China to launch yen-yuan trade

China to launch yen-yuan trade
Asia's wealthy fuel museum boom
It brings joy to countless families, but as another disturbing study emerges, what is the truth about IVF and birth defects?
Beijing embraces building boom
RFID technology thwarts bird's nest counterfeiters
Exclusive: Mourinho in the hunt for Drogba as striker wavers over China move
Lost in translation: The hilarious foreign signs that don't get their English quite right
Heavy fog wreaks havoc on highway
China condemns 'cruel killings' of civilians, backs UN efforts
Ex-railway minister expelled from Party
Prostitution gang busted
A Bite of China strikes a chord with food lovers
Irate residents storm local office
Rocket debris hits homes
Tibetans set themselves on fire
Have You Heard… China Tightens Officials’ Overseas Travel to
Factbox: Private investment in China
JPMorgan injects $400 million into China unit, eyes expansion
In thrall of the empire of the sons
Taiwan Ex-Premier Su Tseng-Chang Elected Head of Opposition Party

Posted: 28 May 2012 06:30 PM PDT

China will allow direct trading of the yuan and the Japanese yen next month, in a move aimed at promoting trade between Asia's two biggest economies.

Asia's wealthy fuel museum boom

Posted: 28 May 2012 09:37 AM PDT

Asia's wealthy initiate museum boom

It brings joy to countless families, but as another disturbing study emerges, what is the truth about IVF and birth defects?

Posted: 28 May 2012 05:13 PM PDT

The risk of birth defects among babies tripled in women who had used clomiphene citrate. Sam Major (pictured) believes the drug may have contributed to her son Callum's significant developmental delays.

Beijing embraces building boom

Posted: 28 May 2012 05:23 PM PDT

Beijing's building boom sweeps away old neighbourhoods

RFID technology thwarts bird's nest counterfeiters

Posted: 28 May 2012 04:00 PM PDT

Protecting diners from counterfeit bird's nest soup

Exclusive: Mourinho in the hunt for Drogba as striker wavers over China move

Posted: 28 May 2012 02:50 PM PDT

Didier Drogba is considering a reunion with former mentor Jose Mourinho at Real Madrid. The 34-year-old is wanted by the Spanish champions and talks have taken place.

Lost in translation: The hilarious foreign signs that don't get their English quite right

Posted: 28 May 2012 01:41 PM PDT

Everyone has come across signs on their travels that are clumsily translated into English. Now a website has compiled a list of the most hilarious, including the bra in Japan advertised as 'dairy comfort'.

Heavy fog wreaks havoc on highway

Posted: 28 May 2012 10:24 AM PDT

Police and rescue workers clear up the wrekage of a traffic accident on a highway in central China's Henan Province where a total of 13 traffic accidents happened between 6:17 a.m. to 7:20 a.m on Monday, killing eight people and injuring 13 others in heavy fog on the Xinyang section of the Beijing-Zhuhai Highway, police said. Investigations have been underway into the cause of all the accidents.

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China condemns 'cruel killings' of civilians, backs UN efforts

Posted: 28 May 2012 10:01 AM PDT

CHINA yesterday condemned the cruel killings of civilians in Houla, while insisting Kofi Annan's efforts are the most viable way to end Syria's violence.

"China feels deeply shocked by the large number of civilian casualties in Houla, and condemns in the strongest terms the cruel killings of ordinary citizens, especially women and children," Foreign Ministry spokesman Liu Weimin said. "This incident again demonstrates that an immediate cessation of violence in Syria can brook no delay."

"We call on all sides concerned in Syria to implement the relevant UN Security Council resolutions and Annan's six-point proposal immediately."

Ex-railway minister expelled from Party

Posted: 28 May 2012 09:14 AM PDT

CHINA'S former Railway Minister Liu Zhijun was expelled from the Communist Party of China after being found guilty of corruption, the CPC disciplinary watchdog announced yesterday.

The Party's Central Commission for discipline Inspection said Liu had taken massive bribes and abused his authority to help a private businessman make huge illegal profits.

It also accused him of fostering major corruption throughout the country's railway system and having "degenerate morals," a term that often refers to sexual liaisons and the keeping of mistresses.

"Liu should hold most of the responsibility for corruption in the railway system," according to the Party's discipline body.

Liu's case will now be handed over to prosecutors.

Liu had been under investigation since February 2011, when he was removed from his position on suspicion of "serious disciplinary violations."

In the investigation, it was shown Liu helped Ding Yuxin, who is also known as Ding Shumiao, the president of an investment management company, make huge illegal gains.

Liu took huge bribes and other valuables, according to the discipline watchdog. But the authorities did not disclose the amount of the bribes.

