lumbini Project

Buying Buddha? Plans by a Hong Kong-registered private group to build a US$3bn“special development zone”to transform the Nepalese town of Lumbini, the birthplace of Buddhism, into a major religious and cultural site are generating controversy throughout the region By Hu Yinan in Nepal

multi-billion-dollar mega-project to develop the sleepy southern Nepalese border town of Lumbini, a UNESCO World Heritage Site, has provoked heated debate in the small Himalayan state.

The involvement of transnational, particularly Chinese players in the commercial project, which aims to raise US$3 billion to transform the town where Siddhartha Gautama, the founder of Buddhism was born some 2,600 years ago into an international tourist hub, has caused significant controversy, with some commentators questioning the developers’ true motivation. The original plan is believed to have been initiated by the Nepalese Ministry of Tourism and Civil Aviation, which in June signed a memorandum of understanding with the Hong Kong-registered private investment group the Asia Pacific Exchange and Cooperation Foundation (APECF), to transform the area into a “special development zone” complete with highways, hotels, tourist centers, power projects and even an airport. In mid-August, NewsChina accompanied representatives from APECF and paid a formal visit to Lumbini. APECF has since refuted allegations that it is directly backed by the Chinese government. However, a string of unanswered issues and complexities surrounding APECF,

“In one respect, it is a cultural, religious project; at the same time, it is also an economic development project.” 38 P38-47Oct2011.indd 38

particularly its history, business interests, and the manner in which it seems to operate, have combined to fuel suspicions.

The Master Plan

According to Xiao Wunan, APECF’s executive vice-chairman and vice-president of the World Buddhist Peace Foundation, “The foundation is willing to work under the guidance of not just the Nepalese government, but also any and all agencies striving to rejuvenate Lumbini.” His statement came as a response to what some Nepalese media reports say are an overlap of interests between the existing master plan for Lumbini and the one proposed by the foundation. The UN and the Nepalese monarchy commissioned Japanese architect Kenzo Tange to design Lumbini’s current master plan, which covers 3 square miles of land, in 1972. Tange completed the plan six years later, and Lumbini was designated a UNESCO World Heritage Site in 1997. The construction of the master plan was meant to be completed in 1995. But very little work has so far been done. Acknowledging this, Majhilal Tharuthanaitha, treasurer of the region’s governing body, the Lumbini Development Trust, said in July: “We have to accept failure on our part in the proper utilization of available funds.” Local newspaper The Kathmandu Post said the Trust had been indulging in “excessive spending on hospitality and unworthy foreign trips.” It cited a recent 15-day US tour by the Trust’s vice chairman and Mod Raj Dotel, the newly resigned Nepalese cultural secretary, which cost US$21,000. Meanwhile, Dip Kumar Upadhyay, former president of the Trust, said a limited budget was the primary problem. Based on the

Nepalese government’s current financial plan for Lumbini, he said the master plan “would take at least another 60 years to complete.” Colin Heseltine, a former Australian diplomat and joint chairman of APECF, told reporters in Lumbini that investment promotion is needed to make things happen in the town. “In one respect, it is a cultural, religious project; at the same time, it is also an economic development project. I think where the foundation can play an important role is to work on the economic, infrastructure development aspect of (the Lumbini project),” commented Heseltine.

Amid the Political Reshuffle

The site of Buddha’s alleged birthplace in Lumbini sits 327 km southwest of Kathmandu and is at its closest point, just 4 km north of the Indian border. It is a relatively affluent part of Nepal, a landlocked nation of 30 million people that is among the world’s least developed countries. According to the World Bank, Nepal’s GDP was US$15 billion in 2010. Nepal is caught between its two vast neighbors, China and India. It shares 1,400 km of mountainous border with the Tibet Autonomous Region and has been a hotbed for anti-China demonstrations by proTibetan independence supporters. Meanwhile, India is home to five million Nepalese and exerts an enormous cultural, historical and political influence on the country. The founder of Nepal’s last monarchy, Prithvi Narayan Shah, described the Himalayan nation as “a yam between two boulders” in the 1700s, an assertion many locals still uphold. For years, India was, as a routine, the destination of every Nepalese prime minister’s first visit after taking office. This changed with the election of former rebel leader and NEWSCHINA I October 2011

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Photo by Hu Yinan

Foundation co-chair Colin Heseltine (left) takes questions from the press in Lumbini

chairman of Nepal’s Maoist party, Pushpa Kamal Dahal – better known as Prachanda – who became premier in 2008 and visited China a month before he visited India. Prachanda resigned from the post of premier in May 2009, amid political infighting. He has since resurfaced as joint chairman of APECF. With his party – already Nepal’s largest – taking the lead in forming the next government, Prachanda, who for years criticized Chinese governance as “revisionist,” is now tagged “proChina” by opposition parties in the country, a view bolstered by his new role inside APECF. Prachanda, in response, said: “It is wrong to label me pro-China simply because I was supposed to attend the meeting of the Asia Pacific Exchange and Cooperation Foundation for the development of Lumbini.” “I had proposed to construct an East-West railway line in Nepal as prime minister... It would be wrong to label me as pro-India on that basis,” he said. The India-based RITES Ltd is responsible for the construction of the railway. NEWSCHINA I October 2011

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“Nepal has to develop friendly relations with China as well as India,” said Prachanda, while stressing that he is “against inclining towards one or the other neighbor politically.”

Unexpected Complexity

Speculation on the foundation’s background, coupled with rumors that Nepalese authorities were left in the dark about the project, has led to sovereignty concerns within the young republic. Nepal’s Cultural Secretary Mod Raj Dotel resigned in early August over differences with Cultural Minister Khagendra Prasad Prasai on the project. Dotel claimed that he had no knowledge of the project and opposed its ideas. While Nepal’s Ministry of Culture is responsible for the development of Lumbini, the foundation says its plans are still at “a very early stage” and the final proposal will be submitted to the Nepalese government for approval. Apart from the resignation of the secretary of Nepal’s Cultural Ministry, the Vienna-

headquartered United Nations Industrial Development Organization (UNIDO), feeling uneasy at having been labeled a partner in the Lumbini project at this sensitive moment, terminated the implementation of its consultancy service on August 19, according to an inside source at the foundation. That same day, UNIDO sent Nepal’s Deputy Prime Minister and Foreign Minister Upendra Yadav a statement clarifying the issue. In its statement, later obtained by the reporter, UNIDO said it “has not entered into any valid contractual agreement with the foundation” and “therefore is not involved in any activity related to the Lumbini Special Development Zone in Nepal.” However, in mid-July, UNIDO’s investment and technology promotion office for China signed a memorandum in Beijing with APECF, saying it would offer technical consultancy for a framework design for the Lumbini project. Far-reaching media speculation about

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Photo by Hu Yinan

WORLD

The birthplace of Buddha, Lumbini as it appears today

the effort have collided with an evolving political deadlock in Nepal that led to the premier’s resignation on August 14. Such is the political uncertainty in Nepal that on August 19, Prasai, the Nepalese cultural minister, went so far as to suggest that there is no record of APECF officials touring Lumbini. However, in an exclusive interview with NewsChina, the foundation’s members claim to have been wrong-footed by the political and media storm. “We significantly underestimated the complexity of this project. We did anticipate difficulties, but not of this magnitude,” said Ge Chen, the foundation’s deputy secretary-general. The extent of local guesswork was highlighted by a report in Nepal’s Annapurn Post on August 8, which said a delegation scheduled to meet with co-chairman of the foundation, Prachanda, in the capital city, Kathmandu, on the 10th to discuss the project was “led by senior Chinese leader Zhou Yongkang, as a special envoy of Chinese President Hu Jintao.” Zhou’s three-day visit to Nepal began on August 16. It had no formal links with the

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APECF delegation, which was led by Heseltine, a former executive director of the AsiaPacific Economic Cooperation Secretariat and a joint chairman of the foundation, and Xiao Wunan, the executive vice-chairman, according to a copy of the handbook prepared for its members and obtained by NewsChina. The project’s top priority is to “fully respect the national sovereignty and territorial integrity of Nepal and the will of the people,” said Andy Yok-Lam Tang, a Hong Kong banker and vice-chairman of the foundation. The “completely commercial” endeavor will follow a principle of “whoever invests, benefits,” Tang added. So far, a Dubai-based foundation has expressed interest in helping develop Lumbini’s tourism resources, and another in the US is enthusiastic about its infrastructure upgrades, according to Xiao. He is expected to lead a delegation to visit the Middle East and the US in this fall. On August 11, Xiao’s foundation signed two memorandums for cooperation in Kathmandu with Taiwan-based Tai Tung Communication and Chinese mainland-

based Vanion Investment Group. The former agreement vows to deliver telecoms and public broadband services to Lumbini. “We’re not here to step on other people’s toes or struggle for interests. As devoted Buddhists, we’re here to do something for our sacred site,” Xiao said. Yang Houlan, China’s ambassador to Nepal, endorsed the foundation’s efforts in a meeting with its members on August 10. “The foundation has merely expressed its intentions. These expressions are aimed at inheriting and strengthening mutual cultural traditions,” he said, citing historical respective visits to Nepal by Chinese Buddhists Fa Hsein and Hsuan Tsang in the fifth and seventh centuries. “There’s no other motive. As a cultural center of Buddhism, Lumbini has enormous development potential. The foundation, answering the call of the Nepalese government, came to take part in the project,” Yang said. “But in order to participate in developing Lumbini, full consultation must be made with the Nepalese government. Their understanding, assistance and support are crucial,” he said. NEWSCHINA I October 2011

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NEWSCHINA I October 2011

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MILITARY China’s First Carrier

Purchasing

POWER

Possible active deployment of the retrofitted aircraft carrier Varyag looks set to strengthen China’s naval muscle By Han Yong and Tang Lei

n July 27, China’s Defense Ministry finally unveiled its worst-kept secret, the country’s first aircraft carrier, which, despite a new paint-job, still temporarily retained its Soviet name, Varyag. Two weeks later, this mammoth vessel started its first sea trials. According to a source inside the military, the Varyag is a year away from an official launch and still lacks operational weapons systems and combat aircraft. Pundits anticipate its official launch to coincide with China’s Army Day on August 1, 2012. Despite the vessel’s age and relatively small size, much international attention has been focused on its reconstruction, and the world media is now speculating as to what role it will play, both in the context of China’s naval hierarchy and in relations with its neighbors.

In late 1991 and early 1992, following the disintegration of the Soviet Union, Chinese military officials began to eye former Eastern Bloc states as a potential source of their hopedfor carrier. According to military sources, a representative from one of China’s military academies on a visit to Ukraine was told by his Ukrainian counterparts that the Varyag, formerly named the Riga, an Admiral Kuznetsovclass multi-role carrier, sat 60 percent complete in dry dock due to Moscow having had its funding cut. A cursory inspection eventually led to the purchase of the vessel a few years later. The Varyag’s keel was laid in the Soviet Union in 1985. In 1998, the unfinished ship was put up for auction and was bought by a Macaubased company for US$20 million, which in-

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Smoke rises from the Varyag during a test of its main engine, August 4, 2011

tended to convert the mega ship into a floating entertainment center and casino. However, after departing Ukraine, the vessel was spotted in 2004 at a shipyard in Dalian, a major port city in the northeastern province of Liaoning. Workers had already sandblasted the immense hull and repainted it in the grey livery of the Chinese Navy. Photos and unconfirmed news reports about

the aircraft carrier’s retrofitting were soon leaked on the Internet, fueling speculation in the foreign media and in China’s blogosphere. A State media blackout concerning the carrier within China was finally lifted this summer, though any information about the Varyag’s military capabilities remains under lockdown.

