The following are excerpts from /A’s Week in Retrospect. The site will go live in a month and will offer intelligent aggregation of North and Southeast Asian news headlines by journalists in the region.
[Week of July 13-19]
Rio Tinto case a warning to foreign business in China
The arrest of Stern Hu and three other employees of the Australian mining giant Rio Tinto in China for bribery and espionage is panning out to be a learning lesson for foreigners doing in business in China. The closest thing to concrete evidence to support allegations has been a China Daily article quoting an “industry insider” who accused Rio Tinto employees of bribing executives of 16 Chinese steel mills. This week China’s Foreign Ministry spokesman Qin Gang directly accused Hu of spying and referred to Australian public opinion as “noise” that interferes with China’s judicial affairs. Some experts argue that this arrest, which comes amidst a deadlock in iron ore price negotiations, could be retribution for Rio’s recent walk away from a $19.5 billion investment deal with Chinalco. How Australian Prime Minister Kevin Rudd deals with this diplomatic challenge could have serious implications for Australian’s relations with China. The two countries are key trading partners, their combined trade totaling $53 billion in 2008, with iron ore taking up $14 billion of that.
Read more on ChinaStakes , Asia Wall Street Journal , Financial Times
Jakarta bombings derail Indonesia’s peaceful path to democracy
Indonesia was rocked this week after four years of relative peace when two bombs blasted the Ritz-Carlton and JW Marriot hotels in Jakarta last Friday, leaving nine dead and 53 injured. Asia’s most wanted terrorist, Noordin Mohammad Top, is believed to be behind the suicide bombings which have set Indonesia back after years on track to becoming the world’s third largest democracy with the world’s largest Muslim population. The attacks come after President Susilo Bambang Yudhoyono’s re-election, revealing that his approach to containing terrorism has not been foolproof. Days after the attack there is a sense of urgency to get Indonesia back on track; “Indonesia’s very soul is at stake” writes the Jakarta Globe. One week after national elections Indonesians were expecting an anti climatic return to the norm, “But after this week, we probably need an even stronger morning-after pill to face a new reality about our country” says the Jakarta Post. These attacks and recent shootings near a gold and copper mining operation in Papua means that the government “must lead the country once again out of this new crisis.”
Read more on Jakarta Post , Jakarta Globe]]>
China held the attention of bankers and financiers around the world this week at a meeting of the International Institute of Finance in Beijing June 10-12. Most of the world’s financial power brokers gathered to discuss how a new global financial architecture would look, and China figured prominently. The meeting appeared to be strongly supported by the country’s elite.
What was behind the fancy talk about challenging old financial sector paradigms and giving a voice to emerging markets which members were told was a major theme? The answer appeared to be the stark realization by everyone there that global markets have to be stabilized and the unspoken fact that Chinese banks must play a major role in sustaining economic growth. Also unspoken was the fact that such a major role would not likely be played by China without a great deal of diplomatic and political give and take on the part of individual nations.
A time for reassessment
“Financial institutions live globally but die nationally,” explained Philipp Hildebrand, Vice-Chairman of the Swiss National Bank, pointing out that the Financial Stability Board, a global body tasked with monitoring national policies, must leverage off of domestic policies.
But what needs to be done in the short term is exactly the opposite of what should be done in the long term, warned financier George Soros, Chairman of Soros Fund Management, a private institution that by all accounts seems to have come through the recent financial crash unscathed.
In the short term governments must replace credit, which will increase national debt, but in the long run government needs to remove itself. Soros called for an immediate redefining of market risk and an end to credit default swaps which he called “instruments of destruction.” According to Soros, markets are imperfect, regulators are even more so, and therefore regulators should be kept in line. His final message and the last note of the meeting was this: markets are global, global regulators must monitor them.
That the financial sector must be re-defined was a point also made by Sir Deryck C. Maughan, Managing Director and Chairman Asia of Kolhberg Kravis Roberts & Co. Maughan urged a new definition of banking to include less leverage, more capital and lower returns. While the party was fun, he said, it is now over and the “social contract is about to be rewritten” soberly adding that “the way forward requires a much more rigorous business model.”
Jacob Frenkel, Vice Chairman of American International Group, was frank in highlighting the amnesia that was characteristic of the banking sector until the very last moments before the crash. Like so many at the conference, he belatedly emphasized that sustained growth could not be achieved without sound macroeconomic policies. He also pointed out the success of China’s focus on domestic infrastructure growth, but left audience members somewhat confused with his contention that a new paradigm was not the solution, “we are on a detour from the old paradigm.”
The ‘old paradigm’ did not include much of emerging markets, a point acknowledged by Terrence Checki, Executive Vice President of Emerging Markets and International Affairs at the Federal Reserve Bank of New York. He pointed out global adjustments need to be made to accommodate emerging Asian markets that are taking on a greater role in globally. This will require some to spend more and others to save, he said.
Much of the focus of the conference was naturally on China’s emergence as financial powerhouse. Stephen Roach, Chairman of Morgan Stanley Asia, was blunt about China’s approach so far. “Asia needs a new growth model,” he said. “We are at a critical juncture” and while China may be taking a proactive domestic approach while waiting out the crisis, it still has a long way to go. Roach recalled Chinese Premier Wen Jiabao’s announcement in 2007 that China’s macro conditions were “unstable, unbalanced, uncoordinated, and unsustainable.”
Bank of China’s Vice President Zhu Min did not specifically counter Roach’s argument. But he strongly affirmed China’s current successful macro policies and massive amounts of stimulus being pumped into infrastructure expansion and social services. This he pointed out this means China’s confidence is high and the economy is growing strong.
