China Wakes

Doing bioscience business deals in China? Why ‘guanxi’ matters to you | MedCity News

noreply@blogger.com (Brian Edwards) — Wed, 09 May 2012 09:41:30 PDT

China presents life sciences opportunities, but to Western pharmaceutical and medical device companies seeking business deals, the Chinese business world can be a mystery.
To understand the Chinese way of thinking about business relationships, it might help to consider the experience of an American. Michael Batalia, director of technology asset management at the Wake Forest University School of Medicine, grew up in rural Illinois. Batalia recalls farmers who relied on each other based on relationships going back decades. Beyond the farm work, families knew each other well. It was a blending of work life and family life.
In the West, this way of life is mostly a relic, Batalia said. But in China, it is the centuries old practice of “guanxi.” The word refers to the network of relationships that is the backdrop of Chinese business. Batalia, who has traveled to China in his work with the Association of University Technology Managers, said that Chinese business relationships go beyond strict business deals. Without a more personal connection, deals don’t come easily.
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“It’s hard to distill relationships down to a contract when you barely know each other,” said Batalia, one of the speakers on a panel at China Bioscience Connect, a conference held last week in Winston-Salem, North Carolina on developing Chinese business relationships.
While many Americans prefer to keep a clear line between work life and personal life, in China that boundary is not well defined. Americans define themselves by their work, typically asking new acquaintances what they do for a living. In China, the first questions are never about business, said Shiqin Xu, director of the Global Training Initiative China Program at North Carolina State University. A Chinese person will ask about family, even hobbies. These questions might be considered too personal in the context of American business, but they are standard in Chinese relationships. Such details are important, Xu explained, because the Chinese view this personal information as the building blocks of a relationship. That relationship is what leads to business deals. But it takes time.
Creating one of these relationships is best done through an introduction, perhaps from a mutual friend, said Yin Chen, vice president of business development for the U.S. region for Shangai Medicilon, a preclinical contract research organization. As you build these relationships, expect to share many meals.
“In the Chinese tradition, we always prepare more than you can eat,” Chen said. “You don’t have to eat it all.”
Relationships are built on reciprocity, Batalia said. A favor done from someone creates the expectation that a favor will be returned. Business deals are negotiated to benefit both parties, rather than to put one party at a disadvantage. It’s a different approach than Western business practices, where Americans relish bargaining for advantage, said Dr. Joseph Molnar, a professor of plastic and reconstructive surgery and associate director of the burn center at the Wake Forest University School of Medicine. The Chinese view negotiating from a position of power as arrogance, Molnar said. The Chinese approach is negotiate with humility, which in the West is viewed as weakness.
“It’s one of the culture clashes that’s misunderstood on both sides,” said Molnar, who along with several Wake Forest colleagues is part of a faculty and physician exchange with Shanghai Changhai Hospital in Shanghai, China.
But well before the point of executing a business deal, much simpler exchanges take place as the relationship builds over time. Chen stressed that gift giving is considered an important part of guanxi. While the sentiment of the gift matters most, Chen offers one sage piece of advice: “You better not bring gifts made in China.”
[Photo from stock.xchng user yum]

via medcitynews.com

Interesting post on the importance of 'guanxi', or personal relationships, when doing business in China. To be successful in the Middle Kingdom, US health tech companies will need to operate under a different, more conciliatory mentality than they do in Western markets.

First US-China tech incubator launches | chinadaily.com.cn

noreply@blogger.com (Brian Edwards) — Mon, 16 Apr 2012 19:12:49 PDT

2012-04-13 11:28:58.0Zhang Qidong in Santa Clara, CaliforniaFirst US-China tech incubator launches1811040061Home2@usa/enpproperty-->

Ken Wilcox, chairman of Silicon Valley Bank, speaks at InnoSpring's opening ceremony on April 11. Chang Jun / China Daily

InnoSpring, Silicon Valley's first US-China technology startup incubator, officially opened its doors on April 11 to Chinese returnees starting their own companies and American entrepreneurs seeking to enter the Chinese market.

InnoSpring, created from a joint partnership of a consortium of Chinese and American financial institutions - Tsinghua University Science Park, Shui On Group, Northern Light Venture and Silicon Valley Bank - is expected to compete with leading local incubators by providing a full range of services to its beneficiaries.

"Newly inducted incubatees joining InnoSpring's ecosystem can leverage our US-China focus as well as receive customized incubator services," said Eugene Zhang, president of InnoSpring. "Today, we crossed our first milestone and eagerly look forward to building InnoSpring for the long haul."

Twelve technology startup companies have already been selected and will settle into InnoSpring's 1,350-square-meter facility. InnoSpring plans to select 15 companies every six months for its "Seed Program". These companies will receive an initial $25,000 investment at the outset of the program.

The Seed Program is akin to a 6-month boot camp for entrepreneurs who aim to complete a prototype, assemble a core team and conduct initial customer feedback.

Select startups will also have the opportunity to receive additional funds of up to $250,000 in capital from TEEC Angel Fund, bringing the maximum initial investment amount to $275,000.

Ken Wilcox, chairman of Silicon Valley Bank, said the establishment of InnoSpring is a sign of true innovation between China and the US.

"Chinese engineers and high tech professionals have made major contribution to technology innovation in Silicon Valley. The creation of InnoSpring tells us again that innovation has no borders, and most progress can be made where there is collaboration between different parties," he said.

Xia Shuguang with the San Francisco Consul of Economic & Commercial Office described the incubation center as a "nest where future golden eggs are being hatched".

"We will help set up the best incubation platform to help technology startup companies to go through the initial stage of business innovation," said Lei Yang, managing director of Northern Light Venture Capital.

"The life cycle of business starts with innovation. Our goal is to eliminate the globalization barrier and make the Silicon Valley's technology innovation a global innovation," Yang said.

The VC managing director also said InnoSpring can accommodate up to 40 startups in its office space. The company also give access to venture capitalists and angel investors, mentor executives and entrepreneurs, give business and funding advice, provide entrepreneurial workshops and assist in assembling core teams recruiting.

"We also offer cross-border development for US and Chinese startups, and access to Chinese public agencies to facilitate China expansion for US startups, which basically cut all the barriers out for both side to achieve their goals better and faster," Yang said.

kellyzhang@chinadailyusa.com

via usa.chinadaily.com.cn

Doors open at the first US-China technology incubator in Silicon Valley.

U.S.-based Chinese entrepreneur finds working with China difficult | MedCity News

noreply@blogger.com (Brian Edwards) — Mon, 16 Apr 2012 06:05:45 PDT

When Kevin Liu, a Minnesota-based Chinese entrepreneur, decided that he wanted to test his disposable medical device, he thought that going to China was a no-brainer.
Experience proved otherwise. Liu had intended to file a 510(k) application by the end of last year with a launch in May. Instead, he had to contend with repeated delays and finally submitted an application in March.
“What happened is that like many companies, to cut costs I thought to test products in China because it’s a fraction of what it costs to test here,” Liu said. “But I had a tough time. We picked a reputable testing center in China, but still we had communication issues back and forth, wording corrections, things that were wrong that we had to fix over and over. That made everything so much slower.”
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Then Liu ran into the Chinese New Year, the big annual celebration in which the nation of more than 1.3 billion shuts down for the better part of a month.
Finally, in March, Liu through his company United Medical Innovations submitted 510(k) applications for its syringe and manifold kit system. He now expects a launch in the fall.
“I am from China, so I always thought it would be easier because of my cultural background and my language — to communicate with them directly — but experience tells me that it is not as easy,” he said. “There are difference business styles and there is a real trust issue with business men in China. You are thinking of how are you going to protect your intellectual property. There are so many things to think about. That is something I learned from this experience.”
[Photo Credit: Ohmega1982]

via medcitynews.com

A Chinese entrepreneur explains why he finds entering the Chinese market much more difficult than he could have ever anticipated, and he already speaks the language.

Ai Weiwei: "The Internet is uncontrollable, freedom will win" | TheNextWeb

noreply@blogger.com (Brian Edwards) — Mon, 16 Apr 2012 05:57:05 PDT

It’s easy to forget that Ai Weiwei is an artist, at times. The man who is so often (and rightly) described as ‘outspoken’ and a ‘dissident’ is one of the most vocal critics of the Chinese regime, particularly on the subject of Internet censorship, to the point that it tends to overshadow his work.

Ai, who famously designed the Beijing ‘Birds Nest’ Olympic stadium, something he now regrets, discusses the Chinese government and its attitude to technology and the Web in a new op-ed published by The Guardian.

In the article, that is also available in Chinese, Ai looks at the affect that the Great Firewall censorship has had on China. An avid user of Twitter — @awiwi – he pens an argument that, in the long term, China’s can’t keep the power of the Internet at bay forever.

The government is certainly doing its best to provide that theory wrong. Its heightened efforts to quash ‘harmful information online’ have seen it implement a identification verification policy for microblogs (albeit loosely so far) and make arrests, close websites and restrict Twitter-like services following excessive political speculation last month.

“[China] blocks major internet platforms – such as Twitter and Facebook – because it is afraid of free discussion,” Ai says. “And it deletes information. The government computer has one button: delete.”

Ai compares China’s Web effort to the construction of a dam:

China may seem quite successful in its controls, but it has only raised the water level. It’s like building a dam: it thinks there is more water so it will build it higher. But every drop of water is still in there. It doesn’t understand how to let the pressure out. It builds up a way to maintain control and push the problem to the next generation.

Ultimately, he believes, this approach will see the Internet and freedom “win” in the communist country:

It still hasn’t come to the moment that [the regime] will collapse. That makes a lot of other states admire its technology and methods. But in the long run, its leaders must understand it’s not possible for them to control the internet unless they shut it off – and they can’t live with the consequences of that. The internet is uncontrollable. And if the internet is uncontrollable, freedom will win. It’s as simple as that.

The over-arching effect of China’s Internet freedom, Ai says, impacts on more than just civil liberties, it also blocks creativity, leaving China “far behind” other nations, he says.

For example, while those in the US discuss the (unlikely) possibility that Apple might bring its operation and manufacturing plants to the US, China’s dream is for the design of the device, and others like it, to come from within the Asian country.

Ai believes that the flagship Apple smartphone is ”an understanding of human nature” and therefore it cannot be conceived from within China, he argues:

If a person has never had the right to choose their information, freely associate with any kind of ideology, and develop an individual character with some passion and imagination – how can they become creative?

Ai is unique in not being afraid to criticise, and be seen criticising, China. Consequently, his vocal comments have seen him handed a series of stiff punishments from authorities.

At its worst, he was detained for 81 days last year after a series of comments, released after apparently confessing his crimes. Though initially forbidden to return to social media, Ai quickly returned to his regular diet of Twitter and its Chinese equivalent Sina Weibo.

Last year he was hit by a massive $2 million tax bill but his supports used social media to rally round and collect donations to help pay it.

