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Blogs » Politics » Law Against Forced Psychiatric Treatment Adopted


Law Against Forced Psychiatric Treatment Adopted

Posted: 26 Oct 2012 05:04 PM PDT

Xinhua reports that, after almost 30 years of efforts, China has adopted its first mental health law to protect patient privacy and other rights, and to combat the problem of wrongful institutionalisation.

Under the new law, there should be no infringements upon the dignity, personal safety or the property of mentally ill people.

The law also stipulates that institutions and individuals should protect the privacy of mentally ill people by preventing leaks of private information, such as their names, addresses and employment status, unless the sharing of such data is necessary for institutions and individuals while exercising their lawful duties.

China currently has about 16 million people suffering from severe mental disorders, according to the Ministry of Health.

[…] The law is expected to curb abuses regarding compulsory treatment and protect citizens from undergoing unnecessary treatment or illegal hospitalization.

Xinhua notes the 2011 case of Chen Guoming, held in an asylum for 56 days at his wife's instructions after he refused to lend money to her family. But forced psychiatric incarceration has also been used as a political weapon against activists, petitioners and whistleblowers. From Reuters' Sui-Lee Wee:

"We welcome it because having a law is better than not having one," Nicholas Bequelin, a researcher at , a New York-based advocacy group, told Reuters.

"The most important thing that this law does is it will allow to step in to monitor and press for improvement in the management of mental health in China, including … pushing for greater and progressive curtailment of police rights."

[…] But Bequelin said he was still concerned about China's police-run psychiatric hospitals, which confine people the authorities consider troublemakers.


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Chen Guangcheng: “Speak Out … The Sky Won’t Fall.”

Posted: 26 Oct 2012 04:16 PM PDT

The Atlantic's James Fallows spoke recently to legal activist Chen Guangcheng, currently living in New York after his dramatic escape from house arrest in April. Chen explained his views on the deterioration of in China, the country's prospects for peaceful reform, and the role that international pressure might play in encouraging it.

As you think about the overall situation for the rule of law, and development of and individual liberties in China, would you say that things are on the whole getting better? Or getting worse?

[…] I think China has taken the first step, which is to make sure that there are rules and regulations and that govern the society. China is not doing a great job of the second step, which is to make sure that those rules are implemented and complied with in practice. Law enforcement generally speaking cannot function in today's Chinese society. That is what has given rise to all these numerous cases in which the government ignores the rules that they themselves have set up. For instance, the case of my nephew [, arrested after Chen's departure], and my own case. These are all examples of the government's blatant ignorance of the law. The government acts contrary to the law, tortures people, 'disappears' them, does all sorts of things to the innocent people without any legal basis,

What do you think outside individuals or organizations who support China's evolution to a rule-of-law society can most usefully do?

[…] I want to deliver this message to people in any democracy in the world. I want to let them know that every effort they have made in this respect will make a huge difference in China. I urge them to have faith in their ability to make changes in China. Be confident and speak out. The sky won't fall just because people speak up on their own opinion.

Chen reiterated his view that Western companies should take on more social responsibility in China, singling out for praise: "It really has played a model role in this respect …. So far I believe that has earned the confidence of the Chinese people."

Chen finally met with his admirer Christian Bale this week at an awards dinner hosted by Human Rights First. The Batman star mounted an unsuccessful attempt to visit Chen last December in the village of Dongshigu where he and his family were being illegally held. One of the guards who aggressively blocked Bale's visit went on to attain some measure of Internet stardom as a new Batman nemesis and generally Photoshopped omnipresence.

Fallows also wrote a short passage on Chen for The Atlantic's Brave Thinkers 2012 feature:

Chen, who has been blind since early childhood and taught himself law, showed physical courage comparable to the Tank Man's in climbing over walls and feeling his way along roadsides for miles, to escape the house in which local authorities had detained and physically abused him and his family for years. He broke a bone in his foot and fell repeatedly, but he continued on.