Deal or no Deal NEWSCHINA I October 2011

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Photo by Lian You/CFP

After Chinaâ&#x20AC;&#x2122;s first research taskforce charged with designing a homegrown Chinese carrier was disbanded in 1971 amid the chaos of the Cultural Revolution, the project was not resumed until 1980. Although the Chinese Navy was convinced that a blue-water navy was the key to securing its interests in the Pacific, limited technology and funding were major problems. A naval commander, speaking on condiNEWSCHINA I October 2011

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tion of anonymity, told NewsChina that a lack of funding in particular seemed an insurmountable barrier to building an aircraft carrier in the 1980s, when economic development overrode everything else, including Chinaâ&#x20AC;&#x2122;s defense budget. In 1985, total Chinese military expenditure stood at US$19.2 billion, less than one-tenth that of the United States or the Soviet Union. Consequently, plans to build an aircraft carrier

were postponed until the beginning of the 21st century. When information that Ukraine might be willing to sell decommissioned carriers was passed on to the Chinese military in 1992, the Politburo dispatched a delegation of Chinese military advisors and ship builders in March 1992 to inspect potentially convertible vessels. They found the Varyag.

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MILITARY Rear Admiral Zheng Ming, ex-director of Chinese Naval Ordnance, was one of the delegates. He told NewsChina his primary task was to evaluate the Varyag’s seaworthiness and appropriateness for retrofitting, as well as to determine whether the Ukrainian authorities would be willing to sell. Ukraine was eager to find a buyer and the Varyag, its hull already close to completion, looked promising. Former deputy naval commander Zhang Xusan said the Chinese personnel made a total of five inspections of the Varyag while she remained in dry dock before reporting back to their superiors that they had found China’s first carrier. The response was less than encouraging. It was estimated that a total of 70 billion yuan (around US$6bn) would be needed to retrofit the Varyag. As in 1980, the funds weren’t there. Consequently, purchase plans were officially scuppered. After the deal with the Chinese navy fell through, the Varyag’s Ukrainian owners put the vessel up for auction in 1998. It was purchased by the Chong Lot Travel Agency from Macau, whose official claim was that they planned to convert the ship into a floating leisure complex. Upon delivery, the vessel’s interior was stripped of weapons systems and onboard power sources. The purchase of the Varyag by a Macanese company led to speculation that Chong Lot was a front company for the Chinese government, who wished to obtain the carrier covertly at a cut price. Rear Admiral Zheng Ming has officially denied these rumors, claiming that a direct purchase would have meant the Chinese Navy would have benefited from the ship’s existing hardware. In Zheng’s words, “we’d have gotten a better ship at a lower price.” While being towed through the Bosporus Straits, the Varyag was stopped by the Turkish Navy, who objected to its presence on the grounds it could be a danger to other shipping as well as present a military threat, as its 300-meter deck could still be used for aircraft. The dispute was later solved when the Chinese government promised to allow approximately 2 million Chinese tourists per year to travel to Turkey. Meanwhile, China’s central bank invalidated the loan that Chong Lot had obtained from its State-controlled subsidiary Huaxia Bank, insisting that it “had not been legally approved.” This allowed the Chinese government to insist on immediate repayment. Chong Lot was unable to repay the full amount, and the

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Vital Statistics

302m

long

70.5 m wide 67,000 tons 31 knots 50 aircraft Chinese government promptly claimed the vessel as State property, redirecting it to Dalian in 2002. On arrival in Dalian, disputes over the disposal of the Varyag began to rage in the corridors of power. The Ministry of Foreign Affairs saw the carrier as a diplomatic risk, with some officials calling for it to be dismantled. The Chinese Navy, desperate not to lose its first putative carrier, requested retrofitting into a training vessel, rather than scrapping the Varyag. The government sided with the Navy, and the Varyag was approved for retrofitting in 2006.

All Aboard

On April 26, 2005, when the Varyag was towed by six tugboats into the largest dock at the Dalian Shipyard, three years had passed since its arrival in China. A thick crust of marine life as well as its fading Ukrainian paint had to be sandblasted from the hull, while its massive

propellers and rudder were cleaned and repaired. The part of the hull above the waterline was painted in the colors of the Chinese navy, with the rest coated with rust-resistant chemical paint. The whole process took half a year. In the following three years, work moved to the interior of the ship under tight security. At the end of 2008, fresh photos of the Varyag started circulating on the Internet. Obvious refitting work on the deck could be spotted in these photos. The front part of the flight deck had been reconstructed, and the 12 ship-to-ship missile silos which were a feature of the Admiral Kuznetsov-class of carriers had been removed. In May 2009, a Soviet navy air force crest was removed from the stern, and its Russian nameplates discarded. On May 19, 2010, the Varyag was moved to the outfitting quay, an action seen as the Chinese Navy’s official unveiling of the vessel to the world. The Varyag’s military capabilities remain NEWSCHINA I October 2011

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Photo by IC and Du Yang

Top left: A helicopter takes off from Varyag’s flight deck, August 4; Above: The Varyag undergoes retrofitting

closely-guarded State secrets, but its vital statistics have now been made public. At 302 meters long and 70.5 meters wide, the Varyag weighs in at 67,000 tons, has a top speed of 31 knots, and could potentially carry 50 aircraft. With no catapults or arrestor cables visible on the Varyag’s flight deck, it is presumed aircraft will launch from a ski-jump ramp at the bow. The Chinese Navy’s choice of aircraft also remains undisclosed. Foreign media reports have speculated that the J-15 Flying Shark, a Chinese adaptation of the Soviet Sukhoi-33, might form the backbone of the carrier’s future complement of jet fighters, though military authorities have neither confirmed nor denied these reports. The carrier’s potential escort is also a subject of speculation. In order to be considered complete, China’s first aircraft carrier battle group would likely consist of two 052C missile destroyers, four 054A corvettes and two nuclear NEWSCHINA I October 2011

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attack submarines in addition to the carrier itself.

Sea Power

When the People’s Republic of China was founded in 1949, the Navy for decades consisted merely of small gunboats and torpedo boats. In the 1960s, the Navy proposed to develop destroyers, but the proposal was harshly criticized by the then top military authorities. “Offshore defense” was the core of the naval strategy at the time, particularly in the face of the overwhelming naval superiority of the US, with ordnance largely confined to shore batteries protecting ports and overlooking the Taiwan Strait. Following the death of Mao and the accession of Deng Xiaoping as paramount leader in 1979, Beijing began to attach greater importance to China’s naval capabilities, issuing a directive to construct “a highly capable and modernized navy.” Former director of the political

department of the National Bureau of Oceanography Zhang Haifeng believes that one reason for this change was the country’s increasing demand for foreign oil to fuel its burgeoning economy. This thirst for fuel has, in turn, led to confrontation between China and the other claimants to potentially oil-rich regions of the South China Sea. Zhang told NewsChina that reserves of “combustible ice” (frozen methane and water that constitutes a potential fuel source) in the South China Sea are almost equal to the area’s oil and gas reserves. According to Zhang, nearly half of the 3 million square kilometers of marine territory claimed by China is under dispute, with island chains in the South China Sea a particular sticking point. In Zhang’s opinion, the discovery of vast maritime resources has made the military importance of the oceans secondary to their economic importance, making China’s naval expansion more an economic strategy than a military one. China’s neighbors are unlikely to welcome the inauguration of the country’s first aircraft carrier. Indeed, even China’s officials seem to be under no illusions about international attitudes to the expansion of Beijing’s naval capabilities. A naval commander speaking on condition of anonymity said the Ministry of National Defense’s attempts to separate discourse on the Varyag from the South China Sea disputes “would not sound convincing to others.” The potential deployment of the Varyag, while small fry compared to the US fleet of 11 active supercarriers, shows a major leap forward for China in terms of military reach. A defensive white paper issued by the central government in December 2006 stated that the Chinese Navy had “gradually expanded the strategic depth of its offshore defenses and enhanced its capability for comprehensive maritime operations and nuclear counterstrike.” Such terminology will provide little comfort to the regional powers challenging China’s territorial claims in the South China Sea. 

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ECONOMY Fatal Flaws

A Creditor’s Crisis The US sovereign debt crisis has put its largest foreign creditor at unprecedented risk, exposing the frailties of China’s export-driven, dollar-backed economy. Is the situation grave enough to spark a shift towards diversification? NewsChina investigates By Li Jia

tandard & Poor’s decision to downgrade the US government’s sovereign credit rating from AAA to AA+ was a wake-up call for China’s economic policymakers who had long placed their faith in the safe haven of US Treasury bonds. That the US came perilously close to default after several weeks of partisan squabbling in the House of Representatives left China speculating on what it might mean for China if the US were to find itself unable to square its debts.

With China the largest overseas holder of US Treasury bonds since 2006, a litany of fears overshadowed the international relief at President Obama’s 11th-hour deal with the Republicans. The potential for further devaluation of the dollar and a double-dip recession have been cause for particular alarm in China, which owes its bullish GDP growth in no small part to the proclivity for Made in China products in developed economies. As of June 2011, about 70 percent of China’s total US$3.2 trillion foreign exchange reserves were in dollar-denominated assets. As of the end of May, 55 percent, or US$1.2 trillion, of these dollar holdings were tied up in US Treasury securities. China’s stake in US government solvency is 30 percent higher than the second-largest holder of US debt, Japan, and triple that of the thirdlargest, the UK. Despite the reiteration by the Chinese central bank of a pledge to “diversify investment in China’s foreign exchange reserves” immediately following Congress’ decision to raise the debt ceiling, there was little sign that such a shift would be forthcoming.

Crisis of Confidence

Before attempting to calculate the future value of the greenback, creditors should perhaps ask if the US will consistently be able to meet its financial obligations. The answer, financial commentator Ma Guangyuan said in a recent article, is: “God knows!”

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With Federal debt now above 90 percent of GDP, an unprecedented high since the 1950s, this raising of the debt ceiling provides little cause for comfort, with pessimism starting to set in among investors, including China’s central bank. “The budget outlook, for both the coming decade and beyond, is daunting,” warned the US Congressional Budget Office’s 2011 Long-term Budget Outlook issued in June. This document highlighted the need to “increase revenue substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches”. Neither path is smooth. US GDP growth for the first half of the year was lower than expected. At the end of June, the Fed revised down its economic growth forecast for 2011 and 2012 and raised projected unemployment figures. However, at least in the view of S&P, it was the political pantomime over what should have been a routine raising of the debt ceiling that resulted in the rating downgrade, as the Obama administration failed to secure its preferred deal and was forced to reduce Federal spending without ending Bush-

era tax cuts for the wealthiest Americans. China’s current strategy also puts its total international reserves - a mix of gold, foreign currency and IMF assets - at risk. Statistics from the World Gold Council show that gold accounts for only 1.6 percent of China’s international reserves, compared with 75 percent for the US and 63 percent for the Eurozone. US Treasury bonds are the Achilles heel of China’s State reserves. This burden is shouldered almost entirely by the Chinese government. Unlike European and American economies, foreign currency in China is concentrated in State hands, meaning that any devaluation in one currency affects the national reserve and State-owned enterprises far more than private individuals and companies. According to China’s State media, only US$1 trillion of Japan’s US$9 trillion foreign holdings are held by the Japanese government, meaning losses in case of a US default will be far less likely to severely damage the national economy.

