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How Building Shanghai Up is Bringing It Down

Posted: 21 May 2012 11:40 PM PDT

At TIME's Ecocentric blog, Kate Springer discusses the problem of subsidence which, according to a recent government report, affects more than fifty cities and around 50,000 square miles of land across China. The issue is strongly tied to the country's chronic water shortages, with over-extraction of groundwater accounting for almost 70% of subsidence. But in , the sheer weight of buildings makes matters even worse.

Though some critics argue the Chinese government has been too slow to act, research, public concern and some hefty bills ($35 billion in Shanghai alone in the last 40 years), has sparked some momentum. Recently, the state council approved China's Land Subsidence Prevention Project, a countrywide initiative to prevent land subsidence. Likewise, , which has descended more than a foot in the past decade, has also made an effort to reduce underground water extraction, with plans to close 800 water extraction wells in 2012, according to the Water Authority. By 2014, the city hopes to halt underground water extraction in urban areas altogether as part of the North-South Water Diversion Project. The project expects to bring 3 billion cubic feet of water supply to from the . This would not only satisfy one-third of the city's total water demand, but would also cut the extraction of underground water in half.

But Li, who worked at the Chinese Academy of Science for 15 years, says such programs will not be enough. "It's hard to quantify how much this might help, but the question is, is that a problem solved? The answer is no. The problem lies in the early issue with urbanization," he says. Scientists expect the regulations to help curb the consumption of underground water supplies, but there a few things the government has less control over, such as global warming. As the land degradation and excessive guzzling of ground water continues, environmentalists predict waters surrounding Shanghai to rise 9 to 27 inches by 2050 as a result of melting ice caps.

© Samuel Wade for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
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Former Tycoon Wu Ying Likely to Escape Execution

Posted: 22 May 2012 12:00 AM PDT

's fallen business tycoon Wu Ying was resentenced on Monday in a decision likely to avert her execution for fraudulent fundraising. Her controversial was overturned last month by China's Supreme People's Court, which upheld her guilt but sent the sentence back to the provincial court for reconsideration. From Caixin:

After a serial of trials which first began in April 2009, was sentenced to death with a two-year reprieve, according to the Zhejiang Higher People's Court website.

Legal experts immediately interpreted the sentence as life imprisonment under China's legal environment.

Wu's former lawyer Zhang Yanfeng said to media, "She's been sentenced to life imprisonment, barring any wrongdoing in the next two years." Zhang said the verdict was expected as provincial high courts are subordinate to the Supreme People's Court.

New York University law professor Jerome Cohen told The New York Times last month that the SPC's decision "seems a typical Chinese judicial compromise between what those who call for the wanted and what Wu's many supporters, both popular and professional, have called for". The new suspended death sentence may be an attempt to maintain a similar balance, compared with the lighter sentences Cohen held out as another possible outcome. But human rights researcher Joshua Rosenzweig described it as "a gutless decision, one that ignores core problems with the case". Although some supporters expressed satisfaction at Wu's likely escape from , questions about uneven punishment and institutional problems remain. From Chuin-Wei Yap at China Real Time Report:

The case attracted widespread media attention for the severity of the sentence and the long-running campaign in China's blogosphere to save her.

Many of her supporters wondered aloud why she was facing death when found guilty of similar crimes were often granted lighter sentences ….

For the public that's kept the issue alive for more than three years, it's a gratifying conclusion. "It's not just Wu Ying," , a prominent magazine editor, wrote on the Twitter-like microblogging service Sina Weibo. "If it's non-violent financial crime, no one should die."

"Wu Ying was unlucky to run into hole in the ," added another Sina Weibo user writing under the handle Chaoxin Xinzhixing. "When will China's be more robust, so the public can be convinced?"

Tea Leaf Nation's survey of Sina Weibo reactions reveals similarly mixed views, and notes that over 3.5 million posts on the subject were culled from search results overnight.