Yet his more impressive courage is intellectual and temperamental. Intellectually, he has challenged Chinese authorities, not to give up their hold on power, but instead to live up to the commitments they have made to Chinese citizens, on issues ranging from the rights of the disabled to protection against forced abortions. Temperamentally, he has remained resolute and optimistic, even while knowing that his family still in China is vulnerable to retribution, and that as an exile, he may lose influence in his homeland.

Also on the Brave Thinkers list is Shanghai-born architect Jun Xia, currently directing the design of the 121-floor Shanghai Tower.


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Drawing the News: Politics in the House

Posted: 26 Oct 2012 04:05 PM PDT

From world politics to personal freedoms, this week's cartoon selection runs the gamut of major recent events in China.

The week as a microcosm of China's ills: at the top, onlookers take photos of a with their cell phones, uploading to accounts like "@PeacefulChina," "@PeacefulUniverse" and "@PeacefulMyAss." The "peaceful" prefix is often used in the official accounts of the Public Security Bureaus. Musician Zuo Xiao has now brought his protest against the forced demolition of his home online. But will his message get across to the general public? He has competition. Plastered to the side of the house is a graffitied ad–8 yuan to add 1000 Weibo followers–an injunction that "Family Planning Is Good," and this important notice: "Nobel Roof Tiling reports you have won the prize. Please transfer RMB30,000 to Agricultural Bank account number XXX." That last jab is at the planned "Mo Yan Culture Experience Zone," a US$112 mil government project for the Nobel winner's hometown.

Below that violent scene, a tyrannical kindergarten teacher lifts up one of her students by the ears, barking, "Let's see you tear up another leader's portrait!" A Chinese factory supervisor will be deported from Cambodia for cutting up photos of the late Norodom Sihanouk, king until 2004. Another child is tied up and shut up in a garbage can that warns, "According to the and regulations, this user does not exist," a reference to removing Weibo users who cross political lines. Lindihuan (@小林-数码生存) has little hope for Weibo to effect any change beyond these particular circumstances. The online public stumbles around blindly at the bottom, each person asking the other "What do you think, Watson?"

 

 

 

 

In two weeks, the world's two largest economies will undergo two very different leadership transitions. In one, it will be a meticulously planned changing of the guard; in the other, a battle to the bitter end. In the eyes of Benevolent Brother (@仁哥时漫), China's transition could hold surprises. A group of nine rats (the nine members of the ?) argue as their leader shouts over them. They remain unaware of the mutinous group marching into their cave. Meanwhile, woodland creatures gather in awe outside a gated compound where a donkey and an elephant fight to the death.

 

 

The U.S.-China relationship is one of the most vital today, but do the two understand each other? Beijing frets that the U.S. "pivot to Asia" is really a pivot away from China, as America strengthens its partnerships with Burma, Thailand and other regional players. Add the scant discussion of China in this week's final presidential debate and some will ask if these two major powers are even playing the same game of chess. In "Connect," B. Kuang's answer is that the two aren't even playing the same type of chess.

So, what's next for China after the reshuffle of the ? Could reform be afoot? Marx, Lenin and Mao were conspicuously absent from several Chinese Communist Party statements this week. Mao Zedong Thought may even leave the Party constitution. And Xi Jinping may urge reform as future president. Then again, the world is always waiting for China to change. In Old Pinzi's view, political reform is as slow as a snail, taking the stage in what could be a very long, drawn out performance.


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Bo Xilai Case Sent to Prosecutors

Posted: 26 Oct 2012 11:18 AM PDT

Following the announcement on Friday of Bo Xilai's expulsion from the National People's Congress, The Wall Street Journal's Carlos Tejada reports the latest step in the process of bringing him to trial:

Xinhua late Friday said the Supreme People's Procuratorate has decided to put Mr. Bo under investigation for alleged criminal offenses, as well as impose what it said were "coercive measures" on him in accordance with the law. It didn't elaborate. The Supreme People's Procuratorate investigates cases at the national level and prosecutes serious criminal cases.

The Bo case still requires a formal indictment before it moves to trial, making it increasingly unlikely that Mr. Bo's fate will be decided before the Nov. 8 beginning of the , which kicks off the leadership change. Chinese leaders are thought to have been anxious to conclude the scandal surrounding Mr. Bo ahead of the congress, in part because his case raises uncomfortable questions about power and corruption.