The country's rapid railway network development slowed down after the fall of Liu and the fatal bullet-train crash that killed 40 passengers in July last year in Wenzhou.

Liu, born in 1953 in central China's Hubei Province, began his career in 1972 as a railway worker and joined the CPC a year later. Liu took control of the railway ministry in 2003 and soon oversaw the railway system's leap into countrywide expansion of high-speed railways.

It was during the period that Ding's Boyou Investment Management Group Ltd benefited greatly from providing equipment to the nation's high-speed projects.

During Liu's tenure, fatal railway accidents frequently made headlines. A train collision killed 72 in 2008 in Shandong Province. Liu was criticized then but was not removed.

Together with Liu, several high-ranking railway officials were removed and investigated in a series of graft probes.

Zhang Shuguang, the ministry's former deputy engineer, who was Liu's right-hand man, also faced corruption charges when he was found to own luxury homes in the United States.

China's bullet train system has been the subject of a series of scandals involving corruption, some of which are still under investigation.

The bidding process for high-speed railway projects was fraught with difficulties that gave business executives such as Ding with close ties to top rail officials priority in equipment contracts.

As a result, such equipment was found to have been bought at prices much higher than the market rate.

The July accident led to a public furor and accusations of reckless growth without proper attention to safety.

The current railway minister, Sheng Guangzu, ordered thorough checks of the railway network and slower speeds on high-speed railways.

Prostitution gang busted

Posted: 28 May 2012 09:00 AM PDT

SIX people have been arrested for allegedly recruiting schoolgirls as prostitutes in Yongkang City, east China's Zhejiang Province, China News Agency reported yesterday.

Police detained a total of nine suspects, including three businessmen and a village officer, in the city. The officer, surnamed Hu, was also a member of the city's National People's Congress.

Apart from the six in custody, three others are under investigation and could be arrested, police said.

The crime was discovered in February following a public tip but local police declined to provide details, according to Qianjiang Evening News.

Early speculation indicates more than 20 girl students, including underage teens from three schools, were seduced into prostitution.

A Bite of China strikes a chord with food lovers

Posted: 28 May 2012 09:00 AM PDT

A DOCUMENTARY series combining human interest elements with foods from across China captured the country's hearts and stomachs for the entire first week that it aired.

On May 14, the series "A Bite of China," produced by China Central Television, debuted, kicking off a week-long surge in viewership for CCTV-1 during the 10:30pm time slot.

The series has stirred heated discussions both on- and offline, and episodes have been watched over 20 million times online and attracted an unexpectedly high TV audience.

"The food, cooked by the most ordinary people in the remote corners of China, reminds me of my hometown, my mum's cooking, and my childhood," said Wang Xin, 28, who hails from northwest China's Shaanxi Province but works for a bank in Beijing.

"No matter how far you go, no matter who you become, your stomach will still be your hometown stomach," said Chen Xiaoqing, the director of the documentary as well as a famous food writer in China.

The seven-episode series weaves together stories of ordinary Chinese and the diversity of their food and cooking methods, with each episode focusing on a particular food-related topic, including ingredients, staple foods, and how one ingredient could be used to make many different dishes.

The first in-house documentary broadcast on CCTV-1, the series attracted an audience 30 percent larger than that for the TV dramas that usually fill the station's 10:30pm time slot, said Liu Wen, the producer of the documentary.

Netizens have described the documentary as "a disaster for people who are trying to lose weight."

The program boosted online food orders around the time that it aired, and orders for previously unpopular local specialties peaked after these foods appeared on TV, said a spokesman for Taobao.com, China's largest consumer-to-consumer trade website.

During that week, more than 8.9 million people bought over 10 million local food items on the website, up 12.5 percent from previous months.

Irate residents storm local office

Posted: 28 May 2012 09:00 AM PDT

ANGRY residents of Rui'an City in east China's Zhejiang Province vandalized cars and rushed in to a government office, smashing windows, yesterday morning to protest over the death of a resident, the city government said.

Video clips uploaded by witnesses on the microblog weibo.com show a group of youngsters smashing windows of cars at a parking lot near the government office and then turning them over one by one.

Hundreds of other residents came on to the street to watch them smashing the cars, some egging them on until police arrived, the videos show.

According to the city government, the protest was sparked by an incident on May 12 when a Hunan Province worker fought with a company official in a salary dispute. The worker, Yang Zhi, 20, was seriously injured in the head during the fight, while the company official, Xu Qiyin, 39, fled the scene.

Police launched an investigation into the incident and Xu turned himself in to police two days later. He was then detained by police on May 15.

