September 2015 by China Newsweek Corporation

SOCIETY

Senior Strike Force: Why Are Employers Withholding Pensions?

ECONOMY

Bull, Bear or Bust: Explaining The Stock Slide

past lessons Is 'national studies' the key to reforging a lost cultural identity?

$4.99 www.newschinamag.com

Kid Vicious: China's Bullying Problem

Volume No. 085 September 2015

SPECIAL REPORT

EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Director: Liu Beixian Editor-in-Chief: Wang Xiaohui Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Ruan Yulin Copy Editors: Jack Smith, Brittney Wong Lead Writers: Yu Xiaodong, Li Jia Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Du Guodong First Reader: Sean Silbert Address: 5th Floor, 12 Baiwanzhuang South Street, Xicheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: readers@newschinamag.com www.newschinamag.com Art Department Art Director: Wu Shangwen Art Editor/Designer: Zhang Dawei Publishing and Development Office China Newsweek Corporation President: Wang Xiaohui Chief Executive: Fred Teng Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: 820 2nd Ave, 3B-C, New York, NY 10017, USA Email: readers@newschinamag.com Toronto Office Director: Xu Chang'an Address: 51 Halstead Drive, Markham, ON Canada L3R7Z4 Tel: 1-905-604-6150 Fax: 1-905-604-6170 Email: canada@newschinamag.com Marketing Director: Wang Chenbo Account Manager : Ren Jie Tel: 86-10-88388027 Circulation Manager: Yu Lina Tel: 86-10-88311834 Advertising Director: Gao Weiwei Tel: 1-212-481-2510 Marketing Promoter: Jerry Meng Tel: 1-212-481-2510 New York Office: Wang Yongzhi, Ruan Yulin, Deng Min Washington Office: Zhang Weiran, Diao Haiyang Los Angeles Office: Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Zhou Zhaojun Tokyo Office: Wang Jian Paris Office: Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Zhao Shengyu Moscow Office: Huang Xiujun Manila Office: Zhang Ming Berlin Office: Huang Shuanghong Sydney Office: Zhu Daqiang Brussels Office: Shen Chen Astana Office: Wen Longjie Rio de Janeiro Office: Mo Chengxiong Johannesburg Office: Song Fangchan Jakarta Office: Gu Shihong Kathmandu Office: Fu Yongkang Legal Advisor: Allen Wu ISSN 1943-1902

CN11-5826/G2

NEWSCHINA I September 2015

China is on the right track in restructuring its economy

n July 15, the National Bureau of Sta- result of various government-led initiatives to entistics released a set of statistics measur- courage innovation and to boost the development ing how the Chinese economy fared of start-ups. during the first half of the year. Thirdly, 60 percent of the The data show that China’s economic growth in this pePositive trends in GDP expanded by 7.0 percent riod was driven by domestic economic development year-on-year during that time consumption, an increase of are taking place, period, slightly exceeding the 5.1 percent from last year. In with the government median market forecast for comparison, the total volume making more of an growth, which was 6.9 perof imports and exports decent. As China is challenged creased by 6.9 percent. The effort to restructure by an economic slowdown, the increase in domestic consumpthe economy to be GDP growth rate has become tion is most likely driven by a more people-oriented a major concern for the Chibetter employment rate and a and environmentally nese government, which has rise in disposable household infriendly. set its annual growth target at come, which increased by 9.0 7.0 percent. percent. Recently, the government Positive trends in economic has implemented policies development are taking place, aimed at restructuring China’s with the government making economy in order to make it more of an effort to restructure less dependent on State-led investment, more ef- the economy to be more people-oriented and enficient, and more innovation- and consumption- vironmentally friendly. The aim is to achieve what driven. The July data indicate that some of these Chinese officials call a “better GDP.” In March of policies have started to take effect. this year, the Chinese government adopted a new Firstly, output in the service sector increased by set of measurements with which it can evaluate the 8.4 percent during this period, considerably higher health of the economy. The government dropped than growth in the agricultural and industrial sec- “electronic power output” and “total cargo voltors, which increased by 3.5 percent and 6.1 per- ume,” two statistics that have been used for decent respectively. The service sector now accounts cades, and adopted “research and development for 49.5 percent of China’s economy, 2.1 percent expenditures” and “energy intensity” as two major more than it did over the same period last year. new factors in its evaluation system. According to Secondly, despite the economic slowdown, em- the official data, energy intensity dropped by 5.9 ployment appears to be improving, with an official percent in the first half of 2015. unemployment rate of 5.1 percent. 7.18 million There is no doubt that China is still under a more urban jobs were created in the first two quar- huge amount of pressure to maintain its previous ters, a surprisingly high number, accounting for economic momentum and to prevent further slow71.8 percent of projected job creation for the entire down, but these statistics show that the Chinese year. The increase in urban employment may be a government is on the right track. 

Contents

constructing culture

P16

Editorial

01 China is on the right track in restructuring its economy

politics

10 Urbanization: Pushing The Limit 13 Government Relocation: Journey to the East

Cover Story

society

P64

16 National Studies: Back to Our Roots/Rough Road Ahead/Looking Forward

26 Street Performers: Freedom to be Managed 28 Exam Fraud: Put to the Test

P60 NEWSCHINA I September 2015

Photo by CFP

Over the past two decades, an infatuation with traditional Chinese literature and culture has swept the country. But is China’s ‘national studies’ craze all style and no substance?

Contents

P50

P40 32 34 38

Lottery Funds Scandal: Out of Luck Rural Teachers: Rough Schooling Migrant Workers: Right to Retirement

visual REPORT

SPECIAL REPORT

Commentary

60 Last Stand

OUTSIDE IN

64 Cool Caving: Down in the Depths

40 Campus Bullying: Victims of Silence

72 China’s new economic strategies require an overhaul of its telecommunications industry

economy

04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 49 China by numbers 66 real chinese 67 Flavor of the Month 68 ESSAY 70 CULTURAL LISTINGS

44 Stock Market: Raging Bull international

50 52

China-US Dialog: Partners in Positivity China-EU Relations: Refreshing Changes/Delicately Dedicated

P26

P38

culture

58 Movie Producer Lü Jianmin: An Eye for Success NEWSCHINA I September 2015

NewsChina, Chinese Edition

Xinmin Weekly

July 20, 2015

June 26, 2015

Focus on HK

Child Suicide When news broke in June that four “left behind” children living in a village in Guizhou Province, all siblings aged between five and 13, died in a hospital after drinking pesticide in an apparent mass suicide, the problem of abandoned children became a trending topic on China’s social media. The children, three girls and one boy, had lived without parental care since March 2015 after their father landed a job in the city and their mother left home after a quarrel with her husband. The boy left an apparent suicide note in the family’s bare home, saying he had “wished for death” for a long time. While an extreme case, a number of similar incidents involving the deaths of left behind children, some 60 million of whom are alleged to live in China, have brought this pressing social problem to national attention.

Hong Kong has found itself at a political crossroads following the voting down of an electoral reform package this summer. Confrontation and discontent have become ubiquitous in Hong Kong society. NewsChina interviewed a number of prominent figures working in the territory’s political, commercial and academic fields to discuss their perceptions of Hong Kong. Almost all of them regretted the current political deadlock, but also praised the attitude of Hong Kongers, particularly the middle classes who form the backbone of the city, for thinking seriously about the future of the territory. Many believed that the cultural gap between Hong Kong and the mainland has narrowed considerably over the years, claiming that Hong Kong has to learn to adapt to the shifting situation and continue to be “the best city in China.”

South Reviews June 14, 2015

‘Made in China 2025’ In the wake of the global financial crisis, many countries have turned away from overreliance on manufacturing, despite major technological advances in the industry boosted further by the rise of e-commerce. The State Council, China’s cabinet, has unveiled a 10-year plan dubbed “Made in China 2025,” aiming to embrace this tech revolution and turn China into a high-end manufacturing power. The plan will focus on upgrading China’s manufacturing sector to improve innovation, integrate technology and industry, develop Chinese brands and support green manufacturing. A major obstacle for Chinese manufacturing remains structural weaknesses in the country’s industrial clusters, as well as an underdeveloped financial system. Principal players in Chinese manufacturing are private, small- and medium-sized enterprises who continue to smart from limited financing options, high taxes and low profitability, leaving these key drivers of innovation without a financial basis to sustain and expand their businesses.

Oriental Outlook July 7, 2015

Cruise Mania In 2006 the Italian cruise ship Allegra visited China, a first since the founding of the People’s Republic. In the year since, a growing number of Chinese have begun to favor luxury cruises as a vacation option. Data from the China Communications and Transportation Association show that 466 cruise ships visited China in 2014, with nearly 740,000 passengers, most of them Chinese, embarking at mainland ports, a 36-fold increase in nine years. The cruise business is expected to bring in revenue of 51 billion yuan (US$16bn) by 2020, though the market is dominated by three international mega-companies accounting for over 95 percent of market share. Now, domestic cruise companies are squaring off to catch up with their global competitors, but remain burdened with a number of restrictions, including a rule against embarking passengers under 10 years old on all cruise ships and a requirement demanding that all vessels flying a Chinese flag are crewed entirely by Chinese nationals.

Money China July 15, 2015

Crowdfund Concern Online crowdfunding platforms, which first appeared in the US about a decade ago, are gaining in popularity in China. In 2014, crowdfunding through various websites raised a total of 188 million yuan (US$30m) donated by more than 100,000 investors. A World Bank report released in October 2013 predicted that China is expected to become the world’s biggest market for crowdfunding, worth over US$50 billion by 2025. Crowdfunding is widely praised in China as a necessary development in the otherwise restrictive financial sector. Some, however, have attacked the model as just a new kind of “illegal fundraising” even as the government mulls regulating the sector. However, some Chinese crowdfunding sites lack a comprehensive mechanism for information disclosure, potentially putting investors at risk, with some calling on fundraisers to be more transparent in their conduct in order to boost confidence in this emerging phenomenon. NEWSCHINA I September 2015

Illustration by Wu Shangwen

“China’s smoking bans would progress more quickly if the regulations were not partly decided by China Tobacco. You can’t let a tobacco company manage tobacco control.” Yang Gonghuan, director of the Institute for Global Tobacco Control’s China branch, calling for China Tobacco’s removal from the national leadership council on tobacco control.

“A huge percentage of dogs being eaten are not farmed. Instead they are stolen from rural homes by roving bands of violent dog thieves… Illegality is rife at every stage of the industry supply chain while those on the inside do their best to avoid the spotlight.”

Jill Robinson, founder and CEO of Animals Asia, launching her organization’s four-year investigation into the Chinese dog meat industry.

“The current [Chinese] Internet is getting farther away from the traditional, with its love for making up weird words and spreading the most shocking stories. This is truly the‘age of gossip.’”

Journalist Shan Renping, commenting on the instant popularity of a young couple’s online sex tape that was filmed in the fitting room of a popular clothing store in Beijing. “The American geostrategist Zbigniew Brzezinski has worried that China and the US will be caught in the ‘Thucydides trap.’It seems that the Americans are warning China not to challenge the US and lead both sides into war. However, the world has changed and I don’t think the Thucydides trap will occur during every big power struggle; at least the US avoided the trap when it took over Great Britain’s role as the world’s greatest superpower.” Qiao Liang, a military professor of National Defense University PLA China, on Sino-US politics.

“Some officials and Party members were so spineless and weak-willed that they confessed their breaches of laws and ethics within a few days.”

“Only after you marry a foreigner do you realize how good Chinese men are.” Chinese actress Yuan Li, revealing to Anhui Television Station how cultural differences between herself and her Canadian husband have been a source of trouble.

“I hope you all do not lose your ability to think as an ordinary person. Let your conscience remain as fresh and sensitive as it is when you first walk off campus. If you feel your conscience is tormenting you, hold onto that feeling. That is the best proof that you are still alive.” Peking University professor Ge Yunsong, speaking at the law school‘s graduation ceremony.

“Just to quietly enjoy them.” Li Youcan, former deputy director of Hebei Province’s Bureau of Foreign Trade and Economic Cooperation, explaining why he kept huge amounts of cash bribes in his home.

“Watching CCTV news is a must.” Mrs Sun, a 78-year-old woman in Wuhan, Hubei Province, attributing her impressive success in the stock market to keeping track of the latest government policies, typically announced during the State broadcaster CCTV’s 7 PM news program.

Yu Yuanhui, former Party secretary in Nanning, Guangxi Zhuang Autonomous Region, speaking at a Party education lecture just a week before his detention for alleged corruption.

NEWSCHINA I September 2015

Top Story

China and Japan in Top-level Talks

State Councilor and former foreign minister Yang Jiechi met with Japan’s secretary for national security Shotaro Yachi to convene high-level political talks on July 16. China and Japan have tentatively restored relations since reaching a consensus in November 2014 after months of tension. Bilateral talks and exchanges in various fields have since resumed.

During the dialog, Yang emphasized that China will promote bilateral relations based on historical political agreements previously concluded with Japan. Yachi, meanwhile, pledged to maintain the historical consensus that both countries are cooperation partners and pose no threat to one another. The gradual restoration of ties has,

however, been overshadowed by an ongoing Abe administration review of Japan’s security policy, which has already resulted in several bills to expand the operational role of the country’s Self-Defense Force. During the dialog, Yang described the bills as an “unprecedented move” by Japan, calling on Tokyo not to do anything to undermine peace and stability in postwar Asia. “It does not comply with international norms for Japan to reinforce its military while the international community pursues peace and cooperation,” Yang claimed at the dialog. “Bilateral relations have reached a sensitive point, as China is about to hold a celebration of its victory in the second Sino-Japanese War and the end of World War II,” Gao Hong, vice-director of the Institute of Japanese Studies under the Chinese Academy of Social Sciences, told the media. “Despite the high-level talks, whether or not bilateral relations will thaw will depend on Japan’s attitude towards history,” he added.

Society

Lawyers Detained Beijing police recently raided the offices of the Beijing Fengrui law firm, detaining several lawyers and a legal assistant on suspicion of “hyping up sensitive social incidents in the name of protecting people’s rights.” The police took the Qing’an case in which a local policeman shot a farmer to death as an example. According to police, Fengrui lawyers allegedly employed netizens to post and spread rumors relating to the shooting death of a rural resident by police in Qing’an County, Heilongjiang, also inciting petitioners to protest the shooting. State media reports claimed that a petitioner from Shandong Province has already confessed to being paid 600 yuan (US$98) to make such a protest. The Qing’an shooting was ruled lawful after investigators examined footage of the incident, with police claiming that the deceased had previously threatened police. Police told State media that Fengrui had earned its reputation and its “fortune” by allegedly manipulating around 40 similar incidents.

Critics both inside and outside China, meanwhile, have protested the detention, alleging that it is an attempt to muzzle a law firm that has been critical of the authorities in the past. The case remains under investigation.

NEWSCHINA I September 2015

China Publishes National Health Survey China’s National Health and Family Planning Commission recently issued the results of its 10-year study on health and chronic disease in China between 2002 and 2012, warning of a looming obesity crisis largely resulting from worsening dietary habits and generally poor cardiovascular health. Despite recording improving living standards across the country, the report shows that Chinese adult males had an average height of only 1.67 meters in 2012, while women averaged 1.56 meters tall, reportedly shorter than the average recorded in Japan and South Korea. National average bodyweight, meanwhile, was 66.2 kilograms for men and 57.3 kilograms for women, with a record 30 percent of Chinese adults classified as “overweight.” The report noted that fat and sugar intake among Chinese nationals was rising, while few were consuming the recommended daily amount of non-animal protein or dairy. It also highlighted how few Chinese nationals were engaging in sufficient physical activity. The report showed that in 2012, 25.2 percent of Chinese nationals suffered from high blood pressure, while 9.7 percent had some form of diabetes. According to the 2013 data, 235 people out of every 100,000 had suffered some form of cancer, with smoking, alcohol consumption, lack of exercise and excessive salt and fat intake the leading causes of chronic diseases.

2002

Politics

2012 Percentage of adults classified as overweight

Percentage of adults classified as obese

Percentage of children aged 6-17 classified as overweight

Percentage of children aged 6-17 classified as obese

167.1cm 166.7cm

155.1cm 155.8cm Average height of adult males

Average weight of adult males

Average height of adult females

Average weight of adult females

Estimated Number of Smokers: 300 million (2012) Percentage of population (aged 15+) who smoke: 28.1%

Percentage of smokers who are men: 52.9%

Non-smokers exposed to second-hand smoke: 72.4%

KMT Nominates Hung Hsiu-chu The Kuomintang (KMT), Taiwan’s current ruling party, has nominated Hung Hsiu-chu to be its leadership candidate in the island’s upcoming elections in January 2016. Born in 1956, Hung now serves as deputy director of Taiwan’s Legislative Yuan. Announcing her candidacy, Hung pledged, if elected, to promote peaceful relations across the Taiwan Strait and uphold the 1992 Consensus that enshrined the “One China” principle, interpreted differently by Taipei and Beijing. Dubbed “little chili pepper,” Hung is well known for her scathing remarks regarding supporters of Taiwanese independence, particularly those among the island’s opposition. She is seen as a KMT foil to the popular Democratic Progressive Party (DPP) candidate Tsai Ing-wen, who is currently leading Hung in the polls by 12 percentage points.

Source: National Health and Family Planning Commission

International

AIIB Agreement Signed On June 29, 57 members signed the Articles of Agreement on the Asian Infrastructure Investment Bank (AIIB), marking another milestone in the process of commencing formal operations. Dubbed the “Basic Law” of the AIIB, the agreement defines the bank’s structure, its operational model and the allocation of shares, with China currently commanding 26.06 percent of votes based on its current stock holdings. The next step is to establish the AIIB’s governing council and board of directors, as well as allocate management positions, with the bank’s president elected for a five-year term. All the bank’s top-level leaders, including its president, will be directly elected by officials. Given that the AIIB’s Asian members are eligible to occupy 70-75 percent of the bank’s equity based on their GDP, it is most likely that China will become the biggest single shareholder. Experts predict that the AIIB will begin operations at the end of 2015. NEWSCHINA I September 2015

Photos by Xinhua , CFP and IC

Health

Fun Six trainee female flight attendants attending a training academy in Chengdu, Sichuan Province, held a Chinese martial arts contest for potential future boyfriends, claiming that they would like to date those superior to them in Chinese kungfu, the art of the tea ceremony, and other art forms. Attracted by the young women’s talent and good looks, many men participated in the contest, but few defeated the six future flight attendants. The competition has now been extended nationwide, though many netizens have stated that such a contest cannot truly lead to love.

Ridiculous Xiong Aichun, director of the branch of China’s Association of Literature and Arts in Leiyang, Hunan Province, posted a poem on a local online arts forum to show off, only to find that netizens disparaged his work. Xiong was so infuriated by the comments that he rushed to the website’s actual office and smashed one of its computers. The local government said that Xiong might have some mental health issues, but netizens questioned how a “weirdo” like him could reach such a high position in a government-backed organization.

Shocking

The balcony on the seventh floor of a residential building in Shenyang, Liaoning Province, suddenly collapsed while homeowner Ms Li was chopping meat for dumplings in her living room. The falling balcony took the sixth-floor balcony with it, and both of them crushed the balcony on the fifth floor. No one was injured. Witnesses told the media that they didn’t see steel supports in the fallen balconies, causing other residents to worry whether or not their homes will collapse as well. The police have asked professional surveyors to assist in the investigation.

Controversial

The local government of the city of Jilin in northern China recently held a celebration for the 11 local students who scored the highest on this year’s gaokao, China’s national college entrance exam. The students received monetary prizes and walked the red carpet like movie stars. The government viewed it as a way of encouraging future test-takers, but many netizens worried that the hype would lead to a stronger emphasis on exam-oriented education.

Poll the People Wu Jundong, a recent graduate of Beijing’s Renmin University, has stirred up controversy by asking the public to help pay the tuition for his postgraduate studies at Harvard University. In return, Wu promised to share his experiences via WeChat. Crowdfunding is actually becoming increasingly popular in China, but has proven quite contentious when brought into the realm of education. Many netizens criticized Wu’s stunt as “begging,” which violates the principle of “earning one’s own way.” What do you think about it? We should be tolerant of something new 7,307 30% It is a kind of begging. 16,789 70% Source: views.news.qq.com

Most Circulated Post Retweeted: 196,546 times by July 17 On July 7, 1937, imperial Japan launched its full-scale invasion into China. China Central Television held an online commemoration of the 78th anniversary of the invasion, appealing to the public to never forget how the Japanese army “bombed, slaughtered, raped and vivisected” Chinese nationals. “During this war, more than 35 million Chinese were injured and killed, including many children. However, some Japanese right-wingers have claimed it was assisting China. Let us retweet the post to commemorate those who fell under Japanese butcher knives.”

NEWSCHINA I September 2015

WHO’S

Top Five Search Queries On

HOT? WHO’S NOT?

over the week ending July 17 The Sun to Sleep? 505,912

The British newspaper The Daily Mail cited the work of British scientist Valentina Zharkova demonstrating that the sun will begin to “sleep” in 2030 and lead the earth into a “mini Ice Age.”

More Second Babies? 414,754

China’s National Health and Family Planning Commission recently told the media that it is working out new regulations to allow all parents to have a second baby.

China’s Fortune 500 368,677

Diligent Boy

The Chinese edition of Fortune magazine published its 2015 Top 500 list on July 8, with two petroleum giants, Sinopec and China National Petroleum, reclaiming the top two spots.

Reportedly due to a sluggish local economy, the populations of China’s three northeastern provinces, Heilongjiang, Jilin and Liaoning, have declined by two million people every year for the past three years.

Shinzo Abe Invited to World War II Commemoration 40,326 Chinese President Xi Jinping has invited Japanese Prime Minister Shinzo Abe to attend China’s September commemoration of the end of World War II. The Japanese leader has not officially responded to the invitation.

Top Blogger Profile Tian Xiaopeng Followers: 131,208 by July 17 Chinese director Tian Xiaopeng shot to fame after his latest 3D animated movie, Monkey King: Hero is Back, broke 500 million yuan (US$80.6m) at the box office in just 12 days. Impressed by the movie’s 3D effects, its characters’ vivid movements and an original score with strong Chinese characteristics, many audience members praised the movie for narrowing the gap between Chinese and American animation from 100 years to 10. According to media reports, Tian spent eight years on the film despite one investor reportedly withdrawing support. Moved by Tian’s persistence in developing domestic animation as well as the high quality of Monkey King, a number of movie-goers have voluntarily promoted the movie on and offline. Tian, however, modestly remarked that Money King is “just not bad” in his eyes, and the hype surrounding it can be attributed to Chinese people’s excitement over domestic animation in general. The amiable director often replies to questions from fans on his blog, and recently revealed that he is planning a Monkey King sequel. “I want a brilliant, thrilling life, but I find few chances to realize [this desire] except through animation,” he tweeted. NEWSCHINA I September 2015

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

Shrunken Population in Northern China 255,279

A nine-year-old Filipino boy aroused the sympathy of Chinese netizens after a post showed him kneeling on the ground, using a stool as a desk and studying in the dim light from a nearby McDonald’s. It quickly reminded Chinese people of a well-known tale in which a poor little boy “borrowed” the light from his neighbor to read by chipping a hole in the wall between his home and his neighbor’s.

Phony Policeman A 35-year-old man surnamed Lei in Wuhan, Hubei Province, was found to have impersonated a police officer to get money and attention from women. The local police said that the man had even transformed his home into a “police station” and installed a range of equipment, some of which was even more advanced than equipment used in real police stations in China.

Little“Superwoman” 12-year-old Zhou Meiling earned praise after she saved a threeyear-old child from being run over by a truck in Changsha, Hunan Province. Although she sustained severe injuries to her left leg, the brave girl refused an amputation and has fought against excruciating pain during her treatment.