Many netizens hailed the result. @杭州恰恰 wrote, "This is…a victory for public opinion! [Responsiveness to] public opinion is progressing!" @洪陈纷纭 wrote: "The power of democracy; the power of Weibo."

Unfortunately, many netizens felt their victory, if it was theirs at all, was a Pyrrhic one. @Q版温故's comment aptly captured netizen sentiment: "No matter what, the result is progress. But this time, the progress is mostly because of the contributions of public opinion, and not law itself." Instead of law, many commenters perceived realpolitik, hard at work. @闫英士 opined, "The real meaning is this: The death sentence is to save face, the commutation is to quiet citizen rage. But it all has nothing to do with Wu Ying herself, and certainly doesn't prove the independence of the so-called judiciary."

© Samuel Wade for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
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How One Policeman Got Burned

Posted: 21 May 2012 11:34 PM PDT

In March, told a State Council conference that corruption is "the most crucial threat" to Party rule; this month, wrote in The New York Times that because of it, "no roads are straight" in China. Caixin examines one particular case, in which a high-ranking drug squad officer in Hunan was stripped of his position after relentlessly pursuing a case in which his fellow policemen were apparently involved.

On March 17, 2012, the Public Security Bureau in Chenzhou, in the central province of , said it was removing Huang Bailian as head of its drug squad.

Huang's explanation for the move was simple: "This is retaliation."

Three years earlier Huang, who is 48 years old and a 25-year veteran of the police force, cracked what he thought was a large case. However, before the case could be handed to prosecutors, his classification of it was changed to clear one suspect. Furthermore, some of the drugs seized during his arrests quickly went missing.

Evidence of the theft pointed to a subordinate of Huang's, Wang Bin. Furthermore, there were suspicions that Wang and Huang Bailian's boss, vice-captain of the drug squad Huang Zhongxiang, were protecting traffickers.

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Photo: All in all, by Michael Steverson

Posted: 21 May 2012 10:56 PM PDT

Too Much “Negative” News, or Too Little?

Posted: 21 May 2012 10:47 PM PDT

Last week, China Media Project wrote about a recent series of articles in the Beijing Daily, a newspaper controlled by the Party leadership, that blasted the West, including an editorial that condemns Western-style media freedoms. From CMP:

An editorial in the the paper today criticizes "commercial newspapers and magazines" in China — that would be the likes of Southern Metropolis Daily, Caixin Media, 's Oriental Morning Post, etcetera — of being infected with a Western notions of journalism that they do not sufficiently understand.

The editorial argues further that the Western concepts of the media's role do not suit China's unique "circumstances".

"Chinese media must sing the main theme," the editorial said, a reference to the media's role as propaganda vehicles for the CCP. "This is determined by China's political system, and accords with the realities of China as a nation of 1.3 billion people. The fact is that for China to develop it must maintain social stability, and it must create a public opinion environment conducive to stability."

CMP also pointed out that after the editorial was published, ironically, searches for "" were blocked from Sina Weibo.

CMP now reports that the above editorial has inspired a lively debate in China about the purpose of the media. They translate a letter to Southern Metropolis Daily in which the author disagrees with the concept of media put forward by the Daily:

On the question of whether or not media reports on food safety have created a sense of fear and anxiety, we have recently had two media expressing different views on this issue. Beijing Daily says that quite a few report lately — on food safety, doctor-patient conflicts, quality, official and other issues — have been built up by the media, giving the impression that all food in China is "poisonous", the all buildings are "tofu architecture," that all public officials are corrupt, and suggesting that social tensions are growing ever more severe and prospects for development are grim. "In fact," the newspaper said, "this is just a mistaken impression created by various media."

The Xinhua Daily Telegraph responded with an editorial called, "Expert Opinion Helps Calm 'Food Panic'" (专业舆论有助于消除"吃的恐慌"). The editorial argued that "facing problems head on is the basis of resolving problems, and media reporting on food safety issues is a form of monitoring by public opinion and monitoring by society that should be encouraged" (New Express, May 19).