Prior to the two announcements, Reuters spoke to Human Rights Watch's Nicholas Bequelin, who said of the ongoing proceedings: "It's theatre. The judiciary grinds into action only when the outcome has been determined. There is no indication we will see a genuine trial because Bo knows too much."


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Photo: Birds, by Gonzalo RA

Posted: 26 Oct 2012 10:58 AM PDT

Sensitive Words: Wen Jiabao’s Family Wealth

Posted: 26 Oct 2012 10:33 AM PDT

As of October 26, the following search terms are blocked on Sina (not including the "search for user" function):

"Grandpa Wen" is now blocked from Sina Weibo search results.

Wealth of 's Family Exposed: The English and Chinese websites were blocked within hours of publishing an exposé on the vast, hidden personal wealth of Prime Minister Wen Jiabao's relatives. Bloomberg suffered the same fate in June for its investigation into the assets of Xi Jinping's family. The Times' report arrives just two weeks before Wen, Hu Jintao and others hand over power to the next decade of leaders during the 18th Party Congress.

- New York Times (纽约时报)
- Twist Times (扭腰时报): "Twist" (扭腰 niǔyāo, as in the dance) sounds similar to New York (纽约 Niǔyuē).
- NY
- New York Times
- New York SB (纽约SB): SB is the pinyin abbreviation for "Times" (时报 shíbào).

- 2.7 billion (27亿): The minimum amount of controlled assets (in U.S. dollars) held by Wen's relatives, according the the New York Times.
- Wen + assets (温+财产)
- Wen + wealth (温+财富)
- Wen + prime minister (温+总理)
- Wen + family (温+家族)
- Wen treasure (温宝)
- Wen clan (温氏)
- Wen Party (温党)
- Wen Emperor (温帝)
- movie star (影帝)

- Yang Zhiyun (杨志云): Wen's mother
- Duan Weihong (段伟红): Founder of Taihong, the company which served as the vehicle for Wen's relatives' shares in Ping An Insurance.
- Daimengde (戴梦得): Wen's wife Zhang Beili's jewelry company.
- Wen + diamond queen (温+钻石女王): Zhang has earned the nickname "diamond queen" for her role in the industry.
- Lady Wen (温夫人)

- Wen Yunsong (温云松): Re-tested. Wen's only son.
- Crown Prince Wen (温太子)
- Young Master Wen (温少爷)
- Zheng Jianyuan (郑建源): Wen Yunsong's alias according to online rumor.
- China Satellite Communications Corporation (中国卫通): Wen Yunsong is currently chairman.
- New Horizon Capital (新天域资本公司): Wen Yunsong is one of the founders.
- Excellence Science and Technology (创优科技): Company founded by Wen Yunsong.

- Zhang Beili (张培莉): Re-tested.
- Wen Jiahong (温家宏): Re-tested.
- Grandpa Wen (温爷爷): Re-tested. One of Wen's nicknames, earned for his public appearances with ordinary people.
- Prime Minister Wen (温相): Re-tested.

Note: All Chinese-language words are tested using simplified characters. The same terms in traditional characters occasionally return different results.

CDT Chinese runs a project that crowd-sources filtered keywords on Sina Weibo search.  CDT independently tests the keywords before posting them, but some searches later become accessible again. We welcome readers to contribute to this project so that we can include the most up-to-date information. To add words, check out the form at the bottom of CDT Chinese's latest sensitive words post.


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Inside China’s “Sunshine Detention Centre”

Posted: 26 Oct 2012 10:32 AM PDT

The Guardian's Tania Branigan visited a model pre-trial detention centre in Beijing, where birthday noodles and counselling take the place of and fatal "hide and seek accidents". Her report describes the apparent conditions in the facility, and discusses how representative of reality this carefully presented showcase might be.

Allowing reporters to visit Beijing No 1 and 2 centres was a surprising move by public security officials, who usually avoid foreign media. But it was only a tiny glimpse of the highest quality facilities in the country.