A Drunk from “S.H.I.E.L.D” A drunk driver from Shishi, Fujian Province, showed traffic police a novelty badge from the Strategic Homeland Intervention, Enforcement and Logistics Division, a virtual organization in the American TV series Agents of S.H.I.E.L.D., much to the amusement of netizens. “I am on an urgent mission,” he reportedly told the policeman. One netizen commented: “You still have to be punished for drunk driving, even if you were on your way to save the world.”

politics

Urbanization

Pushing The Limit In its search for a new development model, China’s urban planners have moved to place boundaries on city expansion By Wang Ning

n the last few decades, China’s rapid economic growth has been accompanied by an unprecedented rate of urbanization. Between 1978 and 2014, China’s urban population increased from 170 million to 750 million. In 1978, 17.9 percent of China’s population lived in the country's cities. In 2014, this number had increased to 54.8 percent. It is estimated that by 2020, more than 60 percent of China’s citizens will live in urban areas. While rapid urbanization has helped China lift millions out of poverty, rapid urban expansion, in tandem with an export- and investment-led development model, is now being blamed for some of the country's most pressing problems, such as environmental degradation, dwindling agricultural land resources and social unrest resulting from the forced appropriation of land by local governments. While China’s urbanization rate is impressive, the construction rate in many Chinese cities has managed to outstrip even the exponential growth in the urban population. For example, between 2000

and 2010, the average size of China’s cities increased by 64 percent, far more than the 46 percent increase in urban population officially documented in the same period. It is estimated that municipal governments in more than 100 Chinese cities have aspired to develop their cities into what are often referred to as “international metropolises,” and more than 400 cities are enacting plans to establish new districts. As the Chinese government released its “Made in China 2025” strategy – a public search for an alternative and more sustainable development model – the fact that Chinese cities have been expanding at what most experts agree is an unsustainable rate has become a focal point of China’s urban development policy.

Compulsory

In July 2014, the China Ministry of Land and Resources (MLR) and the China Ministry of Housing and Urban-Rural Development NEWSCHINA I September 2015

Photo by Kevin Frayer

(MOHURD) announced that they will jointly conduct a “pilot” program to delineate the “boundaries” of China’s urban expansion. More recently, in June 2015, Zhang Xiaoling, assistant to the president of the Land Surveying and Planning Institute under the MLR, told the Guangdong-based Southern Metropolis Daily that both the MLR and the MOHURD have selected 14 cities, including some of China’s largest such as Shanghai, Beijing, Guangzhou and Shenzhen, to be included in phase one of the pilot program. According to Zhang, urban development boundaries for these cities will be drawn up within the year. He added that, unlike guidelines on urban development previously released by the government, these boundaries, once set, will be “compulsory.” Moreover, according to Dong Zuoji, director of the MLR’s land planning department, similar urban expansion boundaries will eventually be imposed upon more than 600 cities across China. While officials claim that boundaries for emerging cities will NEWSCHINA I September 2015

change over time, those set for already large conurbations will be much more strictly enforced. According to a decree released in 2014 on “new-type urbanization” by the State Council, China’s cabinet, the government will tightly restrict the development of megacities, which have a population of more than five million people while allowing cities with smaller populations to continue to expand “at a reasonable speed.” So far, it is estimated that 88 Chinese cities fall into the government’s “megacity” category, 13 of which have a population in excess of 10 million. 215 Chinese cities have official populations calculated as being between one and five million. According to Zhang Xiaoling, while the central government will impose some kind of “permanent” boundary for megacities, “dynamic” boundaries will have to be set up for smaller cities that are still developing. “For example, we could set up a boundary for 2020, then another boundary for 2030,” said Zhang.

politics

“The key is to limit the size of relevant cities and to prevent blind expansion,” he added.

Food Security

At a press conference held in late June, Hu Cunzhi, vice-minister of the MLR, told reporters that his ministry will establish an appraisal mechanism aimed at increasing the efficiency of land use in China's newly established urban districts. Hu said that the overarching goal is to reduce by 30 percent the amount of land required to produce US$1 of economic output, increase urban capacity by 10 to 30 percent, and increase construction density by 5 to 8 percent. A major objective behind limiting urban expansion is to ensure China’s food security by safeguarding the country’s dwindling arable land resources against further urban encroachment. Ensuring food security has long been one of China’s core strategic priorities. For decades, the Chinese government has claimed that 1.8 billion mu (about 300 million acres) of farmland are needed as a “bottom line” underscoring long-term food security at the national level. According to official data, China’s total arable land reserves fell by 124 million mu (24 million acres) between 1996 and 2006. It is estimated that, by the end of 2010, the total land area still occupied by arable land was 1.83 billion mu (301 million acres), a figure barely above the “red line” set by the central government. Many experts even suspect that the actual figure has already fallen below the government’s “red line,” given the existence of massive illegal and unreported land appropriation operations in some localities. In addition to its efforts to more firmly delineate city boundaries, the MLR is also working with the Ministry of Agriculture to assess the quality and total area of farmland surrounding 106 major cities. Based on their assessment, high-yielding farmland will be permanently included in China’s “fundamental farmland” strategic reserve, making it off-limits to developers. It is argued that by limiting urban expansion, local governments will be compelled to change wasteful policies and practices. Rather than relying on enhancing urban sprawl to further enhance economic growth, city officials will have to focus on increasing the efficiency of urban land use.

Government vs. Market

However, although few dispute the problems underlying and resulting from China’s rapid urbanization, many are concerned about the wisdom of this proposed State-led approach to tackle them. For many observers, the government’s plan may in fact exacerbate several existing problems associated with urbanization. For example, housing prices, already way beyond the means of most residents in major cities such as Beijing and Shanghai, could rise even further as

the expansion of urban residential areas is capped. The fact that the cities with the most expensive housing will be subject to the strictest controls on further expansion have further fueled such concerns. Moreover, with an ever-growing income gap between China’s urban and rural communities, experts are concerned that an even clearer boundary between urban and rural areas will further entrench this income disparity, possibly exacerbating already palpable social tensions between town and country. For others, a more fundamental flaw in the plan is its State-driven approach, which economists have criticized as adhering too closely to the principles of planned economy, in effect making it a regressive move at a time when China is supposed to be pushing reform. Cai Yuanming, an economist at Tsinghua University, argued in a commentary published in Guangming Daily that redistribution of land, one of China’s most important economic resources, should be conducted through market-based mechanisms, rather than made subject to the discretion of the government’s economic planners. To a large extent, the fundamental reason behind China’s extensive and largely inefficient process of urbanization is the government’s ability to obtain rural land at an arbitrarily low price through appropriation. The increasing income disparity between rural and urban residents can also tempt rural villages, desperate for prosperity, to sell their land to unscrupulous developers. According to Cai, to protect agricultural land resources, the government should focus on establishing a fair land market where farmers’ ownership rights are well-protected. He has also argued that the government should address the problem of market failures through agricultural subsidies and revenue redistribution to rural communities, measures which can, in his view, encourage the development of agriculture, and are preferable to imposing “compulsory” boundaries on cities. “As long as farming remains an unprofitable business, and the revenue of local governments in rural regions remains far behind that of [those in] urban areas, farmland protection will not be a rational choice for local governments,” commented Cai. Without addressing these fundamental problems, the central government’s plan to set up city boundaries may simply lead to a repeat of the previous failure of similar schemes. Zhang Shaoqin, head of Shanghai’s City Planning and Land Resources Bureau, recently admitted that the expansion of the Shanghai metropolitan area has already reached a proposed 2020 limit set down in a development guideline previously approved by the State Council. Many are concerned that lines on a map will not be able to stop those charged with ensuring the continued prosperity of China’s evergrowing urban centers, nor can they help overhaul China’s overall development model.  NEWSCHINA I September 2015

Government Relocation

Journey to the East

The Beijing municipal government will move some departments to the city’s eastern suburbs to ease traffic congestion and boost regional integration, but challenges abound By Du Guodong and Min Jie

peculation over whether Beijing’s municipal government would relocate some administrative departments from the city center to the eastern suburbs finally ended when Beijing Party Secretary Guo Jinlong officially announced at a July plenary session of the city’s Party committee that the district of Tongzhou would become a “subsidiary administrative center.” Two functions of the mooted “executive sub-center” were highlighted in Guo’s speech — easing pressure on city center infrastructure through population transfers, and advancing the national-level Beijing-TianjinHebei integrated development plan, which was also passed by Party officials at the same meeting. Beijing is now set to go all-out to accelerate the goal of regional integration. Guo described this as a challenging task, but also a necessary solution to many of the current problems facing the city’s urban planners. The planned executive sub-center will be located in Lucheng, Tongzhou District, 20 kilometers from Tian’anmen Square. While details of the relocation are yet to be released, officials have claimed that the plan would have made “remarkable progress” by 2017. NEWSCHINA I September 2015

Move

Tongzhou’s selection as the new home for elements of Beijing’s municipal government is a logical one. As early as 1993, Tongzhou was named a “satellite town” of the capital, before being upgraded to a city district in 1997. In 2004, the Beijing government announced that Tongzhou would play a supplementary role in city administration, a move which sparked speculation that the government would relocate to the area. In July 2012 the Beijing government announced its plan to build Tongzhou into a city sub-center. In a Beijing municipal government work report released in February 2015, the local government pledged to speed up the construction of Tongzhou as a city sub-center and to break ground on a total of 86 approved key projects in its core areas, representing an investment of nearly 164 billion yuan (US$26bn). The primary goal for the shift eastward is to address the population explosion in central Beijing, which has led to worsening overcrowding in recent years and exacerbated what the government and State media term “urban ills,” such as traffic jams and air pollution. Beijing was home to 21.5 million

people in 2014, according to the municipal government, which is now working to control population growth by cutting the resident population of the city’s six downtown districts by a planned 15 percent, bringing total population below 23 million by 2020. Offices of the Beijing municipal branch of the Communist Party and the municipal government’s various administrative organs, over 250 in total, are currently scattered throughout the downtown area and, according to 2012 data, employ 143,000 people. The relocation plan involves relocating over one million people to Tongzhou, even though which departments will move, and when, has yet to be announced. Zhang Keyun, professor of regional economy at the School of Economics at Renmin University, told NewsChina that the government’s road map also stresses the adjustment of Tongzhou’s economic structure, with relocation only the most recent step to echo the national strategy for the coordinated development of Beijing, the nearby port of Tianjin, and the manufacturing hub of Hebei Province, which surrounds the other two. In Zhang’s view, Tongzhou, as a focal point between all three regional economies, can

profile

Workers pave a road outside the Haojiafu Subway Station in an area allegedly set aside as part of the subsidiary administrative center in Tongzhou

play a bigger role in resources integration and coordinated development. “Reconsidering Beijing’s role is a major factor behind the relocation plan,” he said. Another highlight of the relocation plan is to relocate industries that are unrelated to Beijing’s primary function as the nation’s capital, and as a national center for politics, culture, international exchanges and technical innovation. In the government-issued document “Beijing Overall Urban Planning (2004-2020),” released in 2005, the capital was positioned as China’s “national capital, international city, cultural city and livable city.” Wu Dianting, geography professor at Beijing Normal University, told NewsChina that Beijing, as the national capital, has been planned along typical Chinese lines — to be large and all-encompassing in its functions — making it hard to list and clarify the capital’s multiple functions to this day. “The role of Beijing as the capital is different to that of Beijing’s local government. Beijing’s role as ‘four national centers’ is a role not fulfilled by its municipal government,” said Wu.

Ye Tanglin, professor at the Capital University of Economics and Business, told NewsChina that, as the northern part of Beijing is now under ecological protection, the west is hemmed in by mountains and a new airport is under construction in the south, “to move east to ease the excessive concentration of administration is the best option.” Hu Gang, head of the South China Urban Planning Institute under the Urban Planning Society of China, said the road map for relocation is a “good start” for redesigning Beijing’s administrative geography. “After a subsidiary administrative center is established, State-owned enterprises and public services will also relocate,” he told the official Xinhua News Agency, adding that Beijing can also help set a good example for regional development in other areas of the country.

Sub-prime

The relocation to Tongzhou is promising news for the district and the surrounding areas but, in the view of some experts, is less than ideal in terms of establishing jurisdiction and population control.

Professor Zhang Keyun told NewsChina that it is not ideal to relocate some municipal administration to Tongzhou because it is likely to further aggravate the already alarming traffic congestion between the city center and Tongzhou — a district already home to a huge population of people working in the city center — as well as bring additional population pressure to an already-populous district. More affordable real estate, improving transportation links and high concentrations of recent migrants have made Tongzhou and other suburbs more attractive to lower-income workers who are priced out of Beijing’s cosmopolitan center. Statistics from the Tongzhou government indicate that the district had 1.3 million permanent residents in 2013, up from 880,000 in 2005, making it one of the most populous districts in the capital with 1,300 residents per square kilometer. According to a report by Xinhua, Tongzhou District’s population is increasing by 6.23 percent annually, higher than Beijing’s average of 4.69 percent. A survey by China Youth Daily, meanwhile, showed that only 38.2 percent of respondents thought the establishment NEWSCHINA I September 2015

Photo by cfp

An abandoned car blocks the gate to partly demolished Qianbeiying Village, Lucheng County, Tongzhou, June 28, 2015

of Tongzhou as a “subsidiary sub-center” would benefit both Beijing’s city center and the district itself. 23.5 percent of them, on the other hand, declared themselves “worried” that the move would increase traffic congestion and push real estate prices, already seeing sharp rises in Tongzhou, even further upwards. In recent years, Tongzhou’s GDP growth has also been shown to be faltering, with a major contributing factor being a lack of industry and increasing overreliance on a ballooning real estate market. In 2009, Tongzhou’s GDP was 27.8 billion yuan (US$4.5bn) with over 50 percent, or 17.58 billion (US$2.8bn), coming from real estate development. Since 2009, investment in property development in Tongzhou rose by 30 percent year-on-year. Professor Wu Dianting believes that practical problems concerning relocation also abound, not least the sheer cost of constructing entirely new infrastructure. The way out, according to Wu, is to rely on the evaluation and auction of local real estate with the help of direct financial support from the central government. Even if these factors NEWSCHINA I September 2015

are brought into play, Wu claimed, Beijing would be shouldering a heavy burden. Wu and other analysts are also concerned about resistance from public servants and their families to relocate, given the improved access to workplaces and schools available in the city center. “It is unlikely that people will readily move to Tongzhou to work and live unless [access to] public services, including education and healthcare, is established in these areas,” he said. “Otherwise, people will have to commute between offices in Tongzhou and homes in the city center, further increasing congestion.” Niu Fengrui, former director of the Institute for Urban and Environmental Studies under the Chinese Academy of Social Sciences, said that one issue needs to be considered before a relocation occurs — whether or not the move will help or hinder Beijing in playing its core roles. Current Chinese wisdom maintains that locating local executive authorities in city centers is the most efficient use of space, therefore, moving the capital’s administrative organs to an eastern suburb could be risky. “If the subsidiary administrative center

is not located in the city center, especially when staff in other districts and counties have to commute longer distances for work, it will definitely increase traffic and there will also be a time cost,” he said. Niu added that it is not easy to solve Beijing’s urban ills in the short time frame given for relocating the municipal government. Beijing, he argued, has long been burdened with too many functions, which have resulted in an over-concentration of resources including education, healthcare and other public services. Yang Kaizhong, professor with the Regional Science Association of China, Peking University, told NewsChina that the solution to urban ills is shearing some noncore functions away from Beijing, rather than simply moving some departments to the suburbs. At the same time, Yang recommended the planning and establishment of a national executive center at an “appropriate place” somewhere in the vicinity of the capital, a location where Beijing’s local party and government branches, but also certain agencies of the central government, can relocate.

Photo by IC

cover story

Massed students recite Standards for Being a Good Student and Child outside Beijingâ&#x20AC;&#x2122;s Imperial Academy, January 1, 2014

Over 1,000 Confucian scholars take part in a ceremony commemorating the Great Sageâ&#x20AC;&#x2122;s 2,356th birthday, Juxi Village, Zhejiang Province, September 28, 2010

past and presen A ceremony commemorating Confucius held in Sihai Confucius Shuyuan, Beijing, September 28, 2012 Photo by IC

Internet titan Alibaba Group holds a traditional Chinese-style group wedding ceremony for more than 100 employees

NEWSCHINA I September 2015

Photo by IC

Performers dressed as ancient officials during the opening ceremonies of the 2008 Beijing Summer Olympics

ent

fter disappearing from the academic world during the turmoil of the 20th century, the study of traditional Chinese literature and culture has recently surged in popularity, bringing Confucianism and traditional arts back into the public eye. NewsChina delves into how this craze originated, and asks if ‘national studies’ can revive China’s traditional culture

NEWSCHINA I September 2015

Photo by IC

Children hold up examples of their calligraphy, just one of the many traditional art forms that have recently begun to regain popularity

cover story

National Studies

A nationwide craze for studying traditional Chinese philosophy and culture has brought the Confucian classics and traditional arts back into the limelight decades after being expunged from Chinese academia. NewsChina explores how this trend started, and how much further it may grow By Wang Yan

n the mid-1990s, Gong Hongyuan, then a Peking University student majoring in Chinese classics, was mocked by his peers for wasting time on what they viewed as obsolete schools of thought. 20 years later, Gong, now 38, frequently speaks to young parents eager to train their children in these supposedly “obsolete” schools of thought. Gong is the co-founder of a school that falls into the growing category of those that teach children guoxue, a term that literally translates to “national studies” but has come to mean the study of traditional Chinese philosophy, literature and culture. He has been a firsthand witness to and participant in the transformation of attitudes

Photo by IC

Back to Our Roots towards ancient Chinese culture and education over the past two decades. Gong and two friends founded Boya Shuyuan in Beijing in 2008, with starting capital of just 250,000 yuan (US$40,300). Since then, the private school’s student body has grown from just a few students to an annual enrollment of over 70. “We started from scratch, but now we occupy four buildings and enjoy decent equipment and a playing field,” Gong said as he showed our reporter around the campus. “We offer courses including Chinese classical arts, such as calligraphy, painting and guqin [Chinese zither], to students ages three to seven. So far we’ve taught some 500 children.” The guoxue craze doesn’t stop with 500 NEWSCHINA I September 2015

A summer camp in Taiyuan, Shanxi Province, where children study Standards for Being a Good Student and Child in Taiyuan, Shanxi Province, June 30, 2010

children in private schools, however. Starting this year, Communist Party members are encouraged to take training courses in guoxue. In addition, guoxue is scheduled to be included in the gaokao, China’s national college entrance examination, a test of such paramount importance that its contents virtually dictates school curricula across the nation. Nearly 50 years after Mao Zedong told the Red Guards to “smash the Four Olds,” the entire country is starting to welcome old customs, old culture, old habits and old ideas back into the fold.

Beginnings

The definition of “guoxue” has evolved over time, and for different people or social groups it means different things and serves different interests. The term was coined by Chinese intellectuals in the early 20th century to promote and protect Chinese culture’s core values against the threat of encroaching Western education. Although there is no single universally accepted interpretation of what guoxue is, the most commonly accepted definition is that of Zhang Taiyan (1868-1936), a Chinese philologist and revolutionary. He defined it as “all knowledge accumulated by China.” According to Zhang, guoxue is a country’s foundation, and the survival of a country and the survival of its guoxue are inextricably linked. He breaks guoxue into three components: the Confucian classics, philosophy and literature. In other words, guoxue includes all scholarly works written or produced in China over its millennia of history, be they literary, philosophical, artistic, geographical or even medical. The core of guoxue is, indisputably, Confucianism. The shuyuan system, named for an ancient term applied to academies of classical learning and a part of Gong Hongyuan’s school’s name, emerged as a Chinese education system during the Tang Dynasty (618907). It developed and strengthened over the next thousand-plus years until the country started to embrace Western-style education in the 20th century, causing the number of shuyuan to dwindle. With Confucianism as

NEWSCHINA I September 2015

its base, the shuyuan is responsible for cultivating students’ moral integrity and educating them on ethical principles as well as the breadth of guoxue knowledge. Confucianism has been the dominant Chinese sociopolitical ideology since the Han Dynasty (206 BC-220 AD), although it was challenged by many during the 20th century. During the May Fourth Movement in 1919, Confucianism was criticized as an obstacle to modernization. During the Cultural Revolution (1966-76), Confucianism and almost all related ancient texts were denounced as feudalistic and autocratic. It was not until the mid-1990s, well after China had enacted its policy of Reform and Opening-up and had begun to embrace a market economy, that Confucianism was rehabilitated, tentatively, into State ideology. The first hint of guoxue’s official resurrection was a long article titled “Guoxue quietly comes back to Peking University,” printed in August 1993 in Party mouthpiece People’s Daily. Guangming Daily, another Party paper, published a piece called “The charm of guoxue and guoxue masters” in October of the same year. Then, in March 1995, nine esteemed academics, including Zhao Puchu, Bing Xin and Cao Yu, spoke at the annual Chinese People’s Political Consultative Conference and advocated for the establishment of schools that promote the study of Chinese classics. As a result, an experimental primary school focusing on teaching Chinese classics was set up in Miyun, a northeastern suburb of Beijing. Yet grassroots supporters had already started to get the guoxue movement off the ground. A considerable number of small, independent schools known as Confucius Shuyuan started to quietly revitalize this branch of learning that had nearly been destroyed during the tumult of the 20th century. However, the vast majority of existing guoxue private schools fail to meet official standards for educational institutes, so they operate illegally behind front companies. The government has not caught up with guoxue’s growing popularity and there are no legal reg-

ulations monitoring these types of schools.

From the Ground Up

Apart from limited government support, the major forces promoting guoxue for the past two decades have been independent grassroots agencies, Professor Xu Yong, dean of the Institute of Education History and Culture told NewsChina. From 1995 to 2004, academics debated whether or not China needed a guoxue revival and, if it did, how to go about it, according to Gong Hongyuan. Then, over the past decade, supporters have been trying out different practices and exploring various teaching methods. Various guoxue curricula emerged, with the most influential spearheaded by Taiwanese educator Wang Caigui, who first started teaching the classics to children in Taiwan, moving on to China in the late ’90s. Schools following this curriculum require students to spend hours each day memorizing Confucian texts and other Chinese classics as their primary method for traditional education. The texts include The Analects, The Great Learning, The Three Character Classic, Standards for Being a Good Student and Child, The Chuang Tzu, Tao Te Ching and the I Ching (known as the Classic of Changes). According to Wang’s philosophy, children may not understand the words they recite when they’re young, but they will recall Confucius’ writings as they grow older and gradually realize the Great Sage’s relevance in modern life. Despite continuous criticism labeling this method as dull and rigid, it is still dominating guoxue education. “This trend unavoidably resulted in pushback from some teachers, and they were not willing to explore and study the deeper meaning of the texts themselves, not even to say [to students] ‘Practice these principles in your daily life,’” Chen Lu, the executive director of guoxue-based school Huading Shuyuan, told our reporter. “However, that’s against the requirement of the Confucian theory that ‘Knowledge and action should go hand in hand.’”

cover story

Sihai Confucius Shuyuan (often referred to as the Sihai Confucius Academy), one of the oldest and most influential guoxue-focused schools in Beijing, opened in 2006. Students enter the boarding school at age three and are expected to remain until age thirteen. They are required to memorize the most prominent Confucian texts and to be proficient in calligraphy, tai chi and the guqin. A significant number of supporters or even founders of similar private schools that focus on guoxue education are actually parents who disliked the test-oriented, mainstream education system and were seeking an alternative for their own children. Lin Die, 41, mother of an eight-year-old girl and founder of the school Baopu Xuetang in Beijing’s eastern Tongzhou District, is one such parent. She sent her own daughter to a guoxue-focused kindergarten in the early 2010s, and started to study the Chinese classics by herself. Driven by the goal of immersing more preschool kids in the roots of Chinese culture, Lin opened Baopu Xuetang earlier this year. The school has grown rapidly, from an initial enrollment of two children to 20-something within six months. Lin admitted to our reporter that the school cannot yet break even, but she is determined to dedicate her life to this endeavor and is optimistic about its future. For Lin, guoxue education mainly centers around the introduction of Chinese classics and esthetics, so as to let children absorb the rhythm and beauty of ancient texts. “It is like planting a seed in the children’s hearts,” Lin told NewsChina. “[In the future] that seed will be triggered to sprout or bloom. It’s a natural process and beyond my control.” Lin’s school practices a softer approach to teaching rather than the strict method of requiring the children to memorize entire texts.

According to Gong Hongyuan, there are hundreds of shuyuan in Beijing, both large and small, and the total number in China as a whole is estimated to have surpassed 1,000. The number of educational institutes which offer guoxue classes is estimated to be around 3,000.