His latest scuffle with authorities saw the state order him to switch off a series of surveillance cameras that the artist had set up across his home. Ai had made the feed freely available online from April 2 to mark a year since his detention.

It remains to be seen how his latest article will be received by authorities in China and whether there will be further punishment dealt out to Ai Weiwei for his criticisms.

The full opinion article is most definitely worth reading, you can find it here.

via thenextweb.com

Very interesting perspective on the current state and future of Internet freedom in China.

China: the next must-have, private jets | beyondbrics | News and views on emerging markets from the Financial Times – FT.com

noreply@blogger.com (Brian Edwards) — Wed, 28 Mar 2012 15:48:44 PDT

It will come as no surprise that rich Chinese have developed a taste these days for private jets. It is a short step, in China, from Gucci to Gulfstream: according to a survey of China’s richest people, released by the Hurun report at the Asian Business Aviation Conference Asian Business Aviation Conference in Shanghai, 13 per cent of Chinese with personal assets over Rmb100m plan to buy a corporate jet.

China had only 32 business jets registered in 2008, but that number rose to 132 by last year, according to state-owned China Daily. Beijing’s latest five year plan calls for developing the industry, and Cessna, one of the world’s biggest makers of business jets, recently signed agreements with Chinese partners to build business jets in Chengdu. The aviation industry is salivating at the opportunities presented by the notion of rich Chinese looking for the convenience – not to mention that sheer bragging value – of owning one’s own personal airplane.

But VistaJet, the ultra-luxurious Swiss business aviation company, is confident that there will be plenty of rich Chinese who think owning a jet is just too much trouble. VistaJet promises on-demand access to the company’s 31 near-new Bombardier aircraft, under a subscription model which VistaJet says makes much better financial sense than owning a jet for anyone who flies less than 500 hours per year. VistaJet today announced a memorandum of understanding with Beijing Airlines (the private jet subsidiary of Air China) that will allow it to base some of those aircraft in China, and eventually fly between domestic Chinese destinations.

Thomas Flohr, VistaJet chairman and founder, knows that deciding to buy a jet, especially in China, is not always a purely rational decision. Reason not the need: ultra high net worth Chinese have given “need” an all new meaning. But he is sure there will still be plenty of value-conscious business people around – even in China – who want access to a jet without having to pay for pilots, mechanics and downtime.

Flohr said his company is already doing good business flying the Chinese to Africa and Africans to China – often to remote locations that could not conveniently be reached by commercial airlines. “As an entrepreneur, you cannot afford to spend up to three days flying commercially between Harbin and Khartoum,” he said, adding “nor are you going to want to fly on some of the airlines that will get you there”. And even if some Chinese entrepreneurs are tempted to buy a jet rather than a block of hours on VistaJet, there will still be plenty of wives and kids, grandmas and grandpas of entrepreneurs who need moving from place to place – and as Flohr put it, first class on Air China will no longer cut it once they have tasted private aviation.

Related reading:
Chinese airlines hit by dispute over hedging, FT
China creates turbulence over EU aviation levies, FT
Luxury brand makes links with China’s past, FT

via blogs.ft.com

Not surprised the Chinese have taken to private planes.

Wen Jiabao attacks party conservatives on the way out the door | via @FinancialTimes

noreply@blogger.com (Brian Edwards) — Thu, 15 Mar 2012 12:11:34 PDT

(Source: FT.com)

©Getty

Chinese premier Wen Jiabao fired a parting shot at conservative officials in the ruling Communist party, warning them that China could face another Cultural Revolution unless it undertakes urgent political reforms.

“Without successful political structural reform, it is impossible for us to fully institute economic structural reform and the gains we have made in this area may be lost,” Mr Wen said at his farewell briefing at the National People’s Congress, China’s rubber stamp parliament which meets for just 10 days every year.

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“New problems that have cropped up in Chinese society will not be fundamentally resolved and such a historical tragedy as the Cultural Revolution may happen again,” the premier added, in remarks that were broadcast live on national television. “The mistake of the Cultural Revolution and impact of feudalism are yet to be fully eliminated.”

Mr Wen, who will step down from the party’s powerful politburo standing committee later this year, directed his aim at rivals including Bo Xilai.

Mr Bo is the ruling party official in Chongqing, a large city in southwest China, and a candidate for promotion to the top ranks of the party in the upcoming leadership transition. His propects, however, have been damaged by a recent scandal involving Chongqing’s former police chief.

Mr Wen’s references to the anarchy of the 1966-76 Cultural Revolution, during which millions of people were persecuted and perished, appeared to be a swipe at the “Cultural Revolution-style” campaigns organised by Mr Bo in Chongqing. The campaigns evoke revolutionary, or “red”, propaganda and ostensibly target organised crime.

In another rare example of open criticism among senior Communist party officials, Mr Wen also addressed the scandal that brought down Mr Bo’s former police chief and political ally, Wang Lijun, who tried to defect to the US last month. Mr Wang is in custody and his case is under investigation.

“The current [Chongqing] party committee and government of Chongqing must seriously reflect on the Wang Lijun incident and learn lessons from this incident,” Mr Wen said.

As Mr Wen and President Hu Jintao prepare to make way for a new generation of leaders in a once-in-a-decade reshuffle, the country’s political elite are engaged in internecine strugglesthat will determine the national agenda for years to come. Mr Bo has been angling for a place on the nine-person Politburo standing committee, the Communist party’s most powerful body.

“There are obviously some conflicts [among China’s political elite], with the most important conflicts related to the distribution of power within the party,” said He Weifang, a law professor at Beijing University. “There are also different views over how to solve China’s social problems, including the wealth distribution problem, corruption and China’s relations with the outside world.”

During a three-hour press conference, Mr Wen outlined a liberal reform agenda, including gradual steps towards direct elections. While Mr Wen has commented about the need for such reform before, he has rarely done so in such forceful language.

Asked whether China would hold general elections to choose its leaders, Mr Wen said he believed lower-level village elections should be expanded to towns and counties: “The democratic system of China will continue to move forward in keeping with China’s national conditions and no force will be able to hold this process back.”

Referring to the wave of uprisings sweeping across the Middle East, Mr Wen was more emphatic in his support for free elections. “The demand for democracy by the Arab people must be respected and truly responded to,” he said. “I believe this trend towards democracy cannot be held back by any force.”

Mr Wen has often been criticised for failing to match his rhetoric with action. He alluded to this criticism on Wednesday, blaming “institutional and other factors” for his inability to push through some policies and reforms. He also referred to unspecified “slander” directed at him personally and said these attacks made him “worried about society”.

Breaking News - A Warning for the CCP from Premier Wen Jiabao (ilookchina.net)
You: Chinese Premier Wen Jiabao calls for political reforms even as Peoples Congress strengthens detention law (washingtonpost.com)
China's Wen Jiabao calls for 'urgent' political reform (telegraph.co.uk)
Confucius is Politically Bolder than Wen Jiabao (uselesstree.typepad.com)
China political reform 'urgent'‚ says Premier Wen (thehimalayantimes.com)
"Chinese premier urges political reforms" (thechinahotline.wordpress.com)

A Political Shocker in China Has Implications for the Economy | via @bloomberg

noreply@blogger.com (Brian Edwards) — Thu, 15 Mar 2012 11:21:00 PDT

[[posterous-content:pid___0]]In a terse announcement, China’s official Xinhua News Agency announced March 15 that the charismatic Chongqing party leader and princeling, Bo Xilai, has been replaced. It is the biggest setback for a senior Chinese Communist Party leader since at least the sacking of former Shanghai party secretary Chen Liangyu in a corruption scandal in 2006. “Bo will no longer serve as
secretary, standing committee member, or member of the CPC Chongqing municipal committee,” according to the Xinhua announcement.

While Bo is still listed on a government website as one of the 25 members of China’s ruling Politburo, it is unclear whether he will also have to step down from that body. Even if he doesn’t, Bo’s political future seems finished, and his once-likely appointment to the nine-member Standing Committee of the Politburo—with seven positions up for grabs this fall in a major leadership transition—is finished.

While some see the fall of Bo as a setback for princelings, or the children of early revolutionary leaders, others see his downfall stemming from a more generalized resistance in the ruling party to Bo’s swashbuckling, nontraditional campaign style—in essence, his use of populism and personality to try to win promotion to the top echelons of Chinese leadership. “Some leaders have been very nervous about Bo Xilai’s self-promotional campaign. They see it as a possible effort to establish a political kingdom to challenge Beijing,” says Cheng Li, a senior fellow at the Brookings Institution in Washington.

The 62-year-old party leader’s demise also suggests significant resistance to what some had started calling the Chongqing model. That’s usually seen as an approach to running the political economy that advocates conservative values, including the singing of “red songs” from China’s Maoist past, as well as an aggressive crackdown on crime. Bo’s assault on crime, a campaign called “dahei”—literally, “hit black”—put 2,000 people in jail in the southwestern municipality of 30 million people. These moves raised the ire of some Chinese intellectuals and party members, who saw them as a regressive step back to a less open, and more dogma-ruled China.

The Chongqing model also includes a focus on state-led control of the economy, a return to government-owned companies that dominate the business world, as well as policies aimed at combatting China’s growing inequality, including by building subsidized housing for the poor. On March 9, on the sidelines of the National People’s Congress, Bo said that China’s gini coefficient, an index of income inequality, had exceeded 0.46, well above the level that most economists say leads to social unrest. “As Chairman Mao said as he was building the nation, the goal of our building a socialist society is to make sure that everyone has a job to do and food to eat, that everybody is wealthy together,” Bo said. “If only a few people are rich, then we’ll slide into capitalism. We’ve failed. If a new capitalist class is created, then we’ll really have turned onto a wrong road.”

In pointed comments during a press conference the day before Bo’s dismissal, outgoing premier Wen Jiabao took aim at the soon-to-be deposed princeling and his policies (Wen very likely already knew of Bo’s fate; the decision to replace Bo would almost certainly require lengthy discussions by China’s Standing Committee in the days proceeding the move). “The current party committee and government in Chongqing must seriously reflect on the Wang Lijun incident,” he said, referring to Bo’s former chief of police, who, after taking temporary refuge in the American consulate in Chengdu, Sichuan, last month, is now under investigation and has been relieved of his previous positions.

“I want to say a few words at this point,” Wen continued, before launching into a spirited defense of the need for continued economic reform. “Our country’s modernization drive has made great achievements. Yet at the same time, we’ve also taken detours and have learned hard lessons,” the 69-year-old Wen said. “In particular, we’ve taken the major decision of conducting reform and opening up in China, a decision that’s crucial for China’s future and destiny. What has happened shows that any practice that we take must be based on the experience and lessons we’ve gained from history, and it must serve the people’s interests.”