In the meantime, Yang died in hospital on May 26 due to the severe head injury after surgeries failed to revive him.

The city's sub-district government officials tried to mediate with Yang's family over compensation for his death, but the family rejected the government's offer.

The family then gathered about 200 fellow villagers to protest at the government office this morning, demanding punishment for Xu and a better compensation offer.

But some of the protesters began vandalizing cars and then rushed into the government office, smashing windows.

Rocket debris hits homes

Posted: 28 May 2012 09:00 AM PDT

THE debris of a carrier rocket hit some houses and high voltage wires in central China's Hunan Province on Sunday night, causing a blackout in a village.

The debris of the Long March-3B carrier rocket crashed on some houses and hit a 10kw high voltage wire in Wawutang Township and Shuikou Township in Suining County around midnight, local news portal Rednet.cn reported yesterday.

"After hearing a loud boom, a giant structure weighing 30 kilograms crashed on the wire and the whole village was plunged into darkness," according to a staff member of the power supply station of the Wawutang Township.

Some villagers felt electric shocks when they tried to pick up the debris. Local authorities said they will compensate the damages later.

The Long March-3B carrier rocket was used to launch a telecommunication satellite "ChinaSat 2A" into orbit on the evening of May 26. The satellite was successfully launched from the Xichang Satellite Launch Center in southwest China's Sichuan Province.

Tibetans set themselves on fire

Posted: 28 May 2012 09:00 AM PDT

ONE man died and another was seriously injured after they set themselves on fire on a busy street in downtown Lhasa, capital of the Tibet Autonomous Region.

Dargye, from Aba in the Tibetan area of Sichuan Province, and Tobgye Tseten, from Xiahe County in a Tibetan community in Gansu Province, attempted self-immolation at 2:16pm on Sunday on Pargor Street in the heart of Lhasa, the publicity department of Tibet's regional committee of the Communist Party of China said yesterday.

It said police put out the flames within two minutes and sent the men to hospital. Dargye survived but Tobgye Tseten died. Dargye is stable and able to talk.

They were the first cases of self-immolation in Lhasa, though a spate of similar incidents have taken place in the Tibetan areas of Sichuan, Gansu and Qinghai provinces in the past year.

Downtown Lhasa is crowded these days as Tibetans celebrate Saga Dawa, falling on the 15th day of the fourth month in the Tibetan calendar and marking the anniversary of Buddha's birth, enlightenment and death.

Large crowds of pilgrims walk clockwise around Pargor Street in observance of Buddhist ritual.

A senior official in Tibet condemned the Lhasa self-immolations, saying they were separatist attempts.

"They were a continuation of the self-immolations in other Tibetan areas and these acts were all aimed at separating Tibet from China," said Hao Peng, secretary of the Commission for Political and Legal Affairs of the CPC Tibet Committee.

Police set up a special task force to investigate the case.

More than 20 Tibetans have died from self-immolations since March 2011. Most were lamas, nuns or former clergy members, said Qiangba Puncog, chairman of the Standing Committee of the People's Congress of the Tibet Autonomous Region.

Investigators found in many cases that photos of the designated self-immolators had been sent to separatist forces abroad, indicating that the self-immolations had been carefully planned. After the tragedies, separatist forces would publish the photos alongside pictures of the self-immolation scenes to play up the situation.

Premier Wen Jiabao said at a press conference after the conclusion of the annual parliamentary session in mid-March that China opposes Tibetan clergy taking such radical moves of self-immolation to disturb and undermine social harmony.

"The young Tibetans are innocent and we feel deeply distressed by their behavior," Wen said, adding the so-called Tibetan government-in-exile in India is in nature a theocratic one, under the direct control of Dalai Lama or under his indirect influence.

"Its purpose is to separate Tibet and the Tibetan-inhabited areas from China. We have a firm position and principle on this matter," the premier said.

Have You Heard… China Tightens Officials’ Overseas Travel to

Posted: 28 May 2012 09:23 AM PDT

Have You Heard…

Factbox: Private investment in China

Posted: 28 May 2012 08:52 AM PDT

Source: Reuters | Photo: Xinhua

(Reuters) – China's top economic planner has signaled it wants to boost private investment in its key industries, putting heavy emphasis on the energy and financial sectors.

China will lay out detailed rules and directions to encourage private investment in seven key sectors by the end of June. The rules will supplement a similar plan that was first unveiled in 2010 but has not been successful, state news agency Xinhua quoted an official with the National Development and Reform Commission, China's most powerful planning agency, as saying.