Perhaps outlining the starting point for a new Asian financial paradigm, China Banking Regulatory Commission Chairman Lui Mingkang said the key to China’s development will be the “scientific development” of capital markets. He was blunt in rebuffing earlier arguments by some attendees that the world is merely on a detour and will likely return to the old financial blueprint. The current global response to the crisis has not been enough, he told the conference - a new road map must be drawn up.
What was unclear was whether China expected the high powered listeners to be involved in designing the new map or if China already has a new map ready for unveiling.]]>
Today marked the 20th anniversary of the 1989 Tiananmen massacre. The foreign community here in Beijing waited in anticipation for some sign of protest. Those holding their breath gathered near the Square and waited. Nothing happened.
To China watchers who hope for indicators of democracy sprouting many Chinese will say that China has been offered democracy from an indecipherable Western menu. Among them is Xinran, author and journalist who spent twenty years interviewing China’s silent generation, old Chinese who survived the barren years under Mao. She likens China thirty years ago, after Deng Xiaoping’s economic opening up, to a hungry child who, given the option of a menu or bread, picks bread: For her, “the menu is just a piece of paper – she won’t believe that piece of paper will provide food.”
Today, it’s still not a valued item on the menu. This is a result of holes in China’s modern history and rapid economic development.
This is an excerpt from a recent post on her blog, Xiang Yi Xiang — Think! Tiananmen Movement in 1989:
” Today’s comforts have made us too lazy to think and to dig the truth…or, at least to question the truth of our past. We must not ‘water [down]’ our beliefs and the glory lost by the blood of others - both of Chinese students and Chinese soldiers in 1989! Wo Men Bu-Neng Jian-Hua Li-Shi. We must not simplify history.”
Xinran believes that China’s history has not been taught properly; young people do not understand the depths to which the country sank a mere three decades ago. For this group of mainly single children, financial independence is paramount.
It remains to be seen how amidst global recession, China, with its national pride often spurred by hawkish foreign response to its rise, and its undefined modern identity, will define democracy in the future. There is no question that China will closely examine how Western democracies resolve the current economic crisis: If they succeed, democracy will likely become a choice on China’s menu. And then the foreign community here won’t need to stand, waiting with bated breath, for some notion of democracy to show signs of life.]]>
Yet the students who survived don’t care about numbers; they only care about the images of individual faces of loved ones they saw die in the quake, images which are constantly with them. And they are, almost to a person, not about to share those deeply personal feelings with any nosy foreign reporter. So I was fortunate to meet Randy Simmon, the only foreign teacher at the temporary location in Mianyang, because he put some perspective on the matter. Randy, an American, who has been teaching at the school since last November, tells me that the grief these students have had to deal with is compounded by many things, but predominant is a very deep sense of survivor guilt.
Survivor guilt seems to be the biggest hurdle to overcome in the healing process. Randy recounts the story of a high school student who recently confided in him. The boy was terrified that if he started dating again, he would forget his girlfriend who died in the earthquake. This teenager is just one of many students who have come to talk to Randy.
Having so painfully been confronted with death and devastation, it appears these young survivors have one of two options: drown out the world around them, or focus on the road ahead. While Randy spoke with me, a tall girl named Sophie came bounding up to us. She was beaming, and it was clear that Randy is someone very important in her life. Sophie told me that she just had her hair cut. Then she told me she was training for an upcoming swimming competition and that the training was going well. After having seen many students in the area with crutches, in wheelchairs or limping, I thought to myself, this girl is so lucky to have gone through the earthquake unscathed. Later I found out that Sophie had lost both her legs in the earthquake and was only able to walk because of two prosthetic legs.
I can’t think of a better example of courage than Sophie. The official tally of students who died in the earthquake last year, 5,335, was released this week. We might never know the accuracy of this seemingly cold figure, which came out just in time for the first anniversary of the earthquake. But there can be no questioning the survivors, those living examples of courage who, by again embracing life, also keep alive the memory of friends they lost.]]>
What has left the biggest impression on me after these five days of visiting some of the earthquake hit areas of Sichuan, is the resilience of the people who experienced death and devastation on such a grand scale. One farmer I spoke to, Zhao Rude, was energetic and sprightly for a seventy year-old as he showed us his newly built home. But as with so many others, tears rolled down his face as he began to recount the days and months after the quake. Despite all the pain that comes with those memories, and the new burdens of rebuilding a life, he is optimistic that he will one day pay off the 25,000 yuan worth of loans he has accrued.
It’s this kind of optimism that has kept the survivors of the Sichuan earthquake from buckling under feelings of guilt that they were spared while some 70,000 others lost their lives. Even children feel survivor guilt. They worry about making new best friends to replace those lost, and letting new people into their lives, who might possibly replace lost loved ones. But, as hard as it may sound, part of the human condition is learning to deal with sorrow in a constructive manner and move on. This is what many are trying to do. It is clear, however, that wounds have not fully healed.
Seeing Sichuan’s temporary Styrofoam cities and schools, meeting with locals and foreigners who experienced the Wenchuan quake, and interviewing local and provincial officials who are dealing with the aftermath, I am left with a strangely optimistic feeling. For many, despite losing everything, right down to the floor upon which they once stood, people have managed to pick themselves up from the rubble and start to rebuild their lives, piece by piece. This gives me renewed hope in human resilience and endurance.
[I will write more in the next few days about some of the stories I heard and the people I met]]]>
A no-nonsense guide to negotiating the cunning salesladies and sensory overload at Beijing’s famous Silk Market.
A Beijing bargain from Rahul Venkit on Vimeo.
This guest post was written by Myra Cecere, a freelance journalist living in China.