Wen also made an appeal for political reform, saying that without it, China could once again experience a “tragedy” like the Cultural Revolution. His reference to the decade-long era of Mao excesses seemed also to be criticism directed at Bo’s recent campaigns. “Reform can only go forward and must not stand still or go backward, because that offers no way out,” he said. “Without successful political reform, it’s impossible for China to fully institute economic reform, and the gains we have made in these areas may be lost.”

“It was a very, very powerful statement. It was the clearest, most comprehensive statement talking about the necessity of political reform in China,” says the Brookings Institution’s Li. To Bo’s Chongqing model, “there is a linkage absolutely. Chongqing’s approach is ultimately anti-democratic, and it is very dangerous. Wen was saying that political institutionalization or Chinese-style democracy, not red terror, should be the way forward for China,” says Li.

Bo was replaced as party secretary by 65-year-old Vice Premier Zhang Dejiang, a less well-known senior Politburo member. The native of China’s northeastern Liaoning province has a decidedly mixed background: He earned a degree in economics from North Korea’s Kim Il Sung University, hardly a place where one is likely to acquire a reformist bent. But Zhang also served from 1998 to 2007 as party secretary of Zhejiang and Guangdong, respectively, two of China’s most open provinces, albeit doing little there to distinguish his tenure. The Brookings Institution says this promotion increases Zhang’s chance of winning an eventual appointment to the Standing Committee.

More tantalizing is what the sacking might mean for the future of presumed Bo rival and, at 57, relatively youthful Guangdong party secretary Wang Yang. Bo’s dismissal could open up a slot for Wang in the top leadership body but also could hamper his prospects if the elite or princeling faction lashes out at Wang in retaliation, says Li.

In recent years, Wang has earned a reformist reputation running China’s export-oriented southern province. In particular, his handling of labor strikes that have swept the Pearl River Delta, including the spring 2010 Honda strike in which he personally intervened (he is believed to support reforms to China’s usually toothless official union, including allowing workers to elect their own representatives), as well as his dealing with the Wukan Village movement last year, has encouraged those hoping for a more politically open younger generation of leaders taking over in China.

Still, the sentiments driving much of what has been identified with the Chongqing model are unlikely to go away with Bo’s departure, says Patrick Chovanec, a business professor at Tsinghua University in Beijing. “Bo was hopping onto some broader trends that exist in the Chinese economy and society, especially in the wake of the global financial crisis. Those include greater skepticism about the market, embracing the role of the state in the economy, and concerns about income inequality,” he says. “The things that made [the Chongqing model] so attractive to so many people are still very real for many in China today.”

By Dexter Roberts on March 15, 2012

(Source: Bloomberg BusinessWeek)

China's Corruption Scandal: Bo Xilai Sacked as Chongqing Communist Party Chief (the2012scenario.com)
Chinese Prime Minister Wen Calls for Reform but Sidesteps Details (nytimes.com)
Why Chinese succession matters (globalpublicsquare.blogs.cnn.com)
Bo Xilai is not yet finished - Victor Shih (chinaherald.net)
Chi-com party leader: "You're fired" (teapartywit.wordpress.com)
China to step-up FX reform, allow freer yuan trade: Wen (news.yahoo.com)

China set to become top smartphone market in 2012, critical for Apple & Others | via @TechCrunch

noreply@blogger.com (Brian Edwards) — Thu, 15 Mar 2012 04:26:46 PDT

(Source: TechCrunch)

China is already a significant market for companies like Apple, with CEO Tim Cook describing “staggering” and “off the charts” sales of the iPhone in China last quarter. But according to IDC the opportunity is just beginning for Apple and others working in the smartphone world: China is set to become the world’s largest smartphone market this year, overtaking the U.S., which has led in years past.

IDC says this is part of a larger trend of emerging countries getting up to speed with developed nations: by 2016, China will be joined by Brazil and India in the top-five countries in terms of smartphone shipments. Countries like the U.S., U.K. and Japan will continue to see growth, but not at the rate of these other, more populated countries.

The growth of China is something that IDC had already started to track in 2011: China had already overtaken the U.S. in terms of shipments in the last two quarters of that year, it said today.

The shift raises questions about pricing and what we might expect in these devices as they roll out to bigger markets.

IDC notes that so far, in China, it has been the rush of sub-$200 Android devices that have benefited most from the surge in smartphone demand. But it believes that the trend will be for smartphones to cost less than $50.

The big names so far have been domestic handset makers like Huawei, ZTE, and Lenovo, but Samsung and Nokia (which had once led the smartphone market in China before the Android onslaught) are also playing a part with the launch of cheap devices. Nokia’s first Windows Phone handset China — one of its less expensive Lumia devices — is expected to launch by the end of this month.

That drive for domestic handset makers is not only being played out in China. In India, names like Micromax, Spice, Karbonn and Lava — also developing low-cost devices — are trying to set the agenda for what consumers demand and expect out of their smartphones. However, up to now more global brands like HTC and Samsung have been leading the pack.

Brazil, meanwhile, seems to be facing a still-high cost for devices, and it is only this year that average prices have come down to below $300 for a smartphone. Whether Apple chooses to try to create devices to better target users in markets like this one, rather than continue to aim for the high-end consumer, still remains to be seen.

IDC notes that it will not just be about cheap devices, however: it says that carriers will have to step up with innovative data plans, and probable handset subsidies, to get people using smartphones to their full effect.

Some good headway seems to already have been made in that area in some emerging markets:

Some statistics out yesterday from OnDevice Research found that in China, some 38 percent of consumers are only accessing the Internet from their mobile devices. In comparison, countries like the UK registered at 25 percent; while countries with less fixed infrastructure registered with even higher percentages: Nigeria’s figure was 56 percent, and Kenya’s was 51 percent. In effect, that means the opportunity is there not just for device makers, but for carriers and the many companies developing content as well.

Apple falls to 54.7 percent tablet marketshare in Q4 2011 following Kindle Fire launch, says IDC (theverge.com)
IPhone losing out to Samsung in China (business.financialpost.com)
Nokia Windows Phone sales may explode this summer: ~4 million new Lumia 610s, 719, China Mobile deal (unwiredview.com)
Living In A Smartphone World: Apple Number-Three Among ALL Mobile Players (paidcontent.org)

China’s holy grail: a leading indicator | beyondbrics FT.com

noreply@blogger.com (Brian Edwards) — Wed, 14 Mar 2012 11:51:47 PDT

For anyone foolhardy enough to make Chinese economic forecasts, a constant problem is the lack of crystal balls at hand.

The usual arsenal of predictive tools in other countries – yield curves, stock prices, purchasing manager surveys, Conference Board and OECD indices – all exist in China. But all are market-based measures, making them deeply flawed in an economy which is so heavily managed by the government. So what to believe?

Three leading analysts who cover China have in recent weeks revealed their frustrations at the paucity of leading indicators, but also made a few novel suggestions.

Stephen Green and colleagues at Standard Chartered looked at a series of unconventional data points: wheel-loader and excavator sales, steel and cement production, and projects under construction. Their conclusion was that cement output and construction were indeed useful, but didn’t function as leading indicators. That is, they closely track investment activity in real time, but “there is very limited leading information here”.

Jonathan Anderson, who left UBS this month, used one of his last research notes at the bank to savage the idea that purchasing manger indices (PMIs) are even remotely useful in China. Not only did PMI numbers fail to predict the country’s downturn in late 2008 and recovery in early 2009, they were actually late in detecting the economic changes and thus misleading as coincident indicators.

He writes: “Did this show up in the PMI? Hardly. In fact, if you were watching the index you essentially had no idea that any of this was going on.”

What, then, can we rely on if we want to get a feel for where the economy is headed?

Green reaches for an old stand-by: “After following one tantalising clue after another, we are still left with credit growth as the only leading indicator of investment.”

The beauty of looking at credit growth in China is two-fold. The financial system is dominated by bank lending, making credit issuance far and away the most important factor in liquidity conditions and hence also the best predictor of investment activity. What’s more, credit growth is closely managed by the government through a loan quota system, so it does a good job of reflecting Beijing’s policy preferences, not just market sentiment.

Du Jinsong, a property analyst with Credit Suisse, makes a more unusual proposal for a leading indicator: the production of bricks and pre-stressed concrete piling. To be clear, he is only thinking of these as predictors for property construction – they seem to lead new housing starts by about eight months.

But property is the dominant component of Chinese investment activity and the broader economy is led by investment, so getting the real estate market right would be a very good start.

There is only one problem. The leading indicators proposed by Green and Du point in slightly different directions.

Looking at credit growth, Green forecasts a moderate pick-up in investment growth in the second quarter. Looking at brick and piling production, Du says property construction will probably remain flat for the next six months.

Now, it is of course possible that both are right. Investment growth may accelerate, just not in property. But given China’s frustrating track record for would-be oracles, it is also possible that at least one of the two may be more of a red herring than a leading indicator.

via blogs.ft.com

Very interesting post about the tools available to economists for predicting economic growth in China.

Meet The Chinese Guy Who Ripped Off Conan O'Brien

noreply@blogger.com (Brian Edwards) — Thu, 01 Mar 2012 04:08:50 PST

This is Da Peng. He is a Chinese variety show host, and he recently made his American television debut—for ripping off Conan O'Brien.

On a recent episode, Conan O'Brien showed how Da Peng's program, Da Pang Debade, totally copied Conan's opening animation. O'Brien then copied some of the silly antics of the Chinese show in revenge.

Da Peng's program, however, isn't televised. It's an online talk show, which isn't exactly a household name in China. However, it does have its loyal fans, and it does appear on a major Chinese web network. After Conan took the webshow to task, that could change—being called out by a famous American celebrity does mean Da Peng suddenly has more name recognition as this story makes its way through Chinese cyberspace via microblogs and webforums.

In the most recent show, Da Peng removed the intro animation—the one that ripped off Conan. Then he apologized. "At this point I want to the time to say sorry to Mr. Conan on behalf of myself, my show, and our staff," said Da Peng, who then started doing a "sorry dance". He even refers to his own show as "shanzai" or a Chinese imitation.

He's apparently a comedian, so he's trying to be funny. "I hope English majors, translators and American show lovers will help me translate this," Da Peng added. "We will immediately stop using the opening sequence—and will officially apologize again. We'll have to apologize again after apologizing."

Da Peng then went off on tangent (again, he's trying to be funny), saying that the show's name is too hard to pronounce as well as mentioning Jeremy Lin and the U.S. debt.

Online in China, many seem embarrassed by the show's opening and how it copied Conan. "China invented the four great Inventions (gunpowder, paper, paper Printing and the compass)," wrote one individual online. "But that is in the past, and now all we're doing is plagiarizing and copying... Such a tragedy."

Chinese people might feel embarrassed. Though, if anyone "won" in this brouhaha, it's webshow Da Peng. "The guy downstairs selling fruit even recognizes me," he said about his newfound celebrity. "I guess everyone knows about this now.