Below are details of the main sectors that were targeted for private investment in the 2010 announcement:

ENERGY

– The private sector was encouraged to join state-owned oil companies in oil and gas exploration and development, and also to invest in storage and pipeline transportation facilities of crude oil, LNG and gasoline.

But the industry remains dominated by China's triumvirate of state oil firms and the government only opened up its shale gas sector to private firms last week.

POWER

– Private firms were encouraged to enter China's renewable energy sector, as well as to invest in construction of hydro and thermal power plants. They would also be allowed to hold shares in nuclear power plants.

The announcement also said China would further open up its power market and reform pricing to create a more profitable environment for private investors.

FINANCIAL SERVICES

– The State Council said that private companies could invest in financial institutions and it lifted shareholding limits by private firms. But progress has been slow and the cabinet only approved a pilot project in March to legalize private lending in Wenzhou and allow private investors to buy into local banks.

TRANSPORTATION

– Beijing is encouraging private firms to invest in motorways, water transportation, ports, civil airport and aviation facilities construction.

– The transport ministry published detailed plans in April that would allow private firms to bid for railway construction projects. Their subsidiaries will also be permitted to list shares and pension funds would be allowed to invest in such companies.

TELECOM

– The 2010 guideline said that private investors would be allowed to provide value-added telecom services in the country.

LOGISTICS

– Private capital was encouraged to enter China's merchandise wholesale, retail and logistics sectors.

AFFORDABLE HOUSING

– Private investors were encouraged to build affordable housing projects – one of the key pillars of the government's 12th Five-Year development plan aimed at addressing a widening income gap and public anger over high property prices.

MUNICIPAL SERVICES

– The cabinet gave its support to private investors to engage themselves in various municipal services, including water, heating, gas supply, garbage disposal and public transport.

WATER CONSERVATION

– Private firms were encouraged to move into land and water conservation projects, comprehensive utilization of water resources, and irrigation and water conservancy with government subsidies, compensation schemes and other policy benefits.

DEFENCE INDUSTRY

– Private investors were given the green light to participate in research and development of technologies. They were also promised to be able to take part in military tenders.

HEALTHCARE

– Private capital was given government support to set up hospitals and other medical services, such as clinics and community healthcare centers. They were also encouraged to participate in the privatization of public hospitals.

EDUCATION

– The government encouraged private companies to set up high schools, secondary and primary schools, and other educational institutions.

SOCIAL WELFARE

– China's cabinet promised to support private investment in social welfare with various policy tools including lending support and land supply.

CULTURAL TOURIST AND SPORTS INDUSTRIES

– The government promised to open up areas such as publishing, entertainment, tourism and gaming industries to private investors.

LAND REMEDIATION AND MINERAL RESOURCES EXPLORATION

– The government promised to give private investors full access to China's mining rights market. Firms were also encouraged to take part in land remediation projects as well as the restoration of the environment in mining areas.

JPMorgan injects $400 million into China unit, eyes expansion

Posted: 28 May 2012 08:57 AM PDT

Source: Reuters

(Reuters) – JPMorgan Chase & Co (JPM.N) has injected 2.5 billion yuan ($394.08 million) into its China unit, the latest foreign bank to beef up its Chinese operations.

Foreign banks, including HSBC (HSBA.L) and Singapore's DBS Group (DBSM.SI), have either injected or are planning to pump in capital into their China units which are expected to grow rapidly over the coming years even as growth in the world's second-biggest economy comes off the boil.

"The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China," Zili Shao, Chairman and chief executive of J.P. Morgan China, said in a statement on Monday.

"The capital will be used to expand the bank's branch network, develop products, increase corporate lending, and recruit employees," Shao added.

The injection brings the registered capital of the locally incorporated unit to 6.5 billion yuan.

The local unit, which conducts commercial banking businesses in China, has also received regulatory approval to open its 7th branch in China in Suzhou, west of Shanghai, the statement said.

JPMorgan has a separate investment banking joint venture in China.

HSBC (0005.HK) injected 2.8 billion yuan into its China unit last year, even as it laid off several hundred investment bankers in London, Hong Kong and elsewhere as part of its jobs cull to save billions of dollars.

DBS, Southeast Asia's largest bank, said in April it is planning to make an injection of 2.3 billion yuan into its China unit to increase its network and staff, and upgrade infrastructure and other technology platforms.

($1 = 6.3439 Chinese yuan)

In thrall of the empire of the sons

Posted: 28 May 2012 09:10 AM PDT

Source: The Sydney Morning Herald By John Garnaut

When the kingmaker of Chinese politics, Zeng Qinghong, asked to see quintessential Australia, his diplomatic minders treated him first to jugs of beer and an oversized fillet steak at Brisbane's Breakfast Creek Hotel. Next stop was Sydney, where he dropped into Rupert Murdoch's Fox studios and was introduced to Nicole Kidman and Ewan McGregor on the set of Moulin Rouge. "He had a grin from ear to ear," says a source who accompanied him.