Indecision

“You don’t have to be an international financial

China’s US Treasury Holdings 2000 – June 2011 China’s Holdings (US$bn) Rest of World (%)

1,165.5 2011* 30

1200 24 2008

1000 800 US$bn

19 2006

600 400

2000

2002

2003

2004

222.9 2004 2001

% of 15 global share 10

477.6 2007

9.6 2002

200 60.3 2000 0

26 2011*

2005

2006

2007

2008

2009

2010

2011*

* up to June

Source: US Treasury Department / Federal Reserve Board NEWSCHINA I October 2011

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“You don’t have to be an international financial expert to ask why China hasn’t made real progress.”

expert to ask why China hasn’t made real progress,” said Professor Zheng Jianming of China’s University of International Business and Economics (UIBE). The reason, he explained, is that there is no market equivalent to US Treasury bonds which could absorb China’s huge official foreign exchange holdings. As the Eurozone struggles with an arguably more severe sovereign debt crisis, with Italy now joining the growing list of economies in need of a bailout, the aggressive purchase of euro-denominated bonds is not an option for China’s central bank. With more secure currencies such as the Swiss franc and Japanese yen subject to limited supply, for the time being China must put its faith in the greenback. Zheng Jianming’s research has revealed that US stocks have offered a better rate of return over the years. Zheng, along with other prominent economists, are now calling for China to widen investment into gold, or even foreign stocks. The price of gold in particular soared after the S&P downgrade as investors sought to hedge against the risk of a possible devaluation of the dollar. However, Chinese policymakers seem reluctant to act decisively to realign the country’s longstanding dependence on Treasury bonds. Commodities investment is unpopular with the State Administration of Foreign Exchange (SAFE), an institution wary of the market turbulence that could be unleashed by the entry of a buyer as vast as the Chinese government. “It’s too expensive to get into the international gold market, and the stock market is too volatile,” Li Xiangyang of the Chinese Academy of Social Sciences told NewsChina. In the corridors of power at least, the most contentious, and widely discussed, alternative to diversification seems to be a loosening of State control over China’s foreign currency reserves. According to economist Li Yining, the risk inherent in the purchase of foreign currency could be diversified among citizens and private investors, who traditionally respond with greater speed and flexibility to fluctuations on the international financial market. NEWSCHINA I October 2011

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SAFE opposes such an idea on the grounds that there is a popular “reluctance to purchase US dollar assets due to the strong expectation of devaluation.” Ye Tan, a well-known financial commentator, criticizes this claim as “irresponsible” in a recent article. According to Ye, what undermines people’s willingness to purchase dollar-denominated assets are the incredibly limited dollar investment channels open to private citizens. Zheng Jianming agrees, adding that this “diversification of investors” is of more pressing urgency than a diversification of government-held assets. The relaxation of capital controls, allowing China to merge into the international financial market, is “too big a step to be realistic in the short term,” said Li Xiangyang. “Not least when nobody knows how the S&P downgrade will re-

shape the market.” Most economists seem to agree that time is running out for China to create reliable buffers against further economic turmoil in the US. As long as the State has a monopoly on investment, its billions of people will be doomed to bear the brunt of its fiscal losses, meaning that, in many ways, China’s growth can only endure as long as the US can remain solvent.

47 8/25/11 5:50 PM

ECONOMY Courier Tax

Return to Sender

A prospective new policy to make overstretched private courier companies pay a subsidy to State giant China Post, a Fortune 500 player, has proved controversial among small business owners By Sun Zhe

or Chang Zhichao, a courier at Shentong Express in Beijing, delivery speeds are largely dependent on how fast intended recipients can spot him. Like the majority of couriers that hustle through the city’s busy network of streets, Chang sends out his location via SMS message, before waiting patiently by the side of his electric tricycle for the recipient to arrive and claim their package. For businesses such as privately-owned Shentong Express, delivering packages doorto-door has been near impossible since last year, when increasing operating costs forced the company to reduce its number of couriers. Like many similar companies, Shentong has been reluctant to raise its delivery prices. The country’s express market is so fragmented that any sign of a price increase is likely to result in an immediate loss of business. On average, profit margins across the express delivery market dropped from 35 percent in 2005 to a mere 10 percent in 2010, or 1-1.5 yuan (US¢16-23) per parcel delivered. More worrying for businesses such as Shentong, however, is the threat of a new government policy that would see small express companies forced to pay a subsidy to help fund China’s state post service. According to a report by China Business News in late July, the State Post Bureau, the country’s express industry regulator, is drafting a policy intending to charge express companies 0.5 yuan (US¢8) for each parcel delivered, as a means of subsidizing universal post services offered by the State Post Group, including snail mail and postcards.

Photo by CFP

Subsidy and Privilege

Express delivery is a cutthroat market in China

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“As a public service, the universal post service should be fully funded by the government, instead of by private express companies that do not benefit from it,” said Liu Jianxin, an express specialist with the Beijing-based China Communications and Transportation Association. “The government is rich and the subsidy NEWSCHINA I October 2011

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“As a public service, the universal post service should be fully funded by the government, instead of by private express companies that do not benefit from it.”

needs only one drop of water from the fiscal bucket,” said Liu. The central government’s revenue stream totaled 8.3 trillion yuan (US$1,290bn) in 2010, up more than 21 percent from the previous year, a growth rate double that of China’s national GDP. The government has been subsidizing the universal post service since reform in 2006 saw the State Post Bureau downgraded to the role of industry regulator, and its business functions were transferred to the newlyfounded State-owned China Post Group. However, the size of the government subsidy for universal services has been dwindling year on year, according to the Ministry of Finance, although specific numbers have yet to be disclosed. In the meantime, China Post Group, whose services include banking, stamp printing and sales, express delivery and insurance, is gaining a foothold in the market and has begun to record profits. This year, China Post Group was listed for the first time as a Fortune 500 company, with its 2010 revenue totaling US$28 billion and net profits hitting US$1.3 billion. “The revenue generated by the China Post Group only adds to the absurdity of this new scheme,” said Xu Yong, president of cecss.com, a courier consulting website based in Shanghai. According to Xu, the universal post service, monopolized by the China Post Group, has given the company’s express arm, EMS, a huge edge over its privately-owned counterparts. The blurred boundaries between China Post’s universal and courier service enables EMS to run at much lower costs than private competitors, many of whom are teetering on the brink of closure, warned Liu Jianxin of the China Communications and Transportation Association.

Another Way to Deliver

Every morning, 21-year-old Chang moves more than 100 parcels from Shentong’s distriNEWSCHINA I October 2011

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bution terminal to his “patch” near the city’s Beihang University. An open space in the center of the campus has become a rendezvous for couriers from various express services, and Chang, a relative veteran in the express industry having worked in the field for over three years, has secured a shady spot in the shadow of a dormitory building, a favorable location in the sweltering summer heat. On arrival, Chang sorts parcels into alphabetical order according to the recipients’ surnames, before stacking them on the ground. The job is rather time consuming as in the meantime he needs to input all the recipients’ cell phone numbers into his touch-pad handset in order to send out notices to them via text message. He routinely works 8 AM to 8 PM Monday to Saturday, with only half a day off on Sunday morning. He takes home a monthly salary of 2,000 yuan (US$310), with board and lodging provided by his employer, a Shentong distribution terminal franchise owner in west Beijing. By franchising their distribution terminals, big express brands are able to penetrate the market at a relatively low cost, and gain a foothold across the country. The country’s top five express brands, including EMS, Shunfeng, Shentong, Yuantong and Yunda are unknown outside China, yet together share an estimated 60 percent of the domestic market, with the remaining 40 percent split between more than 10,000 smaller or regional companies, according to the China Express Consulting website. For these companies, price is the chief means of competition. “There are some companies willing to deliver at prices so low that you can’t help wondering if they want to close down tomorrow,” said Chang. Dressed in flip-flops, denim cutoffs and a black T-shirt occasionally pulled up above his stomach, he is nothing like the smiling couriers in well-cut uniforms in UPS or DHL advertisements.

In contrast to their international counterparts, such as UPS, FedEx and DHL, who own their own aircraft, the majority of Chinese express services do not even have their own independent logistics chains, with packages mostly transported between cities by commercial trucks, increasing the probability of parcels being damaged or lost. Express delivery has drawn more consumer complaints than any other businesses in recent years, yet what they lack in professionalism, private companies make up for in low price. A one kilogram parcel delivered by Shentong from Beijing to Shanghai, costs just 12 yuan (US$1.9), compared with 20 yuan (US$3.1) with EMS or more than 100 yuan (US$15.6) with DHL, which has pulled out of China’s domestic market due to the government’s ban on foreign companies’ involvement in delivery of express documents, which accounts for more than 30 percent of DHL’s global revenue. China is a market yet to mature for international service-oriented express giants, said Liu of the China Communications and Transportation Association, though the market has seen an annual growth of more than 20 percent in recent years. Last year, domestic couriers delivered a record total of 2.8 billion parcels, or about two parcels per capita, a ratio far lower, however, than the European or the US annual average of around 20 parcels per person. The courier industry is expected to see fast growth in the upcoming 15 years, in line with the country’s transformation from an exportoriented economy to one based on around domestic consumption and e-commerce, said Liu. Shentong courier Chang also wants to be part of the anticipated boom in e-commerce. After working as a courier for three years, he is tired of waiting all day in the shadow of a dormitory building. He is saving every penny he earns to open his own online store.

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ECONOMY Solar Power

Surface Heat

The world’s largest solar panel manufacturer is renewing attempts to open up the domestic market, but is the domestic market ready? By Sun Zhe

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Photo by CFP

lthough responsible for manufacturing the majority of the world’s solar panels, China has been slow to embrace solar energy. Apart from a small number of private water heaters and the occasional village street light, solar power in China remains a largely export-oriented industry. All this, however, could be set to change, as the country prepares to set its first unified solar plant power tariff to help open the domestic market. The proposed feed-in tariff – the subsidized electricity price as set between solar plants and the State Grid, is 1 yuan (US¢16) per kilowatt-hour, or 1.15 yuan (US¢18), according to a statement released on August 1 by the National Development and Reform Commission (NDRC). The country is eager to add a larger green component to its energy portfolio in order to help reduce its carbon emissions and dependence on coal-fired power. Already the world’s largest wind farm developer, its next aim is to raise its solar capacity by as much as 10 times its current amount by 2015. At the end of 2010, China’s solar power capacity totaled 700 megawatts, equivalent to two large coal-fired power plants. The government has since vowed to raise its solar capacity to 10 gigawatts by the end of 2015, with a further increase by 2020. For Chinese solar panel manufacturers, who make more than half of the world’s solar cells but sell only 3 percent to the domestic market, the tariff policy comes at just the right time. Global demand has slowed in recent years as big markets, such as Germany and Italy, have moved to reduce their feed-in power tariffs for solar plants. Government support will see China become the world’s biggest solar panel market over the course of the next decade, said Zhang Jianmin, spokesman for Jiangsu Provincebased Suntech Power, China’s largest solar panel producer.

Renewable energy is a boom market in China

With more than two thirds of Suntech’s products sold to Europe, the domestic market accounted for just 5 percent of its 2010 sales. This figure is expected to climb threefold to 20 percent in 2011, thanks to the new subsidy policy, explained Zhang. “Solar plant developers have been offered a clearer market perspective when making investment decisions,” said Professor Lin Boqiang, of the China Energy Research Group, at Xiamen University. “Now it comes down to a simple choice – if they can see a margin for profit they will carry on, if not, they will simply pull out.”