"My ex-girlfriend sent me a text saying how she regrets dumping me and how she saw me on American television. Now, I'm international." That you are, Da Peng, that you are.

View Da Peng's apology in the link below.

Da Peng Debade [TV Sohu]

via kotaku.com

Its always interesting to see what elements of western culture go viral in the Middle Kingdom, just usually with their own Chinese flavor.

China is right to open up slowly - FT.com

noreply@blogger.com (Brian Edwards) — Tue, 28 Feb 2012 17:45:12 PST

The next big global financial crisis will emanate from China. That is not a firm prediction. But few countries have avoided crises after financial liberalisation and global integration. Think of the US in the 1930s, Japan and Sweden in the early 1990s, Mexico and South Korea in the later 1990s and the US, UK and much of the eurozone now. Financial crises afflict every kind of country. As Carmen Reinhart of the Peterson Institute for International Economics and Kenneth Rogoff of Harvard have remarked, they are “an equal opportunity menace”. Would China be different? Only if Chinese policymakers retain their caution.

Such caution permeated last week’s report that the People’s Bank of China has recommended accelerated opening up of the Chinese financial system. Given what is at stake, in both China and the world, it is essential to consider the implications. Maybe the world will then do a better job of managing this process than it has done in the past.

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This plan was published by Xinhua, the state news agency, not on the PBoC’s web site. Moreover, it was published under the name of Sheng Songcheng, head of the statistics department, not that of the governor or a deputy governor. This must mean that it is more an exercise in kite-flying than a policy. Nevertheless, this was published with the PBoC’s approval and, quite possibly, with that of people much higher up still.

The article lays out three stages for reform. The first, to occur over the next three years, would clear the path for more Chinese investment abroad as “the shrinkage of western banks and companies has vacated space for Chinese investments” and so presented a “strategic opportunity”. The second phase, in between three and five years, would accelerate foreign lending of the renminbi. In the longer term, over five to 10 years, foreigners could invest in Chinese stocks, bonds and property. Free convertibility of the renminbi would be the “last step”, to be taken at an unspecified time. It would also be combined with restrictions on “speculative” capital flows and short-term foreign borrowing. In sum, full integration would be indefinitely delayed.

What are the implications of this plan? The answer is that it seems sensible. In reaching that view, one has to take into account the benefits and risks of financial “reform and opening” for China and the world.

The arguments for such opening up to the world are closely connected to those for domestic reform. Indeed, the former cannot be undertaken prior to the latter: opening up today’s highly regulated financial system to the world is a recipe for disaster, as Chinese policymakers know. It is for this reason that full convertibility would come in the distant future, as this plan suggests.

Happily, arguments for domestic reform are powerful. Dynamic financial markets are an essential element in any economy that wishes both to sustain growth and to begin rivalling rich countries in productivity, as China surely aspires to do. More immediately, as Nicholas Lardy of the Peterson Institute for International Economics notes in a recent study: “Negative real deposit rates impose a high implicit tax on households, which are large net depositors in the banking system, and lead to excessive investment in residential housing. Negative real lending rates subsidise investment in capital-intensive industries, thus undermining the goal of restructuring the economy in favour of light industries and services.”*

Yet, as Mr Lardy also knows, this distorted financial regime is part of a wider system for taxing savings, promoting investment and repressing consumption, which has led to huge interventions in foreign currency markets and vast accumulations of foreign currency reserves. The deeper case for reform is that this system no longer contributes to a desirable pattern of development. But it has become so deeply entrenched in the economy that reform is politically fraught and economically disruptive. The question is even whether such reform is politically feasible. It is surely likely to be a slow process.

How would the PBoC’s proposed moves towards opening up then fit with such a cautious reform? Presumably, the greater freedom for capital outflows envisaged for the next five years would partly substitute for accumulations of foreign currency reserves. Yet if this went with suggested moves towards higher real interest rates, China’s savings and current account surpluses might explode, worsening the external imbalances.

This point underlines just how big a stake the rest of the world has in the nature of China’s reform and opening up of the financial sector.

China’s gross savings are running at an annual rate of well over $3tn, which is more than 50 per cent larger than the gross savings of the US. Full integration of these vast flows is sure to have huge global effects. China’s financial institutions, already enormous, are also almost certain to become the biggest in the world over the next decade. One need only think back to Japan’s integration in the 1980s and subsequent financial implosion to recognise the possible dangers. We should be pleased, therefore, that China is taking a cautious approach.

The world has a huge interest in a shift of China’s economy towards more balanced growth. It has a parallel interest in the way China manages its domestic reform and opening up of the financial system. A whole range of policies need to be co-ordinated, particularly over financial regulation, monetary policy and exchange rate regimes. If this is done well, today’s high-income countries’ crisis will not be promptly followed by the “China crisis” of the 2020s or 2030s. If it is done badly, even the Chinese might lose control, with devastating results.

The PBoC suggests a timetable of reforms that would fit with China’s and the world’s needs. But if this is to happen, thorough discussion of all the implications must now occur. China’s policies do not matter for the Chinese alone. That is what it means to be a superpower – as the US should note.

* Sustaining China’s Economic Growth After the Global Financial Crisis, Peterson Institute for International Economics, 2012.

via ft.com

Good commentary from Martin Wolf at the Financial Times.

U.S. ambassador: Political situation in China “very, very delicate” | The Cable

noreply@blogger.com (Brian Edwards) — Thu, 19 Jan 2012 15:58:41 PST

The Chinese people are increasingly frustrated with the Chinese Communist Party and the political situation in China is "very, very delicate," U.S. Ambassador to China Gary Locke said on Wednesday.

"I do believe that there is a power of the people, and there is a growing frustration among the people over the operations of government, corruption, lack of transparency, and issues that affect the Chinese people on a daily basis that they feel are being neglected," Locke told NPR's Steve Inskeep during a Wednesday interview, part of a media blitz Locke is conducting during his visit to Washington.

"Do you think that the situation is fundamentally stable in China right now?" Inskeep asked Locke.

"I think, very delicate -- very, very delicate," Locke responded. "But there were calls earlier this year for a Jasmine Revolution and nothing came of it. I think it would take something very significant, internal to China, to cause any type of major upheaval."

Locke said that since he took over the ambassadorship from former GOP presidential candidate Jon Huntsman, he has become aware of public demonstrations large and small throughout China that ordinary people were using to pressure the government to address their grievances. He singled out a recent protest in the southern Chinese city of Wukan over the confiscation of land without reasonable compensation.

"[The people] basically prevented anybody from the outside from coming in and brought the city to a halt and forced the Chinese government communist leaders to send people to address their grievances," Locke said.

The discord inside China is partly a result of the income and wealth disparity between China's growing middle class and the masses of poor, rural residents, Locke said. He also said the Chinese government's human rights record was worsening.

"[I]t's very clear that in the run up to the 2008 Beijing Olympics and since then, there's been a greater intolerance of dissent -- and the human rights record of China has been going in the wrong direction," said Locke.

Asked for comment at today's State Department press briefing, spokeswoman Victoria Nuland backed up Locke's comments on human rights and the rule of law in China.

"[Locke] obviously speaks for the administration in expressing continued concern that we seem to have an increasing trend of crackdowns, forced disappearances, extralegal detentions, arrests and convictions of human rights activists, lawyers, religious leaders, ethnic minorities in China," she said.

But Nuland declined to repeat Locke's assertion that the Chinese government was potentially unstable.

"I think our message to the Chinese government on these issues is the same message that we give around the world when we have human rights concerns, that governments are stronger when they protect the human rights of their people and when they allow for peaceful dissent," she said.

via thecable.foreignpolicy.com

This is a very interesting comment from the US Ambassador to China and with the pending transfer of power to the next generation of Communist Party leadership the country could be poised for its largest political upheaval decades.

China's med-tech market to grow 17% in 2012 | MassDevice.com

noreply@blogger.com (Brian Edwards) — Sun, 15 Jan 2012 16:33:34 PST

January 12, 2012 by MassDevice staff

The Chinese medical device market is slated to grow 17% in 2012, survey says.

MASSDEVICE ON CALL —China's medical device market is set to grow 17% in 2012, according to a Citigroup hospital survey.

Major medical equipment in the Chinese market include medical monitors and life support, diagnostic imaging, in vitro diagnostics and therapeutic systems.

GE Healthcare (NYSE:GE) leads the Chinese medical equipment market, but in orthopedics and drug-eluting stents, Medtronic (NYSE:MDT), Johnson & Johnson (NYSE:JNJ) and Stryker (NYSE:SYK) take the lead, according to the report.

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Citigroup's survey, which was based on responds from 383 Chinese hospitals across 29 provinces and cities, also named med-tech titans Philips (NYSE:PHG) and Siemens (NYSE:SI) as leaders in China's med-tech market.

Domestic manufacturers such as Mindray Medical (NYSE:MR), Wandong and Aeon have tapped into the market with the sale of market of patient monitors, anesthesia machines and radiography machines.

The 2012 growth will be largely due to bigger budgets and planned infrastructure upgrades from Chinese hospitals, according to analysts.

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via massdevice.com

US and EU medical technology companies need to start making plans to take their products to China before the country is able to develop its own medical device national champions. Once the country has the capacity to develop everything themselves, the West should expect their products to be largely shutout of what will be the world's largest market one day.

Ai Weiwei’s taxing conundrum | The World | International affairs blog from the FT – FT.com

noreply@blogger.com (Brian Edwards) — Wed, 09 Nov 2011 09:22:23 PST

The Chinese are voting again. Having lost their chance to determine the outcome of Happy Girls, an audience-participation talent show that has mysteriously vanished from next year’s schedules, they are voting instead for Ai Weiwei, the artist and thorn in Beijing’s side.

Mr Ai was recently slapped with a tax bill of $2.4m, a financial summons that followed several months’ imprisonment earlier this year. But Chinese people in their thousands are offering to help the controversial artist pay. The BBC reports that, according to Liu Yanping, a volunteer at the artist’s studio in Beijing, nearly 20,000 people have donated a total of $790,000, and counting.

Most have done so by electronic transfer. Some – presumably technophobes – have simply lobbed money over the wall and into the artist’s compound. A few notes, folded into paper planes, have sailed over the wall too.

Last week, Mr Ai, whose release from prison was conditional on his not talking to the press, told the FT: “When Chinese people have no other way to express themselves, this is the way they feel they can vote to express their dissatisfaction.” That probably constituted talking to the press. In fact, he has done several recent interviews in defiance of the ban.

Whether Mr Ai will have the last laugh is not yet clear. The Global Times, an English-language tabloid owned by the People’s Daily, wrote: “This event has been interpreted by some foreign media as the Chinese people donating to Ai’s cause. The action has also been regarded as a special protest by the artist.” But it cautioned: “Since he’s borrowing from the public…. some experts have pointed out this could be an example of illegal fundraising.”