Official Endorsement

“Why is Confucius so popular right now? It is because his understanding of the world, descriptions of humanity and explanations of the truth can really help us solve our own problems and those of the world,” Sihai Confucius Shuyuan founder Feng Zhe said in a 2008 interview with China Daily. After the Cultural Revolution dismantled China’s ancient belief systems, the country entered a period of economic reform that led to newfound prosperity for many Chinese people. Instead of worrying about where they would get their next meal, many encountered a problem of a different kind – a “spiritual void.” The central government, once indifferent to the silent grassroots movement to reintroduce guoxue in the 1990s, began to take a more vocal stance in its favor. Top Party leaders started to give speeches advocating Confucianism, and State television launched a series of guoxue lectures. A number of guoxue “masters” emerged, headed by Yu Dan and Yi Zhongtian, both of whom became media celebrities for their modern explanations of classic verses. In early 2005, then-Party chief Hu Jintao quoted Confucius by saying: “Harmony is something to be cherished.” Soon, “building a harmonious society” became a new mantra for the entire country. The campaign intensified when current leader Xi Jinping became president after the 18th Party Congress was

A traditional debutante ceremony held in Binzhou, Hunan Province, June 21, 2015

held in 2012. Xi has mentioned the revitalization of traditional Chinese culture, as exemplified by Confucianism, in almost every public speech. As shown by Xi’s speeches, Confucianism is one such traditional concept being brought in to bolster modern-day governance. On many occasions, Xi has also encouraged schools to teach the Chinese classics. Relatedly, many shuyuan directors have recently experienced a change in local government officials’ attitudes towards them. For example, according to Chen Lu from Huading Shuyuan, instead of over-regulating her school, the local official in charge of private education has helped her to increase teachers’ resources and broaden the school’s influence. “The strong presence and involvement of the government in promoting guoxue since the 18th Party Congress is unprecedented in the history of the People’s Republic of China,” Professor Xu Yong told our reporter. “The two joint forces of the government and the grassroots movement led to a real boom in traditional cultural education in the Chinese mainland.” NEWSCHINA I September 2015

Photo by CFP

Photo by IC

Children at Taiyuan Guoxue Kindergarten bow to a portrait of Confucius, July 21, 2009

Guoxue Craze

The boom started with universities. Many of the leading universities in China started up guoxue institutes or guoxue training classes, some of which were designed for entrepreneurs and promised to reveal “commercial wisdom” in the classics. Middle school guoxue textbooks have been compiled, with a significant amount of content now culled from the Chinese classics. In some provinces elementary school kids are made to memorize classic works such as The Three Character Classic or Standards for Being a Good Student and Child while wearing robes in the style of ancient scholars. More Confucius statues have been erected across the country. In the sage’s hometown of Qufu, Shandong Province, a 500-million-dollar Confucius museum-and-park complex is under construction. Nearly every bookstore in China now carries numerous publications analyzing and reinterpreting the Confucian classics. Guoxue afterschool programs have also exploded. Driven by market demand, some existent educational institutes are adding guoxue courses to the repertoire to expand

NEWSCHINA I September 2015

their customer base. Zhang Zhuo from a Beijing branch of Xingkong Piano Training Center told our reporter that the center would launch a new set of classes in late July, each focusing on a different traditional Chinese art form, including the guqin, calligraphy, traditional Chinese painting and the art of the tea ceremony. “Our company’s marketing strategy is to simply provide quality educational courses for children to meet their needs,” added Zhang. Chen Lu told our reporter that she often receives requests from marketing personnel from other institutes, mostly English training centers, who are interested in cooperating so that students from both schools can attend the other’s courses. Quite a large number of new shuyuan have emerged within the past five years, including those that cater to China’s elite. For example, high-profile school Peide Shuyuan, which enrolls children aged two to 12, charges tuition amounting to over 120,000 yuan (US$19,320) per year.

Future Growth

Feng Zhe from Sihai Shuyuan predicted

that the number of shuyuan in China will exceed 10,000 within the next 10 years as the nation re-embraces its traditional heritage. Gong Hongyuan shares his optimism. “The previous two decades were the trial and error period for guoxue education, while the next decade will see knowledgeable and capable people emerge to promote the spirit of modern shuyuan,” he said. “The real guoxue revival will come by the middle of this century.” Gong even expects shuyuan education to reach a level of influence in the Chinese academic world comparable to that of Montessori or Waldorf curricula in the West. As ambitious as Gong’s expectations may be, in reality there are already young people working to continue the efforts to promote guoxue-based education. Five fresh college graduates who majored in guoxue at Shanghai’s Fudan University are the perfect example – they recently set up a small guoxue school in metropolitan Shanghai. “A lot of guoxue knowledge is new for our students,” school co-founder Li Zilu told NewsChina. “They are very interested in listening to our teachings about ancient history and traditions.”

Photo by CFP

cover story

A teacher at Haiyin Early Education, a guoxue private school, has been accused by students’ parents of adopting corporal punishment as a method of discipline

National Studies

Rough Road Ahead

The comeback of traditional Chinese studies has stirred up controversies because of a lack of regulations and resources. In a modern context, reviving classical Chinese culture is easier said than done By Wang Yan

he Chinese government has been focusing on economic development for decades. As the country’s GDP rocketed and the gap between the rich and poor spread ever-wider, Chinese people began to chase wealth in a way they hadn’t been able to for generations. But as China’s dive into materialism deepened, people started to feel a kind of spiritual crisis and loss of identity. As globalization and commercialization engulfed their lives, many sensed true “Chinese-ness” fading away. Today, young parents struggle to seek methods to help their children establish a sense of cultural identity, which many think cannot be achieved through a public education system that is heavily influenced by internationalization. China’s modern education system is largely

a copy of the West’s. The problem, according to some educators, is that in the West, a rounded education generally consists of efforts from both schools and religious organizations. Schools impart knowledge, while moral education tends to depend on families and, potentially, their religious beliefs. “In China, there is a lack of religious groups to shoulder the responsibility of cultivating people’s morality,” said Gong Hongyuan, cofounder of traditional Chinese school Boya Shuyuan. “Thus there is an urgent need to recapture shuyuan [academy of classical learning] culture, which can spread the Confucius spirit.” At the same time, as China has come to be the second-largest economy in the world, the State has pinpointed cultural soft power as an element that is key for domestic stability and

international acceptance. One official top initiative was a resolution to develop and promote “China’s cultural system” both at home and abroad. Abroad, China has escalated efforts to establish Confucius Institutes around the world since 2004, and domestically, a wave of an apparent obsession with guoxue, or the study of traditional Chinese philosophy, literature and art that mainly centers around Confucianism, has been sweeping the nation for nearly a decade. Lured by potential profits to be gleaned from the expanding market, guoxue education, like many things in China, is expanding too rapidly for regulations and resources to catch up.

Facing Challenges

Despite the fact that there is a commonly accepted concept for guoxue in some acaNEWSCHINA I September 2015

demic circles, for the rest of society, ambiguity and uncertainty prevail. There are different versions; guoxue means different things to university researchers, businesspeople, government officials and children in school. Some training centers take advantage of this ambiguity by designing seminars on things like feng shui and fortunetelling while labeling it as guoxue, diminishing guoxue’s true cultural significance and confusing the public. “Such lowbrow training programs run by unqualified people are popular, while just a few private guoxue schools teach traditional Confucian theory,” said Han Demin, a professor at Beijing Language and Culture University’s College of Humanities and Social Sciences. Yet because of a lack of established standards for guoxue schools, these institutions are held to the same standards as other private schools. Almost all existing guoxue schools cannot meet the official requirements necessary to obtain a proper private school license. They survive in a gray area by illegally registering under the names of other businesses, like cultural entities or centers that run afterschool programs. Another byproduct of this absence of supervision are reports of some private schools using corporal punishment and other extreme methods to discipline students. “On one occasion, I saw one five-year-old boy being forced to kneel down and recite classics until he could memorize them,” said Kong Ji, a Beijing father of a three-year-old girl. Some private guoxue schools broadcast recordings of classic works for eight hours a day to push students to learn them by heart. “That made me feel like they’re turning guoxue into a cult, which would be a very terrifying phenomenon,” said Kong. In addition to a lack of oversight, the guoxue fad suffers from a lack of qualified resources. It is easy to find teachers skilled at traditional Chinese arts, however, finding teachers qualified to teach Chinese classics is a different story. At worst, some teachers who lecture on the classics, like The Analects or the I Ching (The Classic of Changes), had never even read these books themselves before teaching them. NEWSCHINA I September 2015

During the interview, Chen Lu, from guoxue school Huading Shuyuan, and Gong Hongyuan, from Boya Shuyuan, both said the lack of qualified guoxue teachers is one of the main obstacles that the industry faces. “The cultivation of qualified teachers is a very long process,” said Chen Lu, explaining that teachers not only need to know the classics, but to live and behave according to Confucian principles. “Even our team members who have an educational background in ancient Chinese need to continue learning and to practice in the field for at least five years before becoming truly qualified to teach students.” The problem is that while the guoxue craze is peaking now, trained teachers with five years’ experience are incredibly rare. The craze intensified too quickly; parents want their kids to learn from qualified teachers, while majoring in guoxue will be made available in some Chinese universities for the first time next year, according to the Beijing Evening News. The Ministry of Education just finished ironing out a guoxue curriculum for students from preschool through university in May of this year, and the new materials have already been used in schools in Beijing’s Tongzhou and Daxing districts on a trial basis. In Gong Hongyuan’s words, although challenges caused by the deficiency of qualified guoxue teachers are harsh, the situation will improve. “When I was at university in the 1990s, there were a pathetically small number of students who chose to study the Chinese classics, but now more and more college students are beginning to study guoxue, and the recent increase in designated guoxue institutes in universities will definitely cultivate more useful talent in the field.” More and more universities are establishing guoxue research centers; for example Shaanxi Normal University and Central South University both opened such centers in 2014.

Controversy

The government’s efforts to promote guoxue and its own take on purportedly traditional Chinese concepts have come under fire. China’s current generation of leaders has publicly embraced Confucian ideas to such

an extent that some academics, especially those who are more liberal, have objected to the officials’ top-to-bottom implementation of promoting guoxue, expressing that it’s important to fully develop the idea before plunging into it. In Professor Han Demin’s opinion, Confucianism, which emphasizes filial piety, order and harmony, worked well in earlier societies where people often lived with a large number of extended family members, but such concepts need to be transformed to suit modernday families. “I am not denying the positive education that guoxue can convey nowadays, but finding an effective and healthy way for its implementation remains a question,” Han said. “Indeed, I am pessimistic about how many people can really behave according to what they learn from Confucianism early on.” If Confucianism and other guoxue philosophies are not adapted into something relevant to present-day China where utilitarianism prevails, “students will regard guoxue as another compulsory school subject that only comes up in texts and tests,” Han added. Chen Lu shares the same concern over the potential strain that studying guoxue may bring upon children who are already weighed down by extreme academic demands. “If someday, the classics become a burden for children, that’s what we’d least like to see,” she said. Regarding the development of Confucianism in modern China, Han echoed the opinion of Princeton University professor Yu Ying-shih — that the Chinese central government’s promotion of Confucianism is the tradition’s “kiss of death.” Yu fears that the top-down promotion of institutional Confucianism would prevent true Confucianists from expressing opinions contrary to the State’s definition of the philosophy. Similarly, Han said guoxue, if implemented improperly at a local level, would either stagnate its development or push it in an unhealthy direction. “If Confucianism is made to become a part of the political system, I think it will be very hard to avoid the malpractice that has occurred throughout history [when it was used as an autocratic tool],” said Han. 

cover story National Studies

Looking Forward

According to Beijing Normal University’s Professor Xu Yong, national confidence comes from its cultural prosperity and revitalization, and he is sure the revival of “national studies” is a big step forward

Photo by CFP

By Wang Yan

Nanjing Fuzi Temple Primary School organizes a traditional-style induction ceremony for 320 newly enrolled students, September 1, 2009

n mid-July 2015, Beijing played host to a forum on how to include Chinese traditional culture in modern-day education. More than 60 academics from the Chinese mainland, Taiwan and Hong Kong attended to discuss how to pass traditions down through today’s school system. In between the discussion sessions on July 14, NewsChina sat down with Professor Xu Yong, the dean of Beijing Normal University’s Institute of Education History and Culture, to ask him about his perspective towards the recent revival of so-called “guoxue,” or “national studies” education.

NewsChina: What is the purpose of guoxue education in contemporary China?

Xu Yong: Different people might take different stances in promoting guoxue education. I personally regard it as more than moral cultivation and classify it into three different levels: the basic level is to appreciate and master the elegance and esthetics of the Chinese language; the second level is to approach the spiritual world conveyed through Chinese classics; the highest level is to get deeply rooted into our traditional culture and become cultured and self-aware Chinese people... rather than being Chinese merely on a biological level. NC: Has guoxue become a compulsory course within the public education system? XY: In some provinces, like Shandong,

compulsory courses on traditional culture were launched as early as 2009. The course includes the classics, cultural history and traditional arts and skills. Last year, I publicly recommended to the Ministry of Education that guoxue content be included in nationwide compulsory courses for basic education [kindergarten, elementary and middle school education], however so far there is no such course. But there are various forms of attempts in this regard within different schools. NC: Will the addition of guoxue education be a burden for Chinese students who are already overworked? XY: I do not agree. If schools should reNEWSCHINA I September 2015

NC: How can we balance guoxue with the influence of the Western ideologies of democracy and freedom? XY: I do not think the two are incompatible. For example, Taiwan is more democratic than the mainland, however Taiwan has preserved its traditions better than the mainland. Modernity and tradition are actually not in opposition. Innovation should be based upon understanding of tradition. But of course, we should not advocate guoxue while completely denying Western education. Guoxue promotion should be placed in the context of an international environment. NC: What is the biggest obstacle for the revival of guoxue? XY: There is still quite a lot of social opposition to the revival, calling it backward and conservative. Even some officials in the Ministry of Education are against the agenda to promote guoxue. NC: Does Beijing Normal University train future guoxue teachers? XY: We’ve set up the Institute of Education History and Culture, which focuses on setting standards for guoxue curricula and the compilation of guoxue textbooks. It is true that the lack of qualified teachers is acting as a bottleneck for guoxue education. But, so far, except for some sporadic, short-term training programs, we [at the Institute] don’t have enough resources to systematically train teachers in this regard. NC: How do you perceive traditional guoxue education in comparison to Westernstyle education models like Montessori or Waldorf? XY: First of all, I am a big fan of those two Western models of education. Yet I do not NEWSCHINA I September 2015

Photo by IC

quire [students to] memorize texts, it would surely be a burden. But as long as schools have a sound appraisal method for this course, this won’t be a problem.

Children in traditional Chinese dress read classic scriptures in Yuzhang Shuyuan, June 26, 2011

agree with the idea of giving children complete freedom, since education itself is about guiding and mentoring, and may sometimes even include punishment. Thus, I prefer to combine both traditional Chinese methods for educating children with Western ones, following children’s dispositions while at the same time steering them away from indulging in incorrect behavior. NC: Do you agree with using the corporal punishment often employed in China’s ancient education system? XY: I know that in ancient China, particularly southern China, corporal punishment was highly emphasized in children’s education. The modern education system does not allow this to happen. I personally am also against this behavior. Those teachers who physically abuse children in private guoxue schools are ignorant of the law, and of teaching. NC: What’s your perspective on the growing number of guoxue private schools, also called shuyuan? XY: Shuyuan and public schools are two completely different systems. The comeback

of shuyuan education indeed poses challenges towards modern school teaching. It is estimated that there are over 3,000 private organizations offering guoxue education under different names. Most of them are illegal, since they have not yet acquired a license to run a private school from a sub-branch of the Ministry of Education. It is always hard to supervise them. Thus, in my opinion, the government should issue licenses to those private educational institutions that have a long history, a pretty good reputation and a strong group of teachers. For those small schools that are insufficiently equipped, the government can assist them to merge, while the government should crack down immediately on those institutions that cheat or use corporal punishment. [The central government needs to] encourage the establishment of an industry coalition among shuyuan so as to enforce self-discipline and guidance. It also needs to improve the training, testing and quality certification system for teachers in those private guoxue schools. All shuyuan teachers should obtain an offical teacher’s license, thus ensuring the teaching quality of guoxue education.

A street performer in Shanghai

Photo by IC

society

One of the first eight street performers licensed in Shanghai performs for passersby, October 25, 2014

Street Performers

Freedom to be Managed

China is experimenting with licensing street performers to enliven its public spaces. However, with a large number of government departments involved in the process, things are moving slowly By Zhou Fengting

n the plaza in front of the swanky commercial complex Shanghai Centre, one of the fanciest downtown shopping areas of China’s economic capital, singer Zhang Yi belts out jazzy tunes to shoppers accompanied by his guitar. Some passersby stop to listen and, occasionally, throw some loose change into his guitar case. Fifty meters from Zhang, Li Xionggang’s dexterous fingers shape Chinese zodiac animals out of empty cans. When people stop to ask Li how much his creations cost, he tells them to “pay whatever price.” Not far away from Zhang and Li, conspicuously the only street performers in the area, security guards patrol the center’s main concourse, but none are interfering with the two men’s “business.” While elsewhere in China both would have likely been hauled away, Zhang and Li both hold licenses to keep the peace between them and local security forces. These licenses, granted by the Shanghai Performance Trade Association (SPTA), bear the legend: “License of Verified Performance of Shanghai Street Entertainer.”

Restoration

As long as it is not raining, legally licensed street performers appear on the Shanghai Centre plaza every evening from 5 to 7 PM. There are two other sites in the city’s Jing’an District where the government has approved street performances by licensed entertainers. So far, however, only Jing’an District has actually allowed such performances to take place. Strictly speaking, unlicensed business or performances on the streets and in other public spaces are all illegal, according to Chinese laws and regulations. However, public busking is far from uncommon in the country, particularly in areas close to tourist attractions and retail spaces. In many cases, street performers have long been playing a “guerrilla game” with urban management officials. Among China’s cities, Shanghai is wellknown for its orderly and tightly managed urban environment. Yet, to Luo Huaizhen, a Shanghai native and professor at the Shanghai Theatre Academy, “orderliness” and “neatness” can also be interpreted as “monot-

ony” and “boredom” when applied to a city. “Since ancient times, there have been all sorts of acrobatics and performances on the streets and in markets,” Luo told NewsChina. “Many palace performers of the preQin [Dynasty] era were selected from a pool of street performers.” Luo also speculated whether Shanghai should “give its streets back” to free artists, arguing that the municipal government should “restore the scenery a city should have.” As one of China’s busiest cosmopolitan cities, Shanghai has a history of fostering a large number of street performers. According to a 1956 report by Xinhua News Agency, more than 1,500 street performers and 33 circus wagons were recorded to have performed in the city that year. However, as the central government pushed forward its plan to nationalize the economy, the entertainment industry fell entirely under government control, and the number of independent artists withered. Luo Huaizhen has been lobbying to bring street performance back to Shanghai city life since he served as a deputy of Shanghai’s PeoNEWSCHINA I September 2015

ple’s Congress in 2004. That year, he brought a bill before the congress concerning the “Regulation of Shanghai Street Entertainer Management.” In his proposal, Luo suggested that the “regulation,” if passed, should officially acknowledge street entertainers, their particular art form and the nature of their performance, and designate space and time for such performances. Luo’s proposed bill also argued that the government should provide tax relief and funding for such performers. The bill failed. In 2008, Luo and 11 other members of Shanghai’s People’s Congress resubmitted the same bill for consideration. This time around, it passed. However, enacting a regulation concerning China’s sensitive cultural sphere involves a more complicated coordination of resources and responsibilities than Luo had initially imagined. More than 10 government departments, including bureaus tasked with “cultural inspection” and “cultural management,” as well as the bureaus of urban planning and management, public security, traffic and taxation, all participated in the project. It was six years before the trial project licensing street entertainers tentatively launched in the city’s Jing’an District.

Management

On October 25, 2014, Shanghai’s first eight licensed street performers – who were also the first on the Chinese mainland – took up their “official” positions in Jing’an Park. In the contract signed with the SPTA, street performers are required “not to set prices” or “sell” their services or performances, and are also prohibited from “begging.” Their licenses also need to be renewed every three months, while their performances need to occur at a strict, prearranged time and in an officially sanctioned location, with the

NEWSCHINA I September 2015

Photo by IC

Two street performers in Shanghai show off their licenses

Another newly licensed Shanghai street performer at work, October 25, 2014

content of all performances requiring official approval. Failure to stick to the rules will likely cause their licenses to be revoked. China’s first group of licensed street performers are permitted to perform on average three days a week. They shift between the three locations currently available in Jing’an District, where they perform under the gaze of a “supervisor” between the hours of 5 and 7 PM. Li Xionggang has been making his can sculptures for 17 years, and has a significant fan following. Though he started working on the street in 1998, he was quickly signed by a cultural agency which offered him a fixed pitch in Shanghai’s Chenghuang Temple, one of the city’s most famous tourist attractions. For Li, working in the three officially approved public locations in Jing’an District has meant a “return to the street.” Unlike his fixed pitch, Li feels the street offers him more freedom and inspiration for his art. He arrives with a few ready-made pieces and then sculpts zodiac animals to order, while taking the opportunity to chat with passersby about his work. He has been working on one particular piece, titled “Memory of the Bund,” for a month, and has added to it according to public suggestions. Zhang Yi was among the second batch of entertainers who received their licenses on June 1. These performers include three saxophonists, two guitarist-singers, one portrait painter and one craftsman. After one month’s “internship” on the street, these entertainers finally received their licenses. Zhang Yi has been a guitar player and singer for thirteen years. He began his musical career performing in and around Beijing’s busy Xizhimen subway station. Gradually, he was offered opportunities to perform in bars, before relocating to Shanghai in 2012, where

he began to give concerts and even perform at music festivals. However, he still enjoys what he calls the “freedom and romance” of the streets. “Many people left the streets and stepped onto formal stages and even grand venues,” he told NewsChina. “But, for me, the street is another grand venue. I need validation from the streets.” But the government’s experiment in bringing art back to the streets is making slow progress, with few precedents for free, public performance in the People’s Republic. The involvement of so many government departments in regulating street performance also complicates matters. Presently, the SPTA issues a performance roster according to schedules submitted by performers one week in advance. All 16 entertainers currently scheduled have to “work” strictly in accordance with the roster. However, many wonder if the “strict management” of street entertainers will constrict the art it is designed to promote, as it places restrictions on their creativity and freedom. Also, precisely how the government will determine which varieties of performance may go on the streets and how much input officials will have in terms of content remain contentious. The miserly allocation of space, and other management issues, are also likely to be sticking points. Yet on June 23, 68 individuals and groups of street performers, the first batch of this size received their government licenses in Shenzhen, Guangdong Province. These entertainers are placed into three categories: performing arts, visual arts and creative craftsmanship. As the second city in China taking part in the trial licensing of street performance, Shenzhen, often a trailblazer for new economic and social policies, could enjoy more success than Shanghai.

society

Exam Fraud

Put to the Test As cheating on international exams like the SAT and TOEFL becomes rampant in China, a NewsChina reporter wonders: Just how easy is it to scam the system? She takes the TOEFL to find out, and collects firsthand information on the examâ&#x20AC;&#x2122;s exploitable loopholes By Qian Wei and Ran An

NEWSCHINA I September 2015

n May 21, 2015, 15 Chinese nationals were indicted by a federal grand jury in Pennsylvania on 35 charges relating to a grand conspiracy to help students cheat on college and graduate school entrance exams in the US. According to the indictment, from 2011 to 2015, the defendants provided counterfeit Chinese passports to impostors who then snuck into testing centers to take the SAT, the GRE, or the Test of English as a Foreign Language (TOEFL) in a third party’s name. The 35 charges include conspiracy, counterfeiting foreign passports and defrauding the Educational Testing Service (ETS), which creates the GRE and TOEFL, and the College Board, which sponsors the SATs. If the defendants are found guilty, they face a maximum of 20 years in prison and hundreds of thousands of dollars in fines, according to US media.

Haunting Issue

As the Chinese upper-middle class grows, so does the desire of wealthy Chinese families to send their children to prestigious Western universities. The latest official statistics from China’s Ministry of Education show that there are 459,800 such applicants, with their average age decreasing every year. According to the Institute of International Education, China remains the leading country of origin for foreign students in the US, making up over 30 percent of its international student population. In the 2013-14 academic year, over 274,000 students from China were studying in the US, an increase of 16.5 percent compared to the previous year. Accompanying this large influx of Chinese students is the harsh reality that the number of Chinese students who cheat on admission exams has also increased. Indeed, the widespread evidence of cheating on exams, including the SAT, GRE and TOEFL, has become an open secret in China. Due to alleged cheating, in previous years the ETS has withheld and reviewed the test scores of some Chinese students on a few occasions. According to TIME magazine, ETS reviewed the scores of all students from China and South Korea last October, holding the scores until some early admission deadlines had already passed. For some students, the delays interfered with their applications and made it more difficult for them to select a school. The latest instance of such an intensive review on Chinese students due to security breaches occurred in February 2015. For some students, cheating on exams and academic dishonesty did not serve them well upon acceptance into foreign universities. In 2013, a survey conducted by EIC Education, one of China’s largest international education agencies, indicated that one in four Chinese students enrolled in Ivy League schools dropped out, possibly due to a lack of preparation or language skills. A 2015 report published by WholeRen Education in late May states that 80 percent of Chinese students dismissed from US universities over the past year were dismissed because of a low GPA or

NEWSCHINA I September 2015

academic dishonesty.