Zeng was then taken for a leisurely early dinner at Lachlan Murdoch and Sarah O'Hare's mansion, in Wolseley Road, Point Piper. Rupert Murdoch was accompanied by his new wife, Wendi Deng, dressed in a body-hugging green outfit. She performed as Zeng's guide and translator and took the lead in persuading him why News Corporation's Star TV should be beamed into China. "Wendy was definitely running the show," says the chaperone. One of Sydney's finest restaurants was closed for the day so its chefs could prepare Zeng's seafood extravaganza, featuring huge green lip abalone, to be consumed as the sun set over the Sydney Opera House and Harbour Bridge.

Zeng had clearly enjoyed taking off his tie, rolling up his sleeves, and bantering with the punters at the Brekky Creek, but he was even more impressed with the Murdochs' stunning harbour views. In 2008, just after Zeng had brokered the deal that installed Xi Jinping as the next president and Communist Party secretary, his son paid $32 million for a home with a nine-car garage, and an almost identical harbour vista, diagonally across the road.

The century-old mansion, Craig-y-Mor, used to be the home of Australia's most famous inside trader, Rene Rivkin. The Chinese purchase did not attract attention until 2010, when Zeng Wei applied to Woollahra Council for approval to knock it down and fork out another $5 million to build something more expansive. Zeng Wei eventually won the council battle, and demolition workers are expected soon. But he is rarely home as there is still too much money to be made in China.

"They are out of town," said Gavan Slaughter, a spokesman who helps take care of Zeng Wei's Sydney residence. He said Zeng was unlikely to respond to questions but that he would pass the message on. The Zeng family spends most of its time outside Australia including in Beijing, where they have a villa.

As the lure of the market grows ever greater, and the Communist Party refuses to fetter its enormous administrative powers or subject itself to any laws, ambitious officials and entrepreneurs have found it difficult to accumulate wealth and impossible to defend it without currying the favour of princelings or others welded to the party-state. They gravitate to the "princeling" children of leading revolutionaries such as Zeng Qinghong, and grand princelings such as Zeng Wei, knowing that doors open for them and officials or competitors do not dare disturb their interests.

Four years after Zeng Wei's purchase – which remains the most egregious confirmed example of Communist Party princelings flaunting their wealth – China's leaders are again grappling with the predicament of being unable or unwilling to control the privileges that flow towards their relatives. The reformist advocacy of the Premier, Wen Jiabao, has long been discounted because of his wife and son's aggressive use of family status to pursue private business opportunities. And now the purged Politburo member Bo Xilai also stands exposed to allegations of great hypocrisy, as foreign journalists pore over his family's financial dealings.

While Bo Xilai was reviving Maoist nostalgia on his official's salary of about $US1600 per month, in a country where per capita income is ranked 121st in the world, his son was renting a presidential-style suite at Oxford and driving a Porsche in the United States. Bo Xilai's elder brother adopted an alias to control $US10 million worth of shares at the Hong Kong-listed subsidiary of a state-owned bank. Two sisters of Bo's wife control business interests worth $US126 million, according to what a Bloomberg investigation could identify. And his wife, Gu Kailai, is accused of murdering an English friend, Neil Heywood, after they fell out over money.

Zeng Qinghong, Bo Xilai and Wen Jiabao are all immensely capable individuals, engaging and at ease in any company. Zeng and Bo, who were born into the heart of the communist aristocracy, are far more interested in accumulating personal power and defending the regime than acquiring the trappings of personal wealth. In today's China, however, where "politics is in command" and capital comes at the cost of a future favour for those who have the right connections, even simple-living and apparently idealistic leaders have found it difficult to deny their families access to the power and largesse that naturally flows their way.

Of the nine members of the Politburo Standing Committee, at least six have children who have profited handsomely from their family status. Since the tragedy of Tiananmen, leaders have collectively failed to find a way of limiting each other's family privileges without fracturing solidarity. It is becoming a regime-threatening vulnerability.

HISTORY

The Communist Party has not seriously tackled corruption among its princeling children since 1986, when the country was poor and tentatively opening itself to the power of the market. The reformist party chief Hu Yaobang fought to limit the privileges of leaders' children and even empowered his security apparatus to arrest the son of a Politburo member, Hu Qiaomu, in relation to an embezzlement and pornography racket (he was reportedly peddling videos to sex parties in the People's Liberation Army). Many party elders were disturbed by his audacity, as they also had children who were engaged in murky business dealings. Hu Yaobang's attempt to limit princeling corruption was a factor in him being purged in 1987, says one of his children.