Naturally, the fact that such issues as food safety, doctor-patient conflict, construction quality and official corruption have become public opinion hotspots has to do with media reports. But if there were no media reports, would these problems be any less obvious or serious? No one lives in a vacuum, and the various problems we come upon were not created because of media reports. Sometimes, naively, I'm even of a mind to feed information to the media! Which is to say, I think there are far too few media reports on negative issues.

© Sophie Beach for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
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For Leaders, Fear at the Top?

Posted: 21 May 2012 10:20 PM PDT

In a New York Times Opinion, Harvard's Roderick MacFarquhar writes that the – and the revelations about the wealth and lifestyle of his family and the families of other "" – has suggested an underlying fear among China's leadership about the country's future:

This may seem strange, given that the Chinese have propelled their country into the top ranks of global economic powerhouses over the past 30 years. There are those who predict a hard landing for an overheated economy — where growth has already slowed — but the acquisition of wealth is better understood not just as an economic cushion, or as pure greed, but as a political hedge.

China's Communist leaders cling to 's belief that their continuance in power will depend on economic progress. But even in China, a mandate based on competence can crumble in hard times. So globalizing one's assets — transferring money and educating one's children overseas — makes sense as a hedge against risk. (At least $120 billion has been illegally transferred abroad since the mid-1990s, according to one official estimate.)

…

Today, the party's 80 million members are still powerful, but most join the party for career advancement, not idealism. Every day, there are some 500 protests, demonstrations or riots against corrupt or dictatorial local party authorities, often put down by force. The harsh treatment that prompted the blind human-rights advocate Chen Guangcheng to seek American protection is only one of the most notorious cases. The volatile society unleashed against the state by Mao almost 50 years ago bubbles like a caldron. Stories about the wealth amassed by relatives of party leaders like Mr. Bo, who have used their family connections to take control of vast sectors of the economy, will persuade even loyal citizens that the rot reaches to the very top.

Last week, The Guardian reported that three retired CCP officials called on leaders to disclose their family wealth before the issue further erodes the party's grip on power ahead of the upcoming leadership succession.

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China Reverse Merger News: Gulf Resources Litigation Moves Forward

Posted: 21 May 2012 09:05 PM PDT

If you've been following the investor class action against Shandong-based Gulf Resources, one of those China reverse-merger companies gone wrong, you probably are not surprised that the plaintiffs survived a motion to dismiss yesterday:

A federal judge advanced claims that a Chinese chemical company violating securities laws and duped investors with fake accounting figures.

Yeah, that's right. Another Chinese company listed in the U.S. accused of accounting book flim-flammery. Funny thing: I haven't really been following this case, but once I read about the status of the litigation, I had a quick peek at Gulf Resources to see who they are. Perusing their latest annual report, I was interested to read about who they used to be.

If you're not used to reverse mergers, this language might sound a bit crazy (I personally find it entertaining):

Our Corporate History

We were incorporated in Delaware on February 28, 1989. From November 1993 through August 2006, we were engaged in the business of owning, leasing and operating coin and debit card pay-per copy photocopy machines, fax machines, microfilm reader-printers and accessory equipment under the name "Diversifax, Inc.". Due to the increased use of internet services, demand for our services declined sharply, and in August 2006, our Board of Directors decided to discontinue our operations.

Upper Class Group Limited, incorporated in the British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan Chemical Company Limited ("SCHC"), a company incorporated in Shouguang City, Shandong Province, the People's Republic of China (the "PRC"), in May 2005. At the time of the acquisition, members of the family of Mr. Ming Yang, our president and former chief executive officer, owned approximately 63.20% of the outstanding shares of Upper Class Group Limited.

[ . . . ]

On December 12, 2006, we, then known as Diversifax, Inc., a public "shell" company, acquired Upper Class Group Limited and SCHC. Under the terms of the agreement, the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2-for-1 stock split in 2007 and the 1-for-4 stock split in 2009) shares of voting common stock of Gulf Resources, Inc. in exchange for all outstanding shares of Upper Class Group Limited. Members of the Yang family received approximately 62% of our common stock as a result of the acquisition.