The story of Yang Jia has solicited a lot of attention online in China. Some see him as a national hero, others as a murderer. On November 26th 2008 he was executed for murdering six Shanghai police officers. His story, and now new accounts of police misconduct involving his mother, while not fully substantiated given the sensitive subject matter, shows a murky side to law and order.
The abridged version of his story is this: in 2007 he was taken in for interrogation by the Shanghai police for riding an unregistered bike, where he was allegedly beaten and verbally abused. In July 2008, while trying to throw Molotov cocktails at the police station, a guard stopped him. He stabbed the guard and then went on to kill police in the station. He was taken away, his trial and subsequent appeal postponed until post-Olympic celebrations. His story has been widely circulated through the Internet - a Twitter account has been made for him - where an active community of bloggers comment about the events that lead to his execution. Less known is his mother, Wang Jingmei’s story. She disappeared for four months shortly after she visited the police station to help with investigation last year. She may have been the only person with details of Yang’s beating in 2007. According to Time China Blog , without her, allegations of police abuse were moot.
Recently, Wang Jingmei’s story has surfaced. In the below link you can read translated sections of her personal account of being taken to a psychiatric hospital by police.
The Story of Yang Jia’s Mother - ChinaGeeks
Disclaimer: The views and opinions expressed herein are those of the author and do not necessarily reflect those of Alexandra Stevenson.]]>
牛年中国经济能牛起来吗？China feeling bullish in the Year of the Ox? China Radio International webcast
This short clip was shown at the National People’s Congress meeting last week in Beijing. Originally put together by the China Radio International web cast team.
Reporting: Bao Congying, Voiceover: Alexandra Stevenson. Subtitles, translation: Wutong, Yangyong. Shot, scripted and edited by Rahul Venkit.]]>
A fire that erupted Monday around 8:30pm in downtown Beijing was started by fireworks set off during a light show organized by Chinese state television station CCTV to celebrate the last day of Chinese New Year celebrations. The ensuing blaze lit up the sky in something far grander than the usual lanterns and fireworks that clutter the sky. Authorities have confirmed that the fireworks used for the CCTV show were too powerful for a construction site and unsuitable for the urban environment where they were set off. According to authorities, the station had been denied permission to set them off. Policeman were ignored after they tried to stop the show.
The building, just north of the new CCTV headquarters, was the unfinished Mandarin Oriental Hotel. One firefighter has died and seven other people were injured. The entire debacle is not only a major PR disaster for the state-owned TV station, but it has also forced Beijing citizens to reconsider a ban on fireworks in Beijing.
For two weeks straight now the city has been under siege, it’s attackers thousands of firecrackers and fireworks. Over the Spring Festival holiday Chinese nation-wide are given temporary permission to set off fireworks in approved areas. Ask any Chinese person on the street and they’ll tell you this is a centuries-old tradition. Ask any foreigner on the street and they’ll tell you there is no apparent restriction on fireworks, which often ricochet off everything, from apartment windows to sidewalk trees.
From 1993 until 2006 fireworks were banned in urban areas, but authorities eased up, granting certain areas permissible in 2006. The last official day for fireworks was set for this last Monday, and as I set off to the scene of the fire, the firework police were lurking in the shadows, in large numbers ready to arrest anyone still firing crackers past midnight.
A Chinese newspaper, the China Youth Daily, published commentary presenting one side of so-called Chinese sentiment: that allowing citizens to set off fireworks shows the authorities’ respect for social, cultural and traditional customs. The article goes on to say that the solution shouldn’t be to ban fireworks, but rather to beef up Beijing’s emergency services.
This is just half the story, the other side being that CCTV is now the brunt of a jeering Chinese online community, pointing out the fact that while the fire was started by the station, it failed to report on it. According to University of California’s China Internet Project, many Chinese have expressed frustrations in online forums about the lack of transparency at the state TV station in covering stories like recent milk scandal.
Whether the subject of ridicule, or just a blaring sign that something needs to change, it’s clear this blaze has, ironically, instigated change for the New Year. But not the kind of change anyone anticipated here in Beijing.
People’s Bank of China vice governor Su Ning responded to “persons in a Western country [who] have said China is manipulating the yuan,” in an announcement reported by Chinese news agency Xinhua. “These remarks are not only inconsistent with the facts but they are misleading about the reasons for the financial crisis.” All this was in response to US treasury secretary Timothy Geithner and former treasury secretary Henry Paulson’s allegations that China’s currency is undervalued and that China has contributed to current financial crisis.
The Chinese government fears American trade barriers amidst already slowing demand for Chinese exports. In his statement, Su Ning also warned against “excuses” for protectionist trade barriers under the new Obama administration. How this blame game progresses will set a precedent for Sino-American trade relations under the Obama administration. While not yet accusing China of being a “currency manipulator” (which, by US law, would require the treasury department to engage in “expedited” negotiations with the Chinese government) the new Obama team are courting potential future trade hostilities.]]>
The new American treasury secretary’s comments last week seem to indicate that the new presidency will take a protectionist stance towards China. In a written Timothy Geithner said “President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency.” While comments in the Chinese papers and media have been reactive, the government and the People’s Central Bank have yet to comment officially.
A quick glimpse at the China Daily, a mouth-piece for the Party media machine, however, makes the Chinese position clear; the list of op-ed titles include: “Logic of blaming China for US crisis “bizarre’”, “US has itself to blame for financial meltdown”, “Blaming China for crisis is an irresponsible act.”
Geithner’s comment is not the first example of such ‘blame’ rhetoric. Earlier in the month former treasury secretary Henry Paulson announced that the accumulation of huge savings in Asian countries like China helped to put America in it’s current financial crisis. “This view is extremely ridiculous and impossible and it’s ‘gangster logic,’” says Chinese central bank researcher Zhang Jianhua in Xinhua, the Chinese news agency.