The Business of Cheating

According to insider source Zhao Chenyu (pseudonym), who has just achieved a desirable over-100 score on the TOEFL (which has a maximum score of 120), some domestic training institutes who claim that they can baofen, or “guarantee” exam grades, are those who provide various cheating tools or tricks to test-takers. Zhao Chenyu is one of numerous students who have resorted to such services. To learn exactly how students are cheating, a NewsChina reporter pretended to be an exam-taker and personally experienced the whole process of taking the TOEFL held in Beijing in late May. People can easily find an agent who can provide these services on popular domestic shopping website Taobao by searching key words like “TOEFL baofen.” The reporter randomly chose one of these online stores through initial searching and consulted with the salesperson about the company’s services. The vendor replied: “We provide exclusive, fast and correct answers to the TOEFL you are to take. Prices range from 3,000 yuan to 13,000 yuan [US$483-2,094], depending on which form of service you choose.” The store wouldn’t provide further explanation unless the buyer sent “the confirmation letter [sent to TOEFL applicants] and a payment account to testify his/her personal identity as a test-taker.” After the reporter provided the shop with the required materials, a document titled “100 Percent Insurance to Secure a High TOEFL Grade” was sent to the reporter. According to the instructions, for 10,000 yuan (US$1,611), the buyer could receive a “hidden earpiece” which is not visible from the outside, isn’t detectable by metal detectors and isn’t affected by signal-jamming technology. The salesperson explained that during the examination, the test-taker can listen to real-time broadcasts of correct test answers transmitted from an experienced test-taker planted in a different testing center somewhere outside China. A less expensive option was to use a watch-sized mini cell phone to receive the answers via text message. The seller promised that this method would secure a total score of at least 55 out of 60 for the listening comprehension and reading sections. The reporter decided to spend 2,500 yuan (US$403) on this cheaper product. Three days later, the reporter received an express delivery sent from Shenzhen. The “secret gadget” in the package was a knock-off Apple Watch which had almost all the basic functions of a cell phone. The seller then instructed the reporter to hide the gadget inside her clothes and carry it into the exam room. Its plastic frame eludes metal detectors. “Since the examiners won’t strip-search test-takers, it will be 100 percent safe for you to hide it inside your underwear,” reassured the salesperson. These online shops that arm clients with the tools to cheat are just the tip of the possible “iceberg” of cheating facilitators, considering the large number of test-training agencies.

society

The knock-off Apple Watch our reporter bought from a Taobao vendor

According to the report 2014 Trends of Students Studying Abroad released by Chinese education website eol.cn, language test-prep companies or cram schools have surged in scale; it’s approximated they’re worth a total of more than 30 billion yuan (US$4.8bn). It is estimated that the number of such agencies has increased from a dozen in the 1990s to several thousand, employing hundreds of thousands of people. To make a profit, a significant number of these agencies try to attract more clients by helping them obtain high grades through dishonest tools or tricks. Gui Chun, 39, a former teacher from New Oriental Education Group who has more than 10 years of experience in the industry, told our reporter, “Fierce competition and a chaotic situation has caused misconduct to snowball. Without proper treatment, the situation might even deteriorate, like bad money driving out the good.”

Manipulation

On May 24, the reporter went to Beijing Foreign Studies University to take her TOEFL that started at 9 AM sharp. She hid the gadget she bought online inside her blouse. Indeed, due to increased incidence of cheating in recent years, TOEFL test centers in China have strengthened supervision. Nobody is allowed to take anything with them into the test center, not even paper or a pencil. Each room is equipped with handheld metal detectors, and some Beijing test centers have even started to jam cell phone signals. Despite strict inspection and a thorough scan from the metal detector, the supervisor failed to find anything abnormal on our reporter’s person. The reporter did not make any attempt to look at the gadget

throughout the exam, nor did she press the submit button at the end of the test. But, in order to investigate the issue, she did spend a total of four hours at the exam site. During the mid-test break, the reporter took out the gadget while in the bathroom and saw 13 unread messages containing answers to all the questions on the first half of the test. Who sent these messages and how could they possibly type them while the exam was still in progress? The online store attendant later explained to the reporter that answers were sent out from prearranged test-taking professionals who can get a score of over 110 on the TOEFL. In other words, planted, professional test-takers were taking the same exam alongside our reporter. Through later investigation, our reporter learned that the bespectacled young man sitting next to her was indeed one such test-taker. After the exam, he told NewsChina that he was an English teacher and he takes the TOEFL once a month. Apart from cheating through these devices, another common and much more direct method is cheating by impersonation. According to the online agent, for a fee of about 15,000 yuan (US$2,416) for the TOEFL or 30,000 yuan (US$4,833) for the GRE, a student can hire a professional TOEFL test-taker who actually physically resembles him or her.

Vacancy

Two days before the reporter’s May 24 TOEFL exam, she called the test center’s local police station and informed officers about her undercover investigation. After she gave a detailed explanation, however, no police personnel claimed to have responsibility for issues like cheating on the TOEFL. Domestically, major national-level exams such as the gaokao, China’s college entrance examination, are listed as a national security issue. If cheating is discovered, the suspect might face criminal charges. Yet the government office responsible for this is ambiguous in its attitude towards the problem of people cheating on exams for overseas study, like the TOEFL. Normally, if this sort of cheating is spotted on site, the punishment is no more than pleading guilty to counterfeiting an ID card, if the student hired a surrogate test-taker. Chen Hang, chief development officer at WholeRen, expressed to NewsChina during a recent interview: “It is not breaking the law to cheat on exams, but in the US, counterfeiting others’ forms of identification is illegal. Thus in China, cheating on exams like the TOEFL does not principally break any law and there has never been a conviction in China over this issue.” Teacher Gui Chun explained that the ETS authorizes China’s Ministry of Education to conduct the TOEFL and GRE. With limited financial subsidy, it is impossible to expect the exam supervision could be as strict as the gaokao. “The gaokao could be regarded as the strictest exam in the world. Girls are not even allowed to wear bras with metal clasps and the exam site is shielded from any form of mobile signal. This June, some parts of China even utilized on-site drones during the test to detect NEWSCHINA I September 2015

NEWSCHINA I September 2015

Photo by Xinhua

radio signals,” said Gui. He added that hundreds of teachers working for different English-language training institutions had once wrote a joint letter to the ETS, imploring the latter to take action against rampant TOEFL cheating in China, but received no response. NewsChina wrote to the ETS a few days before the May 24 test, explaining that a reporter would carry a cheating device into the exam held in Beijing. On this topic, ETS spokesman Tom Ewing replied in an email only that “we would urge caution in detailing to any great degree the method that you used.” When NewsChina asked if the ETS conducts any specific preventative measures to thwart potential cheaters, Ewing said that cheating was not exclusive to China, or to any other At an exhibition in Zhejiang Province, a teacher from a foreign university talks with a Chinese student country. “When an alleged security consulting him about studying abroad, March 2, 2014 incident occurs, we would conduct a comprehensive investigation and statistical analysis to determine if a breach has occurred,” Ewing said. “Over the past year, with more than During an interview with NewsChina, he admitted that since he four million test takers around the globe, fewer than 5,000 scores have started his business in 2009, he has become both more skeptical and more sympathetic towards Chinese students. “The fraud and extreme been canceled after thorough investigation.” Robert Schaeffer, public education director of The National Center test prep is on a level greater than most admission officers realized,” for Fair & Open Testing (FairTest), an organization that advocates Crawford told our reporter. “This is the plight of Chinese students, for standardized testing reform, told the Guardian in May: “By all and they are, to a certain extent, pathetic.” Considering the unsolvable problems surrounding the standardappearances there’s widespread cheating on admissions exams involving people in mainland China, Hong Kong, Singapore and South ized language test, InitialView co-founder and COO Gloria Chyou Korea.” He also pointed out that recycling test forms that were previ- suggests: “Why not just admit Chinese students based on their much ously administered in the US is the root cause of this ongoing scandal more reliable [gaokao] scores?” She admitted this solution would of and called upon the College Board and the ETS to stop reissuing test course require much more research and had other issues that required consideration. questions. Starting this year, Chinese students applying to the University of San Francisco can submit their gaokao score and an interview vidDilemma “Students in China could endeavor to be honest, provide an ac- eo instead of SAT scores or a GPA. Illinois Institute of Technology, curate transcript, and take care of all aspects of the application process Brigham Young University and Suffolk University already accept themselves, but most feel that not tapping into an agent’s ‘expertise’ China’s gaokao scores in lieu of international standardized test scores. This May, after the recent indictment of the 15 Chinese nationwould leave them uncompetitive against their better-advised classmates,” wrote Terry Crawford for The Atlantic in January. Crawford is als, FairTest urged US colleges to adopt a “test optional” admissions the founder and CEO of InitialView, a Beijing-based company that system, which would evaluate students based on transcripts, curriculum and extracurricular activities rather than test scores. But FairTest’s interviews Chinese students on behalf of selective US colleges. “Everyone knows of the smart kid who decided to apply ‘DIY’ Robert Schaeffer also admitted during an interview with the Guardand then wasn’t accepted—and they don’t want to risk being the next ian that such a system would put many international students at a one,” Crawford continued. “Unfortunately, there’s a sense in China disadvantage due to the unfamiliarity between US college admissions offices and foreign secondary school systems. that the honest applicants are the chumps.”

society

Lottery Funds Scandal

Out of Luck China’s recent audit of lottery funds uncovers massive corruption and fundamental flaws within the industry By Min Jie

People buy lottery tickets in Dongguan, Guangdong Province, October 2013

fter launching a nationwide audit of China’s lottery funds in November of last year, the National Audit Office (NAO) released a report on June 25, 2015, revealing extensive corruption relating to the use of lottery funds across the country. Covering 18 provinces, 228 lottery institutions and 4,965 individual lotteries, this was the first large-scale audit of lottery funds conducted in China’s history. The NAO found that more than a quarter of funds covered by the audit, or 16.9 billion yuan (US$2.72bn), had either been misappropriated or embezzled. 73 departments were found to have used fake or fraudulent documents to embezzle 596 million yuan (US$96m). 32 of them appropriated 3.1 billion yuan (US$507m) to construct office buildings, training centers and hotels. 141 departments used 383 million yuan (US$61.7m) in lottery funds to finance subsidies and allowances for their staff, while 122 departments used lottery funds to buy public vehicles or organize overseas travel for officials. Among the 18 provinces covered by the audit, 17 had engaged in lottery sales over the Internet without approval from the Ministry of Finance, a legal requirement under Chi-

nese law. In Chongqing alone, local lottery authorities illegally sold 514 million yuan (US$82.8m) worth of lottery tickets online. Some officials even set up fake lotteries in certain localities. Claiming that the authorities have reclaimed some of the money, the report did not specify whether these officials had been punished for their abuses, nor did it offer any suggestions on how to address the industrywide problems that it reveals.

Flaws

For many experts, the existence of massive corruption is only a symptom of some fundamental and systematic flaws within the lottery industry that can only be solved with a radical overhaul. For example, under the current regulations which were passed in 2012, government lottery agencies are allowed to pocket up to 15 percent of total lottery funds to cover “administrative costs,” far higher than the international rate. In the US, for instance, cost of administration, which covers such expenses as salaries and advertising, is only about 5 percent of total lottery funds. The fact that China has seen a boom in the lottery industry over the past few years also

means that lottery agencies simply have access to a huge amount of money that far exceeds their normal expenses. For example, in 2014 alone, lottery ticket sales totaled 382.4 billion yuan (US$61.6bn), an increase of 23.6 percent over the previous year. Roughly 14 percent of that sum, or US$8.6 billion, was funneled to lottery agencies as “administrative fees.” It is estimated that the funds allocated to administration have increased sevenfold between 2002 and 2012. As administrative costs typically do not increase proportionally with that of sales, it is not surprising to see that some lottery agencies are spending this money elsewhere. For example, top lottery administrator China Welfare Lottery Management Center was found to have spent 222 million yuan (US$35m) on a “training center” in Huang Shan, a popular tourist destination and UNESCO World Heritage Site located in Anhui Province. The center includes a luxury resort, seven restaurants and a 2,000-square-meter open area covered with red carpet. In Yunnan Province, local lottery agencies have even used some lottery funds to pay “bonuses” to staff members in the three NEWSCHINA I September 2015

Photo by CFP

governmental bodies that regulate the lottery: the provincial finance department, the civil affairs department and local recreation bureaus. “How can you expect these departments to regulate the lottery agencies when they receive bonuses from those they’re regulating?” asked Feng Baiming, director of Henan University of Economics and Law’s Lottery Research Institute. Moreover, the management of many lotteries is subcontracted to private companies, usually for an amount equivalent to the 15 percent administrative fee. In this way, the industry can become a hotbed of corruption and rent-seeking, as officials can embezzle by giving contracts to companies with whom they have a relationship, a practice that was not investigated during the audit.

For Profit

With the existence of this high administrative fee, which effectively serves as a commission, the lottery industry is essentially run more like a commercial, profit-driven business, rather than the public welfare fund it was intended to be. The result is that lottery agencies have developed new strategies to boost ticket sales.

NEWSCHINA I September 2015

One example of this is the need to “multiply” tickets to win larger jackpots. Unlike many developed countries, where prizes can climb into the hundreds of millions of dollars, China caps jackpots for a single ticket at 5 million yuan (US$805,000). If the pool exceeds 5 million yuan, consumers can only win additional money by “multiplying” their ticket, or paying the price of multiple tickets for a single combination of numbers. For example, to be able to win a 100-million-yuan jackpot, consumers would need to “multiply” their ticket 20 times over, which means purchasing the same numbers 20 times. According to Su Guojing, founder of research institute China Lottery Industry Salon, this practice, which aims to encourage people to spend more on lottery tickets, is a major reason behind the recent jump in ticket sales, which have been growing at a much faster rate than that of the average consumer’s disposable income. “As lottery agencies devote themselves to encouraging and enticing people to spend more on lottery tickets, the lottery industry becomes more and more like a gambling business,” said Su. He argued that it makes a vicious circle; the commercialization of the lottery industry not only creates more corruption because of the increased revenue going to “administrative fees,” but also it discourages people from seeing the lottery industry as a resource for public welfare, which may explain the public’s lack of awareness over the use of lottery funds.

Overhaul Needed

In theory, as 15 percent of the total lottery funds goes to administration and 58 percent is allocated for lottery prizes, about 27 percent of lottery funds is set aside for two purposes: public welfare and sports. The country’s two major lotteries are actually called the China Welfare Lottery and China Sports Lottery. However, as there is no official legislation governing the use of lottery funds, it is very difficult to track where the money really goes. Under the agreement reached between various agencies, the funds are split 50-50 between the central government and

local governments. Among the funds allocated to the central government, 60 percent is merged into the National Social Security Fund (NSSF). This number amounted to 27 billion yuan (US$4.3bn) in 2014, which accounted for almost half of the NSSF’s total revenue that year. According to Feng Baiming, this arrangement is a misappropriation of lottery funds, as the majority of the money is used to counteract the NSSF’s deficit that has resulted from China’s aging population, rather than to support designated public welfare projects. But while the public has at least some idea where the lottery funds allocated to the central government end up, there is minimal information available about those given to local governments. Under current regulations, local governments have no obligation to publicize the use of lottery funds. Of the 282 cases of funds misuse listed in the audit report, 48 percent are related to various local departments. In Yangzhou, Jiangsu Province, the funds set aside for a nursery home were used to fund the construction of a high-end serviced apartment building. In Wenzhou, Zhejiang Province, the local finance bureau allocated 100 million yuan (US$16m) of lottery funds to a State-owned company as a subsidy. Since the audit report has caused a public outcry over the abuse of lottery funds, there have been calls for some serious industry reform. In April, the authorities suspended all online lottery sales, which many interpreted as a sign that a major plan for reform may be under way. Wang Xuehong, a lottery researcher at Peking University, told NewsChina that China’s lottery industry regulations, which were established when the industry was tiny, have become obsolete at a time when the lottery has developed into a 400-billion-yuan business. “China needs to set up a new national body to supervise the lottery industry,” said Wang. But given the scale of overall corruption within the government, the central government will need more than just a new administrative body to overhaul the culture of corruption entrenched in the lottery business.

society

Rural Teachers

Rough Schooling

China’s rural teachers have long been underpaid and undervalued by the country’s highly centralized education system. Will a newly released support plan improve their lot? By Du Guodong

n June 8, 2015, the State Council, China’s cabinet, rolled out a “support package” designed to boost the number and quality of teachers in the country’s rural areas. The much-anticipated Rural Teachers Support Plan (20152020), the most comprehensive of its kind according to education experts, is expected to benefit China’s vast and beleaguered population of rural teachers. The measures outlined in the eight-part plan include the establishment of multiple channels to incentivize teaching in rural areas, the creation of a special training program and the introduction of a merit-based evaluation system designed to reward those who have been working in the countryside for many years. In addition, foreign language qualifications and the publication of academic papers will cease to be a main factor determining the allocation of professional titles to educators. Low pay accounts for China’s high turnover among rural teachers, particularly successful ones. The generally poor welfare provision and living standards of village teachers — a state of affairs long criticized by observers — has pushed the officials behind the new plan to guarantee stipends, comprehensive social security and housing for rural teachers. Xu Tao, director of the Teacher Education

Department of the Ministry of Education (MoE), announced during a press conference that the central government’s plan is aimed at narrowing the education gap between urban and rural areas, giving children in impoverished areas the same educational opportunities as their urban counterparts. “The plan was released to set up a stimulus mechanism through which teachers in more impoverished and outlying areas across the country could receive better remuneration,” he said.

Disparity

China is home to over 40 million rural students in compulsory education, and 3.3 million rural teachers, according to the MoE. UNESCO data also show that more than 60 percent of China’s schools and at least 50 percent of its teachers are located in rural areas. The living conditions and salaries of rural teachers have consistently lagged behind their urban peers, fueling concern that this built-in disparity was placing already disadvantaged students even further behind China’s privileged. In its May 2014 “Report on Rural Teachers’ Work and Living Conditions in Central and Western China,” the China Youth Development Foundation stated that rural teachers

First-grade pupils at a rural school in Rongjiang County, Guizhou Province, March 17, 2015 NEWSCHINA I September 2015

Photo by IC

suffered low pay, poor working conditions and high pressure both at work and at home, which had turned them into a marginalized group. The same report also indicated that rural teachers in China are generally older than their urban counterparts — only 17.5 percent are under the age of 30, and 51.6 percent are under 40. In its own report, “Rural Education Development in China 2013-2014,” the Research Institute of Rural Education at Northeast Normal University found that 80.2 percent of graduates from teacher training colleges across the country declared that they would “prefer to work as a teacher,” and yet only 38

NEWSCHINA I September 2015

percent of these respondents would choose to teach in rural areas. Among those surveyed, 36.7 percent of rural teachers stated that they wanted to change jobs, and 65.7 percent said they hoped to teach in urban areas. Those surveyed highlighted poor working conditions and inadequate salaries as the main obstacles to settling into rural life. The report also claimed that the average salary of a rural teacher in China in 2013 was 2,359 yuan (US$380) per month, much lower than the overall national average of 3,806 yuan (US$613). The report concluded that if the average monthly salary for rural teachers were to reach 4,000 yuan (US$640) per month, nearly 80 percent of graduates would opt to teach in rural areas. If this sum reached 5,000 yuan (US$800), the report speculated, 88 percent would take a rural job. Shi Guoqin, a retired teacher who taught both Chinese language and math at the rural Qinye Elementary School in rural Pingxi County, Siping City, Jilin Province told NewsChina that her salary was only twothirds those of her peers working in the closest city, on top of having to endure the lower social status and poor living conditions afforded to rural teachers. As early as 1993, the State Council’s “Strategies and Guidelines For Education Reform in China” have required that “the average salary in the education system should be higher than that in the whole society.” However, the reality continues to fall well short of this lofty aim. After 2003, when the country’s list of official professions was reshuffled to include 19 average pay grades, listed in descending order from highest to lowest, the salaries of elementary and high school teachers have floated between 10th and 16th place, below the national average. Even with China’s Teacher Law, which took effect in 1994 and requires that teachers be afforded a status equivalent to civil servants in terms of pay, the gap has remained, and even widened in some rural areas.

Xiao Qing, a Chinese language teacher at a middle school in a county of Maoming City, Guangdong Province, told our reporter that he earns a monthly salary of around 2,000 yuan (US$322), adding that many of his former classmates who found teaching positions in rural areas have since changed jobs. “Unlike public servants or employees in other public institutions who are entitled to decent welfare in addition to their base salary, we get virtually nothing extra,” Xiao told NewsChina. “Less than employees in private enterprises — or even waiters.” Recently, during the annual conferences of the Chinese People’s Political Consultative Conference (CPPCC), China’s top advisory body, and the National People’s Congress, China’s top legislature, a growing number of scholars tabled proposals to solve the problems of rural education, most of which included suggestions to raise teachers’ base salaries. Yu Minhong, founder of the Beijing-based New Oriental Education Group and also a CPPCC delegate, told media in March that, in order to encourage teachers to work in rural areas, a long-term solution should be provided to raise average salaries above those offered by urban teaching positions by at least 20 to 30 percent. Yu’s fellow CPPCC delegate Ge Jianxiong, a professor at Shanghai’s Fudan University, agreed, emphasizing the need to significantly raise rural teachers’ salaries.

Closures

Academics have pointed out that the government has largely ignored rural education while praising those engaged in it — even introducing policies that have worsened the plight of rural teachers and their students, further eroding the appeal of a career teaching in village schools. Since 2001, the central government implemented a policy to close and combine some rural schools to address falling enrollment

Photo by IC

society

Photo by CFP

A rural teacher checks homework in his office in Liuzhou, Guangxi Zhuang Autonomous Region, June 15, 2012

Teaching aids hang on the wall of a rural school in Danzhou City, Hainan Province, March 17, 2014

and boost the quality of teaching. Prior to this change, most villages in China had their own school, so the scheme vastly increased the number of students and teachers commuting to classes, as well as the need for boarding schools. This in turn led to largescale increases in the student dropout rate, while many rural teachers were made redun-

dant, with numbers falling from over 4.7 million in 2010 to 3.3 million by the end of 2014, a 30 percent decrease, according to the MoE. In 2012 the central government abandoned this policy, but, according to statistics from the 21st Century Education Research Institute, a non-governmental think tank,

the number of rural elementary schools had declined by some 230,000, 52.1 percent of the national number of rural schools, between 2000 and 2010. Another way of looking at it would be to say that China lost 63 rural elementary schools and three rural middle schools every day for 10 years. During an interview with caixin.com, Yang Dongping, director of the 21st Century Education Research Institute, said the closure of elementary schools in rural areas was pursued at a pace 5.63 times greater than that of the rise in the actual student dropout rate, a fact which “ran against the purpose and practical needs of the policy.” By the end of 2013, the official number of rural schools across the country began to gradually recover. Yang believes that it is unrealistic to reestablish all closed schools, arguing that policymakers should instead focus on running the existing ones, particularly those likely to remain open indefinitely. “In the development of rural education, teachers play a pivotal role. It is crucial to make the training of rural teachers a priority for the central government,” he said, adding that more government support measures are the only way to attract talent to rural areas. In an article in Party mouthpiece People’s Daily, Pang Lijuan, deputy director of the China Institute of Education Policy, claimed that a brain drain in rural areas has turned into a serious social problem, requiring the government to come up with “fundamental” preferential policies. “Over the years, the central government put emphasis on infrastructural construction and facilities as well as increasing school enrollment, but did not pay enough attention to rural teaching staff,” she argued.