So China’s most famous artist, known for his humorous, provocative and occasionally puzzling art, may be damned if he pays his taxes and damned if he doesn’t. Now that’s just surreal.

via blogs.ft.com

China imposes curbs on buying property

noreply@blogger.com (Brian Edwards) — Wed, 09 Nov 2011 09:06:51 PST

The southern Chinese city of Zhuhai has introduced restrictions on housing purchases in a sign of the government’s resolve to rein in the property market.

The move on Tuesday came even though prices have started to decline across much of the country.

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Similar restrictions have been rolled out in other big cities since last year, including limits on the number of units households can buy, curbs on purchases by non-residents and caps on the amount developers can charge for apartments.

But a big drop in sales volumes and recent price falls in leading markets had led many to assume Beijing would start to ease restrictions.

Shares in most leading Hong Kong-listed Chinese property developers rebounded by between 30 and 80 per cent in the fortnight to last Friday on expectations of imminent easing, although most were still down by more than a third since the start of the year.

Shares in listed developers such as Evergrande, Longfor and China Vanke fell on Tuesday in Hong Kong and Shanghai on news of the Zhuhai restrictions and reports in Chinese media that some large developers were offering big discounts on developments.

Many in the sector fear such discounts could trigger a wave of price cuts amid weak demand just as a large number of new apartments is expected to come to market across the country.

Adding to those fears, data from the China Real Estate Index System released on Tuesday showed average residential property prices across 100 leading cities in China fell 0.23 per cent in October from the previous month, the biggest decline so far this year.

Average prices were still up 5.21 per cent on the same month a year earlier, but this was a slower increase than the 6.16 per cent rise in September.

For most Chinese citizens the rapid price rises of the past few years have put apartments in big cities far out of their reach and the government wants to bring prices down gradually to make them more affordable.

But because of the importance of real estate to the wider economy – housing construction is estimated to make up one quarter of investment and 10 per cent of the country’s gross domestic product – Beijing is wary of triggering steep price declines.

On Saturday, Wen Jiabao, the Chinese premier, said Beijing was looking for a “reasonable correction” in prices and would resolutely continue its property tightening strategy while forcing local governments to implement existing housing purchase restrictions.

Zhuhai, an industrial city in Guangdong province, announced on Tuesday that people who had not paid taxes or social insurance in the city for more than a year could not buy apartments there, while local families were limited to buying one home unit each.

It also imposed a cap on home prices of Rmb11,285 per sq metre for the rest of the year. Any developer asking for higher prices would not be given permits to sell their developments.

via ft.com

Chinese property buyers get BMW thrown in

noreply@blogger.com (Brian Edwards) — Wed, 09 Nov 2011 09:04:14 PST

The sudden downturn in China’s property market is bad news for many global companies, but luxury German carmakers stand to benefit, at least in one city.

In Wenzhou, where house prices have fallen sharply, a real estate developer said that from Wednesday it would throw in the keys to a BMW with each apartment at a new residential complex for the first 150 buyers.

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The deal is a sign of the desperation felt by developers in China’s once-booming property market, which has been pounded by government measures aimed at heading off a bubble. The slowdown is a matter of international concern, with Chinese house construction driving demand for commodities and propping up growth in the sputtering global economy.

Chinese developers have been reluctant to cut prices as transactions have slowed this year, but some are finally capitulating after dreadful sales in October. Others, afraid of the stigma of slashing prices, are offering giveaways such as extra garden plots, Louis Vuitton handbags, cruise vacations and now cars.

“Whoever signs a contract and makes the downpayment will be able to drive away in a BMW,” said the sales assistant at Central Mansions, a cluster of brown towers with 868 apartments that have just come on to the Wenzhou market.

“No, it doesn’t mean that sales are bad. It’s just that we’re trying to attract customers,” she said.

Home to legions of entrepreneurs and speculators, Wenzhou’s economy soared when China was flush with cash. But it has been hit harder than most cities by the government’s shift to a much tighter monetary policy to control inflation, as well as the property clampdown.

Wenzhou’s housing sector is now the weakest in the country, with prices falling 1.4 per cent in September month on month. Its smaller firms have suffered from a lack of bank credit, triggering dozens of bankruptcies and prompting the government to

But while Wenzhou is an extreme case of the stress in China’s property market, it is certainly not alone. Housing prices have started to fall nationwide, according to the China Real Estate Index System.

That has been tough to digest for many Chinese who had come to believe that house values could only rise. When several developers in Shanghai cut their asking prices last month, homeowners protested, ransacking showrooms and demanding refunds.

Fearing similar fallout, many developers are trying to entice buyers with special deals instead of discounts. The BMWs in Wenzhou cost Rmb300,000 locally, equivalent to about 10 per cent of the price for an apartment, the sales assistant said.

Xiaoyunli No. 8, a development in Beijing that has sent workers to leaflet cars at busy intersections, said there would be no discount and no car for buyers.

“But you’ll get a deal and it will be no problem for it to amount to the tens of thousands. It will be like giving you a car,” the receptionist said.

via ft.com

Qualcomm and Life Care Networks partner to battle cardiovascular disease using mobile phones || via @imedicalapps

noreply@blogger.com (Brian Edwards) — Sun, 11 Sep 2011 12:01:20 PDT

Qualcomm and Life Care Networks have partnered to launch an initiative called the Wireless Heart Health project to aid in the prevention and treatment of health conditions such as cardiovascular disease in underserved communities in China. According to the World Health Organization (WHO), chronic diseases, such as cardiovascular disease, are a major problem in China with close to 3 million deaths a year.
Because of the prevalence of mobile phones in China, an idea formed that would allow critical medical care to be given in areas of China that would otherwise never have access.
“With a grant from Wireless Reach, the Wireless Heart Health project is deploying a 3G-enabled cardiovascular screening and monitoring system, developed by Life Care Networks, for resource-scarce community health clinics in Shandong, Anhui and Sichuan provinces, as well as the Chongqing municipality. Community Health Association of China is assisting in clinic selection, project implementation and impact analysis.”
The smartphones contain added sensors (such as ECG) that aid in diagnostics.
“The new 3G system includes smartphones with built-in electrocardiogram (ECG) sensors; web-based, electronic medical record software; and 3G wireless workstations located within the clinics. Each workstation includes a computer terminal with Internet access, providing health care workers with instant access to electronic patient records, including ECG data. The project also includes training sessions for all participating community health center clinicians.”
The Wireless Heart Health project allows smartphones to automatically send critical patient data to a cardiac specialist at a call center. This call center contains doctors that provide feedback to patients and clinic staff over the phone or through text messages. Physicians can remotely provide service for simpler cases or suggest a specialist follow-up in-person. Finally, Qualcomm expects to make some of the ECG-enabled smartphones available for patients to rent and take home.
For further reading, please view Yahoo Finance.

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via imedicalapps.com

Qualcomm takes their wireless health technology and vision to China for wireless ECG experiment called Wireless Heart Health in western China.

Ai Weiwei China's Best Known Artist Arrested in Beijing

noreply@blogger.com (Brian Edwards) — Mon, 04 Apr 2011 13:22:04 PDT

via readwriteweb.com

Ai Weiwei, designer of the "Bird's Nest" Beijing's 2008 Olympic stadium, was detained today in Beijing as he attempted to board a flight to Hong Kong. His Beijing studio was also raided and his staff and family taken into custody. Ai had apparently been making plans to relocate his studio to Germany and has long experienced government pressure to silence his creative expression. I think this is a huge mistake by the Chinese government. If they want to avoid the fate of the Middle Eastern and North African governments that have seen their people rise up against autocracy they would be wise to not so blatantly harass the country's most revered artist.

Dubai a willing host as Chinese go cruising || The National

noreply@blogger.com (Brian Edwards) — Wed, 30 Mar 2011 05:59:36 PDT

Dubai a willing host as Chinese go cruising
Daniel Bardsley (Foreign Correspondent)

Last Updated: Mar 27, 2011

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Dubai is established as a global tourist destination but its importance as a stopping-off point for cruise ships is relatively new.

In 2001, just 7,000 cruise ship passengers visited the city, a mere drop in the ocean compared with the 3.6 million tourists in total who arrived that year.

The emirate last year hosted 8.7 million hotel guests, well over double the figure of a decade ago. This increase, while impressive, is put into perspective by the 55-fold growth in cruise ship tourists over the same period, with 390,255 enjoying Dubai as a port of call last year.

The total number of passengers last year was nearly 50 per cent up on 2009's figure of 262,740, with the increase no doubt helped by the launch of Dubai's new cruise terminal.

In future, more of the hearty seafarers who stride happily along their ship's gangway to enjoy a few hours or days of desert safaris and shopping in Dubai are likely to come from China.

Some cruise lines are already offering 25-day no-expense-spared voyages that begin in China and end in Dubai

Other Chinese tourists are splashing out on fly-cruises that see them jet in to the Middle East and then go cruising for a few days - with Dubai often the place where the voyages start and end.

It has been much easier for Chinese travellers to visit the UAE after Beijing's decision in 2009 to give the Emirates "preferred destination status", meaning visa and other red-tape restrictions have been made less onerous.

"In the recent spring festival, we had several groups who travelled to Dubai to take a cruise to Oman or Qatar, then back to Dubai," says Eric Li, the manager of the Middle East and Africa section of Beijing Jin Jiang International Travel.

Increases in the number of cruise-ship visitors from China are part of a wider expansion in the popularity of cruises among residents of the Asia-Pacific in general. Growth is outstripping expectations.

In 2005, UK-based consultants predicted that 2 million people would be taking cruises annually in Asia by 2015.

Late last year, Soo Kok Leng, the chairman of the Singapore Cruise Centre, said these estimates had proved to be way out, forecasting instead the figure would be closer to 7 million.

Less than a year ago, several countries in the region, among them China, Japan, Taiwan and South Korea, formed the Asia Cruise Terminal Association to allow the region to pool expertise and improve standards.

It is no surprise that China's business capital, Shanghai, has seen dramatic increases in the number of cruise ship tourists sailing in.

The cruise operator Royal Caribbean said passenger volumes at Shanghai increased more than 250 per cent in 2009, and as with Dubai, increases have been encouraged by the opening of an international cruise terminal. The number of cruise passengers visiting Chinese sea ports is now running at about 600,000 a year.

Reports indicate China has encouraged growth by making it easier for Chinese ship operators to run cruises, by simplifying customs procedures and by easing the paperwork burden on foreign companies sailing into its ports.

Yet there remains vast scope for further expansion of the industry in Asia. Up until now, the numbers of people taking cruises around the continent has been modest compared with the global total.

The Cruise Lines International Association predicts 16 million people worldwide, three quarters of them from North America, will embark on cruises this year, up 6.6 per cent on last year.