A Lesson Not Learned

The unified feed-in tariff was better news for solar plant developers in West China than their counterparts in the East, as the sunshine duration is longer in western areas. Under the set feed-in tariffs, only solar developers in Tibet, Qinghai, Ningxia and

Gansu, the four areas that boast the best solar resources in the country, could expect to make a profit, and this would guide investors west towards the Gobi desert, an area ripe for further development, explained Lin. However, big and intensive does not necessarily mean productive, as Meng Xian’gan, deputy chairperson of the China Renewable Energy Society explained. “If there is a lesson to be learned from wind power development, it is not to make the plants too big and too centralized.” A total of seven 10-gigawatt wind power bases, dubbed “wind-power Three-Gorges,” were outlined in 2007’s renewable energy blueprint, leading to the country’s wind power capacity being doubled year on year to its current total of 45 gigawatts, the largest in the world. Impressive as such increases are, the economy and rationality of high-intensity development remains open to question, said Meng. NEWSCHINA I October 2011

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CHINA

BYNUMBERS Japan 18.49%

56.6% “Now it comes down to a simple choice – if they can see a margin for profit they will carry on, if not, they will simply pull out.”

Total market share held by foreign auto brands in China, an increase of 3.05% in the first 7 months of 2011. Germany 16.24%

France 2.73% South Korea 18.49%

Source: China Association of Automobile Manufacturers

The majority of wind turbines were installed in the northern hinterlands, such as Inner Mongolia, Ningxia and Gansu. However, these so-called mega wind plants are thousands of miles away from China’s main power consumers in the south and east of the country Given the costs involved in transporting energy such great distances, not to mention the investment needed for grid construction and upgrading, intensive wind power bases, as well as the large utility-scale solar plants, might not be economically sound, argued Lin. To the grid operator, the power generated from wind farms and solar panels is infinitely less preferable to more traditional forms of energy, due to the unstable nature of wind strength and solar illumination intensity. Such variables, critics argue, could lead to large-scale grid instability. More than onetenth of the total wind capacity has yet to be connected to the grid, due in part to unwillingness from grid operators to receive “too much” wind-generated electricity. For solar power, distributive schemes such as rooftop solar plants should be granted higher feed-in tariffs to enable users to profit, and thereby motivate consumers to diversify their energy sources. “Without more diversified options, the proposed mega solar plants in the West, like the country’s unconnected wind turbines, will become little more than shiny decorations in the desert,” said Lin.  NEWSCHINA I October 2011

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US 11.32%

156,000

14%

The total number of registered cases of IPR infringement uncovered during a nationwide State Council crackdown from October 2010 to June 2011.

The average asset value of China’s 40 richest people, 70 percent higher the average for the world’s richest 241 ethnic Chinese.

The growth rate in the total number of overseas mergers and acquisitions by Chinese companies in the first half of the year, taking the total figure to 107. This comes despite increased economic uncertainty and a downturn in the market.

Source: Huaqiao University, Overseas Chinese Affairs Office of the State Council

Source: PricewaterhouseCoopers

Source: Ministry of Commerce

3.42bn

US$

19.17% 2011 year-on-year decline of US-led investment in China, marking a departure from 2010, when US-led investment rose 13.31%.

Jan 50 43.37% (265m) 40 30 20

Feb 27.91% (520m)

May 24.12% (1.29bn)

Jul 19.17% (1.94bn)

Source: Ministry of Commerce

51 8/25/11 5:54 PM

ENVIRONMENT Desert Agriculture

Turning Sand into Gold

Supporters of desert exploitation claim it promises to both fight desertification and generate wealth. But can large-scale human intervention in fragile ecosystems really prove sustainable? By Li Jia

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As State Councillor Liu Yandong declared at an Elion sponsored conference in early July, in order to combat such issues, China’s antidesertification strategy is to undergo a shift from its previous approach of “focusing only on ecological benefits,” to one of “combining ecologic, economic and social benefits,” or in other words, using environmental projects to generate wealth. But A solar-paneled botanic garden, Inner Mongolia is it possible? According to professor Sun Baoping of Beijing Forestry University, “At least 100 million begun. Yulin, an area in Northwest China’s hectares of desert land has the potential to Shaanxi Province, has made progress in “turnbe tapped.” This may be true, but deserts are ing vast tracts of desert into granaries,” accordextremely fragile, meaning they are highly ing to the local media. Local farmers are revulnerable to external changes. That is why ported to have benefited from growing grapes, the prospect of massive human intervention, potatoes, dates, as well as other fruits and crops no matter how well intended, has aroused in desert areas. Private investment has also serious concern among a growing number been welcomed. Elion, for example, has been of scientists. praised for having “greened 5,000 square kilometers of desert” while simultaneously buildGolden Desert? ing its own commercial presence there. Traditionally, the majority of China’s desertMore is to come. In a circular issued eararea has been located in the north and mid- lier this year, the State Forestry Administrawest, and, as a result, these areas have come tion urged more fiscal and credit support for to rely on grain imports from the more fer- businesses engaged in farming and animal tile south. However, research done in 2009 husbandry in desert areas. The Ningxia Auby Zhang Zhengbin and Duan Ziyuan, tonomous Region, for example, where 23 agriculture experts from the Chinese Acad- percent of all land is covered by desert, boasts emy of Sciences, reveals a marked increase 130,000 indigenous desert herbs and is planin grain production in these formally unpro- ning to further boost agriculture, renewable ductive areas. Indeed, Inner Mongolia has energy and tourism in its desert areas in the become the largest grain producer in China’s next five years. northwest. Meanwhile, grain production in southern China has steadily declined in re- Risk cent years, due to industrialization. Water shortages stand at the very core of the Exploration into the desert has already desertification issue anywhere in the world,

Photo by Li Jia

et amid the grounds of a newly built luxurious five-star hotel complex, a Louvre-like glass pyramid rises from the deserts of Inner Mongolia. Yet, in this world of shimmering mirages, all is not as it seems. The French-inspired pyramid is not only the area’s glittering centerpiece, it is also a source of solar energy. The project is part of a several-billion-yuan investment by Elion Resources Group, a private Chinese company that hopes to turn the barren deserts of northern China into an oasis of wealth and opportunity. However, despite the company’s obvious ambition, Wang Wenbiao, the founder and chairman of Elion Resources Group, remains uncertain as to when he will break even on his company’s investment. The hope of seeing an immediate return now lies in a vast 130,000-hectare liquorice plantation. The company has since estimated that the cultivation of this traditional Chinese medicinal herb could deliver as much as 3 billion yuan (US$460m) in annual sales revenue. “Although I believe it is worth more than that,” said Wang in a recent interview. Through the exploitation of sunlight, and efficient usage of water, desert agriculture has been encouraged in China in recent years as a means to help ease dwindling land resources and combat severe desertification. Faced with the task of feeding 20 percent of the world’s total population, China has begun to seek out new ways to expand its supply of farmland. The country currently has an estimated 120 million hectares of arable land – 60 percent below the international average per capita. However, this too is being threatened by rapid urbanization, a threat that was outlined in a report by the Agriculture and Rural Affairs Committee of the National People’s Congress in February 2011.

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Photo by Xinhua

“Making the landscape green at the cost of the environment must be avoided.”

People plant trees in the Kubuqi Desert, China’s seventh-largest desert, Inner Mongolia, 2010

and China is no exception. China’s per capita water resources stand at merely 28 percent of the world average. At the same time, its water efficiency remains poor. The GDP output produced by 1 cubic meter of water is one-third of the world’s average. The northern part of the country holds only 19 percent of China’s total water resources but has 60 percent of its arable land and 46 percent of the population, according to a recent report by the State-run Xinhua News Agency. Agriculture is the biggest water-consumer sector in China. A survey by the Ministry of Water Resources shows that in 2008 water consumption by the agricultural sector accounted for 62 percent of the national total. The figure rises as high as 75 percent in desert areas in Xinjiang, Inner Mongolia and Gansu. The shift in grain production toward the north and west is a major concern for Professor Hu Yuegao, director of the Center for Desertification Control at China Agricultural University. “Farming on desertified land has driven the quest for land and unNEWSCHINA I October 2011

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derground water in ecologically fragile areas, leading to desertification there.” The underground water level is dropping by 0.5 to 1 meter a year in many areas, and by as much as 8 meters in parts of the north and southwest. Hu believes that this is partially caused by increasing agricultural activity. “Theoretically at least, desert agriculture has the potential to further threaten underground water resources and biodiversity,” he warned; urging those involved “to control the scale of desert exploitation,” no matter how waterefficient their operations claim to be. Others go even further. Professor Fan Shengyue from Minzu University of China, a veteran expert on ecological economics, is outright opposed to any further exploration into the desert. “Desert is a natural, solid, underground reservoir. We should preserve some desert, particularly the mobile desert, rather than destroying it through these socalled efforts to ‘green’ it,” he said. Fan insists that all existing desertified land that can be exploited for farming has already been developed and the focus now should be on raising productivity and ensuring water efficiency in

existing areas. Bitter lessons of short-term gains turning to disaster are by no means rare. Along the “Green Great Wall,” the world’s largest forestry project running across the north of China, many poplar trees withered due to their massive water consumption, while failing to stave off the encroaching sands. The same plants have also been found on Elion’s land. “Making the landscape green at the cost of the environment must be avoided,” Fan cautioned. What people want from the desert goes far beyond crops or herbs. The National Tourism Administration, for example, is talking about the possibility of having “desert golf courses,” notoriously unsustainable and thirsty enterprises. The so-called “win-win” situation, much loved by developers, where economic benefits are drawn from the process of combating desertification, is often more blind optimism than sound practice. Whether that notion can be realized depends largely on whether ecological concerns are really at the heart of new efforts to “green the deserts.”

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FEATURE

Conservationist Monk

A Sacred Responsibility A lifelong birdwatcher, ethnic Tibetan lama Tashi Samge has spearheaded conservationist initiatives in his home province of Qinghai

Photo by Geng Dong

ď&#x192;ŞBy Wang Yan

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itching up his crimson robe, Tashi Samge begins his precipitous climb. There is a biting minus four chill atop Northwest China’s Qinghai plateau, 13,000 feet above sea level. The dangerously thin air and steep pathway soon leave the 41 year-old monk out of breath, but he struggles onward, aiming for his favorite spot. Thirty minutes later, he’s ensconced behind a rock near the nest of a female Tibetan griffon vulture, peering in at a newly-hatched fledgling, a pair of glittering eyes looking curiously back at him from a mess of fluffy white feathers.