Challenges

Beginning in the 1950s, shortly after the founding of the People’s Republic of China, NEWSCHINA I September 2015

NEWSCHINA I September 2015

Photo by IC

local governments, particularly in the country’s remote and less developed central and western regions, began to hire rural teachers to address the problem of widespread illiteracy. In the decades since, central and local governments have formulated policies, legislation and regulations to retain rural teachers while improving their welfare provision and the overall quality of teaching. Since 2004, more than 8,800 students graduated from a special training program for wouldbe rural teachers, most of whom took positions in the countryside. Since 2006, the central government has injected 23.8 billion yuan (US$3.8bn) into its Special Teaching Post[graduate] Plan for Rural Schools to attract a hoped-for total of 432,000 teachers to work at 30,000 designated schools in rural areas of central and western China. In 2007, the MoE unveiled its Free Preservice Teacher Education Program at teacher training colleges, waiving tuition for graduate students who agreed to work in rural areas for at least two years, and as elementary or high school teachers for at least 10 years, after graduation. From 2007 to 2014, six key teacher training colleges under the direct administration of the MoE had admitted 80,000 students free of charge, 45,000 of whom became elementary or high school teachers, with over 90 percent of graduates relocating to rural areas. However, according to a study conducted by Hunan Normal University professor Tang Sulan, only 183 of the 4,621 initial graduates of the tuition waiver program who ended up working in 17 surveyed provinces landed a permanent job as a rural teacher, a mere 3.96 percent of the total. Chu Zhaohui, a senior researcher with the National Institute of Education Sciences, said increasing the number and improving the quality of rural teachers is just a start-

Students play in the activity room of a rural school in Liuzhou, Guangxi Zhuang Autonomous Region, June 15, 2012

ing point to promote quality and equality in Chinese education. “There is still much to be done to ensure that children from urban and rural areas enjoy the same educational resources and services,” he told English-language newspaper China Daily. Wu Zhihui, director of the Research Institute of Rural Education, said during a June rural education seminar organized by Guangming Daily that, in recent years, the government at different levels has unveiled a number of stimulus packages to boost rural education and the salaries of rural teachers, but “the most important thing that needs to be done is to ensure the policies are carried out comprehensively.” Wu added that it is also necessary to continue to reform school funding mechanisms in rural elementary education, which remain constrained by local poverty. Cao Chun, a PhD candidate in education at the Vrije Universiteit Brussel in Belgium who has been researching education inequality in China, told our reporter that the new support package failed to propose any spe-

cific measures targeting China’s large group of temporary or “substitute” teachers, rural teaching staff who are often lacking in experience and qualifications who frequently shoulder the burden of educating children in the country’s most deprived areas, and few of whom receive adequate remuneration. Temporary teachers, having received virtually no training but who have had access to a better education than the average local, are usually selected from a pool of candidates and work off the government payroll. Their schools, mostly running a deficit, try to pay their wages but usually have to offer meager salaries paid in arrears. China was home to 310,000 temporary teachers in 2010, down from 448,000 in 2006, at a time when the MoE made efforts to dismiss “unqualified” teachers to improve the quality of rural education. “It is urgent to compensate laid-off and retired temporary teachers in rural areas, and pay basic social security for those still in the classroom,” Cao told NewsChina. “It is not easy for local governments to solve these problems alone. The solution lies in the determination of those at the top.” 

society

Migrant Workers

Right to Retirement

As the first generation of Chinese migrant workers nears retirement, their widely underpaid pensions have become a dire problem. Older workers are going on strike or suing in order to claim unpaid funds

Photo by CFP

By Gong Longfei and Du Guodong

Work certificates and memos belonging to a migrant worker at a factory in Shenzhen, Guangdong Province

n a scorching Monday afternoon in late June 2015, 51-year-old migrant worker He Meizi asked a few factory coworkers if she could slip away from work. She snuck home for an hour, washed her grandchildrenâ&#x20AC;&#x2122;s clothes, scarfed down a few bites of cold leftovers and then hurried back to the factory to retake her place. Not on the production line, but the picket line. As the weather in Shenzhen neared 40 degrees Celsius, three police officers took cover in the shade of a tree near the factory gate. Eight or nine security guards stood in a line at the door, facing the

hundred-plus factory workers who surrounded them. They were all exhausted and hardly moved. This standoff had already lasted for 14 days. Hundreds of Qingsheng Garment Factory workers had left assembly lines because they were demanding full reimbursement of their pensions and other benefits before the factory moved to a new location. When the factory owners refused to pay, the workers began living and sleeping between machines on the factory floor to prevent the owners from removing the equipment. In a conflict that had dragged on for half a year, the workers viewed this as their last bargaining chip. He Meizi is part of the first generation of migrant laborers who left the countryside to find higher-paying work in Chinaâ&#x20AC;&#x2122;s rapidly growing cities. Today, that generation is facing retirement. Despite the fact that laws require employers to pay social security, due to complicated processes and a general lack of payment, very few workers have fully paid pensions to support themselves in their senior years. A growing number are leaving production lines to strike in order to gain the attention of their employers and claim their unpaid pensions.

By Law

Chinese labor law stipulates that employers must pay into five social insurance funds for employees: pensions, unemployment, maternity leave, sickness and on-the-job injuries. Paying into pensions for Chinaâ&#x20AC;&#x2122;s 270 million migrant workers has been mandatory for employers since January 2010. Only 22.7 percent of migrant workers pay into a pension fund, according to a report released during the Sino-German Symposium on the Social Integration of Migrant Populations in September 2013. Part of the problem is that many migrant workers, particularly NEWSCHINA I September 2015

older people, do not sign contracts with their employers. The Chinese Social Insurance Law does not stipulate punitive measures for employers who fail to pay into their employees’ accounts, giving unscrupulous employers little motivation to adhere to the law.

Striking Back

When He Meizi first heard of the garment factory relocation last December, she immediately spread the word to her coworkers. The Henan Province native had been working at Qingsheng, 12 hours a day, for more than 10 years. The factory not only underpaid her for overtime, it also only paid into her social insurance account for four years. Because of the low wages on offer, many younger workers had already left the factory over the previous six months, but most older workers, including He, chose to stay and stage a strike on December 11 to demand payment of their pensions. About 800 workers participated in the strike, which continued for a week before the factory owners agreed to talk with the workers’ lawyers. Despite this, at about 8 AM on December 18, police arrived and detained more than 20 striking workers until the remainder agreed to return to work. On June 2 of this year, workers decided to seek their rights once more, this time with the help of several NGOs. The workers’ representatives sent their written requests to the factory through express delivery and asked for a reply within three days, but the employers refused to sign for the document. On June 8, another delivery was sent to the human resources department of the factory, but that afternoon employers removed the workers’ check-in machines, making it impossible to sign in for work. This intensified the conflict. One day later, employers posted a notice saying that the factory would indeed relocate five kilometers away, but mentioned nothing about compensating workers for unpaid welfare, igniting a massive strike. On June 13, He Meizi and more than a hundred other workers decided to take a bus into the city to petition the city government, but they were dispersed by the police before they could leave. Workers then split up to take the subway in twos and threes, but shortly after their arrival police forced them onto government buses that drove them back to the factory. “I have never seen a scene like that in my entire life,” He said. After that, the stalemate began. According to Shenzhen’s Social Pension Regulations, employees are entitled to ask employers to make up for unpaid pensions up to two years after leaving the company. After two years, an overdue fine of 0.05 percent of the total premium for every day the payment was past due has to be paid to the social security department. Individuals in China have the right to draw a pension after paying into a fund for at least 15 years. He Meizi told NewsChina that she has to pay 30,000 yuan (US$4,830) for the 11-year gap (because the company only contributed to her pension for four years), but the overdue fine would be around 100,000 yuan (US$16,110). Workers’

NEWSCHINA I September 2015

insistence on holding the factory accountable for these overdue fines further increased the difficulty of negotiations. In August 2013, 380 workers went on strike at the Baode Toy Factory in Shenzhen, protesting unpaid social insurance. After the first round of negotiations, the plant agreed to pay the unpaid pensions. Yet, days later, the Human Resources and Social Security Administration of Shenzhen (HRSSAS) denied the application because “there are currently no detailed regulations as to how to implement the repayment.” HRSSAS replied to questions from NewsChina saying that the Social Pension Regulations of Shenzhen did take effect in 2013, but to this day, the rules for implementation are still seeking public opinion.

Debt

Xiao Yeqing, 51, has also been requesting that her former employer make up for an underpaid pension. She sued Guobang Garment Factory in July last year to reimburse the pension funds owed to her from 2002 to 2006, but she lost the lawsuit in November. The HRSSAS declined her request because of the two-year time restriction. Xiao suffers severe bronchitis due to the constant exposure to dust at the factory. She coughs constantly whenever she speaks unless she continuously drinks water. It was not until 2008, when the new Labor Contract Law took effect, that Xiao and her colleagues realized the importance of social insurance. Some older workers asked the boss to pay into pensions at that time, but nothing came of it. On June 19, 2015, during a second lawsuit, after lengthy and fruitless debates, Xiao withdrew her demands and decided to make up her pension payments by herself. Xiao didn’t know the amount she had to pay. HRSSAS staff told her in court she first had to provide proof of employment before any action could be taken. But there was a problem. “The factory is closed and the boss disappeared,” she told our reporter. “How can I provide proof of employment? I only hope the social security agency can accept my own repayment of the pension.” Wang Xiaofeng, the publicity director of the All-China Federation of Trade Unions, told China Daily that conflict between workers and employers is not unusual. He said the federation has been working on improving trade unions’ abilities to better protect workers’ rights and keep employers in line with the law. Labor dispute lawyer Duan Yi from the Shenzhen-based Laowei Law Firm told yicai.com that the two-year time restriction for the reimbursement of unpaid pensions should be abolished in Shenzhen because it has become an obvious hindrance. “If the problem continues, China’s first generation of migrant workers are likely to be shut off from the pension insurance system,” Duan says. “At a time when legal action is very costly to migrant workers, collective bargaining is the most effective approach, but it could never be a permanent solution.”

SPECIAL REPORT

Victims of Silence

Photo by CFP

Campus Bullying

Video footage of violence on Chinese school campuses has provoked public alarm, with some calling for criminal prosecution of the worst offenders. Experts, however, believe that society, not the law, needs to take responsibility By Xie Ying

n eight-year-old boy squats in the corner of an abandoned bungalow, his head buried in his hands, while two older boys violently kick and punch him. One of his assailants, seemingly deaf to the resulting screams, pushes a lit cigarette down

the back of the little boyâ&#x20AC;&#x2122;s collar. While their victim begs them to stop, his bullies simply renew their attack, laughing. This recent clip, depicting an assault by three middle school students (one of whom was behind the camera) in Qingyuan, Zhe-

jiang Province, has outraged a considerable number of Chinese netizens since it first appeared on the Internet. The three bullies, all of whom are minors, were admonished by local police and asked to pay compensation to the victim, a punishment many felt was NEWSCHINA I September 2015

excessively light, considering the brutality of the attack. China, like many countries, typically places a higher priority on education rather than prosecution in cases relating to minors. Despite clauses criminalizing “causing malicious injury” and “verbal abuse” already extant in the country’s Criminal Law, Chinese teenagers aged under 14 are exempt from all criminal penalties. Offenders aged between 14 and 16 are also exempted from criminal penalty, with exceptions made in serious cases involving murder, rape, robbery or drug trafficking. Felons aged between 16 and 18 at the time they commit a crime are also usually given lighter punishments than those handed down to adults. While many educational experts worldwide believe that, in terms of juvenile crime, prevention is always more effective than punishment, hard-line views on crime among China’s public mean that the sympathetic treatment of criminals, even minors, generally receives short shrift. In the past three months, China has seen a total of 26 cases of “extreme” campus bullying exposed, many of which would, were the perpetrators adults, have led to criminal prosecution. A recent survey conducted by State publication China Youth Daily showed that over 73 percent of respondents believed that campus bullying or violence between minors in China in general, had happened “around them.” Just three days before the Qingyuan case became public, a case in California which saw three Chinese-born high school students kidnap and torture two of their classmates, with those accused facing possible life sentences due to US torture laws, also led to an outcry in China. Once the Qingyuan case emerged, Chinese netizens began to call for harsher punishments for underage criminals to serve as a deterrent to potential bullies. Sociologists and psychologists, meanwhile, believe that tough laws will not solve the problem. Instead, they have urged Chinese parents, schools and society as a whole to take the lead in preventing campus violence – which, they claim, the US has also done. NEWSCHINA I September 2015

Parents

While minors exposed as violent bullies may be the focus of public criticism, it is widely believed that they too might be victims of violence. Numerous reports have emerged in Chinese media concerning both the emotional neglect and material “overindulgence” of children growing up as part of China’s One Child Policy generation. Some experts claim that, lacking education and communication within their own families, children and teenagers are inclined to form “gangs” in order to combat their loneliness and confusion. “Gangs provide the conditions for campus bullying to occur,” Guo Xinxin, a director of the Guangzhou-based youth advocacy NGO Youth Zone, told NewsChina. “If a member is bullied, the other members of their gang will counterattack. Conversely, if a member wants someone else bullied, their fellow gang members will join in.” There is mounting evidence that China’s most extreme cases of campus bullying, at least those profiled in the media, are increasingly being conducted by fixed groups of people rather than random incidents between individuals. In 2006, the China Youth & Children Research Center launched an independent investigation into campus bullying in a western Chinese city. During their investigation, the center’s workers discovered that 51 percent of schools they had surveyed documented incidents of bullying on campus, and that more than 36 percent of these incidents involved “school gangs.” Two years previously, a similar survey conducted among middle school students by China Youth Daily revealed that 25 percent of male and 4 percent of female respondents said that they were “willing to join a school gang.” These school gangs are believed to be more common among Chinese students studying abroad who are generally isolated from other sources of support, particularly their families. Zhai Yunyao, one of the defendants in the campus bullying case in California, for example, was reportedly the leader of such a “gang,” members of which Zhai regularly sent to “deal with” anyone who she believed had

offended her. The three attackers in the Qingyuan case, meanwhile, though not in the same class, often cut class at the same time, and became acquainted on the streets while playing hooky. Another feature of violent incidents between students on Chinese school campuses that has come under scrutiny is the tendency of Chinese parents to attempt to hush up, rather than confront, their child’s violent behavior. One parent in the California torture case, for example, was later detained on bribery charges after attempting to pay hush money to one of the victims. In many cases, including the Qingyuan assault, Chinese parents are completely unaware of their children’s violent tendencies, with multiple sources saying that the Qingyuan bullies’ parents all ran businesses and felt that amply feeding their offspring demonstrated sufficient “care.” NewsChina also discovered that the father of at least one of the three bullies routinely used corporal punishment to discipline his son, while the victim himself was also a victim of violence at home. While there is no official data available on the extent of child abuse in China, it is believed that corporal punishment has only recently begun to fall out of favor with Chinese parents. “A neglectful or overindulgent home will easily spark campus bullying,” Kou Yu, a professor of psychology with Beijing Normal University, told NewsChina. “[Either] the child or teenager will imitate the violence of their parents, or their misbehavior will be condoned. Gradually, the bullies will go even further, while their victims will become more resigned to the violence.” Kou’s views were confirmed by Wei Yi (a pseudonym), a self-identified former bully from Hunan Province, who began to assault other children after being beaten and slapped by her classmates. “When I was first bullied I asked my father for help,” she told NewsChina.”He just viewed it as an ‘ordinary fight’ between children, and questioned why it was me, and not someone else, that was being bullied.” “I decided to get revenge by joining a

SPECIAL REPORT

powerful gang,” she continued. Wei later attempted suicide in part because of what she called her parents’ “indifference.” “From then on, I turned myself from a victim into a bully,” she said.

Photo by CFP

Schools

Photo by IC

A 14-year-old student from a middle school in Xi’an, Shaanxi Province, suffered major head injuries after being beaten by two of his classmates on December 18, 2013

Lacking a comprehensive protection system, children and teenagers are often exposed to violence on school campuses

Wei Yi also told NewsChina that her school administration was just as indifferent as her parents. According to Wei, her mother once told her class teacher about the bullying her daughter was suffering, but the teacher took no action. Several days later, Wei claims, her bullies announced their intention to the entire class to continue to assault her. No staff members took any action, and Wei continued to be attacked. A paper on campus bullying written by Chongqing Normal University graduate He Lan claimed that teachers are reluctant to tackle incidents of bullying involving gangs. One faculty member interviewed as part of He’s research said: “I don’t want to impact my other work for the sake of one student [victim]. Even the law will fail when its violators are so numerous.” “I don’t think that Chinese schools have a right attitude or solution to campus bullying,” Guo Xinxin, the youth NGO director, told NewsChina. “Most schools will not intervene in campus bullying until it is publicly exposed. Even when they do [intervene], their solutions are usually very simple – they criticize or discipline the bullies. Few teachers will try to find out the root causes of conflict. Some even use violence to ‘settle’ their bullying problems.” Zeng Junru, parent of a student in Beijing, agrees. “I used to tell my son to ask his teacher for help if someone was bullying him, but my son told me that his teacher felt bothered by him,” he said. “I have no idea how to deal with campus bullying. Should I just ask my son to hit the bullies back?” American and European educators are required by law to stop and report incidents NEWSCHINA I September 2015

High-profile Cases of Campus Bullying (May – June, 2015) of violence, with severe cases even being brought to the attention of the police, Chinese schools usually bear no legal responsibility in cases of campus bullying, beyond handling occasional requests for compensation. As a result, schools attempt to gloss over even extreme violence, an attitude which further encourages bullies and gangs. “I believe that Chinese schools attach undue weight to academic education, while moral education is almost abandoned,” said Zeng Junru.

No Regulation

While still lacking a statute dealing specifically with child abuse, China has created several laws to protect and educate minors. Besides the Law of Protecting Minors, the country’s legislature also passed the Law of Preventing Juvenile Delinquency in 1999, the text of which clearly states the steps that must be taken by schools, parents and relevant governmental departments to prevent juvenile criminality. However, given that these laws fail to clarify what, if any, punishment applies should any side fail to fulfill their stated responsibilities, they, like so many others in China, remain virtually unenforceable. With each case of on-campus bullying that comes to light, each school and set of parents attempts to shift responsibility onto the other. When compensation is agreed, even actions regarding extreme cases of violence are typically dropped. Victims remain traumatized, and bullies go on to re-offend. Calls for legislative penalties for negligent schools and parents are thus beginning to grow. “Laws are generally unsuccessful at solving cases of campus bullying, but I believe it will help ease the problem if the parents and schools implicated can be prosecuted for neglect,” Chen Zhon-

ghua, director of the China Institute of International Politics and Law, remarked in an online essay. Tong Xiaojun, director of the Children and Teenage Institute under the China Youth University of Political Studies, takes a more long-term view. “People often zero in on individual cases of campus bullying, but ignore the root causes behind them. Such discussions are too scattered and illogical to settle the problem. From children left alone by migrant parents to children abused at home, from campus bullies to street children, China lacks an overall system for the protection of minors,” he told NewsChina. “Legislation is just a first step. We need a large group of professionals to conduct social work, particularly psychological assistance,” he added. Tong told our reporter that most American schools are required to set up a social work team to engage in bullying prevention work on campus — measures almost entirely absent from China’s public school system. China has yet to conduct a nationwide investigation into abuse in schools, with many school administrations even demonstrating hostile attitudes toward such investigations, believing that those conducting them are attempting to blacken their reputations. However, some remain more optimistic. “We need a platform to connect parents, the schools and students. This is a long-term task for professionals,” Guo Xinxin told NewsChina, adding that her NGO has launched bullying prevention programs in several pilot schools and has received a good response. Perhaps a long-standing Chinese taboo surrounding violence against minors is about to be overturned.  Ma Jing and Liu Ziqian also contributed to the story

May 8: A female student in Guangdong Province was beaten and stripped naked before being photographed by several students and an underage staff member May 11: A female student in a university in

Jiangsu Province was stripped and beaten, with her attackers later uploading images of her naked body to the Internet

May 15: A group of female students

in a middle school in Shandong Province photographed their verbal and physical abuse of a schoolmate

Mid-May: A male middle school student in

Fujian Province was beaten around the head by several classmates and their alleged gang-mates, suffering a perforated eardrum

Mid-May: A male middle school student in Sichuan Province attacked his classmate for “being too ugly.” He in turn later suffered a revenge attack by some other students Late May: Students at a middle school in Guangdong Province uploaded two videos of the physical abuse of their classmates. In the first video, a female student was forced to eat something resembling a condom. In the second, several female students surrounded and beat another girl Late May: A female student in Jiangsu Province was physically abused by two female classmates, who forced her to pose suggestively for them June 5: A male middle school student was

beaten by several older male students until he vomited blood, before being forced to eat his own feces

Source: views.news.qq.com NEWSCHINA I September 2015

economy

Stock Market

Raging Bull

Recent drastic volatility in China’s stock market will not, observers hope, undermine the stability of China’s reform effort By Li Jia, Yue Wei and Wang Sijing

tock markets make history only when they throw out a thrilling story. On Friday, June 12, 2015, the Shanghai Stock Exchange Composite Index, the barometer for China’s stock market, the world’s second largest, hit a seven-and-a-half year high after what was called a “crazy bull” period began in July 2014. This was immediately followed by 15 trading days of panic selling which caused US$3.5 trillion, about 10 times the value of the Greek national debt, to evaporate from Chinese markets by July 3. About half of listed companies stopped trading by July 9 to avoid further losses. The attention of the international media was suddenly dragged away from Athens and instead focused on China’s stock freefall. There are nearly 90 million retail investors participating in China’s stock market, a group responsible for the majority of transactions. Further tens of millions have invested indirectly in the market through mutual funds. The boom which started in July 2014 attracted new groups of investors. The wealth and prevailing sentiment of such a fast -growing and diversified population has a direct bearing on changes in China’s economy and society. In addition, investors have borrowed money and shares to gamble on the stock market, with some of their favored sources of lending difficult for regulators to track. This massive use of leveraged, or debtfinanced, investment instruments for buying and selling shares is thought to have exacerbated both China’s boom and the ensuing bust. The worst-case scenario that can result from the excessive use of these

high-risk tools has been seen around the world for centuries, most recently the 2008 collapse on Wall Street, and China, unlike many developed economies, has no experience of dealing with these new, treacherous financing tools. Fear of systematic financial and social instability has caused the Chinese government to resort to unprecedented measures to encourage investment and punish those with irregularities on the books. The market finally began to rally on July 9, but it has continued to falter, with a record-breaking plunge on July 17. The “market” for debate and opinion throughout this process has proven as volatile as China’s share prices. Divided over the government’s role in making, breaking and ultimately saving the market, analysts openly blamed one another for adopting various standpoints on the government’s reform agenda, which aims to give the market a “decisive role” in China’s economy, and the alleged “conspiracy” between international financiers that some have stated led to the chaos. The international media has also weighed in, and US Treasury Secretary NEWSCHINA I September 2015

Jacob Lew stated during a July 8 address at the Brookings Institution in Washington that he was watching closely to see whether China’s response to the dramatic market fluctuations implied a slowdown in its reform program.

A Feast for All

Unlike developed markets, China’s stock market is dominated by urban middle-class retail investors between 30 to 50 years of age rather than professional institutions. Elderly Chinese people have also impressed the world with their zeal on the trading floor. According to China Securities Depository and Clearing Corporation, by the end of November 2014, 75 percent of China’s nearly 50 million retail investors held shares worth less than US$16,000. Millions of new accounts have been opened each month since November 2014, with that number rising to tens of millions since April 2015. Two groups of new players have attracted particular attention from the media, though the scale of their presence remains un-

NEWSCHINA I September 2015

quantified by empirical data. Several Chinese villages became known as “stock investors’ villages,” with the most famous of these, Nanliu, situated in the relatively underdeveloped northwestern province of Shaanxi. People in more than 200 out of the 800 households in Nanliu have become investors in recent years. Every day since early 2015, villagers gather in the sitting room of village leader Nan Dongliang during trading hours to discuss share prices and follow analysis via the TV and computer. The villagers call Nan’s sitting room their “trading floor.” “People here are now much more interested in talking about national growth policies [that could affect share prices], than gossip and jokes,” Wang Li, a local investor, told NewsChina on a visit prior to the crash. Wang added that she did not want her two young sons to follow in her footsteps, as she worried that the “easy come, easy go” nature of money will wear down the career ambitions of young people. Wang’s younger son, currently in his early 20s and enrolled in college, may have listened to his mother, but many of his peer group,

economy

despite sharing her concerns, have nonetheless waded into the stock market. “When you make tens of thousands of dollars a day, how can you muster any interest in doing anything that may mean a lot in the long run but nothing in the short run?” said Liu Zhengtai, a 23-year-old college student in Shanghai. Before Liu gave an interview to NewsChina in early June, he had refused a job offer at a securities company, as his returns from the bull market in the first five months of 2015 were far more lucrative than an office salary. Unlike Liu, who majored in finance, Ma Yan, a student at a Beijing arts college, had never given much thought to playing the stock market. Then one of his schoolmates excitedly told Ma how he had made a killing from the recent boom. Ma promptly borrowed US$1,500 from his parents, who are also investors, and bought his first shares. Family support is not the only source of funding for would-be investors, with riskier sources of financing also whetting appetites. It is estimated that about US$654 billion worth of shares were financed by borrowing, with nearly half of those arrangements under no form of regulatory scrutiny. Lenders included banks, securities companies and private lenders via various direct and indirect financing platforms. Soaring share prices caused investment funded by borrowing, or margin trading, to become increasingly popular from late 2014 onwards. Chinese companies listed overseas were also caught up in trading fever. In the first half of 2015, only three Chinese companies were listed in the US, 70 percent fewer than in the first half of 2014, raising a total of US$163 million, a 95 percent drop. According to a recent report by Ernst & Young, an international accounting firm and consultancy, between 2014 and the first half of 2015, 36 Chinese companies with an existing presence in the US stock market had quit the US market and were preparing to go public back in China, or were considering doing so. The fast growing share prices on China’s stock market, the report claimed, was one of the main factors behind this apparent change of heart.