That Chinese are more keen and financially able to travel outside their country is beyond doubt. Last year, 56 million tourists from the mainland travelled abroad, an increase of 8.3 million or 17.5 per cent on 2009's figure of 47.7 million.

Regional destinations, including Taiwan, South Korea and Japan, were the most popular, and many cruise operators are catering to this fondness for relatively local destinations. "A lot of people choose to cruise from Tianjin or Shanghai to Korea or Japan," Mr Li says.

While the much higher cost of European or Caribbean trips is one barrier, language is another reason why Chinese cruise ship passengers like to take shorter cruises from their home country. Chinese travellers taking voyages on the other side of the world often find that few passengers or crew can speak their language.

Things might however be easier for Chinese travellers in future. Just as many UAE hotels have hired Chinese staff to cater to guests from the world's most populous country, so cruise companies have indicated, in discussions with Mr Li's firm, a willingness to employ more Mandarin and Cantonese-speaking crew. This is vital, he says, if they are to attract Chinese passengers.

"There are [Chinese] people who are interested in European and North American cruises, but they fear the language barrier," Mr Li says.

"Sometimes the films and other things are all in English. They feel bored because there's nothing in Chinese."

business@thenational.ae

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Very interesting article about the Chinese adventuring abroad as they growth wealthier. Few people appreciate the fact that foreign travel for leisure purposes is a very new concept to mainland Chinese. In fact, I believe it was only made "legal" to travel on vacation to the US within the last 5 years.

HealthGrid11 in Bristol, England || June 27

noreply@blogger.com (Brian Edwards) — Mon, 21 Mar 2011 20:48:18 PDT

Latest Directives From the Ministry of Truth, March 10-18, 2011

noreply@blogger.com (Brian Edwards) — Sun, 20 Mar 2011 02:16:58 PDT

The following examples of censorship instructions, issued to the media and/or Internet companies by various central (and sometimes local) government authorities, have been leaked and distributed online. Chinese journalists and bloggers often refer to those instructions as “Directives from the Ministry of Truth.” CDT has collected the selections we translate here from a variety of sources and has checked them against official Chinese media reports to confirm their implementation

State Council Information Office: Article from China-Tibet Web

March 18, 2011

From the State Council Information Office: All websites are requested to repost, in its entirety and in a prominent location, the article from China-Tibet Web, “Can Seeds of Enmity Bear Fruits of Harmony?” It is not permitted to change the title, and the article must remain up until March 19, 10:00 am.

国新办：中国西藏网文章

国新办：请各地网站在首页最醒目区统一转发中国西藏网的《仇恨的种子能结出和谐的果实吗》一文，不可改标题，并且保留到19日10时。

State Council Information Office: Radiation Levels in Urban Areas

March 16, 2011

From the State Council Information Office: Starting on March 17, all websites are requested to prominently repost on their front pages information regarding radiation levels in main urban areas, provided by the Environmental Protection Department. This information must be placed in a fixed location, and note that it must be updated every day. All provincial-level Internet surveillance and propaganda Departments are requested to strictly examine websites under their jurisdiction, and strictly enforce the demands of this notice.

Every day, all websites that provide cell-phone reports must also issue, “Daily Radiation Levels in Main Urban Areas From the Environmental Protection Department (Office of National Nuclear Safety).” All mobile phone companies must understand that this is a political duty, and immediately implement it.

国新办：城市环境辐射水平

国新办：所有网站请从3月17日起在首页要闻区突出转发环保部发布的全国主要城市环境辐射水平信息，此信息必须置于固定位置，注意每日必须进行更新。各省网管，网宣部门请严格检查属地网站，对照本要求严格执行。

所有设有手机报的网站，也需要每天转发“环境保护部（国家核安全局）发布每日全国主要城市环境辐射水平”。所有手机运营商必须理解这是政治任务，立即执行。

Central Propaganda Department: Property Taxes

March 14, 2011

From the Central Propaganda Department: Regarding Shanghai’s and Chongqing’s experiments with initiating property taxes, opinions that property taxes steal money are not to be reported or hyped.

国新办：房产税

中宣部：对上海重庆启动房产税试点，说房产税是抢钱的言论不报道不炒作

State Council Information Office: Unilateralism, Hillary Clinton style

March 14, 2011

From the State Council Information Office: All websites are requested to repost, on the front page and in a prominent position, the story, “Internet Freedom: Unilateralism, Hillary Clinton style.” It is not permitted to change the title, and the article must stay on the front page until March 15, 6:00 am.

国新办：希拉里式的单边主义

国新办：请各网站在首页最醒目位置转载“互联网自由：希拉里式的单边主义”，不可以改标题，文章必须保持在首页至3月15日晚6时。

State Council Information Office: Concern and Love for Tibetan Students

State Council Information Office: Concern and Love for Tibetan Students

State Council Information Office: All websites must post on their front page news section the article, “For 33 years, 75-year-old Professor Yang Changlin has Shown Concern and Love for Tibetan College Students in Almost 10,000 Instances.” Leave this article up until the day after tomorrow (the 15th) at 6 pm.

国新办：请各网站在首页要闻区突出转发《75岁教授杨昌林33年如一日关爱高校藏族学生近万人次》，保留至后天（15日）下午六时。

March 13, 2011

From the State Council Information Office:

Central Propaganda Department: Large Earthquake in Japan

March 13, 2011

From the Central Propaganda Department: Media must solidly grasp reporting on disaster conditions after the large earthquake in Japan, and objectively and quickly report on trends as they develop. Place particular emphasis on grasping the relationship between anti-seismic and relief efforts for the Japan and Yunnan earthquakes and propaganda reporting for the national meetings of the “Two Congresses.” Do not weaken the theme of reporting on the Two Congresses.

We must fully propagandize the state of the rescue work that our teams have initiated in Japan. We must closely follow the circumstances of Chinese people and overseas Chinese in Japan.

Do not deliberately criticize or champion the actions of the Japanese government, and do not make any comparisons with anti-seismic and rescue efforts in our country. Give scientific explanations of the explosions and leaks at the nuclear facilities. Do not play up or casually speculate and analyze the influence of leaks on China.

中宣部：日本特大地震

中宣部：媒体要稳妥把握对日本特大地震灾情报道，客观，及时报道灾情动态信息。注意把握好日本地震和云南地震的抗震救灾和全国两会宣传报道的关系。不要冲淡了两会报道的主题。

要充分宣传好我救援队在日本开展救援的情况。要密切关注我在日华人，华侨的情况。

不要刻意批评或赞扬日政府的有关行为，不要和我国的抗震救灾对比。对日核设施泄露及爆炸要做科学解读。不过分渲染，不随意猜测和分析泄露对我国的影响。

Central Propaganda Department: An Illegal Gathering in Shandong

March 12, 2011

From the Central Propaganda Department: On March 13, there will possibly be illegal gatherings and activities in Jinan, Qingdao, Yantai, Weifang, and Rizhao. Do not give interviews or reports.

中宣部：山东非法集会

中宣部：3月13日济南、青岛、烟台、潍坊、日照可能有非法集会活动，不采访不报道

Central Propaganda Department: The Super Moon

March 12, 2011

From the Central Propaganda Department: Media are not to hype the super moon. It is not permitted to draw connections between the moon, earthquake, fires, and other natural disasters. It is allowed to use scientific explanations circulated by the Xinhua News Agency, and purely astronomical information issued by expert Departments can be published.

中宣部：超级月亮

中宣部：媒体不要炒作超级月亮。不可把超级月亮与地震，火灾等自然灾害相联系。可用新华社所发稿件做科学解读，权威部门发布的纯天文学内容可刊发。

Central Propaganda Department: Housing Rationing in Shenzhen

March 12, 2011

From the Central Propaganda Department: Media are not to hype questions about housing rationing in Qiaoxiang Village and Shenyun Village, Shenzhen. Related information should use information from Shenzhen authorities as the standard. Do not give independent interviews or commentary.

中宣部：深圳房屋配售

中宣部：媒体不炒作深圳侨乡村，深云村房屋配售问题，有关情况以深圳权威部门的信息为准，不自行采访和评论

Central Propaganda Department: The Yunnan Earthquake and the Two Congresses

March 12, 2011

From the Central Propaganda Department: For the Yunnan earthquake, we must mainly report on the active rescue activities of political leaders. We absolutely must not allow the earthquakes to dilute the message of the Two Congresses. We cannot report on representative members being absent from the meetings.

中宣部：云南地震和两会

中宣部：云南地震必须主要报道领导人积极救灾；必须不能让地震冲淡两会；必须不能报道代表委员开会缺席。

Central Propaganda Department: Cultural Industrialization

March 12, 2011

From the Central Propaganda Department: In related reports, media cannot use the term “cultural industrialization.”

中宣部：文化产业化

中宣部：媒体在有关报道中不要使用文化产业化的提法

Central Propaganda Department: Family Planning

March 12, 2011

From the Central Propaganda Department: Media are not to hype family planning problems. Do not report on the issue of having two children. Policy changes on famiy planning will use information issued by authorities as the standard.

中宣部：计划生育

中宣部：媒体不得炒作计划生育问题，生二胎话题不做报道。计划生育在政策调整以权威部门发布信息为准。

The State Administration of Radio Film and Television: Direct Television Broadcasts From Outside our Borders

March 12, 2011

From The State Administration of Radio Film and Television: It is not allowed to directly broadcast television programs originating from outside our borders. If there are currently any such broadcasts reporting on the earthquake in Japan, immediately cut them off.

广电总局：境外电视直播

广电总局：不得直播境外电视节目。如有正在进行的日本大地震相关的境外直播，请立即下线。

Central Propaganda Department: The Earthquakes in Yunnan and Japan

March 12, 2011

From the Central Propaganda Department: When reporting on the current earthquakes, media are not to compare the earthquake in Yunnan with the earthquake in Japan.

中宣部：云南和日本地震

中宣部：各媒体在报道目前地震事件的时候不得把云南地震跟日本地震做比较。

Shanghai Propaganda Department: Han Han

March 12, 2011

Shanghai Party Committee Propaganda Department: Activities and comments related to Han Han, beyond his car racing, are not to be reported.

上海宣传部：韩寒

上海市委宣传部：有关韩寒的活动和言论，除了赛车以外的不报道。

Central Propaganda Department: He Hongsang, Macau Gambling King

March 11, 2011

From the Central Propaganda Department: Do not report on the partitioning of household assets of He Hongsang, the gambling king of Macau.

中宣部：澳门赌王何鸿桑

中宣部：不报道澳门赌王何鸿桑家庭财产分割案。

Central Propaganda Department: Taxi Strike in Lanzhou

March 11, 2011

From the Central Propaganda Department: Do not report on the taxi strike in Lanzhou.

中宣部：兰州出租罢运

中宣部：不报道兰州出租车罢运事件。

Central Propaganda Department: Exchange Student in Norway Injured While Parachuting

March 11, 2011

From the Central Propaganda Department: Do not report on the incident of an exchange student in Norway injuring himself after parachuting from a tower at the Chinese Academy of Science.