Sacred Birds

Tashi Samge holds the senior rank of Khyenpo in the Palyul Datang Monastery in Jiuzhi County, Qinghai. The son of a Tibetan herdsman, raised by the side of a lake at the foot of Nypanpo Yutse mountain in Jiuzhi, he enrolled in Palyul Monastery when he was 13 years old. His keen interest in birds began in childhood and remained unabated even after he became a monk. Tashi claims to have observed a total of 400 bird species in their natural habitats, including 183 in a single prefecture. “Without vultures, the sky is empty,” is a Tibetan folk saying. The Himalayan griffon vulture is regarded by ethnic Tibetans as the sacred bird of the plateau’s patron goddess, a creature that serves as the envoy between the earthly world and the afterlife. Like the buzzard, the Himalayan griffon vulture is a carrion bird that largely feeds on dead and dying domestic animals such as yak and sheep, consuming little food outside the breeding season. This winter, Tashi discovered it was becoming increasingly difficult for the mother bird to get enough food for its offspring. “In the past, the adult vulture would fly out of the nest every day and return in four to five hours with its beak stuffed with meat. This winter, more often than not, the mother bird comes home ‘empty-handed,’ with little more than saliva to feed its lone chick.” In traditional Tibetan Buddhist lore, a certain number of sick or aging yaks would be let loose, and dead domestic animals left in the open for predation by wild birds as a sacrifice to the mountain goddess. In recent years, Tashi has noticed this tradition fading away, with a rising demand for Tibetan yak meat leading ethnic Tibetans to conNEWSCHINA I October 2011

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FEATURE serve every scrap for the marketplace. Consequently, a once-reliable winter food source for the vultures has begun to dwindle, posing a serious threat to these birds’ very survival. “Where else can they find food? Their numbers will definitely decline,” Tashi told NewsChina. “The only way to keep the species alive is to provide enough carrion during the breeding season.” Now, Tashi has taken it upon himself to meticulously record the time when the vultures mate, lay and hatch eggs, when and what they eat, when the young fledglings start to change their feathers and when they finally fly the nest. In the winter of 2010, Tashi successfully persuaded some local Tibetans to leave the meat of dead yaks to vultures. Tashi and his friend Zhou Jie, another monk from the Palyul Temple, have jointly shot a documentary film on Himalayan griffons which was released this April. The film depicts Tibetans making offerings of carrion near vulture colonies in order to save the birds from starvation. However, vultures are not only one of the bird species that fascinate this unusual monk. At his home studio, our reporter spotted an artificial nest made by Tashi’s family to house a pair of red-billed choughs. Tashi told our reporter, “This kind of bird is very special and locals hold them in awe. A local saying goes, ‘If you wound or kill a red-billed chough, one of your family’s yaks will die.’” Tashi‘s devotion to his homeland’s birdlife soon earned him the nickname “the birdwatching lama,” with others joking that he was a reincarnated sparrow. Whenever fellow monks spot a rare bird or even hear a birdrelated anecdote, Tashi will be the man they share it with.

Artistry

In the early 1990s, Tashi began sketching his beloved wild birds, drawing and creating his own distinctive style in the process. So far, he has completed detailed studies of all 400 birds he claims to have observed at close range. With no specialist equipment on the mountainside, Tashi would whisper observations into a tape recorder. At home, he would transcribe his oral description and sketch the birds he had observed, taking the resulting drawings back to the nest the following day for comparison and correction.

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Concerned that his student might be preoccupied with less-than-spiritual pursuits, Tashi’s Buddhist master at the monastery once asked him, “Why do you draw birds? For money, or for fame?” When Tashi replied, “For nothing,” his master was obviously relieved and gave him permission to continue with his hobby. “For me, there is no purpose in improving my drawing skill. I’m drawing the creatures purely out of love for them,” Tashi told NewsChina, adding that his dream is to paint a complete Tangka, an elaborate Buddhist scroll-painting, depicting a bodhisattva surrounded by regional bird species.

Conservationist

Tashi’s passion soon attracted a wide circle of friends. In the summer of 2005, when Tashi and a friend from the Shenzhen Ornithological Society were outside the Palyul Temple, they caught a glimpse of a plain-looking bird with a scarlet back and dark-ringed eyes. According to Tashi, his friend “went wild with excitement,” telling him it was a Tibetan bunting, a rare species unique to Qinghai which was on the International Union for Conservation of Nature and Natural Resources (IUCN) Red List of Threatened Species. Tashi, long-familiar with the species, had never known of its vulnerable status. Locally, the bunting was nicknamed “dzi bead bird” because the shadow surrounding its eyes resembles the etched agate beadwork treasured by ethnic Tibetans. Due to destruction of the bunting’s nests, which it makes on the ground, by humans and grazing yaks, the population has been in a constant state of decline for decades. Upon discovering the plight of a bird he had formerly regarded as rather commonplace, Tashi started painting the bunting and also investigated the range of its territory in the region. Finally, in 2007, he set up the Nypanpo Yutse Ecological Protection Association, drafting a detailed plan to protect the wild bunting. With grants from the WWF and Beijing’s Shanshui Conservation Center, the association was able to initiate the first comprehensive conservation program in the region. Tashi’s initiatives, among other things, cover distribution of images of the species captioned “buntings are like sacred birds, they are a good species and must be protected” in the Tibetan language to each household in the region. As

“The best protection is not to change the rule of nature but to follow it.”

a result of this campaign, locals began to pay more attention to the bunting. Now, locals habitually cover bunting nests with grass as a means of protection, and herdsmen are increasingly choosing to graze their yaks away from the bunting’s breeding grounds. “Our work is paying off,” Tashi told our reporter. “I see my conservation work as a kind of Buddhist practice, since the purpose of Buddhism is to help others, animals as well as humans. “If I just chant mantras inside the temple rather than make a genuine effort to protect the creatures outside, I am not helping,” he added.

Terminal Decline?

As the leader of the Nypanpo Yutse Ecological Protection Association, Tashi has received numerous titles and accolades such as the biannual ecological awards issued by China’s SEE (Society of Entrepreneurs and Ecology)Ecological Association and The Nature Conservancy (TNC) in early June. He has involved himself in the shooting of nature documentaries and published two bird books. When it comes to the challenges facing environmentalists and conservationists on the Qinghai-Tibetan Plateau, Tashi is remarkably candid. In our interview, Tashi explained how environmental protection, particularly the conservation of wild animals, is almost nonexistent in the area surrounding Nypanpo Yutse. Socalled game animals such as the musk deer and blueskin goat were randomly hunted until receiving basic State protection in the 1990s, but still teeter on the brink of extinction. Even more alarming to Tashi is the rapid erosion of the plateau’s grassland caused by poisons used to kill infestations of pikas, a native species of rat. Some 5.1 billion yuan (US$730m) worth of poison has been disseminated throughout the local food chain since the 1950s when the local government endorsed a mass campaign to eradicate the NEWSCHINA I October 2011

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Photo by Wang Yan

In the spectacular Nypanpo Yutse Nature Reserve, diverse bird species and other wildlife, including endangered snow leopards, roam freely

pika from the plateau. “Pika have existed for thousands of years and they have their natural predators, such as foxes, badgers and weasels. But the poisoned rats, if eaten, poison their predators,” Tashi told our reporter. The high reproduction rate among rats means their numbers quickly bounce back. “However, it takes years or even decades to restore the original numbers of predators killed by poison,” he continued. The decline in wild animal populations also poses a threat to the existence of other indigenous animals such as the snow leopard, a highly endangered species which lives among the mountain peaks. With no musk deer or blueskin goats, snow leopards turn their attention to the flocks of sheep tended by local herdsmen, who regularly shoot predators. Tashi’s solution to the clash between human and animal is simple. “The best protection is not to change the rule of nature but to follow it.” NEWSCHINA I October 2011

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Awareness

The work done by the Nypanpo Yutse Ecological Protection Association has paid off over the last four years. The association now has a total of over 60 members including government officials, students, monks, herdsmen, farmers and teachers. As well as protecting and monitoring local bird and animal populations, the association also records fluctuations in the size of the region’s mountain glaciers and lakes, as well as keeping a record of local plant and insect life. The association has also organized conservation clubs in local schools, encouraging young people to take an active interest in regional biodiversity. “If I know you, I will care more about you than I would a stranger,” Tashi said, “once children know animals and plants better, they start loving and protecting them.” “In promoting animal protection in local communities, we feel certain there is not a single person in Jiuzhi County who would

willingly kill a single wild animal,” Tashi continued. However, hunting and poaching are only one way in which humans are destroying Tibetan wildlife. Another issue the association has been working on is promoting systematic garbage collection promotion among local Tibetans. Discarded plastic is proving a serious threat to regional wildlife, choking and smothering birds and animals alike. “Since there are no recycling or garbage treatment facilities in the area, and no one bothers to collect garbage for transfer to bigger cities for treatment, all we can do is to promote local awareness,” Tashi told NewsChina. In theory, Buddhism does not discriminate between human and animal rights. While China as a nation has its own lists of protected animals, which divides species into those meriting first- and second-class protection, the country’s Buddhists make no such demarcation. “We cannot kill one species for the sake of protecting another,” said Tashi. 

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CULTURE

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Photo by Wang Chen

hen the Great Proletarian Cultural Revolution swept across China in 1966, Jin Dalu was a teenager living in Shanghai. Due to his family’s “questionable background,” he was excluded from the privileged ranks of the Red Guards. Out in the cold, Jin watched the revolution unfold from the sidelines, and bore witness to the excesses of “revolutionary activities.” “In the beginning I was a fervent believer in the theory of ‘continued revolution under the dictatorship of the proletariat,’” Jin told our reporter. “Later, growing up, my ideas turned against the Cultural Revolution and its theories.” Jin’s change of heart came in 1971 when Lin Biao, Chairman Mao Zedong’s anointed successor, died in a plane crash in Mongolia attempting to defect to the Soviet Union after a failed coup d’état. Hearing the news, he recalled that he started trembling all over – it was as if all his convictions had been shaken to their very foundations. He began to have doubts about the Cultural Revolution, doubts which later crystallized into a resolve to probe into the political catastrophe that wrought havoc across China and led to the torture and murder of countless people. Thirty-five years later, Jin, as a researcher at the History Institute of the Shanghai Academy of Social Sciences, completed his 670,000-word book Abnormal vs Normal: Social Life in Shanghai During the Cultural Revolution. Abnormal vs Normal is split into two parts. The first deals with the political campaigns and their influence on ordinary people. Voices include some of the millions of “educated youths,” mostly junior high graduates, who were sent to the countryside to perform farm work; those who engaged in iconoclastic vandalism during the “Smash the Four Olds” campaign targeting “old ideas, old culture, old customs and old habits;” and also details the Red Guard raids on the homes of “undesirable elements,” typically intellectuals, and the confiscation of their property. The second part of the book gives an account of people’s daily lives in Shanghai during the Cultural Revolution, describing marriages and divorces, ongoing corruption including cynical profiteering from the sale of Chairman Mao badges to people desperate to cultivate an image of loyalty. “The sins we see today - the abuse of power

Jin Dalu

Life Goes On Historian Jin Dalu’s new book, Abnormal vs Normal: Social Life in Shanghai During the Cultural Revolution, approaches one of China’s darkest hours through eyewitness accounts, offering a human window on a historical period known universally for its inhumanity. In this interview, Jin explains why his interest in the period has become inextricable from the features of daily life By Yang Shiyang in Shanghai

for personal gain, embezzlement and undercover prostitution - all existed in those years, contrary to assertions of those nostalgic for the ‘revolutionary purity’ of the time,” Jin added. While Party archives detailing top-level decision-making during the Cultural Revolution remain classified, researchers such as Jin have ceaselessly probed into unofficial records in search of an explanation for the madness that gripped China in the 60s and 70s. His new book is an attempt at approaching a period China has officially tried to forget from a fresh angle - the daily lives of ordinary people, lived out under the fearful shadow of unprec-

edented political persecution. Jin intends Abnormal vs Normal to be the first part of a trilogy dealing with this period, with a subsequent two tomes focusing on the persecution of “counterrevolutionaries,” sex crimes and suicide, all topics which are skirted around in the official histories. “At the mention of the Cultural Revolution, the younger generation tends to imagine youthful revolutionary zeal and rebellion against the ‘capitalist roaders,’” said Jin. “But in reality, people still had their lives to live and various pedestrian undercurrents flowed beneath a revolutionary crust.” NEWSCHINA I October 2011

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“The sins we see today - the abuse of power for personal gain, embezzlement and undercover prostitution - all existed in those years.”