Nepotism, corruption and, specifically, the fortunes of leading princeling children fanned the popular outrage that became the Tiananmen protests after the trigger of Hu Yaobang's death. Hu's reformist successor, Zhao Ziyang, responded to protester demands by proposing to have his own family assets investigated, but he was purged and placed under house arrest. When Zhao's successor, Jiang Zemin, was flown in from Shanghai to piece the party back together, he brought with him the princeling powerbroker, Zeng Qinghong, whose son would later become the princeling of Point Piper.

The mission was no longer to limit princeling largesse but to manage egos, ambitions and jealousies within that rarefied world in order to optimise the political support that flowed from it. Zeng became the go-to man for favours, positions and advice. He managed, cajoled and manipulated China's most powerful princelings. But his prodigious powers of persuasion stopped at his own front door: He could not control his own son.

THE FAMILY

In 1993, as head of the party's General Office, a post akin to cabinet secretary, Zeng asked a family friend to place his son, Zeng Wei, in a Melbourne university, because he had been unable to gain a place in China's intensely competitive system. "Let him go out and work, in a restaurant, don't let him lean on others," said the father, according to a source familiar with the conversation. Zeng's friend found a financial sponsor in the Chinese community and arranged university admission and accommodation.

But the 25-year-old Zeng Wei never turned up. Zeng Qinghong proudly explained to his friend that his son had decided instead to become an ordinary businessman, engaged in laboriously selling real things people needed, and had even delivered his father a truckload of watermelons to prove it. Neither the father nor the friend had any inkling that within a year of Zeng Wei's no-show in Melbourne he had progressed from selling watermelons to promoting multimillion-dollar events. The friend recalls seeing Zeng Wei in a corporate box at the Workers Stadium in 1994 for an exhibition match between the Beijing soccer team and AC Milan, and embarrassing himself by trying to make an introduction with the CITIC boss, Wang Jun. "Wang Jun said, 'I know him well, this game is sponsored by Zeng Wei, he invited AC Milan'," recalls the friend. "He went from study, to watermelons, to this!"

By the time Zeng Qinghong was planning his trip to Sydney in 1999, his son was a wealthy man. Ambitious businessmen across the country, including many princeling children of his father's friends, were falling over themselves to be seen to be close to the son of China's most important political powerbroker.

"Talking about all these princelings taking positions in government and wealth in the private sector, I think it's quite natural and may not be a bad thing," says the Chinese head of a foreign investment bank in China, who counts himself as a friend of Zeng Wei. "If it's not them making money it will be somebody else."

Murdoch had been fast to grasp the potential of the Chinese marketplace and that his fortunes there would depend on politicians. When he heard about Zeng's visit his staff peppered Australian diplomats with phone calls until he'd carved out a large slice of the Sydney itinerary.

At the mansion in Point Piper, Murdoch brought in the Aboriginal singer-guitarist Jimmy Little to perform and the art consultant Jean Battersby to hang the finest of his Australian works on the walls. Wendi Deng acted as Zeng's guide and translator and took the lead in persuading him why News Corporation's Star television would be good for the Communist Party. Zeng impressed his guests, as always, with his engaging curiosity, poise and affable persona. The following year he returned the hospitality by hosting Murdoch and Deng at the Chinese opera in Beijing.

Murdoch spared no effort in trying to charm his way into the Chinese marketplace. He sponsored a book about Deng Xiaoping written by his daughter, Deng Rong, whose husband ran one of China's main arms-trading conglomerates. His News Corporation led a consortium with investment bank Goldman Sachs to inject $325 million of capital into a telecom venture run by a US-educated entrepreneur, Jiang Mianheng. The investment turned to gold when Jiang's father, president Jiang Zemin, orchestrated the transfer of a third of the assets of China's dominant telecommunications company into it. Murdoch also joined forces with a former PLA radio host to create the Phoenix satellite television joint venture, which helped to prove his flexibility in adapting to Chinese media sensitivities.

In 2002, Zeng was promoted to the Politburo Standing Committee, and then the position of vice-president, while his patron Jiang bowed out from frontline duties. Ambitious politicians, officials and entrepreneurs continued their efforts to cultivate ties and bask in his refracted glory. Zeng's brother, based in Hong Kong (where Zeng Qinghong had portfolio responsibilities), earned a reputation for aggressively muscling into business opportunities and facilitating compromises with Hong Kong business people who encountered regulatory problems on the mainland.

Zeng Wei, meanwhile, was working on a bigger plane.