Nicholas Bequelin, senior Asia researcher at , said there was no doubt the facilities were the country's best, but added: "It does tell you something: it means this is what the government sees it should be doing … I don't think China is building model detention centres just to fool the international community."

[…] But John Kamm of Dui Hua, which advocates for political and religious prisoners and monitors developments in the criminal justice system, pointed out that not everyone was held in a detention centre: those put under residential surveillance were held in "guest houses" run by the Public Security Bureau. Last year, several of those held under such conditions during a crackdown on activists and lawyers, subsequently described being tortured.

In August, lawyer Zhang Yansheng recounted his own visit to a client in a Guangdong detention centre, and complained that conditions inside prevented him from offering effective legal counsel. In addition to residential surveillance, black jails and house arrests, there is also the notorious shuanggui system reserved for Party members, in which Bo Xilai now appears to be held and retired Hunan official Wang Zhongping died under disputed circumstances late last month.


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NIMBY Protest Watch: Tear Gas Used in Ningbo

Posted: 26 Oct 2012 09:22 AM PDT

Another month, another NIMBY protest in China.

Following the similar protests in Shifang and Qidong earlier this year, people in the coastal city of Ningbo have taken to the streets to urge the local authorities to call off a controversial project that may impact the environment.

Protesters object to the proposed capacity expansion by Zhenhai Refining & Chemical Company, which is a subsidiary of Sinopec, one of China's largest state-owned oil companies. 

As in the case of Shifang and Qidong, mass protests by urban residents with photos splashed all over social media seem to spur local governments into action. The People's Daily reports that the local authorities in Ningbo will soon hold a forum to discuss the project with concerned citizens. 

Some Call NYT an Inadvertent ‘Puppet’ in Wake of Exposé on Chinese PM

Posted: 26 Oct 2012 08:56 AM PDT

A search for "NYT" returned more than 185,000 results on Sina Weibo around 9:40am China time on Oct. 26

On Thursday Oct 26 The New York Times published a 4,700 word article on corruption among the members of Wen Jiabao's family, alleging that they amassed a fortune of $2.7 billion through shadowy business dealings. 

Appearing on the front page of both New York Times' English and Chinese websites, both sites were completely blocked in China within hours. Prior to the article's publication, the New York Times website was accessible from within China's Great Firewall of censorship, although selected articles had been blocked from time to time.

"After reading New York Times' bombshell, I felt chills down my spine. I really hope none of it is real," a Chinese social media user commented.

The Wen article spread by word of mouth on China's social media, with users sharing screenshots, picture files or a brief summary in coded references. A typical exchange among friends went like this:

A: NYTimes, a new tycoon in China. 2.7 billion U.S. dollars. 

B: Is it my mother? 

A: Haha, no. It is the "best actor" not to be named.

B: Best actor? Which one?

A: Somebody up there named Wen.

B: Oh. Got it! 

The same search for "NYT" was blocked around 11am China time on Oct. 26

Within hours of the article's publication at 4:34 AM in China, social media censors also shifted into high gear, deleting tweets and posts containing mentions of the article and blocking new search terms.

In early morning China time, a search for "NYT" on Sina Weibo, one of China's most popular microblogging services, yielded more than 185,000 results, many mentioning the Wen article, but by late morning, that search term was blocked entirely. Other phrases, such as "New York Times" and "2.7 billion" (27亿) are also blocked. Well-known code words for Wen such as Grandpa Wen (温爷爷) or Best Actor (影帝) had already been blocked before the article's publication.

Mixed feelings

Say it ain't so, Grandpa Wen. (World Economic Forum/Wikimedia Commons)

Some expressed surprise, shock and disappointment at Wen, finding it hard to believe that "the People's Premier," who appears on newscasts in an old coat visiting the poor and downtrodden, would allow his family to amass such an astronomical sum.

"In this day and age, no official is clean and I can accept that, but they shouldn't treat us like we are stupid. They fill up on abalone and lobsters in a five-star hotel, and then go to crowded street markets to buy cheap vegetables just to put on a show! I can't take that," one user wrote. 