Galaxy Securities analyst Zuo Xiaolei echoed Zhang’s sentiments in Xinhua calling the two Treasury secretaries’ commentary “cliche” and simple rhetoric to stoke protectionist fire. While recent comments from the US are, for now, just testing the Chinese waters, Xiaolei said trade protectionist policies would be a serious concern for China.
China has long asserted that it has its own mechanism for renminbi exchange rates and denies artificially keeping the currency low. The US wants Beijing to increase its holdings, which would mean more liquidity but, “if China toes the line, its economy will worsen,” says China Daily.
Chief Economist for China Construction Bank told Bloomberg that the conditions for appreciation of the yuan no longer exist as a result of global financial hits that have slowed demand for China’s exports.]]>
From the article:
Since its inception in January 2008, the Labor Contract Law (LCL) has garnered a great deal of attention from international and local media alike.
Some have hailed it as a major step forward for workers’ rights, while others blame the law for contributing to high production costs and causing factory shutdowns across the country. On paper, the LCL is comprehensive. Yet while it offers up drastic changes for foreign and domestic businesses operating in China, it has so far been inconsistently enforced. Brought in to reduce the instances of employee abuse, the law is aimed at empowering workers to take matters into their own hands if their rights have been violated.
The trouble is that few employees, or employers for that matter, understand the different aspects of the law, and even if they do, it’s hard for them to determine which sections are being properly enforced.
2008 marked the 30th year since China’s economic reform and so-called ‘opening up.’ In his New Year’s speech, Chinese President Hu Jintao remarked on China’s progress and called for Chinese to “uphold the great banner of socialism with Chinese characteristics.” We know what much of the Western world thinks about China, but what does China think of itself? With its massive trade surplus, can China offer an fresh ideas in a new age of economic chaos?
I interviewed two authors who have recently published books that, in different ways, have provided a major contribution to understanding China’s recent culture. Along with a third woman, Singaporean-Chinese filmmaker who made the film Boomtown Beijing, these women help to offer a nuanced view to contrast the often simplistic analysis of China’s past and future.
China is offered democracy from a Western menu Chinese find indecipherable, says Xinran, author of China Witness, which recounts her twenty years interviewing China’s ’silent generation’ of seniors who survived Chairman Mao. After Deng Xiaoping opened economic free zones in the late 70s, China was a hungry child, given a choice between a rich menu and a slice of bread. The child choose bread because “the menu was just a meaningless piece of paper.”
China today still does not fully trust a menu which offers freedom and human rights. Xinran forced herself to forgive those who made her suffer for crimes she did not commit and whose own real crimes were left unpunished. Now she urges the West to be patient. Living both in London and Beijing, she says, “Outsiders talk about China in monochromatic and political terms.”
Zhang Lijia, author of Socialism is Great, grew up in the 1980s when China was slowly opening up to the West, a phase she thinks of as the country’s coming of age. Zhang worked at a missile factory for what she calls ‘iron rice bowl’ security. She sought refuge in ideas of democracy and individual freedom, staging a workers’ protest in support of the 1989 Tiananmen student demonstrations.
She says that since the 1980s, Chinese leaders have orchestrated a capitalist frenzy without acknowledging those earlier Maoist crimes. “I don’t just want to be a dissident,” she says, but she feels compelled to tell the truth, “China today is still a cage, but today it is much bigger so people don’t always feel the limits of it.”
Despite her rebellious past, Zhang, like Xinran, nonetheless condemns the West’s “blind criticism” like that expressed in April of 2008 in demonstrations against China’s policy in Tibet. She argues that the situation is oversimplified by young people who know little of China’s recent history.
Both Xinran and Zhang voice concern that China’s own youth do not understand the level of despair to which their country sank because they have received no education on Mao’s disastrous Cultural Revolution.
This void puts the China of today in an uncertain state, explains filmmaker Siok Siok Tan who is both Singapore and Chinese. Tan and Beijing Film Academy students documented the impact of the Olympics in Boomtown Beijing. Tan sees China as a teenager “looking at herself in the mirror,” unsure of her own identity.
It remains to be seen how a mix of national pride combined with an undefined modern identity, largely the result of the denial of history under Mao, will shape China’s future. The big question is how that teenager looking in the mirror, will respond to the often hawkish and self centered foreign response to China largely on the part of the US. That $ 1.9 trillion surplus, which has effectively made China the banker of the US, is unchartered territory for both.]]>
In a culture where human relationships are valued but not expressed publicly, modern dance - which uses complicated human interactions as its inspiration - might be considered an unusual form of art. Yet, creative expression is emerging in China through rhythm, and specifically in this one particularly interesting and traditionally ‘western’ form. Beijing has been the breeding ground for China’s own modern dance movement. One of the most original of these is LDTX, which stands for Lei Dong Tian Xia, or Thunder Rumbles Under the Heaven. It is the first non-government professional dance company in China
On November 22, 2008 LDTX performed two pieces - Moment of Color and Undetermined Domain. The programme says it’s a “raw display” of life’s narratives and human relations. An ambitious goal given its choreographic style; 48 chairs remain on the stage in various formations, and at one point are thrown into the center of the stage, as dancers slam into each other and then calmly and fluidly navigate their partner’s body. The overall effect is strangely halcyon and, indeed, ultimately a “raw display” of life’s narratives and human relations. Both pieces, performed at the Minorities Cultural Palace Theater, were compelling, fresh and a revival of creative expression that for over half of the last century had not been allowed.