In the 1990s, Zeng Wei became close friends with the deputy chairman of the Securities Regulatory Commission, Wang Yi, according to a Zeng family friend and a business associate of Zeng Wei. The friendship blossomed at a time when the regulator was discovering it had access to valuable information about state-owned companies that were seeking to list shares on China's nascent stock exchanges. It also had the power to make or break fortunes by providing private companies with listing approvals.

The friendship turned disadvantageous when Wang was detained by party investigators in a probe into securities market violations, although he was later jailed on unrelated corruption charges.

In 2007, investigative reporters at Caijing Magazine discovered 92 per cent of the shares in the power generating company Luneng, with net assets valued on its books at 74 billion yuan ($12 billion), had been transferred to two unknown private companies for 3.7 billion yuan. A follow-up magazine edition was recalled and editors placed under huge pressure as soon as it hit news stands, after China's leaders learned the identity of the princelings involved. Sources close to the Zeng family and also to the investigation reveal that the most sensitive identity involved, in this secret multibillion-dollar transfer of government assets, was Zeng Wei.

Zeng Wei also teamed up with coal barons from Shanxi province. One of his partners hosted the wedding of his daughter at a beach resort in March, according to business sources, where the dowry alone was reported to consist of six Ferraris.

Zeng Wei became close to a Hong Kong property developer, Renhe Commercial, which made its money by streamlining military approval processes and converting underground bomb shelters into shopping centres in southern China. The company president, Dai Yong'ge, joined Zeng and wife Jiang as directors of a company in Australia, shortly before Zeng bought into Point Piper and Renhe listed on the Hong Kong stock exchange.

WHAT IT MEANS

The blurring of state and private interests that took place with the early princelings in the 1980s looks trifling compared with the melding of politics and business today.

Some of China's most respected public intellectuals are warning society and economy are being held hostage to the wealth-maximising requirements of the political elite.

Such warnings are being echoed privately in business circles, too, where entrepreneurs are enthralled by the prospects of short-term profits but increasingly uncertain about their personal or financial security.

The private wealth of the party's princelings is usually well concealed, including through the use of multiple identities. But they provide bridges between politics and the market. Many are joining or establishing investment vehicles and inserted themselves as agents to lubricate or clog the arteries of private sector wealth. Stock exchanges double as vehicles for converting family political capital into cash, which can be re-converted into political power. State-owned enterprises can allocate massive contracts in their favour and entrepreneurs split their profits with them in exchange for regulatory protection.

In investment banking and private equity circles, the best known princeling entrepreneurs are Winston Wen, son of the Premier, Wen Jiabao; Li Tong, daughter of the propaganda chief; and Wilson Feng, whose father-in-law heads the National People's Congress and has overall responsibility for state-owned enterprises. Further from the relative transparency of stockmarket transactions, however, other children of China's top nine leaders are said to be aggressively pursuing opportunities, according to Chinese business people who have encountered them.

They include Jia Jianguo, son of the head of the party's "united front" work (involved in one of Beijing's most controversial developments, at Dongzhimen railway station); He Jintao, son of the party's anti-corruption chief and former Organisation Department head (facilitated a complicated restructuring of the Guangdong Investment Trust and Investment Corporation, which left creditors frustrated); and Zhou Bin, son of oil tsar and security chief Zhou Yongkang (contracting with China's big oil companies).

The business operations of all six princelings relate to the portfolios of their fathers (or father-in-law, in the case of Wu Bangguo).

China's army of censors and propaganda officials ensure the private dealings of cadre children never make it into mainstream Chinese media. Nevertheless, even China's official mouthpieces acknowledge the public's growing discontent when it suits them, as they did shortly after the purge of Bo Xilai. "The spouses and children of some cadres have taken advantage of their power to seek personal gains, disregarding the law, thus stirring public outcry," said Xinhua on April 14.

The hypocrisy of Communist Party leaders using socialist ideals to justify their dictatorship, while allowing their children to make millions, is not just alienating ordinary citizens. It is splitting princelings themselves right down the middle. Many who purport to uphold egalitarian ideals believe the recent crop of leaders have betrayed and may yet destroy the Communist Party their parents spilled their blood for. These descendants of revolutionary leaders reject the term "princelings" for its aristocratic connotations, and draw a boundary between themselves and younger children of "mere bureaucrats", such as those listed above.

"In recent years we've heard about the second generation bureaucrats (guanerdai) but we are not, we are the red successors (hongerdai)," says Hu Muying, the daughter of Mao's long-time speech writer, Hu Qiaomu, who runs a large "red successor" organisation. "My father's generation worked for the interest of the people, but officials today work to become officials, not serving the people but striving for their own power and interests while their children make huge profits from their parents' power."