Rumors about Wen's wife and son using his influence to make money have been around for years, but the New York Times article both validates the rumors and puts a dollar figure. "The number is so large, I have no idea what that even means," tweeted one commentator on Sina Weibo. "Just glanced at it, and I was completely blown away!!!! This is not just corruption, this is a black hole!!!" wrote another. Another also tweeted on Weibo in utter disbelief, "The premier looks so kind and caring about the average people. How is it possible that he has got 2.7 billion USD!!!"  

The article does not directly accuse Wen himself of any wrongdoing, only that his family members used his influence, or the impression of his influence, to secure sweetheart deals. Still, the article's implications are incongruous with Wen's frequent public tirades against corruption within the Chinese Communist Party. One user tweeted on Weibo, "I don't believe Wen has no knowledge of the $120 million sitting in his mother's account." Another wondered, "The article mentions that he is not happy about his family's dealings but unwilling or unable to stop them–although that's not evidence of his guilt, how can he fight corruption in the whole system if he cannot stop corruption within his family?"

Wen Jiabao and Zhang Peili - For poorer, for richer, for a lot richer?

Many, however, defended Wen despite the revelation. One user argued that China's elite politics requires some skin in the game. "In that group, this is the ticket that makes you eligible to play. If your ass is clean and your family has no assets, you have no qualification to form any alliances or make bargains." Others still admire Wen for being the most senior and the most vocal among those Chinese officials who dare to openly call for reforms. "It doesn't matter if these disclosures are true, I don't expect high officials in the CCP [the Chinese Communist Party] to be clean anyway. I just hope that the liberals and the reformers can start real political reforms," wrote one user. 

It's all about the timing

China's armchair political analysts on social media see far more in the article than a simple exposé about Wen's family wealth. The timing of the article, two weeks before the 18th Party Congress that will solidify the future leadership of China for the next decade, seems to indicate that a final showdown between ideological camps is playing out behind the heavy gates of the central government's Zhongnanhai compound. 

Bo Xilai: How did I get involved again?

Just three days before the article's publications, overseas Chinese media reported that a portfolio of documents on Wen had been delivered to various foreign media outlets. As Wen presents himself as a champion of China's liberals and reformers, many assumed that the dirt on Wen was given to foreign media by Wen's enemies or supporters of former Chongqing Party Secretary Bo Xilai, the fallen symbol of the conservative camp who yearned for a return to Communist or Maoist orthodoxy.

"What position is the New York Times taking? Have they been bought out by the supporters of Mao?" asked one user. "All sides are making their final moves and positioning their pieces–that is what I think about the NYT's headline today," commented another. Some believe the newspaper is being used as a pawn in the power struggle, "This time NYT really does not understand China–too much of a puppet."

 Another user wrote:"The information is probably given to the New York Times by left-wing powers in China, and the right-wing deserves it. [In China, "left-wing" means conservative and "right-wing" means liberal.] They are so bad, wanting to eliminate the left wing in China completely and treating Bo Xilai and his family so horribly. If [Wen] does not fall, our country and the Party are finished." 

Others, however, have confidence in Wen's position. One commentator tweeted, "I read it. Except for the crazy big dollar figure, the report is not surprising because the relationship between power and money is so close in China today. Nothing major will happen [to Wen]. I think [the Party] has investigated this a long time ago, and if something like this would cause a problem for Wen, it would have happened already." 

No matter what happens to Wen and the line-up at the 18th Party Congress, Wen's political legacy and historical image are likely to be forever tainted by the revelations in the article. One social media user has no sympathy: "A giant when he talks, but a dwarf when he acts. Fare thee well."

A version of this article also appeared in Foreign Policy magazine's Passport blog.

The Daily Twit – 10/26/12: Gray Lady Down

Posted: 26 Oct 2012 05:01 AM PDT

Today's English-language, foreign China news was dominated by a discussion of . . . English-language, foreign China news. No wait, hear me out. You see, a certain major newspaper from the U.S., often known as the Gray Lady, published an in-depth research piece on the family finances of a certain China government official.