[ . . . ]

[T]he accounting for the share exchange is identical to that resulting from a reverse acquisition, except no goodwill is recorded. Under reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal acquirer, Gulf Resources, Inc., are those of the legal acquiree, Upper Class Group Limited.

Got it? If anyone ever asks you what a reverse merger looks like, just cut and paste that language and send it to them. Any way you look at it, this kind of structure should raise some questions.

So a Delaware company that from 1993 was in "the business of owning, leasing and operating coin and debit card pay-per copy photocopy machines, fax machines, microfilm reader-printers and accessory equipment" is now in the business of manufacturing and trading "bromine and crude salt," among other things in the chemical sector. I guess they phased out the fax machine stuff.

By itself of course, this sort of transaction is fine. Just because these guys were involved in a reverse merger doesn't mean that anything untoward is going on. Improprieties were not apparent, or at least alleged, until about a year ago, when Gulf Resources was slammed by a research report that suggested the chemical company was not at all what they said they were:

A report that was published by Glaucus Research Group on April 26th highlighted the many shortcomings of Gulf Resources (GFRE), a Chinese firm that manufactures bromine, crude salt and related chemical products. The Glaucus piece builds a convincing case that Gulf misrepresents itself in its SEC financial filings.

Among other items, Glaucus shows that the company's claimed assets appear to actually be owned by a private conglomerate owned by GFRE's chairman, and not by Gulf. Glaucus also argued that local Chinese filings show a much smaller business than is indicated by SEC filings, that the company's largest customer is an undisclosed related party, and that Gulf's initial reverse merger partner was China Finance, Inc., which vanished from the public markets in 2009 with no explanation and was an organizer of other dubious Chinese reverse merger companies like Orient Paper (ONP) and Universal Travel Agency (UTA).

Well, that certainly doesn't sound good, does it? The Glaucus report wasn't very positive about investor options, either:

[W]e present compelling evidence that a rival, privately-held Chinese conglomerate owned by GFRE's chairman and founder is actually the legal owner of GFRE's factories and operating assets. We believe that, given the difficulty of litigation in China and the complex multi-jurisdictional organizational structure of GFRE, shareholders are most likely left without a remedy.

In short, investors in this NASDAQ-listed company are likely holding worthless paper in a shell company.

Ouch. Given that Gulf Resources is located in Shandong and does all its business in China, litigation here would normally make sense. But for an investor suit against a U.S.-listed company, coming to a China court really isn't feasible, so they were left with a U.S. federal court action.

Since I haven't seen the evidence and have no special knowledge of this case (or the underlying U.S. law), I don't have an opinion on the merits of the class action. For the record, the plaintiffs are alleging the following:

The investors claim that the group made false and misleading statements about Gulf's finances, withheld relevant business and financial information, and engaged in accounting fraud in its filings with the Securities and Exchange Commission. They claim that Gulf maintained two different sets of accounting books for Chinese state reporting and U.S. government filings, in which the company "grossly overstated its financial position," according to their amended complaint. The investors say Gulf and its directors induced them to buy stocks through impossible sales and inventory figures, and failed to mention that Gulf directors own many of the company's top customers.

Only two sets of accounting books? These guys need to do some more digging.

Needless to say, a lot of folks are going to be watching this case for a variety of reasons, although I suspect it will not end well for the investors themselves. The evidence that comes out during trial will be the entertaining and informative part of all this. Gulf Resources is now a prominent member of the China reverse merger bad boy club, which includes quite a few companies that have been accused of accounting irregularities. Will any of this have an effect on similarly situated companies, or has all the damage already been done with respect to market pricing? Stay tuned.