The Communist Party's "red successors" speak as if they would do anything to rid the nation of corruption. But their determination stops at the thresholds of the family home. What Hu Muying did not say was that it was her own brother, Hu Shiying, who the reformist party boss Hu Yaobang had jailed for corruption in 1986. She has never forgiven Hu Yaobang for allowing it to happen.

Political analysts see the families of Zeng Qinghong and his patron, former president Jiang Zemin, as pioneers of modern princeling business.

These are also the two men that Rupert Murdoch worked hardest to court, as he sought to create a worldwide satellite television empire. In the end Murdoch's prodigious lobbying efforts failed and he pulled out of the market.

Zeng Qinghong has confined his political activities to advising former president Jiang since brokering a deal that saw him hand the vice-presidency to his princeling associate, Xi Jinping, at the 17th Party Congress in 2007. According to a friend, his son's business dealings had contributed to his decision to decline even honorary positions, as they provided too much ammunition to his political enemies. He says Zeng now confines his political work to advising his long-term patron, Jiang.

It seems the lasting legacy of Zeng Qinghong's visit to the Murdoch Point Piper mansion was his son's decision to commence the process of business migration to Australia. Zeng Wei would like his two sons to be educated in Australia, as his father had wanted him to be, far from the white-knuckle adventures of Chinese politics and business. Regulatory scrutiny had also helped motivate Zeng to find an overseas refuge, should it be required, but the Communist Party has proven over 25 years that it has not got the stomach to discipline its own children.

John Garnaut is writing a book on China's princelings. A version of this story will appear at foreignpolicy.com.

Taiwan Ex-Premier Su Tseng-Chang Elected Head of Opposition Party

Posted: 28 May 2012 09:02 AM PDT

Source: Wall Street Journal By Jenny W. Hsu | Photo: AFP

TAIPEI—Following the election of former Premier Su Tseng-chang as the head of Taiwan's opposition Democratic Progressive Party on Sunday, the focus is now on how the new leader plans to improve the party's long-standing acrimonious ties with China, a campaign pledge.

Since the China-friendly Kuomintang took over the government in 2008, cross-Strait economic opening and dialogue have taken great strides, forcing the DPP to adopt a more moderate-—or at least less hostile—stance toward Beijing.

During the race for DPP's chairmanship, all five candidates advocated for a more open approach with China, varying in scale and scope. Mr. Su, who has in the past blasted China's intention to take back Taiwan and questioned the ruling KMT's ties with the Chinese Communist Party, now stressed the DPP will have to recognize China's emergence and that both sides should replace "past conflicts with conversation."

As a founding DPP member and a former defense attorney, Mr. Su, 65 years old, rose to prominence in the late 1970s when he represented a group of antigovernment activists during the Martial Law era under the KMT. Before he became premier in 2006, he spent most of his political career as a lawmaker, county magistrate in Pingtung and former Taipei County and Presidential Office secretary-general.

Having a moderate at the helm of the island's most influential opposition force provides extra assurance that the current cross-strait amity fostered in the last four years will not be easily rattled, analysts said, even if the DPP returns to power in the next presidential election slated for 2016.

But China's rougher-than-expected leadership transition, slowing economic growth and rising tensions in the South China Sea could mean Beijing prefers to put Taiwan on the back burner for now, indicating Mr. Su will most likely have to wait awhile before claiming any major cross-strait breakthroughs in the four years, said analysts.

"Mr. Su's predecessor Tsai Ing-wen was also considered a moderate but Beijing did not budge an inch. Beijing is taking its usual wait-and-see approach and will pay close attention to any cross-strait comments made by Mr. Su," said Liao Da-chi, a professor at National Sun Yat-sen University.

Hsu Yung-ming, political science professor at Soochow University, also said in the near term, cross-strait issues likely won't be a priority for the DPP and the CCP until closer to the 2016 presidential election.

Mr. Su's biggest hurdle for now, he added, is how to rally the party behind him, especially after several DPP heavyweights have accused him of having his own political ambitions, not Taiwan's best interests, in mind.

Those who oppose Mr. Su said he has never been a staunch supporter of Taiwan's independence and worry the movement will wither under his leadership.

Mr. Su's presidential ambitions have been an open secret in the Taiwanese political scene. However, he has lost every election he participated in since he resigned as premier in 2007, including as a vice-presidential candidate in the 2008 race, Taipei mayoral race against the incumbent KMT Hau Lung-bin in 2010 and the party primary for 2012 presidential candidacy to Ms. Tsai by 1.35%.