This sort of thing is frowned upon here in China, and when the media does something like this, web sites tend to get blocked. For example, a certain well known media group that focuses on business reporting did something similar this past June and ran into the same trouble.

So it goes. (Every time I use that line, I have to send the estate of Kurt Vonnegut a dollar.)

Throughout the day, there has been a series of foreign media navel-gazing pieces that cited to the original article and talked about relevant news industry topics. All well and good, if you're into that sort of thing.

My reaction? Muted, for several reasons (aside from the obvious). For the most part, I have little to say about the article and the government reaction because none of it, from beginning to end, is even a little surprising. I'm not trying to criticize the reporting here; I'm just saying I sort of already knew how this was going to play out (kind of like watching the last half hour of Titanic).

So let's move on to some other topics, with the subject of the day being "China domestic issues":

Reuters: China's year of political surprises not over yet — For China watchers, there is perhaps more than a little "I hope so" as a subtitle to this headline. No one wants a disruptive political season, of course, but something unscripted is always fun once in a while.

Xinhua: Bo Xilai expelled from national legislature — Speaking of unscripted . . . well, you know. This is not at all how 2012 was supposed to go.

BBC News: Where are the powerful Chinese women? — Now that we're paying attention to Chinese politics, yeah, where are all the female leaders? Not a new question, and we're still waiting on a satisfactory answer. Personally, I'd also like to know why the U.S. government (better than China on this issue but still not great) hasn't had a female president and why the legislature is such an Old Boys' Club. Sad.

Economist: Embarrassed meritocrats — Old (very old) debate over whether China's government is really a meritocracy or something else. And if it is something less than meritocratic, is that idea aspirational (i.e., will China get there some day)?

East Asia Forum: Does China know it must change? — No, not more politics. This one is about economic policy, specifically rebalancing the economy away from investment and towards more consumption and the role of the private sector.

Bloomberg: Flood of money leaving China — Lots of articles on capital flight these days, both via legal and illegal means. Most of today's news on the subject were reporting on a new study by the organization Global Financial Integrity, and the numbers are really, really big. You can also check out a similar story by Reuters: Dirty money cost China $3.8 trillion 2000-2011.

CNN: More Chinese cities need to come clean on air pollution — Not about pollution per se, but about disclosing pollution data. Good day for this article; the Beijing sky looked like split pea soup.

China Daily: Plan to halve capital's traffic controversial — Speaking of air pollution, this article was rather depressing. Seems like a) we have to reduce the number of cars on the road, but b) it's just not going to happen in an effective manner. Nice.

China Dialogue: Overfishing Pushes 80% of Chinese Fishermen Towards Bankruptcy — This environmental story is a few days old, but I just saw it this morning. Another very important, yet depressing, story. Overfishing is a problem that can be solved by government action (I saw that in Massachusetts in the late 90s), but there needs to be the political will to pass tough laws and then enforce them. {sigh}

Morning Whistle: Mental Health Law passed in China — I've been writing about this for several years now, and it's finally been done. Let's hope things like compulsory/forced admissions to mental institutions become a thing of the past.

Asia Times: US learns hard lessons of Asia 'pivot' — Will America's new Asia policy mean better engagement in the region or just piss off the PRC?

Foreign Policy: The Cyber Trade War — Adam Segal writes that the recent debate over Huawei and ZTE belongs in a greater context, one that deals with the technology infrastructure of both the U.S. and China.

China Accounting Blog: VIE Rumors — Paul Gillis has been hearing disturbing rumblings from both sides of the Pacific about VIEs. I haven't written about this yet as these are just rumors, and it's not clear what, if anything is going on. Stay tuned.


© Stan for China Hearsay, 2012. | Permalink | 2 comments | Add to del.icio.us
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Zhou Xun shows off graceful back at Cloud Atlas premiere

Posted: 25 Oct 2012 06:51 PM PDT

Zhou Xun shows off graceful back at Cloud Atlas premiere

Chinese actress Zhou Xun, one of top actresses in China, arrived at the Los Angeles premiere of "Cloud Atlas" at Grauman's Chinese Theatre on Wednesday in Hollywood, California, and showed off her graceful back.