Stakes

That crucial Chinese economic ambitions and the reputations of market players are at stake in its stock market is beyond question. The trade-off between long-term reform efforts and maintaining a steady economic growth rate is crucial in China’s transition towards a more efficient, market-oriented economy. As Karlis Smits, senior economist with the World Bank, explained at a press conference in Beijing on July 1, 2015, excessive volatility in the capital market could affect the real economy mainly in two ways: less money for household consumption, and less for business expansion. China’s Securities Law is being revised to essentially allow companies, not regulators, to decide when and at what price to go public, a reform aimed at allowing the market to choose the most efficient capital users to support. The new law will also accommodate innovation-oriented businesses that are currently denied access to funding from the equity market due to their lack of profitability while in their infancy. This change will encourage those Chinese companies already

Neighbors gather to exchange stock market information in the home of village head Nan Dongliang, Nanliu village, Xingping City, Shaanxi Province, May 28, 2015

listed overseas, mostly in the US, to return home. Another priority of the government’s financial reform program is to develop alternative sources of capital for companies other than banks. So far, China’s bond market is relatively small and not fully accessible to retail investors, and bonds, like bank loans, also need to be repaid. Net corporate debt in China remains high. For companies hoping to improve their financial positions without increasing their debts, this makes the equity market a more likely and generally more appealing source of capital. Both supplying and demanding capital, China’s banking sector is the largest player in the stock market. All of China’s 17 biggest commercial banks are listed companies. Much of the borrowed money invested in the stock market during the recent boom was provided by banks via both regulated and unregulated channels. The increased openness of the country’s capital market is thought to pave the way to make the Chinese yuan more international. Last November, investors in Shanghai and Hong Kong were given access to each other’s stock markets. A similar scheme for the stock exchanges of Shenzhen and Hong Kong is expected to be implemented later this year. Recently Hong Kong and mainland mutual funds were opened up to one another, giving investors more options in terms of financial products, including stocks.

Reform?

With so many people, so much money and such towering ambitions at stake, the mentality that a government-driven boom in the equity market is urgently needed has spread since late 2014. It is arNEWSCHINA I September 2015

Photo by CFP

gued that the government favors a bullish equity market to facilitate a stable transition towards more consumption- and innovation-oriented growth accompanied by greater openness to the world market. The government has also repeatedly expressed hope for a stable, “slow bull”capital market. The question is, can the government create such a beast? The response of most investors to this question is yes and no. Since July 2014, the markets have ticked upwards on an almost daily basis due to speculation about the anticipated immediate benefits of reform, mainly the restructuring of State-owned enterprises, the launch of the One Belt, One Road initiative and the semi-legendary, rags-toriches stories of private Internet start-ups. Although economic growth data and corporate balance sheets seemed to indicate economic slowdown, share prices just kept soaring. As a result, the boom was termed a “State bull” and a “reform bull” by analysts, a concept implicitly endorsed by remarks made by senior officials and in State media. However, when nearly all investors fall for such bold claims, whether bull or bear, the beast goes wild. Few in the market were interested in the warnings of observers, and even fewer were willing to listen to them. At the end of May this year, Central Huijin Investment Ltd., the largest shareholder in China’s leading State-run financial institutions, sold some of its shares in the Bank of China and the Construction Bank of China. In early June, right before share prices peaked, Li Jian’ge, vice chairman of Central Huijin and a well-known economist, openly warned that exuberance rooted in expectations of a share price spike underwritten by the State, not in economic or corporate performance on the ground, was danNEWSCHINA I September 2015

gerous and did not align with the fact that markets could go down as well as up. Such remarks at the time were interpreted as the voicing of disapproval for the government’s reform agenda. After Li reiterated his warning on June 19, when markets plunged, such views came under renewed attack – this time for having allegedly undermined investor confidence. On July 2, five professors in Beijing and Shanghai published eight suggestions to buoy the market, including naming and shaming “so-called experts who have cast a chill on investors’ good expectations for reform and thus fostered a gloomy outlook for China’s economy and reform.” Demand for immediate and strong government intervention rose quickly. On social media, any doubts about the rationale behind a government-sponsored rescue were subject to ferocious attacks from desperate investors. The hesitance of regulators disinclined to take such strong action at the outset was widely criticized as showing poor judgment and a lack of determination. A theory blaming the crisis on a conspiracy among foreign short-sellers – who, it was alleged, working through Chinese accomplices, had borrowed shares in order to profit from future price crashes – gained a lot of support. On July 1, China Financial Futures Exchange issued a statement dismissing this theory as “untrue.” On July 3, however, Financial News, a paper under China’s central bank, accused international investment banks, among them Morgan Stanley, of making “changeable forecasts” to incite investors to buy during the bull, and then scare them into selling during the crash. Not everyone, the editorial ran, was happy to see China succeed in its attempt at economic transition. The fear of an escalated crisis is also thought to have been enhanced by the use of new leveraged financing tools. Borrowed capital made it possible for investors to buy more shares than they could afford, pushing prices higher. However, once prices began to fall below certain baselines, investors were ordered by lenders to liquidate their shares to pay back their debts. The sell-off dragged share prices down further and faster, triggering yet more sell-offs. Worse still, short-sellers who borrowed shares from securities brokers and profited from falling prices were motivated to further fuel the crash. While this is exactly how a leveraged market operates, China has no experience in dealing with either these financing models or the behavior of those wielding them. A sweeping campaign to rescue the stock market was launched over the weekend of July 4 and 5, and has since been stepped up.

Division

Different voices in China continue to exchange opinions on the causes of and solutions for this recent crisis. Fu Weigang, executive president of the Shanghai Institute of Finance and Law, told NewsChina that he thought share prices were simply shrinking towards their reasonable value, thus it was time for the market to do its job – correcting the overvaluation of shares. He added that he has not seen evidence of looming systemic financial risks that require government intervention.

Photo by cfp

economy

Number of listed companies

Effective accounts

Tradable market capitalization

US$285 billion

US$38 billion

US$8.6 trillion

US$4 trillion

188.2 million

135.58 million

2797

2549

Xiao Yu, a 21-year-old college junior in Wuhan, Hubei Province, teaches her schoolmates about stock price curves

Average trading per day

July，2014 July，2015

Source: China Securities Regulatory Commission / China Securities Depository and Clearing Corporation Limited

Some agreed with Fu’s view, arguing that bubbles remained intact even after the crash, with average share prices much higher than can be justified by companies’ profits, and claiming that no threat to major financial institutions such as that faced by those on Wall Street in 2008 seems apparent in China. In addition, these experts argue, China’s growth prospects are stable and improving, indicating no reason for a total stock market collapse.

Such moderate and optimistic viewpoints, however, were overwhelmed by blatant cries for help. Liu Shengjun, executive deputy director of the CEIBS (China Europe International Business School) Lujiazui Institute of International Finance, told NewsChina that people with direct interests in the market, notably loss-making investors and some analysts with investment banks, cried the loudest. More importantly, he said, implicit endorsement of the “State bull” and “reform bull” models by government officials and the State media gave these direct stakeholders a reason to demand government intervention. As a result, he told NewsChina, populist politics prevailed. The government’s rescue measures have consequently raised more questions than the factors that brought them about. IPOs were suspended on China’s stock market. Securities companies were asked to increase investment. Big shareholders and executives in some listed companies were required to promise to buy shares in their own companies, and told not to sell the shares they already had, while regulators announced that legal restrictions concerning such behavior would not be applied. Liu Shengjun criticized these measures as running counter to the interests of reform, the market and the law. For example, existing laws restrict executives from buying shares in their own companies within six months of selling them, the purpose being to prevent executives from taking advantage of their easy access to corporate information that would significantly affect their companies’ share prices. The suspension of such restrictions encourages executives to break the law, Liu said. Police and regulators have also joined hands in a publicized crackdown on “malicious short-selling,” which, while widely condemned as an unethical trading practice, is a concept unregulated by the law. While “malicious short-selling” was later clarified in the context of existing Chinese laws and regulations as a form of market manipulation misconduct, there is concern that non-legal standards, for example, the concept of “malice,” would be referred to in legal judgments. Liu Shengjun stressed that short-selling is a normal and important counterbalance to the upward movement of prices. Indeed, most analysts, whether for or against government intervention, agree that small-scale short-selling was one of the major contributing factors to the rocketing share prices that ultimately caused the crash. The use of leverage, also demonized by some factions, is also a normal aspect of the market. Leverage magnifies price movements; it does not lead them. To mitigate the destructive effect of abusive use of leverage, it is widely advised that unregulated financing for stock investment be put under scrutiny. Liu also suggested that lower leverage ratios be mandated during a boom, while lower ones take precedence NEWSCHINA I September 2015

china

bynumbers

NEWSCHINA I September 2015

-1.3%

Increase in the amount of government budgets represented by paid-in capital in the first half of 2015, the highest rate since the second half of 2013

The decline in crude steel production in China in the first half of 2015. Consumption was reported to be down by 4.7 percent.

y-o-y change in paid-in capital growth rate, H1, 2015

Source: China National Bureau of Statistics

US$3.5bn

The value of Chinese exports currently under investigation in their destination markets for alleged trade violations in the first half of 2015, the highest amount in the world.

-5 -10 -15

Source: China Ministry of Commerce Others

Foreign-funded

Self-funded

Domestic loans

Budgets

during a bust. Indeed, a clearly defined roadmap towards establishing a sound capital market, focusing less on administrative intervention in listings and more on the punishment of irregularities like insider trading, has long been advocated by regulators. These goals, once achieved, are expected to reduce the possibility of the kind of excessive volatility that caused the recent crash. The biggest challenge now is how to convince investors, both at home and abroad, that China’s reform program will not slow down. Changing the rules on a whim, Liu stressed to NewsChina, shows a lack of respect for the law, which would retrench Chinese investor expectations of a market underwritten by the State, and overseas investor expectations that the enforcement of China’s market rules will remain unpredictable. It increases the likelihood that Chinese investors will continue to behave recklessly. Once prices began to rebound on July 8, Chinese investors already rushed to borrow more, and regulators had to launch another round of crackdowns on illegal financing and brokerage, a game of cat and mouse that further spooked the markets. By July 15, nearly half of China’s stocks had yet to resume trading, with the market stumbling again after a brief rebound. Foreign financial institutions are more divided than ever on whether or not now is a good time to invest in China’s stock market, and have cast yet more doubt upon China’s commitment to market-oriented reforms. A daily media briefing from Beijing-based private think tank Anbound noted that the market had already been “seriously distorted” by intervention. Vigilance against the negative effects of the government’s rescue campaign continues to endure. This time, the alarm bells seem to have been heard, and they are being taken more seriously. 

18.6%

372bn m³ China’s recently announced “sustainable” agricultural irrigation usage target, which aims to cap total annual water usage at 670 billion m³ by 2020. 618 billion m³ of water was used in China in 2014, of which 340 billion m³ was used for irrigation.

-20 -25 -30 -35 Source: China National Bureau of Statistics

1658 tons China’s official gold reserves by the end of 2015, an increase of 604 tons since the end of April 2009, giving China the fifth-largest reserves worldwide. Source: World Gold Council / People’s Bank of China

Source: China Ministry of Agriculture / China Ministry of Water Resources

Official holdings, in tons United States Germany Italy

8133.5 3383.4

2451.6

France

2435.4

China

1658

international

China-US Dialog

Partners in Positivity

The US and China avoided open confrontation over the South China Sea issue during their recent strategic and economic dialogs By Yu Xiaodong and Wang Qilong

n marked contrast to recent mudslinging over a variety of issues, both China and the US adopted the rhetoric of cooperation during the seventh US-China Strategic and Economic Dialog (S&ED), two days of high-level meetings which concluded in Washington on June 24. Strategic talks brought together US Secretary of State John Kerry and China State Councilor Yang Jiechi, while US Treasury Secretary Jacob Lew and Chinese Vice Premier Wang Yang discussed economics, with the S&ED reportedly reaching a combined total of 310 outcomes.

Achievements

Sending a 400-member delegation, including 13 ministers and 40 vice-ministers, China appeared to be devoting considerable resources to this year’s dialog, an effort to avert what many have called a “downward spiral” in bilateral relations following rising tensions in the South China Sea, where the US continues to criticize China’s massive land reclamation projects. US officials appeared to share the same desire with their Chinese counterparts, and avoided being openly confrontational in their public remarks. In his closing address, Kerry called this year’s S&ED “one of the more constructive and productive in terms of the seriousness of the

discussion that we’ve had on a very long, comprehensive agenda,” and said that he saw “not one tiny piece of an indication of a downward spiral.” As both sides focused on the positive, most of the achievements of the latest S&ED focused on issues where the US and China share common interests. For instance, 44 of the 127 outcomes – over one-third – related to climate change and other environmental issues. Both sides agreed on a commitment to reduce carbon emissions and boost clean energy during US President Barack Obama’s visit to Beijing last year. During the S&ED, ministers announced new cooperative projects, including a “Green Ports” project and two new carbon capture, use and storage (CCUS) pilot projects aimed at improving “clean coal” technology. On the economic front, US and Chinese officials discussed the Bilateral Investment Treaty (BIT), which has been under negotiation for quite some time. Following the meeting, Wang Yang described the meeting as a “milestone” toward reaching a final agreement on the BIT, as both sides exchanged “negative lists” specifying which sectors will retain restrictions on foreign investment, and pledged to push forward negotiations to reach a “mutually beneficial and high standard” agreement. In his closing statement, Lew echoed Wang’s optimism by saying that China and the US

had set a goal to “exchange improved negative list offers in early September.” Analysts took this as an indication that may mean a formal result during Chinese President Xi Jinping’s planned state visit to the US in September. The two countries also addressed the issue of international financial governance, holding a special session on US-China “cooperation in the international financial system” as part of the S&ED. Lew said that the US would “welcome China as a partner in supporting, maintaining and advancing high standards in multilateral institutions,” a tone which seemed milder than the hostile one adopted in the immediate wake of the establishment of the China-led Asian Infrastructure Investment Bank (AIIB) earlier in the year. Lew did, however, comment that China needed to further open up its financial system in order to allow the yuan to be included in the International Monetary Fund’s (IMF) Special Drawing Right (SDR), a major stated goal of China’s financial policy. China, meanwhile, pledged that it would not intervene in the foreign exchange market, a persistent bugbear of the US Treasury, unless there are “disorderly market conditions.” Wang Yang, Lew’s counterpart, stressed that the US has promised to implement the plan to reform the IMF’s Executive Board “as soon as possible.”

Disagreements

Despite cooperation in the fields of economics and climate change, some thorny issues continued to feature prominently during the dialogs. For example, as China has been accused of being behind a major hack into the US Office of Personnel Management, despite repeated denials, cyber security issues remained a sticking point. However, hostile remarks were generally avoided during the S&ED, with both sides seemingly at pains to present an amicable relationship. For example, even when voicing US concerns about cyber security, John Kerry stressed that the meetings were “an honest discussion... without accusations, without any finger-pointing.” Chinese officials, in Kerry’s words, refrained from “confrontational pushback.” This is a contrast from earlier, frosty exchanges over cyber security. After the US deNEWSCHINA I September 2015

cided to indict five People’s Liberation Army (PLA) officers on charges of cyber espionage, China suspended a bilateral dialog mechanism on cyber security. Also absent, at least from public statements, was serious US criticism of China’s stance in the South China Sea. In the past couple of months, US officials have been highly critical of China’s land reclamation and construction projects on disputed shoals and reefs under its control, with the US even threatening to deploy naval vessels and military aircraft to the region. During the S&ED, however, the US noticeably toned down its criticism. Calling for “countries with competing claims” to “exercise restraint” and “refrain from preventative unilateral actions,” Kerry refrained from singling out China in his remarks. Chinese officials were also careful not to repeat earlier, repetitive accusations that the US was “flaring up” tensions in the region.

Form and Substance

Following the conclusion of the S&ED, the Chinese media hailed the dialogs as a “success.” People’s Daily, the official paper of the Communist Party of China, commented that the biggest achievement was that the two sides “reset a positive keynote” for US-China relations. The official Xinhua News Agency, meanwhile, declared that “the achievements show that USChina relations are heading in a direction that promotes understanding, expands consensus, manages difference and increases cooperation.” The apparent enthusiasm shown by Chinese media not only reveals China’s desire to avoid direct confrontation with the US, but also reflects a more “holistic” approach toward the bilateral relationship, focusing on the general situation rather than becoming tied down on specific issues. However, it appears that such a perspective is not shared by the American media and various US experts. With its less confrontational style, and lacking major breakthroughs on various high-profile issues, the S&ED received little attention in the US media, with the tone of most commentary tending towards the critical and pessimistic. “The reality is that China and the US have not made concrete progress regarding some

NEWSCHINA I September 2015

“The development of the China-US relationship has been a process of maximizing common interest and minimizing disagreements”

major disputes, such as the South China Sea issue, cyber security, and access to China’s market, although both sides have pledged that they would,” Avery Goldstein, a political scientist at the University of Pennsylvania, told NewsChina. Goldstein added that he expects that some of these problems can be resolved by Obama and Xi during the latter’s visit to the US in September. However, as China, which has emerged to become the world’s second-largest economy, has a very different vision from that of the US in terms of its position in the Asia-Pacific region as well as in the world financial and political order. Some disagreements, analysts have stressed, are so fundamental that they simply cannot be solved in the foreseeable future. US observers and politicians generally call for unilateral change in Chinese policy, and push back against suggestions that the US give ground in many key issues raised by Beijing. For example, while the US has lashed out at Chinese “saber-rattling” in the East and South China seas, China has labeled the US’s strengthening of its alliances and military ties with Japan and the Philippines, China’s principal regional opponents, as an effort to “contain” China. Similarly, as Washington expresses discontent with alleged currency manipulation by Beijing, the Chinese leadership has expressed its own concerns over the US policy of winding down quantitative easing. The US criticizes China for restricting market access, while China has repeatedly asked the US to lift its ban on high-tech exports to China, as well as what it calls “excessive” use of anti-dumping and countervailing duties against Chinese companies. In response to criticism of China’s alleged cyber attacks on the US, China’s Ministry of Foreign Affairs has demanded the US to first provide an explanation regarding the allegations

leaked by Edward Snowden that the US has launched its own cyber attacks against China. For the proponents of the S&ED, conversation itself may be more important than outcomes. According to Zhou Wenzhong, China’s former ambassador to the US, by providing a chance for interaction between American and Chinese government ministries, the goal of the S&ED, is to “control the disagreement” between the two countries, and “prevent it from getting out of control,” rather than to resolve particular issues. “Both sides have already known what our common interests, and our disagreements are,” Zhou told NewsChina. “The dialog simply provides a high-level mechanism to address these issues. Without such a dialog mechanism, there will be a serious communication problems between the two countries.” According to Zhou, in 2005 the dialog successfully prevented a trade war between the two countries over China’s currency policy. “The development of the China-US relationship has been a process of maximizing common interest and minimizing disagreements,” said Zhou, adding that in recent years, the Chinese yuan has appreciated 35 percent against the US dollar, while China’s trade surplus was reduced from 10 percent to 2 percent of the national GDP, which he emphasized had benefited both sides. William Burns, former US deputy secretary of state, who participated in several rounds of the S&ED dialog in the past, shares Zhou’s optimism, at least in part. “Through the mechanism, the two sides can engage in dialog, preventing disagreements from escalating to crises,” Burns told NewsChina. “The mechanism is not a perfect one, but it is very important for the bilateral relationship.” As the China-US relationship is increasingly defined by its tensions, rather than by its cooperation, the S&ED, which many criticize as more about formality than substance, and more about pronouncement than dialog, is perhaps more important than it appears. If such dialogs can regulate and contain disagreements between the world’s dominant power and its largest emerging one, and prevent them from evolving into disastrous crisis situations, then the S&ED is serving a crucial purpose in global geopolitics.

international

China-EU Relations

Refreshing Changes China and the EU are trying to discover new products, new partnerships and new possibilities to boost the world’s second-largest trading relationship

French Prime Minister Manuel Valls takes a selfie with Chinese Premier Li Keqiang during a signing ceremony in Toulouse, France, July 2, 2015

o keep a relationship from growing stale, both sides are often advised to introduce some fresh elements into proceedings. After more than 10 years of close business relations, this is what China and the European Union (EU) appear to need. Trade in goods between the world’s top two markets already approximately matches trade volume between the EU and the US, the world’s two largest trading blocs, and is

increasingly competitive in nature. China and the EU hope to expand bilateral annual trade volume to US$1 trillion by 2020, nearly double the figure recorded in 2013 when this target was set. Meeting that US$1 trillion target will require the value of bilateral trade to increase by 7 percent year-on-year until 2020, returning to the average pace recorded between 2009 and 2014. However, the actual rate was down

by nearly 7 percent in the first half of 2015. Perennial friction between a large number of Chinese and European industrial sectors and a rapidly changing global economic climate mean China and the EU need to share something new with each other, and spice up their trade relations. Trade in services and two-way investment have been identified as key potential areas that could achieve this. China has also seen NEWSCHINA I September 2015

Photo by cns

By Li Jia

opportunities in Central and Eastern Europe. Besides securing deals worth tens of billions of US dollars with France and Belgium during his recent trip to Europe, Chinese Premier Li Keqiang, dubbed China’s “super salesperson” in domestic media, was eager to promote the idea of joining hands with the EU to establish a global supply chain not only in their own, but in third-party markets, notably developing ones. More importantly, it is hoped that, if these two economic and trading giants can work together more closely, Sino-EU cooperation could help reshape the international system of financial governance, a prospect that experts see as both likely and mutually desirable.

Good Service

Services currently account for a mere tenth of the EU-China trade value currently represented by trade in goods, but increased tourism from China can offer an immediate boost to the EU service sector. At the annual China-EU Summit in Brussels on June 29, 2015, Premier Li declared that Schengen visa centers would be set up in 15 Chinese cities lacking EU or member state consulates. France, Germany and Italy have already taken steps to expedite tourist visa services for Chinese applicants. On July 1, 2015, joint visa centers, where Chinese visitors can apply for a UK visa and a Belgian Schengen visa simultaneously, opened in Beijing, Shanghai and Guangzhou. In a briefing before the summit, the EU estimated that trips to the EU by Chinese travelers would rise from two million in 2012 to three million by 2020. Tourism can, in turn, boost trade in goods. Yan Xinmin, an organizer of sporting and cultural events in Beijing, has enjoyed vacations in central and eastern EU member or candidate states, including Poland, Hungary, Bulgaria, Serbia and the Czech Republic. She told NewsChina that she wanted to find Chinese importers keen to sell European food. “Food [in Central and Eastern Europe] is delicious, fresh and cheap,” she said. In his speech at the 5th China-EU Forum

NEWSCHINA I September 2015

in Brussels on June 30, Chi Fulin, president of the China Institute for Reform and Development, a think tank based in Hainan Province, noted that the growing share of China’s economic mix represented by the service sector means more trade opportunities in the EU. Indeed, European and US service providers, including legal and accounting firms, healthcare providers, education businesses and the financial sector, have always been keen to exploit demand among China’s growing middle class. Both sides can offer complimentary resources to jointly develop their service sectors. With significant advantages in this sector, the EU enjoys a trade surplus with the rest of the world, including China, in contrast to the deficit it has seen in its trading in goods. Greater trade volume in the service sector could help reduce the currently enormous size of the EU’s total trade deficit with China. While a few labor-intensive manufacturing sectors have been a source of friction between the two sides, the tens of thousands of jobs these sectors represent, whether in textile work or solar panel manufacturing, have made these disputes politically sensitive and, consequently, difficult to solve.