中宣部：挪威留学生跳伞受伤

中宣部：不报道挪威籍留学生在中科院高塔跳伞受伤一事

Central Propaganda Department: Xu Commits Suicide

March 11, 2011

From the Central Propaganda Department: Do not report on the suicide and death of Xu, Assistant Director of the Testing Center at the National Administration College.

中宣部：徐某自杀

中宣部：不报道国家行政学院考试中心副主任徐某自杀身亡事件

Central Propaganda Department: Delegate Absences at the Two Congresses

March 11, 2011

From the Central Propaganda Department: Do not report on the absences of delegates from the Two Congresses.

中宣部：两会代表缺席

中宣部：不报道两会的代表委员开会缺席一事

Central Propaganda Department: Tax Evasion by Ma Zhongqi

March 11, 2011

From the Central Propaganda Department: Do not report on the case of tax evasion by Ma Zhongqi in Huaiyuan county, Ningxia.

中宣部：马衷琦逃税案

中宣部：不报道宁夏海源县马衷琦逃税案

Central Propaganda Department: Standardization of Proposals at the Two Congresses

March 11, 2011

From the Central Propaganda Department: Do not report on the need to standardize responses to proposals and motions at the Two Congresses.

中宣部：两会议案程序化

中宣部：不报道需将两会议案和提案回复程序化的话题

Central Propaganda Department: Coal Mining in Shanxi

March 11, 2011

From the Central Propaganda Department: Do not report on the sinkholes caused by coal mining in Shanxi.

中宣部：山西采煤

中宣部：不报道山西因采煤引发的地陷。

Central Propaganda Bureau: Mismanagement of the Automobile Industry

March 11, 2011

From the Central Propaganda Department: On March 9, China Management Report (Zhongguo jingying bao) and Southern Metropolis (Nanfang dushi bao) report on Huang Qifang’s criticism that some people have mismanaged the automobile industry. All newspapers are not to re-publish or report the story.

中宣部：胡搞汽车业

中宣部：三月九日中国经营报和南方都市报报道黄奇帆批评有人胡搞汽车业的稿件，各报不转不报

Central Propaganda Department: Chunxiao Gas Field

March 10, 2011

From the Central Propaganda Department: Do not report on extractions in the Chunxiao gas field by the China National Offshore Oil Corporation (Zhonghaiyou).

中宣部：春晓油田

中宣部：对中海油在春晓油田开采一事不做报道

In China, several political bodies are in charge of Internet content control. At the highest level, there is the Central Propaganda Department, which ensures that media and cultural content follows the official line as mandated by the CCP. Then there is the State Council Information Office (SCIO), which has established an “Internet Affairs Bureau” to oversee all Websites that publish news, including the official sites of news organizations as well as independent sites that post news content.

This “Internet Affairs Bureau,” sends out very specific instructions to all large news websites daily, and often multiple times per day. Those instructions do not always mean that related contents are completely banned online, but they instruct websites to highlight or suppress certain type of opinions or information in a very detailed manner.

Chinese journalists and bloggers often refer to those instructions, as well as other type of censorship orders to media and websites, as “Directives from the Ministry of Truth.” The Ministry of Truth (or Minitrue, in Newspeak) is one of the four ministries that govern Oceania in George Orwell’s novel Nineteen Eighty-Four. In the Chinese blogosphere, it is the online nickname for the Central Propaganda Department and generally speaking, all other subordinate propaganda agencies including Internet supervision departments.

Today, it’s been said that news does not break, it tweets. For the officials in the the Ministry of Truth, the news is that their supposedly confidential instructions get tweeted as well.

via chinadigitaltimes.net

How’s Your Chinese Coming Along?

noreply@blogger.com (Brian Edwards) — Sun, 20 Mar 2011 02:08:19 PDT

via mandmx.com

China’s 12th Five-Year-Plan – Will It Help With the Global Trade Imbalance?

noreply@blogger.com (Brian Edwards) — Sun, 20 Mar 2011 02:03:36 PDT

Amongst all the political upheaval in the Middle East and North Africa, with people rising against dictatorial regimes in Tunisia, Egypt, Libya, Yemen and elsewhere, this week China embarked on its annual legislative session. The legislative session of the National People’s Congress, which officially enacts legislation, will rubber-stamp the government’s 12^th Five-Year-Plan (2011-2015), which was decided at the Communist Party meeting in October, 2010.

Details won’t be made public until the conclusion of the legislative session (which usually lasts 10-14 days), but some elements of China’s next five-year economic plan have been made public. The three elements worth highlighting are a lower growth rate and a more balanced/sustainable economic model, meaningful reductions of pollution through better energy conservation, and a more aggressive fight against inflation.

A New Growth Model:

Set a GDP growth target of 7% (down from the current actual GDP growth rate of 10%). To do that, the government will have to divert money away from construction and corporate subsidies, and instead use public funds to increase household incomes.

Cut import tariffs to reduce input-costs, while boosting consumer demand and reducing China’s reliance for growth on exports which generates trade surpluses and contributes to the global trade imbalance.

Improve the income of farmers and migrant workers, who have benefited the least from China’s phenomenal economic growth, by increasing minimum wages. In particular, provinces across China have announced a string of double-digit wage increases this year as part of the government desire to increase incomes among the rural regions and migrant workers in the cities.

Increase spending on health-care and full nationwide social welfare insurance to reduce the need for “precautionary savings” and encourage more Chinese consumer spending.

Raise the minimum threshold for personal income tax. This could exempt hundreds of millions of people from having to pay taxes, and boost household spending.

New Energy Priorities:

Introduce targets for energy efficiency and consumption that will push China’s energy consumption from non-fossil fuel sources to 12% by 2015. Key sectors expected to benefit include: hydro and nuclear power, power grid technology.

In particular, there will be significant growth in nuclear power (from 10 GW to 40 GW), 63 GW of new hydroelectric power, 48 GW of wind capacity and 5 GW of solar power. Unfortunately, coal generation will continue to provide 260 GW, although its share of China’s energy mix is expected to fall from 72% to 63%.

Double the share of natural gas in Chinese energy consumption to 8% by 2015, up from 4% that it was last year. This will make China a natural buyer of large quantities of Russian gas, and an inevitable competitor to Europe, which already relies heavily on gas from Russia.

Introduce taxes of up to $820 (up from just $100) on vehicles with larger than 2 liters (energy inefficient) engines.

Introduce a tax linked to carbon emissions, first via pilot programs in special regions and industries.

Fighting Inflation:

The most important short-term priority for the government is to address increases in food price, which Beijing intends to do through price controls.

In order to control inflation, the government intends to keep using the tools and methods that it has been employing thus far: manage liquidity, use price controls, curb real-estate speculation, and “adjust and improve” property tax policies. Furthermore, the budget for this year shows a 35% increase in spending on low-income housing.

However, no specific lending targets for banks have been outlined by the government yet. New loans topped a 7.5 trillion RMB ($1.1 trillion) ceiling last year and excessive bank lending is considered by some to be a contributing factor to China’s inflation.

Analyst are already predicting that this Five-Year-Plan will be the most significant in China’s modern history, marking the moment that China finally decided to abandon its fast export-led growth strategy in favor for a more sustainable growth model. However, this new effort by China to rebalance its economy in not addressing the root cause of its monetary problem (inflation), and will not facilitate the rebalancing of global trade, which has been so critical to the overall world recovery.

The root cause of China’s inflation is its weak-currency policy, which is feeding an artificially large trade surplus. This policy hurts both China by producing an overheated, inflation-prone economy, and the rest of the world by increasing unemployment in many other countries.

Theoretically, inflation is the market’s way of undoing currency manipulation. According to Paul Krugman, China has been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage.

China’s leaders are trying to prevent this outcome, to protect exporters’ interest, and because inflation is even more unpopular in China than it is elsewhere. Don’t forget that it was inflation that fueled public discontent with the government, bore the 1989 protests in Tiananmen Square.

China is already hurting its citizens through financial controls. For example, interest rates on bank deposits are limited to just 2.75 percent, which is below the official inflation rate of 4.9%. Rapidly rising prices, even if matched by wage increases, are making the situation much worse for Chinese consumers.

Unfortunately, Beijing is not willing to deal with the root cause and let the RMB rise. Instead, they are trying to control inflation by raising interest rates and restricting credit. This is destructive for China, because credit limits are proving hard to enforce and are being further undermined by inflows of hot money from abroad. With efforts to cool the economy falling short, China has been trying to limit inflation with price controls, which also rarely work.

Furthermore, this is destructive from a global point of view as well: with much of the world economy still depressed, the last thing the world needs is major players pursuing tight-money policies. The solution to China’s monetary problem (and to the global recovery) is to let the currency rise!

But, any rebalancing efforts will face serious opposition from special interests domestically, primarily the State Owned Enterprises and regional and local officials. The SOE’s benefit from lax environmental regulations, cheep energy and government subsidies, and an overall export led growth strategy. On the other hand, local officials are not always willing to change, have old ideas about growth and tend to favor pet projects that need massive investments. Couple that with China’s one-party state that refuses to do anything that looks like giving in to U.S. demands, and you have a recipe for certain continuation of the status-quo.

The focus of the new Five-Year-Plan is promising, but its success is questionable.

via chinatrade.foreignpolicyblogs.com

Very interesting...

Don’t Look For Jasmine Revolution Or Tea In China || YaleGlobal

noreply@blogger.com (Brian Edwards) — Fri, 11 Mar 2011 14:10:43 PST

Grounded: Chinese security in plain clothes deal with a foreign journalist hoping to cover the ‘Jasmine’ protest

HONG KONG: If you’re looking for good jasmine tea on Baidu, China’s biggest search engine, you may be in for a surprise. As soon as you type in “good jasmine tea,” Baidu flashes a message: “In accordance with relevant laws, regulations and policies, part of the search results are not shown.”

It’s not that the government discourages the tea, but the word “jasmine” has become toxic – even a song about the beautiful jasmine flower sung by Kenyan students along with President Hu Jintao is censored.

All this stems from the “Jasmine Revolution,” which began in Tunisia last December, leaped to Egypt and now spreads across North Africa and the Middle East. Beijing finds the fall of authoritarian governments in distant Africa embarrassing, recalling scenes of student-led protests in Tiananmen Square in 1989, crushed by the Chinese military.

There are attempts to launch “jasmine rallies” in China, although the anonymous online organizers have little to show for their efforts.

Even worse, there are attempts to launch “jasmine rallies” in China itself, although the organizers, who are anonymous and send messages online, have little to show for their efforts after three weeks. This may well be because China is more economically secure than the countries in the Arab world that are experiencing unrest. After all, it has gone through more than 30 years of rapid economic growth in which hundreds of millions of people have been lifted from poverty and people’s lives have improved dramatically.