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The Daily Twit (@chinahearsay Twitter feed) – 2012-05-21

Posted: 20 May 2012 08:59 PM PDT

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CDT Money: Property Market Still Cooling

Posted: 21 May 2012 09:39 AM PDT

In the wake of another cut to the reserve requirement ratio (RRR) for commercial lenders, the second such move this year, data releases continue to indicate that China will need to take additional policy steps to boost an economy under siege both from financial crises abroad and slowing growth at home. With April's bank lending already weaker than expected, the China Daily reported Thursday that China's "Big Four" banks "made almost no new loans" in the first half of May. The figures do not reflect any increase in lending enabled by the RRR cut, which did not take effect until May 18, but doubts persisted over whether the move by China's central bank would have a large impact anyway.

What ails China's lending environment, and why won't an RRR cut fix it? MarketWatch's Craig Stephens thinks banks might have a supply-side problem, battling higher funding costs as their expanding suite of wealth management products – and the higher returns they offer investors – squeezes their margins. But Bob Davis and Tom Orlik write in The Wall Street Journal that the problem lies on the demand side, that the government can no longer "turbocharge the economy as they have in the past" by pushing state-owned banks to churn out new loans because the system lacks an ample supply of borrowers willing to take them:

The hesitation to borrow runs across the Chinese economy, from massive state-owned steelmakers struggling with overcapacity to small exporters trying to figure out when the European crisis might abate.

"We don't need any expansion of credit because we are playing it safe," said Stanley Lau, managing director of Renley Watch Manufacturing Co., a Hong Kong watch exporter that manufactures in southern China.

"Because of growing uncertainty over the economy, a lot of businesses are reluctant to borrow and, instead, they have decided to put their project or expansion plans on hold," a senior executive at one of China's largest banks said.

Even beyond the steelmakers and manufacturers, the troubles plaguing China's cooling don't help banks' lending prospects either. Average home prices in 70 Chinese cities fell again in April, as the government continues to demonstrate a commitment to a price correction that it began in 2010. And while property prices may rebound in the 4th quarter as supply begins to ease, one research analyst told China Daily, housing ministry official Zhang Xiaohong told local media on Friday that Beijing won't reverse its course and that "There is still room for property developers to continue to adjust prices to boost sales volume, but there is no more room for property speculation." For now, reports Robin Kwong in The Financial Times, developers can only continue to push their large inventories of unoccupied properties:

This dynamic is reflected in the plight of Number 8 Royal Park, a super-luxurious development in where liveried footmen have been chaperoning potential buyers to assay opulently decorated 520 sq m apartments. The developer is still holding firm on its price tag of over $10m, but sales appear to have stagnated. Staff are still urging clients to buy flats in the same two towers that were on offer a year ago.

The Globe and Mail's Mark MacKinnon points out that the Chinese government's handling of the housing market reflects not just an attempt at a market correction, but also a play for political preservation:

That bubble is now deflating, although some economists say the market is still overvalued and that falling property prices will not constitute the main drag on this year.

"You can make a pretty strong case that it's overvalued, the property market, so I personally don't think there will be any reversal…I think they'll hold the line," said Alaistair Chan, China economist with Moody's Analytics, who said this year's forecast for GDP growth may end up around 8 per cent from their previous prediction of 8.2 per cent.

Just as important for China's government, though, is that restricting property prices to try to keep them within reach of the rising is seen as key to preserving political stability. For an authoritarian regime obsessed with maintaining a "harmonious society," this has been a relatively dramatic year, with labour protests, self-immolations by Tibetan activists, continuing food inflation and a rare and colourful political involving the murder of a British businessman that felled one of China's most popular politicians – all ahead of an expected transfer of power at the top that is supposed to begin with the Communist Party's national congress in October.

As a result, some property developers are settling in with what they have, and downgrading any ambitions of big acquisitions.

Wen Calls for Growth

Chinese Premier took time during his weekend trip to Wuhan to reiterate the government's aim of the economy to support growth, according to The China Daily:

"The relationship between maintaining growth, adjusting economic structures and managing inflation, must be properly handled," Wen said in comments reported by Xinhua News Agency. "We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth."