Daily photographs of ordinary Chinese during the Cultural Revolution

NewsChina: Why do you choose daily life as the point of departure for your writing, rather than the political movement itself? Jin: I personally experienced the Cultural Revolution and have long had the urge to have it recorded. Normally, the political history of a certain historical period is placed above its social history. At present, it is tough to write about controversial events like the Cultural Revolution. Furthermore, the top archives have yet to be opened. So, instead, I wrote the first social history of the Cultural Revolution. Some people criticize me as not going far enough in my criticism, but I reached my conclusion through research of historical records, and I do not want to tie ideology to academic research. NewsChina: You also explored differences between “revolutionary zeal” in Beijing and Shanghai, claiming the latter was the only place in the country where no gun violence between rival revolutionary factions was recorded. Why was that? Jin: At the start of the movement, the Shanghai Garrison Command issued an order to seal up all caches of firearms in the city, denying access to feuding Red Guard factions. Shanghai was also the support base of Zhang Chunqiao and Yao Wenyuan, two members of the Gang of Four and ringleaders of the Cultural Revolution, who went to great lengths to seal Shanghai off from the worst of the violence. There were indeed fights between rival factions but they involved sticks NEWSCHINA I October 2011

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and spears, not guns. The situation in Beijing was different. According to statistics, by September 30, 1966, a total of 1,772 people were beaten to death by Red Guards over a period of twelve days during the forced confiscation of goods belonging to “undesirables.” The figures for Shanghai showed a mere 11 deaths. NewsChina: Romantic love became taboo during the movement. But according to your statistics, the marriage rate in Shanghai remained unchanged. Jin: People still managed to live their lives and make the best of harsh circumstances. However, the divorce rate was abnormally low - only 6,489 couples divorced in 10 years, barely two cases per day. This wasn’t so much an indication of revolutionary zeal holding marriages together as an outward sign of inward fears. Contemporary propaganda equated a high divorce rate with decadent lifestyles, and the children of divorced couples became politically tainted. Those who did get divorced were largely driven by political considerations – for example, divorcing a spouse with a “bad background,” rather than as a result of a breakdown in a relationship. NewsChina: The revolution served to dam people’s emotions. Did these pent-up feelings still find an outlet? Jin: For any action, there is an equal reaction. In August 1966, the Red Guards set about cutting “fashionable” hairstyles or repudiating “fancy” clothes, attempts at attaining

“revolutionary purity.” However, the hairstyles and fancy clothes quickly reappeared. Underground sexual transactions never disappeared. Red Guards checked under young girls’ skirts at the entrance to cinemas to see if they were wearing panties, supposedly to prevent prostitution. Sexual harassment and violence became a hallmark of the period. During the National Day celebrations in 1972, gangs of young men forcibly stripped girls on the street. At least one girl was stripped completely naked. Although one ringleader subsequently received a death sentence, such instances of sexual harassment kept cropping up in Shanghai throughout the mid-1970s. NewsChina: Now some people say they “miss” the Cultural Revolution, saying there was no corruption at the time because no officials dared to commit crimes. But your research shows this belief to be false. Jin: A group of cadres at a grocery market in Hongkou District were caught embezzling tens of thousands of yuan. Many officials made fat profits by making and selling Chairman Mao badges, taking advantage of the social necessity of demonstrating love and respect for the Chairman. They formed a complete chain of production, from the purchase of aluminum ingots to polishing and selling. NewsChina: Different schools of thought have different points of view about the Cultural Revolution. How did you decide on your angle? Jin: I have always stressed that historians should base their research on historical material and adhere to the principle of academic supremacy. Today, we see many Cultural Revolution researchers swayed by their preset ideologies or prejudices. Some whitewash the whole affair while others pour their emotions into the research. I try not to let my emotions stand in the way of my research. 

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VISUAL REPORT

Last Look Back The central phase of China’s great South-to-North water diversion project was launched in August 2010, forcing the relocation of 63,000 residents from the mountainous area scheduled to become the Danjiangkou reservoir. Already touted as China’s largest ever forced migration from a single region, the plan is set to be completed by September 30. Locals chose the auspicious date of August 11 to begin the great exodus, with over 500 vehicles transporting people and belongings from rambling mountain villages to new housing in various counties of Hubei Province. In less than a year, their former homes will be underwater.

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VISUAL REPORT

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Photos by IC

Clockwise from left: Xiang Shuangmei and her two-year-old son Wu Xianghao take one last look at their hometown of Guanmenyan village through a bus window, August 19; The family of 76-year-old Zhu Zide take a last photo in front of their former home in Erfangyuan village, Danjiangkou, August 19; Buses transport Erfangyuan villagers out of the mountains, August 21; Villagersâ&#x20AC;&#x2122; belongings are moved by trucks, August 20; Huang Li, 64, has lived in Erfangyuan for about 30 years, August 19; Zhai Yunbang pays a last visit to the graves of his ancestors, August 21

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OUTSIDEIN perspectives from within china

Mount Wutai

A Taste of the Spiritual Alive with the clamor of the business side of Buddhism, the sheer number of Mount Wutai’s monasteries means that those in search of spiritual fulfillment need to shop around. Our reporter unexpectedly found inner peace over lunch By Jack Smith

hina travelers can easily become cynical when it comes to visiting temples. More often than not, a little background reading reveals that countless revered and “ancient” edifices were reconstructed from the ground up in the last twenty years. The ability of a fresh-faced tour guide to point out a gleaming ten-year-old temple and describe it as “ancient” with a straight face never ceases to amaze. Even China’s scattering of UNESCO World Heritage Sites often fall victim to encroaching Walt Disney commercialism. Consequently, Mount Wutai’s status as a UNESCO World Heritage Site, complete with a brand-new highway, failed to fill me with hope. On arrival in Taihuai Village, the confluence of a dozen prominent monasteries in this, the most sacred of China’s major Buddhist sites, the swarming tour groups, hollering salespeople and drone of traffic seemed to justify my misgivings. Indeed, Taihuai Village itself cannot be described as a peaceful Buddhist refuge anymore than many of China’s extant temples can be described as “ancient.” The village is well and truly fixed on the tourist trail, and hundreds of thousands of Buddhists, nonBuddhists and Buddha-curious visitors make their way here each year. However, while the tourist buck may yet eviscerate this holy

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place, right now it has done little to shatter the overwhelming power of the genuinely ancient vermilion edifices sprinkled among Mount Wutai’s five peaks with their romantic names such as the Peak of Flourishing Leaves and Hanging Moon Peak. Many temples date back to the Ming and Tang dynasties and beyond, and for every gaggle of vacationers, there is a contemplative pilgrim climbing step-by-step up one of the interminable staircases to a hilltop shrine, kowtowing with each pace, their foreheads scarred from being pounded into countless stone steps. Wutai’s religious buildings vary wildly in both scale and atmosphere. The touristcentered “must-see” Tayuan and Nanshan temples in Taihuai Village, where pilgrims elbow one another out of the way to pitch a bundle of incense into a burner, are gorgeous buildings with intricate woodcarving and gleaming Buddha icons galore, but remain so rammed with tourists that any sense of spirituality is often yelled and jostled out of existence. The same is true of the terraced Da Xiantong Temple with its awe-inspiring gilded pagodas, though an impressive 400 rooms means it’s easy enough to dodge the crowds. However, there are so many concealed and remote temples to explore that a little wandering can lead you to an ancient hermitage tended by a wrinkled monk or

two where you can be alone with the circling crows and the sound of the wind. As with so many of China’s hotspots, it pays to wander off the beaten track and explore the dozens of trails leading off the main drag. Well worth seeking out is a place to lunch in one of the temples. I was lucky enough to be invited to lunch at the newly-built Foxue Yuan (seminary), closed to ordinary tourists, its vast structure standing silent and contemplative on the mountainside, its many imposing halls terraced into natural ridges. A person I took to be a monk – shaven headed and clad in a grey robe – made their way towards NEWSCHINA I October 2011

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Photo by Jack Smith/Map Illustration by Wu Shangwen

our group at the gate, and it was only when this imposing figure began to speak that I realized she was a woman. Devoid of the false friendliness characteristic of Chinese service personnel, she ordered the small group of tourists around like a Dickensian schoolmistress, soon scaring us into silence and glaring at any person who dared to utter a laugh or allow their cell phone to ring. As we stood in line outside the cavernous dining hall, this nun drilled us in the seminary’s dining hall decorum. No talking, chew quietly, hold out your bowl if you want more, cover it if you don’t want a particular dish, keep your eyes NEWSCHINA I October 2011

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on your own food… the list was too exhaustive to relate, and I wondered if I would remember it all. As she spoke, immense snaking lines of shaven-headed nuns filed silently into the hall, each holding her own dinner service of one wooden and one enamel bowl, iron spoon, wooden chopsticks and cleaning cloth. The nuns were seated first, and then our small group was hurriedly accommodated, with more than a few tart remarks from our chief warden directed at several local visitors who continued to chatter. We sat, were issued with identical eating implements, a long Sanskrit incantation

was read, and the meal began. The food, all vegetarian temple cuisine known as zhaifan prepared without the “stimulating” spices prohibited in Buddhism – in other words, no chili pepper, no Sichuan pepper and no ginger – was uniformly delicious. I later

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travel

discovered the hefty quantity of food was the result of most of the nuns only eating one meal a day. A steaming broth of Chinese radish was accompanied with stewed yam and onions, fried pancakes, potato and cabbage stir-fry and ample fluffy white rice, all ladled out by serene-faced nuns in complete silence. I ate my fill, carefully observing the warden’s rules and keeping my eyes to myself. In a flash of realization it dawned on me that this was by far the quietest meal I had ever enjoyed in China. All I could hear was the wind, the footfalls of the serving nuns, and the sound of my own chewing. Once I had adjusted to this tranquility, I found I could focus on the taste of the food and the sensation of chewing and swallowing. Consequently, despite being ravenous, I instinctively slowed down to savor every mouthful. Soon, my mind wandered into deeper thoughts about the incongruity of my presence in this silent, reverent world. As the meal ended and the nuns wiped down their dishes and departed, I sat back on my hard bench and looked around. All my fellow tourists had been struck equally dumb by this experience, and as we emerged blinking into the January sunlight of the seminary courtyard, we remained silent and contemplative. Here, then, was the reason so many former residents of China’s overcrowded cities had chosen to escape to this serene place – here, nothing interrupts your thoughts, leaving you free to settle into your own mind. In the space of one lunch, committed atheists had experienced the spiritual power of silence. 

Getting There Daily express trains to Taiyuan leave from Beijing West train station, as well as flights from Guangzhou, Shanghai and Beijing. From Taiyuan’s main bus station you can take a bus directly to Taihuai Village, a picturesque but grueling five-hour journey. Don’t forget to factor in the mandatory 168 yuan (US$26) entry fee at the gate of Taihuai Village – if you’re going with a driver, they’ll also have to pay this. The more intrepid traveler can take a train from Taiyuan Station to Wutai Shan Station, which lies 50km from Taihuai Village, however tickets are scarce, trains are crowded with local farmers and hawkers, and timetables subject to change without warning. Once inside Taihuai Village, a hop-on, hop-off tour bus runs to all five peaks, allowing you to explore at your leisure so long as you keep a hold of your ticket.

High-five afresco for good luck.

Accommodation While there are new resort hotels opening all the time on the drive in to the World Heritage Site, it is also possible to secure a bed at Tayuan, Xiantong and Kuangren temples for about 20 yuan (US$3) per person. Where beds are available, you will also be able to dine alongside the resident monks for a small fee – remember to keep silent. Otherwise, food is available from the restaurants in Taihuai Village as well as in hotels – specialties such as wild mushrooms, salt beef and tomato and egg noodles are all good bets – and remember to help yourself to the famously rich Shanxi vinegar.