The first of the two, Moment of Color, choreographed by artistic director Willy Tsao, opened with color coded male-female duos negotiating the their bodies and their emotions while literally being conducted by a sole dancer in black. Tsao later explained that humans have three different types of relationships with music (mirror interaction,
dissociated interaction and dialogue interaction.) It seemed that his third articulation of a dancer’s interaction - that of dialogue - was what could best describe the choreographed moves of the dancers as they danced to the melancholic voice of a violin, music composed by Arvo Part and Astor Piazolla.
The second performance didn’t leave one with the same feeling. Undetermined Domain - choreographed by Ma Bo and Li Hanzhong - is at once abrasive, disturbing and painfully beautiful. All fourteen dancers begin uniformed in white on stage with a large metal cage. A harsh clinical light carves a spotlight which is ignored by the
dancers. They seem to be distracted, or better, trapped. They bang on the metal
cage, climb in and out of it and contort their bodies, trying to break unseen barriers. With the harsh surroundings of a barren stage, it appeared a psychological barrier that these dancers were violently dancing against.
It was a more beautiful dance than the first, but in the same way that accidental beauty can captivate. In the weighty music of an oratorio by Elliot Goldenthal and the cringe-worthy clanging of Bang on a Can there was softness; in the stark contrasts between bright light and dark elongated shadows of dancers against a shiny metal backdrop, there was gracefulness. Most impressive of all was the perfect coordination of the dancers, despite the breakneck speed at which limbs flew, torsos spun and heads turned.
For a dancer, one of the best parts about modern dance is the feeling of freedom its repertory of moves allows for. One of the greatest achievements of a modern dancer and the choreographer is to convey that same feeling to an audience member who remains seated throughout the performance. In this way, the dancers from LDTX Dance Company are the finest - they inspire movement in those who watch them. Hopefully, they will also inspire a new generation of Chinese dancers.]]>
China’s already tough foreign currency control regulations have just gotten tougher
The Chinese market has gotten a little chillier for foreign investors. A new regulation recently publicized by the State Administration of Foreign Exchange (SAFE), now bans Foreign Invested Enterprises’ (FIE) from using foreign capital, converted to RMB, for the purpose of equity acquisitions. Simultaneously, a new amendment to tax regulations eases the way for domestic Chinese corporations looking to invest abroad.
This move is in line with other policies as of late, which have aimed to clamp down on the influx of Foreign Capital looking to buy an undervalued RMB and at the same time flee recessions in developing countries. Still, slowing foreign currency influx has up until this point not targeted enterprises and legitimate investing, making it something of an about face from China’s long standing support for foreign investment, which helped kick start the country’s economic boom 30 years ago, and the official policy of opening up markets.
The new regulation, Circular 142, was issued on August 29, 2008, though it wasn’t fully publicized until October. The circular, besides prohibiting equity investment with foreign capital, also restricts investment in “non-self-use” real estate properties, or investment in securities if those are outside the company’s business scope.
While not stopping all foreign investment, the regulation will severely limit those who can invest in China. Venture and private equity lawyer Rocky Lee explains that this new development “makes acquisitions and expansion capability hard” for FIEs.
An official source in the Ministry of Foreign Commerce, who spoke on conditions of anonymity, said that while he thought the circular contradicted China’s open market policies, there were enough loopholes to keep foreign investment flowing into China. He noted that domestic equity approved by SAFE and individual transactions that have “otherwise been provided for,” are excluded from the prohibition of foreign converted capital buying Chinese equity. These “otherwise provided for” transactions have not been defined. In addition, Circular 142 only defines the purchase of Chinese equity as prohibited, ignoring the purchase of assets altogether. In a note to clients, Janet Tang from the law firm Akin Gump Strauss Hauer & Feld, pointed out another loophole in the poor definition of what is “outside a company’s business scope.”
The influx of foreign currency has caused China’s foreign reserves to skyrocket, which has fueled inflation, and put pressure on the currency to appreciate. In September alone, China’s reserves climbed USD 21.45 billion, putting China ’s surplus at $1.9 trillion. Though the currency hasn’t appreciated greatly since April of this year, remaining at around 6.85 to the dollar, the central bank has had to issue large amounts of notes to sterilize the reserves and keep the currency down, a process that can often only be done incompletely.
In the first half of the year large amounts of “hot money” - money chasing speculative gains - entered the country, putting pressure on the exchange rate. Amidst Chinese interest rate hikes and a falling dollar susceptible to US interest rate cuts, the conditions for foreign investors to hedge their capital in Chinese investments were perfect. Speculators played the currency arbitrage game under the guise of foreign investment, most commonly pumping money into stock and real estate markets.
At the same time the Chinese economy was under threats from falling international demand,and chaos in the stock and real estate market. The newest foreign exchange regulations aimed to help keep the exchange rate steady in the current tough market environment, easing the pressure on exporters, and hopefully calming some of the market volatility.
“Apparently, with these measures, the Chinese government will possess more accurate firsthand knowledge about the actual amount injected in China and converted into RMB int he name of foreign direct investment,” said lawyer Tang. “This information will also presumably help the government obtain authentic and reliable statistical data regarding foreign investment,” she added.
Istvan Pribilovics, former Chief of Budget for the Inter-American Development Bank, theorizes that the government doesn’t want foreign companies coming in and controlling the market, but “at the same time they also don’t want to create a situation where no foreign investors can come in.” This is why a loophole has been left in the new regulation, allowing for interpretation on a case-by-case basis.
Go West young corporations!
The government is at the same time encouraging spending abroad by Chinese companies. Another foreign exchange regulation, released around the same time as Circular 142, removes the need for approval from the Foreign Exchange Bureau for outward investment, requiring instead only registration with the bureau.