The government, he said, will continue to carry out anticipatory adjustments and fine-tuning, boost domestic consumption and promote steady and relatively fast .

Even if he was only repeating the same long-deployed talking points, Chinese stocks rose today and Bloomberg News reports that Wen's comments led analysts to speculate that the fine-tuning may become a little more heavy:

The shift in language suggests authorities are "seriously concerned about growth" and "ready to introduce further measures," Bank of America Corp. said in a research note today. The government on May 12 cut banks' required reserves for the third time in six months following data that showed trade, industrial production and lending were below forecasts in April.

"The April data has been a wake-up call for China," said Alaistair Chan, a Sydney-based economist at Moody's Analytics. "There will probably be some stimulus measures through monetary policy, more bank lending and infrastructure projects being brought forward."

The Battle For Securities Reform

Caixin catches up with , who took over the helm at the China Securities Regulatory Commission (CSRC) last October and has already begun to put his stamp on the job with a flurry of recent regulatory changes. The CSRC's top priority, and "core challenge" of reform, Guo says, is in the arena of public listing:

Guo has said that a registration system for public listings is in fact not so different in nature from China's current approval system. In the United States where a registration system is used, regulatory agencies conduct even stricter checks on companies than do their Chinese counterparts. The key is how to define the roles and responsibilities of the regulators, the exchanges and other intermediaries.

In this light, the recently released guidelines on share issue reform tackle the technical details but fail to address the underlying problems of the system. Rent-seeking can't be eradicated without changing the vetting system. Take the newly appointed officers of the CSRC. As they become familiar with the job, and the temptations for that come with it, won't they also become less inclined to change the system? Based on the historic lessons at home and abroad, support of the top leadership is vital for a reformer.

Reforms are easier when the stock market is at a low ebb, but they will only get harder and harder. It will be a long-drawn-out war.

Is China Deleveraging?

The Wall Street Journal's Tom Orlik writes that while China's credit-fueled growth (which saw the ratio of credit to GDP rise to 173% by the end of 2011) may have saved China's economy from the global financial crisis, the trend has begun to reverse amid an environment ripe with inflation, an overheated property market, among other things. It's good for the ratio to come down and it should continue to come down, but this comes with consequences that Beijing can temper in a number of ways:

The government has options for responding. It could further lower the , which would encourage firms to take on more loans as it lowers the cost of capital and signals that the government intends to keep demand on track—buoying confidence about future orders and profitability.

A further step would be to relax the floor on lending interest rates. China's banks are currently allowed to lend at a discount of up to 10% to the government-set benchmark. People's Bank of China governor Zhou Xiaochuan said in April that the next step in interest rate reform could be liberalizing the lending rate—suggesting the floor could be lowered.

Beijing also has room to ratchet up its own spending. There are signs that this is already underway. Investment funded from the state budget grew 29% year-on-year in the first four months of this year, partially offsetting a meager 4.2% increase for investment financed by bank lending.

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Yahoo-Alibaba and AMC-Wanda: Searching for a China M&A Theme

Posted: 21 May 2012 03:24 AM PDT

The big China business news of the day is twofold: the acquisition of AMC Entertainment Inc. by Wanda, and the buyback of Alibaba shares from Yahoo. What's the big picture here? I really can't think of one. Sorry about that.

Yes, I could do the old "China is growing," or "Chinese companies have a lot of cash," or even "China is coming to get you" (not normally something I would write, mind you). But really, none of these fit very well. There isn't a unitary theme here. I know that lawyers, accountants, consultants and investment banks look at these deals and get stars in their eyes, hoping that a tidal wave of outward investment deals is coming their way and that they will be able to make a few bucks off the trend. But really, these two deals don't tell us anything.

Why not? Take a look at these deals. First, the USD 2.6 billion cinema chain acquisition. AMC is America's second-largest theater group, and with the deal, Wanda will become the largest such company in the world. That's pretty damn impressive for a Chinese company that folks outside of the Middle Kingdom never heard of. And it seems like AMC needed a Plan B, after making IPO noises three times in the past five years:

The Kansas City, Mo.-based theater chain had said in a regulatory filing last spring that it planned to raise up to $450 million in an initial public offering of stock, using the proceeds to pay down debt. Top shareholders in AMC include JPMorgan, Apollo Investment Fund and Bain Capital Investors.