Conduct While Chinese tour groups may stampede in and out of temples as if they’re on fire, it

is worth remembering that your conduct is being observed and it pays to be respectful. Don’t photograph monks without permission and also keep your camera away from Buddhas – this is often painful for veteran photographers who catch a glimpse of that perfect Lonely Planet snap, but it is considered highly disrespectful. Don’t rub against or touch icons, murals or statuary, regardless of how many Chinese tourists are doing this – it contributes to the erosion painfully apparent in the faded frescoes and sunken, blackened reliefs in some older temples. Also, beware of monks offering to read your fortune or personally escort you to hidden sanctuaries – there are plenty who are not above scamming tourists out of large sums of money.

real chinese

meng Cute as a Button Originally popularized in Japanese cartoons, meng, a character which typically pops up next to big-eyed preadolescent female characters has connotations of innocent cuteness. In traditional Chinese, meng is both a noun and a verb meaning “sprout” or “germinate.” As a noun, meng signifies the initial phase of something, while the verb form means “growing up.” The new, popular usage is as an adjective, as in “he or she is really meng” – cute, adorable or irresistible. The closest literal meaning is broodiness felt by adults towards babies and young children. As with many Internet buzzwords, meng has been seized upon and modified to suit specific contexts. Mai meng, literally “to sell cuteness” is used to describe people, particularly girls, who affect innocence and cuteness in order to advance

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themselves personally or professionally, making mai meng a derogatory term similar to “phony.” This expression has even spilled into mainstream parlance, with a recent online critique of 3D movie The Smurfs using the term to mock the film as a whole as mai meng. The author accused the filmmakers of pandering to sentimentality, suggesting that young Chinese people who grew up watching the Smurfs on television could only appreciate the film on a nostalgic level, slamming its lackluster plot and characterization. As with many Chinese words, meng is a double-edged sword, easily transformed from a compliment into an insult, and as such should be handled with care. NEWSCHINA I October 2011

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flavor of the month

Wriggling Eats and Candied Treats By Stephy Chung

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Photo by CFP

treet foods at night markets are quintessentially Chinese. And the red lanterns dotting the Wangfujing snack street in Beijing invite the hungry and bold to experience chow from all over China, in smaller portions. The one-stop street food emporium has over 30 stands, many proclaiming to serve regional specialties like Tianjin steamed buns, hunks of lamb, Mongolian-style, and my least favorite, the south’s stinky tofu dishes. Customers fork over 10-20 Yuan (US$23) in exchange for most snacks, so it’s wise to wait and see what’s offered before getting stuffed on the first few stalls. Many stroll with chuan’r, the piratesounding skewered lamb kebab, in hand. Others prefer sweet over salty. Candied red hawthorn, or bingtang hulu, resembling bulbous abacus counters, are a favorite with Beijingers. The initial bite breaks through the caramelized sugar, before yielding to a teeth-ruining chew. The outer core is almost runny, and the sweetness becomes very tart. The night market is located on Beijing’s east side, in the greater Wangfujing area in Dongcheng District. During the Qing Dynasty, royal residences were erected on the land after the discovery of a natural well, giving the area its eventual name – wangfu meaning princely residence, and jing meaning well. Today, Wangfujing is a symbol of Beijing’s commerce and growing prosperity. Its wide streets are closed to traffic, flashy jumbo screens are fixed onto tall, modern buildings, and there are an obscene number of international retailers. Most tourists, however, seem more drawn to the adventure of gnawing on centipede extremities than shopping at the Gap. The chaotic atmosphere, buzzing with hungry sightseers, the majority Chinese, carries a palpable sense of excitement. An empty stomach and an open mind are essential when visiting the market. Here, land meets sea. Fried grasshoppers, with no hop left in them lay pierced in straight rows next to immobile starfish. Leggy dung bee-

tles seem to taunt tubular fried silk worms, while the most daring gourmands chew on cow hearts and lamb testicles encased in sea mushrooms. Squid and octopi tentacles are wrung like mops and then dangled off sterile tin trays. Snakes and seahorses are easy to pick out, save for their graying color, but other meats are harder to differentiate. Many are rolled in various spices and sauces, threaded kebabstyle, and then grilled over charcoal. Due to the many snap-happy foreign tour groups that frequent the street, the majority of the red apron-wearing vendors have acquired enough English to shout out the names and body parts of the mysterious red, white, and pink masses. The most widely available snack is the scorpion, no doubt because its pincers invoke the most fear. There are two intimidating varieties of scorpions. One is the hulk, a ferocious ready-to-attack, shiny black specimen, about 5 inches in length, and 1 to 2 inches at its widest part. Then there’s the smaller,

yellowish, friendlier looking variant. Some find it thrilling, others grizzly, either way, its difficult not to watch as live scorpions are selected from a pot, skewered, and deep fried. Unable to select my own scorpion, I allowed the vendor to pick for me. Fortunately he chose a tired, weary looking medium-sized one, who I like to imagine, had led a long and fulfilling life. I tried to keep this thought in mind as I bit into what tasted like an overcooked, tasteless French fry. For those less enthused by creepy crawlers, there’s plenty to choose from. The jianbing, a Chinese crepe, is made on the spot. Batter is first ladled onto a hot griddle, and just as it spreads, an egg is cracked and swirled through the mixture. A thin-crepe like body begins to take shape. Various sweet and salty sauces are then smeared on, and a heap of fried veggies are stuffed into it along with a crispy sheet of fried dough. A pinch of cilantro and spring onion are then sprinkled over the stuffing, and the whole ensemble is wrapped and ready to eat. 

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essay

Safety, a Barrier to Logic? The other day I tried to cross the road, a rudimentary act, requiring minimal deliberation, especially when there’s little or no traffic. Or so you’d think. As with almost every road in Beijing, attempts to cross are blocked by row after row of white fencing, of the idiot-proof picket variety. However, as I attempted to climb this particular stretch of aforementioned fence, a lone policeman suddenly appeared. He didn’t seem to be having it, for whatever reason, and as I began to de-clamber from the intersection, the lights changed and suddenly I was left stranded as traffic roared on both sides. I had, I soon realized, committed some form of jaywalking infringement, although was unsure of what the charge would be in Chinese road law (if there even is such a law). I suspect all I’d merely done was something most Beijingers don’t do publicly: step off “the line,” however slightly, in plain view and this was enough to ignite something in this lawman’s heart. In other words, I’d been caught. Around the Beijing Olympics a whole network of white fences was suddenly flung up across the city, presumably with some kind of traffic planning in mind. Unlike the other facelifts the city enjoyed in the 2008 lead-up, when the Olympic road show moved on and the rest of Beijing’s grinning fixtures sagged back with exhausted relief, the barriers stayed put. I can see why they would: they look safe, protective, official. All’s well, they proclaim: our roads are law-abiding and under control. In fact, these fences are largely pointless, certainly ugly and definitely annoying. Pointless because any car that drove into them would knock them over immediately and arguably cause more chaos. If they were intended as a crash barrier, a solid concrete buffer at below-knee height would be far more effective (for everyone). Ugly and annoying, because they are just one more barrier in a litany of obstructions to pedestrian freedom in the capital – especially, if like me, you enjoying running. The roads

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are wide enough, at six lanes, that running across them, even when in the dead of night, feels like attempting to sprint through a lion’s den – so why add obstacles? And if you are going to, why not make it really tricky: litter the zebra crossing with banana skins and buzz people with low-flying model aircraft, for example? “Not a single nationality in this world is as enthusiastic as the Chinese in the construction of walls” noted Chinese blogger Zhang Lifan. He wrote that China has historically barricaded itself, from the Emperor Qin Shihuang’s unifying anti-Mongol fortifications to the Ming Dynasty’s coastal walls. The dregs of these constructions were then mistakenly codified by foreigners into a single, epic entity – the Great Wall of China – and now this mythical construction is the country’s most famous symbol. And whether it’s the Forbidden City or the siheyuan enclosures that still conceal vast courtyards from common eyes, building walls, physical or metaphorical, to outsiders is a Chinese tradition, even within the country. Perhaps these traffic barriers form part of that mindset. Clearly, as they occasionally taper off to ankle-height, they are intended to provide some form of designated crossing zone but, frankly, the epic stretches between such places mean they’re just another irritant to being on foot. Beijing is a massive, grid-like place but trying to get from A to B as the crow flies or thereabouts is constantly thwarted by unnecessary impediments. I’ve lost count of the amount of times I’ve jogged through a particular district only to spend the next hour, running around trying to find an obvious exit from an apparent cul-de-sac, only to find myself surrounded on all sides by barriers, barbed wire, diffident security guards and eternally locked gates. There’s not much sense to all this corralling, other than to make one feel like an enraged steer in a permanent cattle drive. Beijing is, looks-wise, not the cutest of places – adding a whole bunch of street furniture and iron-

Illustration by Xiang Zhaohui

By Robert Foyle-Hunwick

mongery doesn’t help. The same anti-aesthetic happens in a lot in European towns – bollards, signage and fencing are constantly used to segregate – even ghettoize – neighborhoods and roads by local councils whose mindset is influenced by road safety and risk management. But a new mindset is suggesting the opposite is true: the town of Christianfield in Denmark is famous for a 2004 experiment which removed all traffic signs and signals from its major intersections and saw its annual accidents rate drop to zero (admittedly, from three). “Psychological traffic calming” experiments in the US have suggested that constant shepherding signs and barriers provide makes drivers lazy rather than alert and that drivers without such “center-line” guidance drove better. Areas that employed it saw a 35 percent decrease in accidents. Driving standards, still in their infancy in China, would probably have to improve tenfold to see such methods work, of course. People here often laugh at the driving but in truth, speed isn’t the main problem, though probably out of concern for pranging a beloved private car rather than a regard for sanctity of human life. But more effective, cheaper and attractive alternatives exist, which is why I call on the Beijing government: tear down these walls, let’s build a better future, and can I please just cross the road?  NEWSCHINA I October 2011

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Never Looked so Good The view from Beijing has never looked so good. True, it’s hard to make out the tops of buildings in the smog-smeared gloaming, but the economy is still chuntering on, growing at 9.5 percent last quarter and providing wastrels like me with an ocean of opportunities. Meanwhile, plumes of smoke drift aimlessly over London as equally aimless youth set about burning and looting in a spree of violence. In New York, it’s the steam rising from the napes and ears of Wall Street traders that chokes the city’s streets, as stocks suffer their worst sell-off since the 2008 crisis and the Treasury fumes at Standard & Poor’s decision to downgrade the rating of US government debt. A sad lot, that of a ratings agency chief; subjected to vitriol and derision for failing to spot the mortgage securities crisis, and then dealt more of the same when making what appears a fair call on the US government’s woeful fiscal position. When all’s said and done, then, Beijing is not a bad place to be right now, nor has it been since I fled the dissolution of the West in late 2007. At the time, I had no intention of staying for any prolonged period, and my stock reply if asked when I would be returning to London involved mumbling something about waiting for economic conditions to improve before quickly changing the subject. That was four years ago, and if anything

When all’s said and done, then, Beijing is not a bad place to be right now, nor has it been since I fled the dissolution of the West in late 2007. NEWSCHINA I October 2011