Togetherness

The impact of the global financial crisis and the subsequent changes in market structure have cast a shadow over the prospects of the China-EU partnership. Organization of Economic Cooperation and Development (OECD) data show that French government debt rose to 116 percent of the country’s GDP in 2015, up from 79 percent in 2008, a bigger rise than the average recorded in the eurozone and even in Spain, one of the member states worst hit by the crisis. A survey by the European Commission shows that the cost of labor in Germany has been rising since 2011, and frequent strikes there over the past two years have fueled concerns over even the most powerful growth engine in the EU economy. Ayhan Kose, director of the Development Prospects Group under the World Bank, believes the eurozone is already in a “cyclical”

period of recovery, with significant progress made in terms of structural reform in former “problem” countries like Spain, Portugal and the Republic of Ireland. Kose told NewsChina that the outlook for EU competitiveness remains “uncertain,” depending largely on how far commitments on structural reform, mainly labor efficiencies, can be implemented. The recent Greek debt crisis has also aroused global concerns over the prospects of the eurozone as a whole, doubts which have extended to cast a shadow over the future of China’s exports to the EU. Meanwhile, China, formerly the world’s factory only for cheap consumer goods, is now offering more sophisticated goods to its trading partners, such as heavy machinery, railroad track and locomotives, cell phone handsets and even nuclear power plant equipment. European companies specializing in these areas are already feeling the pressure from the East. China, meanwhile, is also facing its own economic slowdown, which does little to boost its attractiveness as a destination for European goods. Cooperating, rather than competing, has therefore emerged as the most appealing option for both sides. By the end of May, EUbased companies had made investments in China valued as much as eight times those made by US companies. In 2014, for the first time, more Chinese investment flowed into the EU market than the other way around. Several big European acquisitions by Chinese companies have been made in various sectors since 2014, ranging from olive oil production and vacation resorts operation to energy and manufacturing. According to a recent report by international consultancy Ernst & Young, Germany, a world manufacturing champion, is regarded by Chinese companies as the EU’s most attractive investment destination. George Wang, senior partner with Shanghai law firm Duan & Duan and co-chair of the International Investment and Anti-Trust Commission of the Shanghai Bar Association, has noticed strong interest from Chinese companiesin buying out or acquiring a controlling stake in European small- and medium-sized

international Trade with the EU, China’s largest trading partner since 2004 40 35 30 25 20 15 10 5 0 -5 -10 -15 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

H1 2015

China-EU trade growth

Photo by IC

China’s total trade growth EU share in China’s total trade

Source: General Customs of China

An A320 passenger jet undergoes final assembly at the Airbus plant in Tianjin, China, January 30, 2015

enterprises. Meanwhile, China’s burgeoning legion of billionaires continues its spending spree, buying up European vineyards, hotels and real estate at an unprecedented rate. In Wang’s opinion, Chinese investors intend to diversify their assets, and are attracted to the EU by a cheap euro and favorable propertyrelated immigration policies implemented in certain European countries. Great potential, therefore, remains. Hans Dietmar Schweisgut, the EU ambassador to China, told NewsChina that EU investment in China is currently only one-tenth of its investment in the US, while China’s business presence in the EU is also in its infancy. In the past few years, China has attached more importance than ever to 16 Central and Eastern European countries, 11 of which are EU member states. In his summit in Belgrade with these countries at the end of 2014, Premier Li announced US$3 billion in funding to help finance public-private partnerships and privatization projects in these countries involving Chinese companies. The cheap, highly skilled labor pool offered by the region, Wang believes, should be attracting as many Chinese investors as it has Western European ones.

Strength

Premier Li and his EU counterparts have accelerated the negotiation of a bilateral investment agreement (BIA), with a joint draft scheduled to be prepared this year. Ambassador Schweisgut described the BIA as an “ideal” solution to address spiraling competitiveness in the EU’s business relations with China. As the talks on a separate EU-US agreement, the Transatlantic Trade and Investment Partnership (TTIP), are also ongoing, some Chinese observers are concerned that the EU will be reluctant to reach an agreement with China before a new set of “AngloSaxon” international trade and investment rules are drawn up and ratified. Sun Yongfu, director-general of the European Affairs Department of the Ministry of Commerce of China (MOFCOM), does not think this would be the case. It is not in the EU’s interest or intention, he told NewsChina, to develop its business relations with its largest trading partner (the US) at the cost of its relations with the second-largest (China). The EU has been the largest exporter of technology to China for a decade. However, doubts have emerged in China over whether

the crisis-wracked EU can continue to play such a big role in helping China modernize its manufacturing and service sectors. “The EU is still well ahead of China in [terms of] technology,” noted Sun Yongfu, the MOFCOM official. Taking all factors into account, including the level of technology, the market openness and the willingness to cooperate with China, as he explained to NewsChina, the EU is a “much better” partner than the US or Japan in terms of helping China with industrial upgrading, and China, a big, enthusiastic buyer of technology with the advantage of a full-fledged supply chain, is also a very good client and partner for EU companies. Sun’s conclusion is that the EU’s role as China’s largest trading partner, and most important supplier of technology, will remain unbeaten for the foreseeable future, adding that he believes China will work with the EU more equally and actively than ever. George Wang agrees, adding that the EU’s well-regulated market offers a “predictable” business environment for investors. Chinese scientists have already become major participants in Horizon 2020, the EU’s largest research and innovation proNEWSCHINA I September 2015

EU investment structure in China, manufacturing vs service

100 80 60 40 20 0

2010

2011

2012

2013

2014

Manufacturing Service

Source: European Chamber of Commerce in China

gram, which launched in 2014. At the Second China-EU Innovation Cooperation Dialog, held in Brussels on June 29, the two sides agreed to establish joint funding for scientific research and academic exchanges, and expand collaboration on research concerning food safety, nuclear energy, aviation, telecommunications and environmental protection.

Trilateral

Not satisfied with expanding their bilateral partnership, China and the EU are also expected to step beyond politics to tap the global marketplace. During his European tour, Premier Li signed agreements with France and Belgium to jointly explore the “thirdparty market,” represented mainly by African and Asian economies. Li also repeatedly advocated the idea of “international cooperation on production capacity” in his meetings with EU and OECD leaders during his trip. Jointly building production facilities in developing markets, as Li said in his speech at the OECD headquarters in Paris on July 1, will “not only improve the industrial level of developing countries, but also force the upgrading of China’s equipment industry and other industries, and drive the exports of key technologies and creativity of developed

NEWSCHINA I September 2015

countries.” According to the joint statement, with half of all EU member states becoming founding members of the Asian Infrastructure Investment Bank (AIIB), an institution in which China holds the biggest share, the EU, as a whole, looks to be guaranteed a place as a partner in such future projects. A joint investment fund will be established to match China’s One Belt, One Road initiative, and the EU’s 315-billion-euro (about US$346bn) Juncker investment plan, named for European Commission president Jean-Claude Juncker, with an additional “connectivity platform” to help integrate Chinese infrastructure projects into the EU’s Trans-European Networks. The major EU financial hubs of London, Frankfurt, Paris and Luxembourg are already building offshore trading centers for the Chinese yuan. On May 27, the Deutsche Börse announced plans for a joint German venture allowing the Shanghai Stock Exchange and China Financial Futures Exchange to offer yuan-denominated financial products to overseas clients. Sun Yongfu believes that the EU as a bloc would welcome the internationalization of the yuan, particularly when the euro is so weak. He told NewsChina that both EU and China share an enthusiasm for a more diversified international financial system that is less reliant on the US dollar. This is why some Chinese experts believe China and the EU could and should work more closely within the G20 framework, a new platform of major developed and emerging economies, allowing the two blocs to reshape the landscape of global economic governance. The United States Congress has not, for example, ratified the 2010 IMF reform agenda which would give emerging economies, notably China, more quotas and voting power without impacting Washington’s veto. The reform agenda was initiated and driven by

the G20 group of nations. In an article published July 7 in Boao Review, the quarterly official journal of the Boao Forum for Asia, Professor Jiang Shixue with the Institute of European Studies of the Chinese Academy of Social Sciences suggested that China and the EU join hands within the G20 framework to seek alternatives with other IMF members. There are signs that the IMF is losing patience with US intractability on this issue. In April, IMF Managing Director Christine Lagarde asked staff to prepare an alternative reform plan that would not need US approval. The existing plan requires the EU to collectively transfer a greater proportion of their established quotas than the US to emerging economies. Such moves, Jiang told NewsChina, prove that the EU is acknowledging that emerging economies, including China, will play a bigger role in the international financial arena in the future, and are adopting multilateralism in the area of global economic governance. Obstacles do, however, remain. For years, China has raised the issue of EU restrictions on some hi-tech exports. According to the 2015 annual confidence survey published by the European Union Chamber of Commerce in China, European companies, especially multinationals with a significant presence in China, are worried about China’s growth slowdown and persistently bemoan China’s slow progress in establishing rule of law. Politically, the EU has continued to stress that human rights take precedence over sovereignty, while China remains prickly towards what it calls interference in its domestic affairs. This, as Chinese analysts say, could become a sticking point in the operation of future joint projects in Africa. Fundamentally, China and the EU need to invest more political will in bolstering their business ties and establishing the more equitable system of global economic governance that both sides have long wished for. It looks like a long road ahead.

international

China-EU Relations

Delicately Dedicated

Unbeknownst to many, China and the EU are forging closer ties on international, regional and even bilateral political and security issues. While further cooperation is expected, this area is proving trickier to negotiate than business By Li Jia

ome things just cannot be bought – respect, love and understanding among them. This is why a business relationship, no matter how intimate, does not always mean political and strategic accord. While the economic partnership between China and the European Union has been thriving for more than 10 years, some have posited that the ofthyped “comprehensive and strategic partnership” between China and the EU remains a vision yet to be realized more than a decade after both sides determined to build it. The lack of conflicts of strategic interest between both sides has been regarded as a good foundation for the partnership as a whole, however, it also seems to have bred a lack of common political and strategic ground. China is growing into its role as an important global actor... Regional and international security issues are continually developing, and are having more of a ripple effect around the world. As a result, China and the EU have stepped up contact and cooperation on unconventional security issues, including military exchanges. In addition, their own interests in terms of security are increasingly interlinked. The extant and potential dynamics of China-EU contact and cooperation on security issues may have been underestimated. There are higher, albeit still cautious, expectations of a growing future role allowing both parties to address “third-party” issues and each

other’s problems.

Channels

Professor Jiang Shixue with the Chinese Academy of Social Sciences told NewsChina that China’s military contact and cooperation with the EU can be conducted via three channels: the EU as a whole, individual and multiple EU member states, and NATO, most members of which are also in the EU. The joint statement of the 17th China-EU Summit, which concluded at the end of June 2015 in Brussels, announced that Chang Wanquan, China’s defense minister, would make an unprecedented visit to EU headquarters. The upcoming visit, the statement said, will “provide opportunities to enhance cooperation on new areas of common interests, including support for peace and security in Africa.” So far, two joint naval drills have been conducted in the Gulf of Aden by the Chinese People’s Liberation Army (PLA) Navy and the EU Naval Forces Operation Atalanta, established in 2008. During Chinese President Xi Jinping’s first visit to Brussels in April 2014, China and the EU agreed to upgrade cooperation on foreign policy and security issues. As a result, Defense Minister Chang Wanquan and Chief of the General Staff of the PLA Fang Fenghui met General Patrick de Rousiers, chairman of the EU Military Committee, in Beijing in Octo-

ber that same year. According to China’s Ministry of Defense, six security policy dialogs have been held between Chinese and EU defense departments. During the fourth round of defense and security policy dialogs between NATO and China in April, Yi Xiaoguang, the PLA’s deputy chief of the general staff, hailed the recent bilateral military exchanges, including dialogs, training exercises and naval escort operations, expressing China’s willingness to seek “gradual progress in military cooperation with NATO,” according to the PLA Daily website. Military contacts and cooperative projects have been built bilaterally between China and all 28 EU member states, and are expected to develop as time goes by. Denmark, a member of both the EU and NATO, will focus on three-pronged military cooperation with China, based on international peacekeeping missions, maritime security and academic exchanges, according to Danish Chief of Defense Peter Bartram, speaking at a June press conference in Beijing. As Bartram explained, about 9 percent of worldwide sea route cargo ships fly the Danish flag, giving China and Denmark a shared interest in maritime security beyond the Horn of Africa.

Self-interest

While third-party and unconventional global security issues remain at the center of NEWSCHINA I September 2015

Photo by cns

In the Gulf of Aden, the 16th Chinese escort task force of the PLA Navy and the EU Combined Task Force 465 launch the first-ever joint China-EU navy drill, March 20, 2014

China-EU political and security cooperation, both sides are also discovering numerous overlapping interests. With a huge economic presence in the Asia-Pacific region, the EU and its member states are increasingly concerned about the escalating strategic rivalry between China and the US, and tensions in the South and East China seas. The EU, meanwhile, is facing its own crises – Ukraine, the Mediterranean refugee crisis, and terrorist attacks in France. Dr Ruan Zongze, deputy president of China Institute of International Studies, believes that such crises, as well as the widening development gap between Central and Eastern Europe, affect both broader European unity and China’s economic interests in the EU. In this context, China and the EU have called for implementation of the Minsk agreement reached by Germany, France, Russia and Ukraine. “The fact that we recognize each other as important global actors means that we feel rather confident in working together on issues of tension and issues which affect each others’ security,” said Hans Dietmar Schweisgut, the EU ambassador to China, at a press conference in early July after the EU-China Summit. As former French prime minister DomiNEWSCHINA I September 2015

nique de Villepin told NewsChina during the Tsinghua University-sponsored World Peace Forum at the end of June, China could contribute aid to Ukraine by investing more in the region, offsetting some of the economic and financial problems that contributed to the current crisis. In his keynote speech, de Villepin, who spoke against Washington’s China “containment” policy, described the EU as a “unique link” between China and the US, telling NewsChina later that Europe “can be key in trying to appease [this] relationship.”

Delicate

However, an EU “bridge” between China and the US could prove rickety, given Washington’s disproportionate influence over the EU, not least in terms of enforcing the USEU arms embargo implemented after the Tian’anmen Incident in 1989. Subsequent EU attempts to ease or lift the ban have been shot down by Washington, though major EU countries, including Britain, France and Germany, have reportedly sold limited quantities of military equipment to China by interpreting the terms of the embargo rather loosely. Nevertheless, the 1989 embargo remains a substantial barrier to deeper military

cooperation. Luo Yuan, deputy secretary of the China Society of Military Science, explained to NewsChina that military cooperation normally involves three areas: high-level exchanges, joint drills, and arms trade and development. China views the arms embargo as demonstrating a lack of political trust, thus ensuring it remains a sticking point repeated by Beijing’s delegates at strategic summits. In June, however, as Ambassador Schweisgut told NewsChina, “it was not a topic of discussion,” as, in his words, both sides “are not able to find the solution for the short term.” Experts say that this shows that the EU needs greater independence from Washington and more internal unity if it is to indeed facilitate bridging the strategic gulf between China and the US. This is more difficult now, de Villepin told NewsChina, due to internal divisions within the EU. A more realistic expectation, according to Schweisgut, is for the EU to help “facilitate” communication between China and the US, without being a “mediator.” At the July press conference, Schweisgut also disclosed that it is “unlikely” that top leaders of EU institutions will attend commemorative events in September marking the 70th anniversary of the end of what China officially terms “the Chinese People’s War of Resistance Against Japanese Aggression” and “the World Anti-Fascist War.” Given the precarious situation between China and Japan in the East China Sea, leaders of the EU member states who have received invitations, Schweisgut said, have yet to decide whether or not to attend. Their decisions, he added, depend on whether the “format” of the celebrations, particularly a military parade through central Beijing, will send the message of “reconciliation” preferred by Europe. Schweisgut was, however, quick to highlight the EU’s “profound respect for the role China played in the Second World War,” also expressing the “full acknowledgement of the sufferings of the Chinese people.” As he told NewsChina, the EU does not “take sides.”

culture

Movie Producer Lü Jianmin

An Eye for Success By Wan Jiahuan

roducer Lü Jianmin goes to the movies twice a week. Before buying his ticket, he spends a lot of time studying each movie’s poster and cast list. Once he enters the theater, he counts the number of occupied seats, noting down the audience’s gender ratio and general age range. Then, after he goes back home, he immediately checks how much the movie grossed at the box office. To Lü, this is work.

Business

Lü entered the movie industry when he was nearly 40 years old, yet he quickly impressed industry stalwarts by repeatedly pinpointing overlooked potential. He bought the distribution rights to the practically unknown 1996 art film Rainclouds Over Wushan for 10,000 yuan (then US$1,220) and then proceeded to sell more than 500,000 copies of the DVD, making a profit of 6 million yuan (US$850,000). In 2009, he invested 2 million yuan (US$294,000) in the low-budget horror flick Midnight Taxi and ended up making 16 million yuan (US$2.4m) at the box of-

Photo by IC

With a gift for spotting untapped niche markets, producer Lü Jianmin has made a name for himself in China’s huge movie market by exploiting a film’s true selling point, whether it’s eroticism, fear or patriotism Lü Jianmin

fice, even though the movie was showing at the same time as Avatar and Zhang Yimou’s A Woman, a Gun and a Noodle Shop. More recently, he produced the military-themed Wolf Warriors, a 2015 movie about China’s special forces solving border disputes caused by mercenaries hired by drug traffickers. With an investment of 74.5 million yuan (US$12m), the movie grossed 540 million yuan (US$81m) in theaters, despite its seemingly tired theme. This box office result was unexpected. The movie didn’t have much star power, relying instead on quasi-famous actor Wu Jing to both direct and lead a cast of virtual unknowns. To make matters worse, it was competing with Let’s Get Married, a movie adaptation of a popular TV series that starred many household names, including Gao Yuanyuan, Liu Tao, Zheng Kai and Li Chen. At the same time, movies with an obvious patriotic feel (like Wolf Warriors) tend to make movie-goers wary of being fed propaganda. All of these factors added up to an unfavorable box office forecast. However, Lü held the opposite perspective. He believed modern war movies have huge

market potential in China, and by appealing to the patriotic side of Chinese people, it could even be a hit. This is his gift; peering into what others overlook and seeing the possibility for success. He’s made a career out of it.

‘Eyeball Economy’

Before he got into the movie industry, Lü lived in Fuzhou, the capital of Fujian Province, and ran a real estate business that failed in 1998. He then moved to Beijing and happened to make contact with some members of China’s “sixth generation” of directors by chance. He watched their movies, many of which were relatively unknown at that time, and often found traces of himself within the movies’ socially marginalized characters. Lü said he was also marginalized and “suffered a lot” to get to where he is today. He started writing novels in middle school. He failed China’s college entrance examination but continued to write novels while working after high school. He wasn’t a successful writer, though he made a living by writing for local newspapers and TV stations. In the 1990s, he started his own advertising agency NEWSCHINA I September 2015

Photo by IC

Poster art for Wolf Warriors

and later turned to the real estate industry until that venture failed. Lü related to many of his chosen films’ characters; while his artistic side was drawn to their stories, the businessman in him saw the films’ market potential. He wanted to help sell these unknown works and quickly realized that these movies often lacked a commercial advertising strategy. Before releasing Rainclouds Over Wushan on DVD, he put an image of a naked couple in the throes of passion on the promotional poster accompanied by the words: “Brought back to light after being banned for eight years.” The stunt made the art movie a great commercial success, selling more than half a million copies. “[Promotional] materials and the movie’s name are all very important. It’s an ‘eyeball economy,’” he said. After combining his artistic interest and business experience to make the DVD release a profitable endeavor, Lü went on to successfully distribute other works from many sixthgeneration directors, including Lu Xuechang, Li Yu, Wang Xiaoshuai and Li Yang. Overall DVD sales in China fell as more NEWSCHINA I September 2015

people started watching movies online, but box office takings began to rise. Lü quickly shifted his focus from DVD distribution to movie production. Without strong financial backup, Lü chose to find projects for niche markets so that his small investments could still find an audience rather than trying to compete for the consumer base of the big studios. It was with this mindset that Lü invested in Midnight Taxi. The director’s original concept was a realistic depiction of the hard life of taxi drivers and other disadvantaged groups. Lü maintained that the movie needed a selling point. He insisted they turn it into a horror movie. At that time, no mainland horror movie had ever been a commercial success. However, Midnight Taxi became an unexpected hit over Christmas in 2009. Lü began to realize that many of his audience members were from smaller cities. Two years later, Lü directed a horror movie called No. 32, B District, producing it with a budget of 1 million yuan (US$154,000). It ended up grossing 20 million yuan (US$3.2m) at the box office.

An Outlet for Nationalism

Wolf Warriors’ tagline is emblazoned on its posters: “No matter the distance, anyone who attacks China must be punished!” A couple of years ago, when actor and director Wu Jing told Lü his idea of shooting a modern war movie, Lü felt himself becoming intuitively excited. He once again saw an undeveloped wellspring touched by few in the movie industry – modern Chinese warfare, a theme that had already proven successful for a number of recent TV shows such as Soldiers Sortie and Digital Army. Lü is also a military enthusiast in real life. One of his favorite websites is tiexue.net (tiexue literally means “iron and blood”), a Chinese military portal which is well-known for its nationalistic user base. Lü doesn’t shy away from the label. “I am a nationalist,” he told NewsChina. In his opinion, most Chinese people are at least partially nationalistic, especially at a time when China is at the center of a number of international disputes, like those surrounding the Diaoyu Islands (known as the Senkaku in Japan), the Scarborough Shoal (Huangyan Island in

China) and cross-border bombings by Burmese jets in China’s southwest. In Lü’s mind, a movie with nationalistic characteristics can give nationalists, like himself, an outlet. “The box office results would definitely be strong,” he said. “Chinese people like to watch Hollywood war movies, but they’re attracted by their cinematography and special effects,” Lü told NewsChina. “Wolf Warriors, on the other hand, will set Chinese people’s hearts afire because it’s about their own country.” Therefore, instead of listening to many of his friends’ suggestions to tone down the movie’s patriotic feel, Lü reinforced it. Bloody battles and passionate patriotism permeate most of the movie’s scenes. Even the trailer exudes national pride; its narrator re-reads the tagline in a strong, intense tone. Wu Jing went to nearly 600 theaters in 21 cities on his promotional tour for the movie and, on many of these stops, he led revved-up audience members in collectively shouting the slogan. Yet Lü was also aware of the movie’s shortcomings – the cast wasn’t strong enough. Some theaters did not even want to be a part of the Wolf Warriors promotional tour. Lü decided to avoid the usual route, perhaps learning from the strengths of his previous films. Instead of launching the tour in Beijing, Shanghai or other first-tier cities as most movies do, Wolf Warriors started its promotional tour in Langfang, a third-tier city in Hebei Province. The strategy worked. The local media gave the movie a lot of coverage. Moviegoers who rarely see stars in person went crazy at promotional events that took place in their own hometowns. Wolf Warriors performed well at the box office in second- and third-tier cities. According to data from entertainment industry research center EntGroup, Let’s Get Married was better received in Beijing and Shanghai, while Wolf Warriors gained wider support in smaller cities. Some critics said that Wolf Warriors was especially appealing to “small-town youth.” The success of Wolf Warriors confirmed that Lü’s confidence in modern Chinese military movies was well placed and his strategy of playing off audience’s patriotism worked. He saw something that others missed. While busy developing new projects, Lü has already started work on two sequels to Wolf Warriors.

visual REPORT

Last Stand A

s the sole preserved ancient residential house in downtown Zhengzhou, the Ren Mansion has survived for 230 years, and today occupies an area of less than 2,667square meters. Surrounded by flat construction sites and wasteland, the house, still under the protection of a scion of the Ren family, stands alone. The owner of the house, Ren Jinling, has refused generous offers from real estate developers seeking to level the site for apartment buildings. Countless ancient residences in China have been unceremoniously bulldozed to make way for high-rises, and few industrial cities like Zhengzhou have done much to retain their traditional architecture. Renâ&#x20AC;&#x2122;s daughter Yingying is a firm supporter of her fatherâ&#x20AC;&#x2122;s devotion to the family home, with the entire family hoping the local government will place their house under official protection.

NEWSCHINA I September 2015

The government has implemented a 30-meter â&#x20AC;&#x153;exclusion zoneâ&#x20AC;? to protect the mansion from demolition.