The regulation is aimed at encouraging Chinese companies, flush with cash, to invest in undervalued foreign companies, which are being devastated by the financial crisis. Many Chinese companies need intellectual property and foreign market access, which they can often only acquire through mergers and acquisitions.
Tom Kirkwood, of Kirkwood and Sons, says that over the past twenty years more than USD 500 billion has been invested by Chinese entities abroad, but that this is changing. Kirkwood predicts that in the next twenty years USD 2 trillion will leave the country in the form of overseas non-liquid asset purchases, which he calls COBI (China outbound investment).
Many Chinese corporations are currently engaging in the financial institutional partnering and acquisition stage of COBI. Recent examples include Shanghai Automobile Industry Corp.’s acquisition of a 20% stake in South African Standard Bank for USD 5.6 billion, and Bank of China bought a 30% stake in hedge fund Swiss Fund Management to facilitate private banking opportunities. “Many Chinese corporations are looking to buy expertise, rather than build it up themselves,” Kirkwood says. He notes that once they buy a stake in the company, the simple parts are often shipped to China to be manufactured, while the expertise stays abroad.
Many of the problems that Circular 142 was put in place to fight have suddenly and spectacularly changed over the past few months. With hot money inflows dropping considerably, and the balance sheets of some of China’s mightiest corporations dropping into questionable health, it is quite possible that within a few months China will be looking for more foreign investment, not less.
SAFE said in a recent announcement that it would clarify these regulations within six months, in order to ease the investment process for legitimate investors. We will have to wait until then to see what comes of it.]]>
Taken from Off the Press Bus Blog on About.com, Saturday August 16, 2008:
Both wearing shades and speaking in low voices, the Gao brothers, two
of the most famous contemporary artists in China today, tell me that
the art district where they exhibit their work has become a main
tourist attraction and has lost its subversive edge. I look down from
the rooftop patio of their gallery and watch tourists, carted in on
giant tour buses, pose outside galleries without going in and can only
imagine how the brothers must feel. They show me a book full of photos
of art that has been banned from their gallery, and all I can think is,
why do the police even bother censoring when no one is looking at the
art? Actually, by publicizing the district as the government has by its
random raids, it has successfully made it too trendy to be subversive.
Last night the second rehearsal (open to the public) for the Olympic opening ceremony took place at the Bird’s Nest in Beijing. The spectacle was incredible but the most interesting aspect were the performers, all proud to be a part of such an important part of their country’s modern history. Below are images of just a few of the 10,000 performers in the show.]]>
From the article:
Congress may be beating up on China to
improve its safety standards - but maybe it doesn’t have to: Chinese
citizens are doing that on their own. As the October 2007 Consumer
Rights and Corporate Responsibility Annual Conference held by the
Beijing Center for Business Ethics (CIBE) demonstrated, there is an
emerging, strong movement in China for better product safety standards.
With less than two weeks to go before the Olympic opening ceremony here in Beijing, the mood is less than lively. Not because security is tight, and not because everyone is waiting in nervous anticipation, but rather, because no one seems to be here. It’s a ghost town (I say this relative to the usually over-crowded capital). I arrived yesterday afternoon from a three week break in Singapore to find that everyone has left the city. With all the anticipation and noise abroad about the Olympics, I was expecting a little more hustle and bustle.
There is an explanation for fewer cars on the road. Just a week ago (July 20th), in yet another attempt to lower the pollution level to one acceptable by IOC standards, the Beijing government instituted an odd-even license plate registration system. This means odd and even license plates are banned on alternate days. Beijing’s major roads, typically big and brimming with cars can accommodate three car lanes and one bicycle lane on each side. They are now more empty than full. So, that explains half the number of cars on the road. What about the people? Where have they all gone?
Fortunately for yours truly, a cab driver was nearby to answer some questions. According to him, much of the Beijing migrant workers demographic (mostly construction builders and housekeepers) have been told to leave the city for three months this summer. This has been done in order to prepare for the ‘massive influx’ of tourists descending upon Beijing for the 2008 Olympics.
Many foreigners who, in the past, were able to stay in Beijing on the wrong visas have been asked to leave or have been deported, adding to the number of people leaving the capital. This includes large numbers of English teachers who, aided by work agencies, were given the wrong visas to work as teachers. Other foreign Beijing residents have been denied visa renewals too. All this has been done for the sake of security and clearing out the place to make room for Beijing’s new guests.
So, where are those guests?
Then there’s another small detail. According to official figures from the BTA (Beijing Tourism Administration) about 400,000 to 450,000 foreign tourists are expected to arrive for the Olympic Games. That’s significantly less than originally predicted (according to The Straits Times about 50,000 less). Tighter visa requirements for tourists, officials claiming unprecedented Olympic terrorist threats, and the negative publicity China has received in the media may be to blame. Many would be tourists just don’t want to deal with any hassles.
Fear not, there will still be many Olympic goers this August. The largest tourist contingent expected will be domestic tourists. Officials predict anywhere between 1.2 and 1.6 million Chinese tourists to arrive in Beijing.
So, with that in mind, for now I will sit here in my apartment and enjoy the relative silence. I’m also going to take my bike outside for a nice, traffic-free ride.]]>
From the article:
Most interesting to me was a quote I found of Thomas Friedman, the America economist, who had written in the New York Times: “Dalian would stand out in Silicon Valley.” This was in reference to the city’s frantic attempt to be a business and high tech center, rather than simply a dusty city outputting manufactured goods. I also read it was the ‘new Hong Kong’ and “the Hong Kong of the North.” This seemed to be confirmed by the fact that the famous mid-year Davos World Economic Forum was being held in Dalian during the week of my arrival.
originally published on Women’sPost.ca]]>
CIBE Conference on Corporate Social Responsibility: October 26th and 27th Sun City, Beijing
Much of China’s recent economic success is due to the fact that production is fast, suppliers are plentiful, and regulations are not always enforced. The factors that make Chinese businesses highly lucrative are often the same ones that weaken China’s credibility abroad. In the fast paced world of commerce, production and profit margins are central and numerous times the consumer has appeared to be an afterthought. As attested by the recent wake of serious allegations about faulty and injurious Chinese exports, this has led to consumers around the world becoming wary of Chinese products. Such issues of social responsibility and consumer rights will be addressed at the Beijing Center for Business Ethics (CIBE) third annual conference, which will take place this weekend at Sun City in Beijing. I will be attending and hope to be engaged by the exciting list of participants.