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those conditions have deteriorated to such an extent as to render plotting a return to the motherland without a cast-iron career job unthinkable. In Beijing, however, it is possible to live cheaply and indulge in what a dramateaching friend of mine refers to as “The Yes Game.” This he plays with school children in an attempt to spark their imaginations, simply by affirming any wacky idea they have and asking the next kid to continue a story based on that assumption. In the longer term, it might be hoped the game will give the next generation the drive and confidence to fulfill their ambitions, while foregoing the urge to don a mask, rush outside and crack shop windows with baseball bats. In Beijing the game is much the same, though rather than the wacky idea being, say, a man made entirely of banana milk, it might be starting your own company or contemplating a career change. While the city is yet to emerge as a hive of entrepreneurialism, it does offer a comfortable redoubt in which to shelter from the economic turmoil engulfing the rest of the world, consider one’s options and possibly even put them into effect at a fraction of the bureaucratic cost attached to similar ventures back home. However, in what long-term expats have come to regard as typically Chinese fashion, the city does do its level best to impede these dreams, most obviously by implementing a strict visa regime designed to prevent layabout idealists from passing time here without gainful employment. Then there are more locally-aimed initiatives, such as the public security bureau’s recent move to force some café owners to install software that monitors the identity of internet users, thereby instantly ruining their business and your pleasure in one fell swoop. Other obstacles include the oft-recounted ordeals of drinking excess amounts of Chinese liquor with various officials, but let’s be honest, worse things can happen

Illustration by Xiang Zhaohui

By David Green

than getting roundly inebriated with people you may not necessarily like. All these issues can be overcome with a modicum of dedication and hard work, but a further word of warning is in order before manning the lifeboats and paddling desperately in an easterly direction. A Chinese friend of mine of moderate views recently invoked the specter of overimmigration, the very issue that is often upheld in Britain as an excuse for the kind of violence ongoing in London. “Chinese people think there are too many foreigners in Beijing now,” he said pointedly over a drink last weekend, before clarifying his view by saying that foreigners should not be coming to Beijing to take jobs that could just as well be held by a Chinese national. His examples were bartending and serving tables, and it is hard to argue with his point. Yet before I leave myself open to accusations of hypocrisy, his views and those recounted above are not necessarily mutually exclusive. I am endorsing Beijing as a haven for the dilettante dreamers who may just require a safe-haven from which to plan the launch of job-creating schemes and money-spinning enterprises, not as a source of abundant employment for those without skills or ambition. 

8/25/11 6:00 PM

CULTURAL LISTINGS

Art

Young, Creative and Unknown A long season of art exhibitions devoted to the work of young artists was launched in Chengdu, Sichuan Province, in June. Titled Youth Artist Experimental Season, the event, hosted by the A4 Contemporary Arts Center in Chengdu, comprises three sessions and will last for three months, closing mid-September. Without a State-sponsored support system, young artists in China often face heavy pressure from their families and schools to seek conventional employment over creative endeavor. Consequently, this art season provides a platform for young and talented artists regardless of style or background. Greater participation in creative industries by the young has been on the rise in China in recent years, with many school graduates looking to distinguish themselves through creative output. Cinema

Reality Check

Book

A Private Album of Wang Guangmei By Luo Haiyan

A retrospective of works by director Wang Quan’an was held in Beijing’s MOMA Broadway Contemporary Film Center in August. Titled Vanishing China – On Wang Quan’an’s Film, the event was the first systematic review of Wang’s works in a decade. At 46, Wang is one of China’s so-called Sixth Generation directors who were singled out for their creative vision. Wang’s works, while concentrating on depicting social realities, have also earned praise for their dramatic punch. From his debut with Lunar Eclipse (1999), through the Berlin Film Festival Golden Bear-winning Tuya’s Marriage (2006) all the way to his current production, White Deer Plain, Wang is one of few directors attempting to preserve China’s vanishing past in the face of modern development.

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When Wang Guangmei was jailed in 1967, she was 46. Two years later, when her husband Liu Shaoqi, the disgraced former president of the People’s Republic of China, was tortured to death during the Cultural Revolution (1966-1976), Wang wasn’t even informed. Born into wealth and privilege in 1921, Wang became the first Chinese citizen to earn a master’s degree in atomic physics. She gave up the opportunity for further study in the USA to join the Communist Party in the late 1940s, marrying Party up-and-comer Liu Shaoqi in 1948. At the time, Wang was 27 and Liu 50. The Private Album of Wang Guangmei, compiled by Xinhua News Agency’s veteran editor Luo Haiyan, selectively narrates Wang’s private and public life through more than 400 photos provided by her surviving family members.

Music

Pay to Play A recent deal was signed between Baidu and OSC (One Stop China), a joint-venture company that represents the Universal Music Group, Warner Brothers and Sony Music’s record business in China. Through the deal, Baidu, which is one of the largest search engines in China and features free mp3 search and download services as one of its most important branches, will be authorized to upload legal copies from the three companies, including both Chinese albums and those in other languages. Users of Baidu can stream songs online before paying to download them to their computers. Industry observers view the agreement as a milestone compelling Baidu, as well as other Chinese Internet companies, to combat piracy and repair strained relations with international music companies, who have continued to see a decline in album sales as a result of the online exchange of music. NEWSCHINA I October 2011

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COMMERCIAL LISTINGS

Beijing International Studies University (BISU) Beijing International Studies University (BISU) was founded in response to remarks by former Premier Zhou Enlai, who stated that China needed more foreign language undergraduates in order to gain prestige abroad. Renowned nationwide, BISU has developed into a multi-disciplinary educational establishment that offers courses in foreign languages, tourism management, liberal arts, management, economics, law and philosophy. BISU endeavors to educate and train its students into internationally-minded professionals proficient in foreign affairs, tourism, economics, business and trade. For decades, BISU has been a popular choice among foreign nationals wishing to study Mandarin to a high level – its location away from Beijing’s expat enclaves guarantees an immersive language environment, and once a certain level of proficiency in Mandarin language is achieved, the rest of the institution’s excellent courses in contemporary disciplines are opened up.

Taste of Beijing

A Long Spanish Summer

The Hutong offers a wide variety of cultural programs: Culinary Events, Healthy Habits, Tea Journey, Creative Pursuit and Youth Education. Beijing Cultural Heritage Protection Center (CHP) and The Hutong present ‘Taste of Beijing,’ an exciting culinary journey through the capital. Learn how to cook three classic Beijing dishes using fresh and seasonal local ingredients, and hear the story behind the recipes. Details Admission: 240RMB, 200RMB (CHP & The Hutong members)

Maximum Manners

The Knigge Akademie, named after German nobleman and pioneer of polite protocol and good behavior Adolph Freiherr von Knigge, is the world’s foremost etiquette training company offering classes in business etiquette, table manners, dress code, interview training, wine connoisseurship and more. The Knigge Akademie has become world-renowned as the only company authorized by the German government to certify etiquette training courses, etiquette trainers, and new etiquette-related start-ups. As a result, the Akademie already has an outstanding reputation in the business thanks to their work with many prominent business figures, Fortune 500 companies, different governmental institutes, and countless celebrities around the world. In March 2011, the Knigge Akademie entered the Chinese market, opening its first overseas branch in Beijing. Since July of this year, the Knigge

NEWSCHINA I October 2011

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Contact: (86) 159-0104-6127 Address: 1 Zhongxiang Hutong, Jiudaowan, Dongcheng District

Akademie has been working closely with many mainstream Chinese media outlets. Media sources like CCTV, BTV, CRI, and NetFM, are all willing to bring Western etiquette into everyday Chinese life. This August, 260 employees from winery Chateau Changyu AFIP Global in Miyun will take part in a one-week etiquette training course offered by the Knigge Akademie. The goal is to train all of their employees in Western standards of etiquette. At the end of August, Dr Hans-Michael Klein, CEO of Knigge Akademie, will travel to Beijing to attend the awards ceremony and personally deliver Knigge Etiquette Certification to Chateau Changyu AFIP Global, thus making them the first certified Asian hotel to meet international Knigge standards of etiquette. A Knigge Akademie spokesperson said, “We look forward to a booming market of etiquette training in China.” For more information, check out the website at: www.knigge-akademie.cn

At Mediterranean-themed Bar Code, the emphasis is on wine, with some nibbles – or pinchos - on the side. Jamon iberico and smoked salmon on toast and the roasted piquillo peppers with sardines are great flavor combos and you get a lot for your money. The same goes for the more substantial tapas such as beef tenderloin with blue cheese sauce, garlic prawns and tortilla Espanola. The boss, a wine importer, has sourced an impressive list of Spanish rosé, aperitif and sweet wines, and also stocks selections devoted to Spanish “new wave” wines, as well as the classics, with the Riojas firmly in charge. The food may once have been an afterthought, but now there’s a full, varied and delectable menu to satisfy patrons looking for a late bite, and wine enthusiasts will be in seventh heaven. Opening hours: 11.30am11.30pm Phone: 8590 7855 Address: Bar Code, World City (north of The Place), 10 Dongdaqiao Lu, Chaoyang District

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COMMENTARY

Why Does the World Fear us? China needs to understand that its enhanced role in the world economy will not automatically earn its leaders political goodwill. By Guo Kai

fter two years of turbulence in the world’s financial markets, try. Efforts to build infrastructure do little to allay criticism that China’s global role has undergone a massive transformation. China is simply pillaging an entire continent of its mineral wealth Not only has China evaded the global financial crisis more with no view to developing long-term, sustainable prosperity. effectively than most, its continued rapid growth has dwarfed its Intellectual property and consumer rights protection, corporate closest competitors. China is increasingly seen as a capital export- governance and governmental transparency are all in their infancy ing country, with countries ranging from the richest to the poorest in China. Corruption continues to erode public confidence in its hankering after Chinese investment. As the G7 gives ground to leadership. China’s demand for resources is taking an ever-heavier the G20, unthinkable a decade ago, China has become a world toll on the environment - for example, Chinese demand for soyheavyweight. beans has resulted in deforestation in Brazil to clear land for farmHowever, China’s investment in other countries is receiving an ing, just as the Amazon basin had begun to recover from the devasincreasingly frosty reception. In the US, one advertisement on major TV networks features an arrogantsounding Chinese national crowing about China’s vast purchases of American government bonds. “It is how an empire declines,” warns a doom-laden voiceover. China’s rise is not a source of relief – it remains, China’s rise is not a source of relief – it remains, particularly in the world’s number one economy, a particularly in the world’s number one economy, a source of fear. source of fear. This fear is not restricted to developed economies threatened by China’s growth. Whenever I attend international conferences, I run into criticism of China. In one meeting held in an emerging country, a local export tation of the 1980s and 90s. official berated me, saying China had “stolen” jobs. This was folThe primary reason other countries fear China is the sheer speed lowed by complaints over currency exchange rates and intellectual of its emergence. The economic growth China has enjoyed in the property protection. But in reality, the country’s economy could last 30 years took over a century to achieve in the US and in Europe. have greatly benefited from China, as it is its biggest single export While the rise of Western countries had similar negative impacts on destination. world politics, economics and ecology, it spanned a much longer During another conference in another developing country, this period and was driven by smaller populations. China’s negative imtime one which does little business with China, senior officials pact in all these areas has become clearly visible in a matter of years. blamed Beijing for their economic difficulties. In their eyes, ever Such rapid change is bound to spread fear – especially when it acsince China joined the World Trade Organization in 2001, their companies economic decline in the world’s former powerhouses. products have been forced out of the world market. This country’s leadership needs to understand these concerns and China’s investment in Africa is also a major source of criticism. abandon the misguided assumption that economic prosperity will While European leaders voice concern that China now exports allow China to bask in a spontaneous outpouring of gratitude tomore industrial products than raw materials, these same leaders wards its leaders. This has failed to work at home, and it is folly to also criticize China’s large-scale purchase of natural resources in Af- believe it will work abroad.  rica, forcing African nations to become dependent on this revenue stream and preventing them from developing homegrown indus(The author is an economist of the International Monetary Fund.)

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NEWSCHINA I September 2011

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NEWSCHINA I March 2011

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