NEWSCHINA I September 2015

visual REPORT

1 2 5

NEWSCHINA I September 2015

1. Ren Jinling and daughter Ren Yingying in front of their historic house 2. Stone carvings in the mansion

3. Ren carries out repair work by himself 4. A plan of the old house drawn by Ren, detailing his wishes for the future protection of the house 5. Tombstone discovered during excavations 6. Ren has a plot of farmland close to the house 7. A family gathering

4 6

NEWSCHINA I September 2015

OUTSIDEIN perspectives from within China

Cool Caving

Down in the Depths

One of China’s largest underground caverns is just a short hop from Beijing. Just watch your step once you’re inside By Kenneth Kagan

Photo by IC

GETTING THERE Silver Fox Cave is close enough to Beijing to be done as an impromptu day trip, and as there’s no easily accessible accommodation in the area, you’ll need to plan to head back to the city after your tour. If you don’t have a car handy, getting out to the main entrance in Fozizhuang Town, Fangshan District can be a pain. Try hiring a black cab (and pay the driver to wait for you) from Pingguoyuan Station at the western terminus of Subway Line 1. Buses to the general area (917, departs from Tianqiao) leave infrequently, so a hired car or taxi is the most painless and effective route.

Silver Fox Cave

NEWSCHINA I September 2015

We’d hear that line again.

It is true that Yinhu Dong, or Silver Fox Cave, just outside Beijing, is northern China’s largest cave. Discovered after coal miners blew out the roof of the cavern in 1991, the cave was quickly identified as a potential tourist goldmine, and opened to the public two years later. The location is ideal for day-trippers escaping Beijing’s teeming streets, a winding hour-plus venture into the mountains west of the city. The underground temperature is cool year-round, providing some well-deserved respite from the city’s sticky summers. Even the main entrance, its cracked parking lot hidden amongst the lush green mountains of Fangshan District, seems designed to blend into the landscape.

NEWSCHINA I September 2015

Dazzling

Indeed, China has a tradition of appreciating the esthetics of nature – just take a look at the country’s great art forms. You may recognize some of the effortlessly memorable attributes of a traditional shanshui [mountain and water] painting: precipitous cliffsides poking through wispy layers of clouds; waterfalls trickling through lush forests – and, to show us where we really rank in the scheme of things, a diminutive pagoda or the tiny figure of a hunchbacked peasant is added to exemplify man’s limited influence on the environment. That last feature becomes painfully ironic when one travels to one of China’s so-called “natural sites” as a tourist. It seems that every mountain and lake is harnessed and mutilated in order to maximize its ability to draw in hordes of camera-toting tourists, and thus turn a profit. Nature, apparently, isn’t breathtaking enough on its own. This is especially true with caves, a pleasingly enclosed environment for tourist-hungry entrepreneurs who delight in filling their every crevice with a spectrum of colored lights. Every stalactite, every rock formation, everything is lit up into a psychedelic dreamscape that completely transforms a lonely cavern into a theme park. Even the stalactites themselves are milked as individual attractions. Curiously-shaped outcroppings in caves are named according to how they look from a certain angle, magically transformed into historical figures, mythical creatures or miniature Chinese landmarks assuming you’re standing in the right place. Silver Fox Cave itself was named for one of these formations: a white pillar resembling a fox sitting back on its hind legs. To be honest, it takes some creative imagination to see the fox, its badly misted glass case notwithstanding. Photo by IC

leven minutes. That’s how much time we managed to take descending into the cave before they caught up with us. We’d slipped away from our tour guide after being told by another to stand awkwardly for half an hour and wait for an unspecified “something.” Impatient, we slid through some open, unattended doors and carefully ambled down a damp staircase using our cell phone screens for light. What we saw in the gloom thrilled us. It was a cave, we reveled, just like in the photos! However, no sooner had we made our way past the first rack of stalactites, we heard it: the warbling, saccharine music piped in from the outside. Then, everything was suddenly bathed in Technicolor lights. We blinked, and our exasperated tour guide emerged behind us, breathless, her face contorted with a mixture of panic and rage. It took a few minutes of concentration before Cave tourism is all the rage in China she let fly. “What were you doing down here?” she exploded with the irate energy of a scolding parent. “We told you to wait for a guide – what would you do if there’s an accident, huh?” Realizing our recklessness, I tried to calm her down, explaining that we were simply pressed for time and wanted to get through the cave quickly. We knew it was northern China’s largest cave and didn’t know how much time we needed to fully explore it. “Fine,” our guide grunted, “but be careful. And don’t think that anybody’s going to take responsibility for you if you keep this up.”

Guidance

Knowing where to look – and more importantly, how to look - is where the necessity of a good guide becomes apparent. The problem was that we had our guide. Having told her we were short on time, she rushed us through vast open caverns and cramped passageways with equal rigor. We began to wish we’d been easier on her at the beginning.

travel

“See that one? That’s a bear,” she motioned with a flashlight. “See it? See it?” “Is it there?” I asked, halfheartedly pointing as my other hand fumbled to adjust my camera settings in the darkness. “No,” she barked. “Let’s move on!” We descended on a metal walkway through a progressive series of halls, each seemingly larger than the last. The cave itself is supposedly over 4,500 meters in length, a distance that was not lost on us as we sped further through the narrow corridors, strategically ducking lowhanging obstacles along the way. After some pleading, we managed to slow down and were given some time to scrutinize the rock formations claiming to resemble heavenly Buddhas and locate the one that supposedly looked like Chairman Mao. This brief stop confirmed what we had suspected – we were being followed. Two construction workers emerged from the dark, one remarking positively on how fast we were moving while appreciatively fondling my lower calves. Who were they, I asked our guide. The boatmen. Yes, boatmen. In a cave. As we reached the deepest point of the cavern, we began to hear the bubbling of an underground stream. Our boatman, after informing us he won’t take responsibility for our camera, slowly hauled his tiny

craft along this waterway via the use of a cable mounted on the cavern roof. The waters were the clearest I’ve seen in China, and so still it was hard to perceive there was water there at all. At times it felt as if we were floating on a sheet of glass. The end of the tour was no less impressive: We marveled at the largest cavern of all, with colossal formations surrounding us on all sides. Even our guide recommended that we snap a few selfies, while she pointed out the more jaw-dropping sites to stand in front of. This, she told us, was the point where the miners who discovered this cavern accidentally dynamited their way into it. One can only imagine the expressions on their faces when they beheld the magnificent rock formations. The entry shaft they created is now the cavern’s exit passage, with tracks originally designed for coal wagons now repurposed for transporting tourists out of the cave. However, the cave trolley stopped working about five years ago, our guide told us; it now lies abandoned, its final resting place in a dim shaft completely unlike the fairyland we had been in. The speaker system, however, is in perfect working order, and blasts a bombastic soundtrack of patriotic songs as tourists shuffle out into the daylight. After hours of exploring the Earth’s deepest reaches, that was a heck of a way to come back to reality.

real chinese

ān

anli Recommend

Monkey King: Hero is Back, a new film which premiered July 10, 2015 has been described as a milestone for Chinese domestic animation for what many called its “international-level” quality, singling out its original score and visual effects for particular praise. Perhaps more notably, due to the movie’s lack of funding, its millions in box office takings were not attributed to an official promotional campaign, but to spontaneous anli-ing, or recommendations, making the movie a word-of-mouth hit. Anli, the Chinese translation of the name of US cosmetics company Amway, has long been a synonym for direct marketing and sales, usually to friends and family mem-

bers. This business model has become so common in China that people will often be stopped by would-be salespeople on the street or outside subway stations, with direct sellers even finding their way into private dinner parties. The apparently compelling strategy of pushing products through word of mouth has allowed the term anli to replace the word “promote” or “recommend,” first in the entertainment sector and then throughout online retail, thanks to social networking tools like WeChat, China’s WhatsApp equivalent. Chinese blogs regularly feature phrases such as: “Let me anli you an app.” The response:

lì

“Ok, I eat your anli,” means that the target accepts the recommendation. However, unlike the Amway or Tupperware models which, in China as in the West, are viewed by some as pyramid schemes, online anli appears to be voluntary, and organized independently of corporate entities. However, whether this “pure” association remains will depend on how the term is used. If, in the style of Amway sellers, netizens continue to hound their clients with anli, the term might become derogatory. Many are already complaining that, despite many anli recommendations such as the new Monkey King movie being worthwhile, they’ve had enough already. NEWSCHINA I September 2015

flavor of the month

Mental Floss By Sean Silbert

eat floss is a crucial component of Chinese dental health. Ha – got you! But the curious name of this culinary anomaly (which is also known as meat wool, which isn’t any more illuminating) is only the beginning. Sure, writing about “weird” Chinese food is like drawing water from a bottomless well, but from any perspective meat floss is one of those items that seems exceedingly strange. Even the name sounds like a comical mistranslation, but there’s a lot more to meat floss than meets the eye. I vividly remember the first time I saw a pork floss bun behind the sneezeguard of a local bakery chain’s glass counter. The bread seemed to be covered with fuzzy, brown mold, clumped together into something that looked like pocket lint. Was this mysterious substance the result of intentional neglect? I couldn’t tell. But in the perverse interest of cultural immersion, I bought one, closed my eyes and took a bite – and before too long, I took another. My taste buds couldn’t have been more surprised. The light brown fluff quickly dissolved after contact with my teeth and tongue, leaving only a wash of sweetness, saltiness and umami. The floss had the subtle, ephemeral quality of cotton candy – that is, if cotton candy were made of pig. If you’re familiar with British English, this is where the translation probably makes more sense: “candy floss” better prepares you for the texture of “meat floss” than “meat cotton” ever could. Meat floss itself is a major component of Fujianese cuisine, hailing from the southeast coast of China. The mass-produced version is so affordable and ubiquitous that few would attempt to make meat floss at home (though there are ways of preparing it simply in a bread machine), since it requires so much NEWSCHINA I September 2015

time and effort to perfect that it scarcely seems worth it. The basic recipe, however, isn’t terribly complicated. Hocks of meat are simmered in a mixture of soy sauce, brown sugar and other seasonings until the muscle fibers can barely cling together. They are then shredded, seasoned and dried in an oven, before being dry-fried and continuously mashed and teased apart. The fluffy result carries only a vague memory of its former life – meat is transformed and reduced to the point it scarcely resembles any animal product. But it is the versatility of meat floss that makes it such a well-loved addition to the pantheon of Chinese cuisine. In Chinese it is known as “rousong,” or “loose meat,” and can be reproduced using just about any animal protein: pork, fish, chicken – you name it. A little extra lard makes it softer, but many leave this ingredient out to ensure crispiness. A distant cousin is roufu, which sounds like a long-lost martial art but is actually a lessrefined, chewier version of pork floss. When it comes to eating pork floss, true fans might go for a heaping spoonful right out of the jar. But this stuff isn’t peanut butter – its airy nature prevents meat floss from being terribly assertive in the mouth, registering on the taste buds more as a light condiment than an entrée, enhancing, rather than dominating, accompanying flavors.

So let’s say you’ve taken the plunge, gone to your local Asian market and bought a whole tub. Don’t fret! Meat floss can be used as a filling, topping or seasoning for a lengthy list of dishes: pancakes, tofu, pasta – anything that’s lacking a little savory oomph. It’s quite common to throw a few spoonfuls of flaky floss onto white rice or plain rice porridge for a little additional zing. Pork floss, I imagine, would also be an excellent candidate for livening up a slice of pizza or layering into a grilled cheese sandwich, so long as one doesn’t think the word “mold” while eating it. Pork floss is also a particular staple of Chinese bakeries around the world. While a plain bun topped with a thin clump of floss is simple enough (this was how I first tried it), many Chinese would jump straight into this condiment when hit with an attack of the munchies – or even homesickness. It has caught on in Southeast Asia, too, where the Muslim populations of Malaysia and Indonesia have appropriated a beef-based alternative in order to make this sinful snack a little more theologically pure. Call it cultural prejudice, but I still can’t get my head around putting what looks like the detritus from a clogged drain into my mouth. Yet I’m still a fan. After I had my first bite of pork floss, all I could think about was what other snacks I could top with it. Another order, please?

essay

Society Girl By Abigail Thomson

Upon commencing the interview, we were asked to ‘describe ourselves using a book title’

Illustration by Liu Xiaochao

Before me are five faces of stone, inscrutable, betraying not the slightest emotion. A long table is placed between us. Four other interviewees flank me on either side. The setup is eerily similar to a scene from The Apprentice. The tension in the air is all I am able to focus on. But these five faces are all two years younger than mine. Surely I can hold my ground here? But nerves have crept in to occupy the place of this once encouraging thought. Our interviewers bow and take their seats, we follow suit, and the interview begins. I should be focusing on what is being said, but my brain is preoccupied with another thought – what am I doing here? Let’s rewind a second. Spending any length of time living in a foreign country is always an experience full of unknowns and surprises. My experience in China, with Zhejiang University’s Students’ Association for Overseas Exchange (SAOE), has to top my list of strange experiences during my year abroad. When some friends and I signed up for SAOE’s music festival, we didn’t appreciate that such events are rarely trivial occasions within Chinese student societies. The deceptively informal audition process (during which we were seemingly accepted as qualified simply for being foreigners in possession of some musical instruments) was swiftly followed by regular rehearsal check-ups, a photoshoot and short film shoot. On the day of the event, all was unveiled: a red carpet, an “SAOE” banner formed from balloons, and a table of sponsors’ merchandise (including enough diminutive bottles of Yakult to feed each audience member 10 times over). The event was a lot of fun and marked the beginning of some great friendships. The interesting part, however, came later in the year. Second semester rolled around and SAOE was once again holding signups. Until this point, it had seemed impossible for us foreigners to become properly involved in a student society. Having made friends with SAOE members, however, we appeared to have found a loophole. Once again, due to our lack of experience, we had little notion that signing up for such societies involved a very intense interview process.

When the big day dawned, awaiting our arrival at the interview room were two SAOE members, smartly suited for the occasion. My friend and I simultaneously exchanged the surprised glances of those suddenly made aware that they are hopelessly underdressed. Our casual attire would prove to be the least of our worries. Upon commencing the interview, we were asked to “describe ourselves using a book title.” Being seated at the end of the row theoretically gave me an advantage in terms of thinking time, if only I had actually understood the question. Instead of coming up with something witty, I simply reeled off a prepared answer explaining my reasons wanting to join the students’ society. A nod of acceptance was received, and we moved on. We were then set the task of planning a hypothetical event. A “group planning” process began, which involved an extremely rapid discussion between the three Chinese candidates, with the two foreign interviewees reduced to pitching random comments into the fray in an attempt

to appear involved. Thankfully, only one person was selected to present the result of our team’s discussion, after which the interview panel could fire back some random questions. I focus very much on the word “random” here – “If your friend were not to be accepted into the society, how would you feel?” was followed by “If these students [indicating our fellow interviewees] were all to invite you to an event, whose event would you choose?” I quickly racked my brains and blurted out some Chinese words assembled into what I hoped was a suitable response. A slight pause, a grunt of approval, and I was in the clear. We all stood once again, bowed, and were dismissed. And that is how we became SAOE’s first non-Chinese committee members. Allocated to the publicity department, our main duty, besides attending weekly meetings, was translating posters advertising events. Our department also produced various items of SAOE-branded merchandise, which were distributed among members. I’m still not entirely sure what connection the SAOE had to actually promoting student overseas exchange, but I wasn’t going to argue with a few free badges and T-shirts. At our induction and welcome event held the morning after our interview, we were greeted by the previous evening’s interrogators. They were now dressed down, running around, playing with balloons. Minus the suits and formalities, their intimidating demeanor had completely vanished. My time with SAOE has affected me in many ways. Above all, it has reshaped my attitude towards comprehending cultural differences. It is easy to be aware of a foreign country’s culture. What is more difficult is to make the effort to understand something new, rather than to simply dismiss it. It is natural to regard what we are accustomed to seeing every day as normalcy, and everything else as “difference.” My experience taught me two things about being able to accept and embrace these differences. First, never turn down an opportunity. Second, don’t try to foresee your future. China is an unpredictable place. NEWSCHINA I September 2015

Transformation By Brittney Wong

NEWSCHINA I September 2015

The skinny grandfather would stand near the door and knead a mound of dough nearly as large as his 18-month-old grandson

Illustration by Liu Xiaochao

We ate there so often we called it “The Place.” “Are you hungry?” my boyfriend would ask me. “Why don’t we just go to The Place?” The bitesized eatery could fit comfortably into my teeny studio apartment, which was just steps away. Its sole hostess/server/busboy was a smiling woman in her 40s who monitored her daughter’s schoolwork while screeching orders to the cook in Sichuan dialect. She always needed to shriek to be heard above the oily din of vegetables frying in his wok. When we called her over to ask for our rice topped with “fish fragrance” eggplant or tomatoes and scrambled eggs, we used the term of respect “laoban,” which means “boss.” She knew us by face and would ask about my boyfriend whenever I came in alone. No matter my level of starvation, it could be quelled at The Place for less than US$2. That was a rare pleasure in that Beijing neighborhood, where foreign faces were nearly as common as Chinese ones, and a pricey steak restaurant, Mexican joint and French cafe were all on the same block. If the Westerners who filled my building hungered for Honey Nut Cheerios or Prego tomato sauce, they only needed to walk a few steps to the sizable import grocery store just across the street. Living in that area was like having the best of both worlds; both Hershey’s chocolate bars and The Place’s spring onion tofu were at my fingertips. I could even pick up a new movie for the night at the DVD shop sandwiched in between a convenience store and a florist on the same stretch of road. When we needed a quick meal to go, we passed The Place to grab a bite at its next-door neighbor, a family-run hole in the wall that sold bamboo steamers filled with pork-stuffed dumplings and buns. The grandmother would take our 6 yuan (less than US$1) with tongs to keep her hands clean before plopping 10 dumplings directly into a plastic bag. The skinny grandfather would stand near the door and knead a mound of dough nearly as large as his 18-month-old grandson, a toddler who had grown unhealthily fat because the entire family babied him. He was never allowed to walk by himself – whenever he tried to totter on his own,

someone always scooped him up in protective arms. If I came home after both of those eateries had closed for the night, I would duck into the donkey place at the end of the strip for soup noodles or a savory donkey meat sandwich on flaky fried bread. Yet despite the decent competition, our favorite go-to was always The Place, with the chatty laoban who never minded help-

ing us break big bills with the ones and fives she carried stuffed in her apron’s front pocket. Then I moved from that expat-heavy area to a hutong apartment and needed to search out my new go-tos for dumplings and other cheap Chinese fare. I didn’t wander back to my old neighborhood for a few months. When my boyfriend and I did find ourselves back near our old haunts, we said hello to our former fruit vendor and were relieved to find the dumpling family’s treasured prince finally waddling on his own two feet. But we were shocked to see The Place was closed – it was the middle of the day. The florist told us the laoban and her family had moved back to Sichuan; rent was too high and she wanted to be with her aging parents. By the time we visited again, the dumpling family had packed up and moved. So had the florist. Construction workers in blue hardhats and cloth shoes had already started demolishing walls and replacing the signs, which now displayed the name of a new restaurant, a spicy noodle place that had already established a reputation for itself with an older Beijing branch. A Western-style cocktail bar popped up in the space where the DVD shop used to be and spread to where the shop-owning family used to sleep. The block that I once knew so well had transfigured into something completely unrecognizable in a matter of months. Each time I go back to my home in Seattle, friends and family members ask me, “What’s it like to live in Beijing?” I often answer them by saying it’s like living in pure energy. Every day is charged with an unpredictable electricity pulsing through the concrete streets and morphing the city from the ground up. To me, the image of China’s metamorphosis into the world’s secondlargest economy isn’t headlines announcing the meteoric number of millionaires or statistics about the country’s imports and exports. It is men dressed in blue hardhats and cloth shoes shuttering off The Place with bamboo scaffolding to erect a new restaurant. It is sipping on an Old Fashioned where a migrant family once slept. It is the transformation of a neighborhood within a few flips of a calendar.

Cultural listings Cinema

Hunting the Future Raman Hui, supervising animator for the Shrek movies and Woody Allen’s Antz, has donned the director’s hat for the animated feature Monster Hunt, which premiered in China on July 16, 2015. The movie, inspired by ancient Chinese fairytales, tells a story of conflict between humans and monsters. With its cute CGI monster protagonist, visual effects that incorporate animated monsters into live-action, and a strong cast of Chinese stars, the movie quickly became a hit. In just eight days, Monster Hunt had already grossed more than 1 billion yuan (US$161m) at the box office. The movie has become China’s highest-grossing in 2015, and critics think it may retain the title through the rest of the calendar year. Screening at the same time as Monkey King: Hero is Back, another animated hit that grossed 500 million yuan (US$80.5) in its first 12 days, observers are convinced that Chinese animation is looking at a bright future.

Music

Book

Skillful, but Still? Beijing band The Bedstars has released its debut album, Wet Hearts & Dry Vomit, after two years in production. An English-language album, Wet Hearts & Dry Vomit combines garage punk and proto-punk with a hint of classic rock. The lyrics, though difficult to digest for most Chinese listeners, are pretty reflective of the band members’ bacchanalian lifestyle and their perspectives on reality, as well as being at times satirical and poetic. Their melodies are both pleasing to the ear and their arrangements are no less skillful than their Western peers, but many critics and fans are still waiting for the band’s members to showcase their creativity through songs written in their mother tongue.

Artisan By Shen Fuyu

Exhibition

The Sublime Good In Taoism, water is known as “the sublime good” as it “benefits all things, but does not contend with them,” a prominent concept in Chinese literature. From July 18 to September 14, 2015, Shanghai’s OFOTO Gallery will showcase works from a dozen Chinese artists that center around the concept of water. These works include oil paintings, watercolor paintings, Giclee prints, sculptures, installations and other art forms, which provide the audience with multiple angles from which to observe these artists’ understanding of or expression through the essential element.

Columnist and journalist Shen Fuyu has a reputation for portraying people from all walks of life through his “New Journalism” style. Through years of interviews, Shen has accumulated large volumes of material and stories of all kinds for his longer pieces. For his latest book, Artisan, Shen picked his hometown, a large village in Jiangsu Province, as his base for research. He tells stories of local artisans whose crafts are slowly disappearing from modern life, including those who make bamboo baskets, tofu and lanterns. Through the stories of these traditional artisans, readers not only bear witness to the beauty of their craftsmanship but also to the changing face of today’s China. NEWSCHINA I September 2015

NEWSCHINA I September 2015

Commentary

China’s new economic strategies require an overhaul of its telecommunications industry ‘Internet Plus’ and ‘Made In China 2025’ cannot thrive if the national telecoms network is monopolized by a few big hitters By Yan Xiaofeng

ollowing a call from Chinese Premier Li Keqiang for ma- ing, big data, and the Internet of Things with modern manufacjor Chinese companies to reduce charges and increase the turing, to encourage the healthy development of e-commerce, inspeed of their Internet services, China Mobile, the leading dustrial networks and Internet banking, and to get Internet-based State-owned telecommunications giant, companies to increase their presence in was also reported to have launched a rethe international market.” China’s three form plan regarding its salary structure, In June, China unveiled the “Made in telecommunication which may see the salaries of its senior exChina 2025” strategy, which identified giants have remained ecutives halved. nine key tasks which needed to be comChina’s telecommunications indusunscathed despite several pleted in order to overhaul commerce: try has long been criticized as a virtual improving manufacturing innovation, rounds of anti-monopoly monopoly dominated by three major integrating information technology and investigations into their State-owned companies – China Teleindustry, strengthening the industrial business practices com, China Mobile and China Unicom. base, fostering Chinese brands, enforcWith all three under the administration ing green manufacturing, promoting of the same agency, China’s “Big Three” breakthroughs in 10 key sectors, advanchave effectively established an oligopoly ing restructuring of the manufacturing over the entire market, resulting in comsector, promoting service-oriented manparatively expensive and slow broadband ufacturing and manufacturing-related Internet that has delivered massive profservice industries, and internationalizing its to service providers. manufacturing. For years, calls have been growing to To push these two strategies forward, reform the telecommunications industry either by introducing a competitive telecommunications infrastructure needs to be put more competition or reforming these profit-driven companies in place. Successful reform of telecoms will have a major multiinto non-profit Internet service providers charged with facilitat- plying effect on the successes of China’s overall plan for economic ing economic development. reform and restructuring. However, China’s three telecommunications giants have reThe recent initiative to lower service charges levied by China’s mained unscathed despite several rounds of anti-monopoly in- telecommunications giants will surely put a dent in their profvestigations into their business practices. As China’s leadership its. It is not surprising, therefore, that this initiative has been met now faces an economic slowdown at the same time as it is at- with resistance from these companies. But for the sake of China’s tempting to restructure the economy, the highly-monopolized broader economic wellbeing, the government needs to muster the and inefficient telecommunications sector has become a major political will to confront its chronic communications problem.  thorn in the side of reformers. Earlier in March, Li released a grand plan called “Internet Plus,” The author is a senior commentator with NewsChina’s sister publicawhich he said aimed to “integrate mobile Internet, cloud comput- tion China Newsweek

NEWSCHINA I September 2015