In fact, a 22-nation Pew Global Attitudes Survey made public last June showed that while most people were unhappy with the direction of their country, China was an exception. “Only in China,” the survey reported, “does an overwhelming portion of the population (87%) express satisfaction with national conditions.”

So, on the face of it at least, China does not seem ripe for a Jasmine Revolution.

Those organizing “jasmine rallies” in China evidently think otherwise. In an open letter published on overseas website Boxun.com, the organizers called on people to gather every Sunday at 2 pm to demand an independent judiciary, a government supervised by the people and an end to corruption.

On February 20, it
was difficult to tell protesters from shoppers since the designated sites in Beijing and Shanghai are busy shopping areas.

On February 20, the first Sunday, it was difficult to tell protesters from ordinary shoppers since the designated sites in Beijing and Shanghai are busy shopping areas, but the police were out in force, overwhelming foreign journalists out to cover the event, or non-event as it turned out to be. Before that day, the police had preempted any protest by rounding up more than 100 activists. Despite no signs of protest outside MacDonald’s on the busy Wangfujing shopping street, designated as the site for a rally in Beijing, police and security agents tried to stop the journalists from reporting.

Since the first protest was pretty much of a fizzle, one might have assumed that the Chinese authorities would relax. But the next Sunday there was an even bigger turnout of police and security agents who declared war on foreign journalists.

In one case, the Wall Street Journal reported, a Bloomberg television journalist was grabbed by five plainclothes officers, “dragged along the ground by his leg, punched in the head and beaten with a broomstick.” BBC footage showed plainclothes men roughing up the reporter and his colleague, throwing them into a van.

The police removed foreign news staff from the Associated Press, the BBC, Voice of American, German state broadcasters ARD and ZDF, and others from the scene.

Police ferocity was in sharp contrast to the behavior of protesters, told by rally organizers to participate by “strolling…or pretending to pass by.”

The New York Times reported that at least half a dozen journalists and photographers were visited in their homes, repeatedly warned not to cause trouble or, as one officer put it, try to “topple the party.”

Reporting rules were tightened. “No reporting” zones were established in Shanghai and Beijing. The Los Angeles Times reported that journalists were privately told that they could be expelled if caught reporting on protests without permission.

These moves constitute a big step backwards from the more moderate regulations for foreign correspondents introduced before the Beijing Olympics in 2008, which are theoretically still in force. The police ferocity was in sharp contrast to the behavior of protesters, told by rally organizers to participate by “strolling, watching or pretending to pass by” without shouting slogans or displaying placards.

The organizers, who remain anonymous, originally stipulated 13 cities for the rallies, which they quickly raised to 27 cities and, on March 6, claimed that their movement had spread to more than 100 cities. Since the only cities with a substantial presence of foreign journalists are Beijing and Shanghai, it’s impossible to verify such claims.

Reacting in such a disproportionate manner to mild forms of civil protest exposes a government that does not enjoy the trust of
its people.

Moreover, because posts are typically immediately deleted on online message boards and forums within China, it’s likely that few people in the country actually know about the call for defiance of the Communist authorities.

On March 6, the third Sunday, Beijing was quiet. But uniformed and plainclothes policemen were out in force in Wangfujing, Xidan and other crowded commercial areas.

Mobile phone service was shut down in parts of the city during the three Sundays.

The Chinese leadership evidently feels confronted with a dilemma: If they allow “strolling” to take place unhindered, then such gatherings will likely expand over time. If they clamp down hard, they may be seen as an illegitimate government able to stay in power only through force.

Clearly, China decided to crack down hard early so that a feeble movement does not gain strength.

In fact, budget figures disclosed on Saturday during the annual session of the National People’s Congress showed a sharp increase in funding for domestic security. For the first time, such expenditures exceed the amount spent on national defense.

Total budgeted spending for police, state security, armed civil militia, courts and jails amounted to 624 billion yuan, or US$95 billion, compared to 601.1 billion yuan, or $91.5 billion, for defense. Apparently, the government sees the domestic threat as being graver than any external threat despite the findings of the Pew Survey.

In fact, the government admits that people are unhappy. The China Daily, the official English-language daily, reported last week that a survey conducted by Gallup World Poll ranked China 125^th among 155 countries when measuring people’s overall satisfaction with their lives. The newspaper pointed out that “only 6 percent of Chinese people see themselves as happy” even though 36 percent of respondents said their lives had improved during the past five years.

Moreover, according to the government’s own statistics, unrest is widespread with the number of “mass incidents” rising in recent years and may now exceed 100,000 a year.

By all accounts, most people still have confidence in the central government, with which they rarely come into contact. But many have little confidence in officials at the local level, the people who seize their land, evict them from their homes to make deals with land developers and lock them up if they lodge petitions.

The way to respond to public dissatisfaction is to deal with legitimate grievances. Reacting in such a disproportionate manner to what’s at most a mild form of civil protest exposes a government that does not enjoy the trust of its people. And browbeating – actually beating – foreign reporters will result in that message being magnified rather than muffled.

Political stability maintained through coercive means may well result in political instability. China’s leaders should recall the saying of their founding father, Mao Zedong, “Where there is oppression there is resistance.”

via yaleglobal.yale.edu

China's economy: Bamboo capitalism || The Economist

noreply@blogger.com (Brian Edwards) — Thu, 10 Mar 2011 14:38:29 PST

FEW would deny that China has been the economic superstar of recent years. Thanks to its relentless double-digit annual growth, it has become the world’s second-largest economy and in many ways the most dynamic. Less obvious is quite what the secret of this success has been. It is often vaguely attributed to “capitalism with Chinese characteristics”–typically taken to mean that bureaucrats with heavy, visible hands have worked much of the magic. That, naturally, is a view that China’s government is happy to encourage.

But is it true? Of course, the state’s activity has been vast and important. It has been effective in eradicating physical and technological obstacles: physical, through the construction of roads, power plants and bridges; technical, by facilitating (through means fair and foul) the transfer of foreign intellectual property. Yet China’s vigour owes much to what has been happening from the bottom up as well as from the top down. Just as Germany has its mighty Mittelstand, the backbone of its economy, so China has a multitude of vigorous, (very) private entrepreneurs: a fast-growing thicket of bamboo capitalism.

These entrepreneurs often operate outside not only the powerful state-controlled companies, but outside the country’s laws. As a result, their significance cannot be well tracked by the state-generated statistics that serve as a flawed window into China’s economy. But as our briefing shows, they are an astonishing force.

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China

The Mittel Kingdom

First, there is the scale of their activities. Three decades ago, pretty much all business in China was controlled by one level of the state or another. Now one estimate—and it can only be a stab—puts the share of GDP produced by enterprises that are not majority-owned by the state at 70%. Zheng Yumin, the Communist Party secretary for the commerce department of Zhejiang province, told a conference last year that more than 90% of China’s 43m companies were private. The heartland for entrepreneurial clusters is in regions, like Zhejiang, that have been relatively ignored by Beijing’s bureaucrats, but such businesses have now spread far and wide across the country.

Second, there is their dynamism. Qiao Liu and Alan Siu of the University of Hong Kong calculate that the average return on equity of unlisted private firms is fully ten percentage points higher than the modest 4% achieved by wholly or partly state-owned enterprises. The number of registered private businesses grew at an average of 30% a year in 2000-09. Factories that spring up alongside new roads and railways operate round-the-clock to make whatever nuts and bolts are needed anywhere in the world. The people behind these businesses endlessly adjust what and how they produce in response to extraordinary (often local) competition and fluctuations in demand. Provincial politicians, whose career prospects are tied to growth, often let these outfits operate free not only of direct state management but also from many of the laws tied to land ownership, labour relations, taxation and licensing. Bamboo capitalism lives in a laissez-faire bubble.

But this points to a third, more worrying, characteristic of such businesses: their vulnerability. Chinese regulation of its private sector is often referred to as “one eye open, one eye shut”. It is a wonderfully flexible system, but without a consistent rule of law, companies are prey to the predilections of bureaucrats. A crackdown could come at any time. It is also hard for them to mature into more permanent structures.

Cultivate it, don’t cut it

All this has big implications for China itself and for the wider world. The legal limbo creates ample scope for abuse: limited regard for labour laws, for example, encourages exploitation of workers. Rampant free enterprise also lives uncomfortably alongside the country’s official ideology. So far, China has managed this rather well. But over time, the contradictions between anarchic opportunism and state direction, both vital to China’s rise, will surely result in greater friction. Party conservatives will be tempted to hack away at bamboo capitalism.

It would be much better if they tried instead to provide the entrepreneurs with a proper legal framework. Many entrepreneurs understandably fear such scrutiny: they hate standing out, lest their operations become the focus of an investigation. But without a solid legal basis (including intellectual-property laws), it is very hard to create great enterprises and brands.

The legal uncertainty pushes capital-raising into the shadows, too. The result is a fantastically supple system of financing, but a very costly one. Collateral is suspect and the state-controlled financial system does not reward loan officers for assuming the risks that come with non-state-controlled companies. Instead, money often comes from unofficial sources, at great cost. The so-called Wenzhou rate (after the most famous city for this sort of finance) is said to begin at 18% and can even exceed 200%. A loan rarely extends beyond two years. Outsiders often marvel at the long-term planning tied to China’s economy, but many of its most dynamic manufacturers are limited to sowing and reaping within an agricultural season.

So bamboo capitalism will have to change. But it is changing China. Competition from private companies has driven up wages and benefits more than any new law—helping to create the consumers China (and its firms) need. And behind numerous new businesses created on a shoestring are former factory employees who have seen the rewards that come from running an assembly line rather than merely working on one. In all these respects the private sector plays a vital role in raising living standards—and moving the Chinese economy towards consumption at home rather than just exports abroad.

The West should be grateful for that. And it should also celebrate bamboo capitalism more broadly. Too many people—not just third-world dictators but Western business tycoons—have fallen for the Beijing consensus, the idea that state-directed capitalism and tight political control are the elixir of growth. In fact China has surged forward mainly where the state has stood back. “Capitalism with Chinese characteristics” works because of the capitalism, not the characteristics.

via economist.com

Cleverly written piece by an obviously bright Sinophile - 'Bamboo Capitalism' - finally a much preferred alternative to the often easily misread moniker 'Red Capitalism'! I love the term Mittel Kingdom too!

The Chinese entrepreneur is a misunderstood and underestimated factor in the emerging global economy and they must be engaged aggressively by their western counterparts to create global ventures. America will remain the epicenter of innovation and entrepreneurship for many decades because American culture glorifies the entrepreneur and encourages risk to a degree that may never be possible in a place as communally oriented as China. However, only the entrepreneur can create a sustainable economic growth story in the Mittel Kingdom, because the state by its very nature undermines the true entrepreneurship, this is true even in the US.

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