But at the prompting of AMC's owners, the circuit has opted to shelve the IPO, out of concern that market conditions aren't ripe for a stock offering[.]

The reaction to this deal has been mixed. Most of the attention has been on the nationality of the acquirer and the price tag, but apparently some folks don't see this as a match made in heaven:

The deal marks the largest investment to date by a Chinese company in the U.S. entertainment industry and gives Wanda a foothold into the U.S. movie theater business in what some analysts viewed as a "trophy" acquisition.

I assume the "trophy" reference suggests that prestige might have sealed this deal, as opposed to the usual M&A analytical factors. This quote doesn't give me a whole lot of confidence:

Wang Jianlin, chairman and president of Wanda, said his goal was to own theaters covering 20 percent of the world theater market by 2020. Speaking through a translator on Sunday, Mr. Wang said his aim for the circuits was to "combine, and synergize and make them profitable."

If that's the most intelligent, interesting quote that the New York Times could find, then Wang is either playing it very safe and boring (quite possible), or he just had little to say. You never know. I'm surprised he didn't mention AMC's history of innovation, such as the 2004 launch of MovieNachos® or the rollout in the '90s of LoveSeat®-style seating. Coming soon to a China theater near you? (Probably not.)

Yes, this deal says something about Chinese firms snatching up U.S. companies held by folks that are looking for an exit. If we want to discuss Wanda alone, then maybe this can be fit into the Chinese overseas investment story. On the other hand, I'm not so sure how many AMC Entertainments there are out there. Moreover, there's still a lot of Western money flowing over here, particularly into China's entertainment industry. Mixed bag, says I.

Regardless, whatever theme we might want to attach to the Wanda deal, Alibaba isn't so easy. What's different about Alibaba and Yahoo? Well, the story is a long one and quite ugly. If you want a very quick reminder on the stormy seven-year relationship between these parties, check out Isabella Steger's Wall Street Journal article. Unlike the Wanda acquisition, this deal is not about a Chinese company flush with cash reaching out overseas. This is a buyback of shares that Yahoo purchased years ago, a deal that many called inevitable and that everyone was waiting on for a very long time. Bloomberg has details on what the deal means for the two parties going forward.

So why is Forbes going with this headline ("Yahoo, AMC Ride Chinese Corporate Investment Wave"), an attempt to characterize these two deals as some overarching trend? Makes it more interesting, I suppose, but at the end of the day, there is nothing here to get too excited about. Each deal has its own particular backstory, and there is really no greater lesson to be learned.

Perhaps the only characterization of these deals I can agree with from that Forbes article is the following: "And so capital flows west, and assets flow east." With these two specific transactions, yes.

© Stan for China Hearsay, 2012.

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Blogs » Politics » Chen Guangcheng’s Former Prison Evaporates Chen Guangcheng’s Former Prison Evaporates Wang Lijun to get less than 10 years: Boxun Another Year, Another Wild Gaokao Baidu Map speaks some truth Pu Zhiqiang: How to Handle the Police Photo: Suzhou Creek, Shanghai, by Remko Tanis What to Make of China’s New Internet Law Li Wangyang: I Won’t Retreat Even if I am Beheaded Mongolian Election: Bumpy Road, but Heading in the Right Direction You Really Can Criticize the Government on Social Media Catfight Between China and the US Over Air Quality China: Gmail Users Warned of State-Sponsored Attacks The Daily Twit (@chinahearsay Twitter feed) – 2012-06-07 PBOC Cuts Interest Rates as Economy Continues Slide How Will The CCP Finish Off Bo Xilai? Foxconn: A Very Quiet Riot China Issues Draft Revision to Internet Law Foreigners In China Chin
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