The powerful Hollywood film is expected to earn the 36-year-old actress the largest global audience ever, as it marks her first major film outside of Asia.

Zhou joins hands with Award-winners Halle Berry and Tom Hanks in the film, playing multiple roles as other actors.

The epic adventure drama film is an adaption from the best-selling 2004 novel of the same name by British author David Mitchell.

It owns a stellar international cast that also includes Oscar winner Jim Broadbent, Oscar winner Susan Sarandon, Hugo Weaving, Jim Sturgess, South Korean actress Doona Bae, and others.

CNOOC-Nexen Deal in Canada Takes a Turn for the Weird

Posted: 26 Oct 2012 01:17 AM PDT

You are probably already familiar with the CNOOC acquisition of Canadian firm Nexen. This energy sector deal could face opposition in more than one jurisdiction, including Canada, where most of the assets are. However, when this was announced a while back, a lot of the bitching and whining about it came from U.S. government folks, who seem to be fixated on Chinese State-owned Enterprises (SOEs) these days. At the time, it appeared as though opposition from Canada would be quite limited.

That was then, this is now. We've been through a lot of China investment-related news over the past couple of weeks. Companies like Huawei and ZTE, countries like the U.S. and Australia. Of course, I'm not sure how much effect, if any, this all had on Canadian decision makers, but it seems like a reasonable assumption.

Running parallel to the CNOOC-Nexen deal was another acquisition of a Canadian energy company by Malaysian oil behemoth Petronas (disclosure: I used to do some IP work for them back in the day), which is a State-owned company. This deal did not appear to be heading for any trouble, and indeed, according to a great report by Reuters, Petronas had already prepared press releases to send out trumpeting a government approval.

What happened? You might have already guessed:

Canada's 11th-hour veto of the $5.2 billion deal was the result of miscalculations and miscommunications, Reuters has learned through interviews with a dozen people briefed on the October 19 events.

[ . . . ]

Ottawa, sources said, wanted to approve the Petronas-Progress deal but was afraid that would tie the government's hands when reviewing the much more controversial $15.1 billion bid by China's CNOOC Ltd for Nexen Inc.

Officials were wary of setting a policy on investment by foreign state-owned enterprises that would make things difficult if Canada later decided to take a tougher line on CNOOC-Nexen.

Oh, Lordy. You have got to be kidding.

At the beginning of all this, it looked like the CNOOC deal would have no problems. Fast forward a few weeks, and not only is it in doubt, but it has contaminated Petronas in Canada.

There were a lot of reasons why the Petronas deal went tits up (i.e., it wasn't just worries about CNOOC-Nexen), but if anything, that just makes the Canadian officials look even worse. I won't get into those details since the timeline of the Petronas cock-up has nothing to do with CNOOC, but if you want a good groan, check out the Reuters article.

So what must China be thinking about all this? Not only are they pissed off at the U.S. government for Huawei, ZTE, and Sany/Ralls, and worried about how Australia will handle Huawei, but now they have Canada making trouble. It's all rather discouraging, isn't it?

If the Nexen deal is ultimately scuttled, I fully expect Beijing to not only be disappointed and bang the usual "Protectionism!" drum, but to accuse Canada of rigging this game from the beginning. With the Petronas decision, Canada is signalling that it has significant doubts about CNOOC; some could argue it has already made up its mind, perhaps prematurely.

An approval of the CNOOC-Nexen deal would certainly help to allay some of China's fears on the foreign investment front, but not all of them. At this point, China's SOEs (and some notable private Chinese firms) must feel like they have targets on their backs.

One final point, on Canadian foreign investment law. The standard used in these reviews apparently has something to do with whether the deal is a "net benefit" to Canada. If it isn't, the deal can be rejected. I don't know more than that, or what sort of analysis the law requires when determining what constitutes a "net benefit."

Quite a difference from the U.S. national security review though, huh? Seems like a "net benefit" standard allows a country to sneak reciprocity concerns into the process, among other factors. I also wonder how this sort of standard squares with WTO law, but that's an issue for another day.

Now we just need to wait and see what the Canadian government does next.


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