The conference, jointly organized by The Research Institute of Applied Ethics at the Chinese Academy of Social Sciences (CASS), comes at a historical moment when China is making big waves in the global economy. It has become impossible for the global community to ignore China’s economic rise. Recent statistics published in The Economist reveal that three of the global market’s biggest firms are Chinese (ICBC, PetroChina and China Mobile). At the same time, in light of allegations against the quality of Chinese exports, it is becoming increasing hard for Chinese multinationals to ignore global consumers.
According to CIBE’s PR and Marketing Director Alexandra Pribilovics, the goal of this year’s conference is to help bridge the gap between international ethical standards and local Chinese business practices. With lectures by leading thinkers like Swiss economist,Dr. Bruno Frey, on topics like the local legal implementation of international ethical standards, the forum presents a great opportunity for learning and discussion within a country that may soon set the global standard for business practices.
Global demand for consumer rights is reflected in CIBE’s list of co-organizers which include: Peking University Press, the Institute for the renewal of Chinese traditional culture Beijing, LIBA Business School of India, and the Center for Research of Economics, Management and Arts (CREMA) in Switzerland. The forum is open to the public and welcomes young people, especially, to join in and be heard. It is today’s youth who will be confronted with the outcome of today’s decisions on ethical and responsible corporate behavior.
The recent public apology to China by multinational toy corporation Mattel, for putting false blame on Chinese manufacturers when it had to recall millions of dangerous toys, provides an interesting context to the conference. The question CIBE poses for everyone in today’s highly integrated world of business is: where in the chain of command and production does ethical responsibility lie?
Where profit maximization was once the bottom line, there is today a pressing need to change the focus to consumers and their rights within China. This emerging consumer rights movement calls for Chinese businesses to attend to hard reality; without a satisfied consumer there can be no profit maximization. More and more enterprising young people appear to be realizing that this is not only the new bottom line but that those who follow it will come out ahead of the game. Let’s hope this conference goes further than just the doors of the conference center. I’ll be there to investigate and talk to participants and lecturers alike.
For more info check out the CIBE website: http://cibechina.ning.com/group/cibeconferenceattendees]]>
From the article:
What does rain have to do with the development of a modern city? Probably nothing in Canada, but while studying Chinese at Peking
University, I learned that in Beijing it is part of a whole new
approach to life. In the past, when drought threatened the city,
petitions were submitted to honorable ancestors. Today, technology is
called upon instead. Yes, China has found an antidote to blazing heat
and relentless sand storms–making rain. In order to wash away the dust
left after major sandstorms hit Beijing in 2006, the government
launched slim rockets filled with silver iodide into the sky. And the
originally published Glimpse.org]]>
CELEBRITIES, OR SOMETHING LIKE IT, FOR THE EVENING
My roommate Gab and I decided that we were going to go to Beijing come hell or high water for the week long October break. Having expected that to be living in Beijing until 3 weeks prior to our scheduled departure for China (the scholarship people pulled a quickie on us, changing our place of residence for our yearlong Chinese studies from Beijing to Dalian), we were desperados So, for our first school break, it was Beijing or bust. As you can imagine, that kind of enthusiasm tends to warrant adventure of some sort. Knowing that everyone in the country would be traveling home for the break we decided to be clever (or not so as you may realize as you read this) and take a fourteen hour ferry to the coastal city of Tianjin, followed by a three hour bus ride into Beijing. The ferry was an overnight one and we were told we had tickets for a four person room. Fair enough, we thought, four isn’t quite yet a crowd by Chinese standards. But the room wasn’t four person room. It was an eight person room. And it was practically in steerage. This minor detail didn’t seem to phase us too much though; we were going to Beijing.
So, we left our bags and headed out onto the deck. Everyone on the boat had the same idea and so we had a chance to mingle with our fellow passengers. And mingle we sure did. Gab and I were the only Westerners on the boat and within seconds of stepping onto the deck someone came up to us excitedly waving his camera. He wanted a picture. With us. Once this seemingly sweet young man had broken the ice it was fair game. For just about a half hour we were surrounded by a mob of people shifting us around from spot to spot to pose in pictures. It was completely absurd and I felt literally like an object, the little token blond gnome that everyone wanted to place in their pictures. Anyone who has traveled remotely in China has had a similar experience. The only thing you can do in such a situation is laugh. And laugh and laugh.
[This picture was taken the next morning when we awoke to find our room filled with young Chinese girls eagerly anticipating our waking up. As soon as we did wake up they wasted no time taking photos.]
ART AND THE MARKET ECONOMY
Once in Beijing things were a little different, which was a nice change. The day we got in we met up with my friend Camille (who we had planned to live with in Beijing before finding out that we had been posted to Dalian instead) and immediately went to Dashanzi, which is the art community that I had so enthusiastically written about in Adbusters a year ago (”Beijing’s Art Factory Feels the Squeeze” Adbusters 70 March/April 2007). In the short time I spent wandering around it seemed like many of the creative artists still struggling to be heard last summer have now sold out. Big time. It was interesting to see that where last year I might have bumped into an artist or two in a gallery, now the only thing I bumped into were the huge crowds of tourists milling about. There is nothing wrong with that but it suddenly seemed like much of the art work was a little more self reflective or commercially self conscious. What I mean is that it felt like many of the exhibits were catering to a Western audience that was craving sensationalist art pieces that recall Western projections of a paternalistic society and political system.’
[This photo was taken last summer of a poster for an exhibit called "existence in transition."]
This time around it seemed as if many artists and their galleries had already made a transition to a more established existence.
We did get another moment of fame while there. Another friend, once a T.A for an anthro class I took at McGill, has been studying Chinese for a long time and just finished some research in Hong Kong. He was in Beijing for a few days before heading home to Montreal. We met up with him in Dashanzi and happened upon a gallery hosting a Swedish photographer, Alexander Berg, known for this project called ‘One Shot’. The whole concept is that he takes people from off the street and gives them one frame to express themselves. The project will eventually become a book with photos taken in Beijing, Paris and London. The four of us were photographed together and will be in his next exhibit. While Berg humored us by squatting (in typical Beijing fashion) with us outside his gallery and listening to our many ideas of what type of photo we wanted to do, in the end he had us jumping in the air, an idea that was entirely his own. So much for giving the subjects artistic license.
In case you’re reading this, Mr. Berg, the picture below is our own version of ‘One shot’ and we think it’s a little more original… well spontaneous at least:
LEARNING THE ART OF JIAOZI MAKING IN SHIJIAZHUANG
Monday October 1st was National Day and my old language buddy from Peking University, Shuqian, invited me to meet his family and make jiaozi (Chinese dumplings) with his mother in his hometown of Shijianzhuang. According to his mother, anyone aspiring to understand Beijing culture should know how to make jiaozi from scratch. So that it exactly what we did. His dad greeted us with a cigarette dangling from his mouth, which he rarely removed from his mouth. In fact, his father joined in on the jiaozi making with cigarette in mouth. I have some great footage of the whole jiaozi making lesson but have yet to fully figure out how I can load that up onto this blog. The meal we ate was amazing and the hospitality that Shuqian’s parents showed us was really remarkable. Unfortunately, we weren’t prepared for the donkey intestines that were incessantly served each time we managed to get a chopstick full down. The rest of the food was delish. At the end of the day, Shuqian’s family sent us off with all kinds of candies and fruits which I promptly finished once sitting on the train.
MUSIC AND BEIJING: FROM TALIB KWELI TO MODERN SKY FESTIVAL
There is a lot going on in Beijing culturally and at the moment the focus seems to be on music. We managed to grab tickets to see Talib Kweli and Ozomatli playing at the Yue Festival (which translates literally to ‘music festival’). Now this is a story that I will still be recounting when I am 80. Only in a place like Beijing could this happen. In a city that is still young, fresh and oblivious to much of the fame and glamour that comes with becoming a hip city. First off, Talib Kweli opened for Ozomatli which was a mistake since he just came out with a new album, Eardrum, and was supposed to be the main act promoting a lesser known group. But the show was great anyway. After Kweli had gone on we ran into a friend who is studying In Dalian with us. He asked us if we wanted to meet Kweli. We thought that would be cool. Kweli was standing off to the side in the corner, basically blending in with the crowd. So much so that my friend Ash had gone up to him and obliviously asked, “you enjoying the show?” and then, “so what do you do?” to which Kweli answered, “I rap.” Kweli asked me, Gab and one of Camille’s roommates what we wanted to drink. Then, he took us up to the VIP and media section and hung out with us. In between hanging, he would disappear periodically,to suddenly show up on stage to rap with Ozomatli. It was pretty cool and the atmosphere was so much more relaxed. Kweli later invited us to the after party at the Hilton where we had Moet with his manager Cody and his DJ, Chaps. Without all the hype that Kweli is getting back home (which my two friends and I were totally unaware of until we googled him the next day) it just felt like a night out with some cool musicians.
[Ozomatli and Kweli on stage, as viewed from above.]
ROCKING OUT WITH BEIJINGERS IN HAIDIAN PARK
As I write this I’m having a hard time believing that so much happened in the past few days. But let me continue. On Wednesday, we went to an all day music festival put on by Modern Sky, a Chinese record label that tends to sign on with new up and coming (and less pop-lik) bands. Actually, the Yeah Yeah Yeahs were playing there on Thursday and Mogwai and Coldcut (two other international headliners) were supposed to have showed up as well.
The best part about the festival, which was held in this beautiful park in the district of Haidian, was the electronic stage. There were four stages showcasing everything from rock to heavy metal to ska/punk and house and electronic beats smoothed out by various international DJs. The electronic stage started out with few audience members, those listening were rocking out completely to their own beats. It was a goldmine for any creative choreographer looking for new moves. It made me think of a Fatboy Slim music video.
So that was my whirlwind of a few days. To top the vacation off, yesterday at the airport we stood in line with the national Chinese volleyball team. Strange this is, they looked like they were a basketball team they were all so damn tall. Since when are volleyball players so big?? Anyway, they were all very sweet and accommodating when a steward at the check-in told them they couldn’t keep all their volleyballs in one giant carry-on bag. Instead, they each took two balls to carry individually.]]>
Taken from Adbusters 70 March/April 2007:
Most of Beijing still gets around on bicycles. This was my main mode of transport when exploring the city, and I saw both the desperate and the enterprising use their bicycles to make money, offering service as movers of everything from furniture to tanks of butane gas. But I also saw more and more shiny new black Audis, once the privilege of government officials; now the nouveau riche buy the same models.