Blogs » Politics » U.S.-China Audit Dispute: Wrong Time to Pick a Fight?

---

• U.S.-China Audit Dispute: Wrong Time to Pick a Fight?
• Will Reform vs. Anti-Reform Define 2013?
• Xinhua Profiles Project Human Side of Leaders
• China’s GPS Alternative Goes Public Across Asia-Pacific
• Guangzhou Reforms Public Kindergarten Admission
• Zhu Chengzhi, Yet Another Subverter?
• Split Persona Academia
• TVs, Satellite Dishes Confiscated in Tibetan Areas
• Chinese Taste for Fish Rankles
• Will 2013 Bring War Over the Diaoyu Islands?
• Is Change Emerging in China’s Factories?
• The Personal Lives of China’s New Leaders
• Pictures: Elderly man raises national flags and pledges allegiance to protest against forced demolition
• Gas leaks as road collapses
• THE NEW NPC DELEGATION: Another Sign of Things to Come?
• Bloomberg: “Revolution to Riches”

U.S.-China Audit Dispute: Wrong Time to Pick a Fight? Posted: 27 Dec 2012 08:32 PM PST I know I said recently that I would limit my comments on the ongoing fight between the U.S. Securities and Exchange Commission (SEC) and its Chinese counterparts over access to audit materials, but an Op/Ed in yesterday's Financial Times forced my hand (or mouth, as it were). I'll just do the lazy man's cut-paste-comment method instead of trying to summarize the thesis of Ann Lee, the author. Suffice it to say that Lee believes now is not the time for the U.S. to be picking this fight and that the downside of doing so might be significant. I find her arguments to be less than persuasive. Let's have a look. [T]he SEC move will strain a bilateral relationship with China that is already on the rocks. [ . . . ] Corporate America would not thank its government for risking access to China's growing middle-class market. Fair enough. One could bring this up with just about any bilateral issue. The U.S.-China relationship is important and America should think twice before ratcheting up tensions. That being said, this cannot be a blanket reason for inaction on all fronts. Moreover, there is a need for additional oversight of U.S.-listed Chinese companies, many of which have been caught cooking the books. Surely the SEC, whose primary job is, or at least used to be, to protect investors (particularly non-institutional investors), can justify the need to act here. If this dispute ends up with numerous Chinese companies de-listing, would Beijing retaliate against American foreign investors? I doubt it. China is big on reciprocity, but on a proportional basis. There is no reason to believe that China would somehow institute broad ranging market access restrictions against U.S. foreign direct investment. Perhaps something narrowly targeted (whatever that might be), but "corporate America" need not worry about this dispute too much. By creating a situation where Chinese companies will be forced to delist, the SEC risks depriving US citizens of lucrative opportunities to invest in fast-growing companies. The US economy may also suffer in the long term if it earns a reputation for legal hostility to Chinese companies. Lee, who used to work for a hedge fund, seems very concerned with investment opportunities. That's fine, but she doesn't seem too worried about consumer protection. That's why we have securities law in the first place, and even hedge funds benefit from greater transparency. Yes, it's possible that this fight might result in some Chinese companies de-listing, but does Lee really prefer that the SEC look the other way and simply trust that these companies and their auditors will cease tolerating fraud? As to a U.S. reputation of hostility towards Chinese companies, I think that horse left the barn years ago (Huawei? ZTE? CNOOC?) and this dispute will neither be the genesis of such a reputation nor the end of its existence. Besides, in contrast to the treatment of companies like Huawei and ZTE, many of these U.S.-listed Chinese companies have already been found guilty of wrongdoing. Surely some of this "hostility" is warranted? Obviously the US must honour its laws and treat everyone equally under them. However, two problems arise. First, laws themselves can be flawed. Some US laws have the effect of reducing competition so that large companies, which may have helped influence their passage, can maintain dominant positions on their turf. The Sarbanes-Oxley act, for example, imposed such onerous requirements that many young companies chose not to access public markets. OK, my first reaction to this is to admit that yes, it is possible that the rules at issue here are flawed. Unfortunately, Ms. Lee never provides any details on what those flaws are or how the law might be rewritten to ameliorate the situation. Additionally, Ms. Lee is once again showing off her investor mindset here by complaining about Sarbanes-Oxley. Look, I'm no fan of that law either, and I've had more than one Chinese company here tell me of how it shelved its U.S. IPO plans after factoring in the time and expense of legal compliance. Yes, Sarbanes-Oxley may have resulted in fewer Chinese companies listing in the U.S. Ms. Lee sees this as lost investment opportunities. But it's also possible that some of these companies never belonged on a U.S. exchange to begin with and that Sarbanes-Oxley scared off some bad actors, a victory for consumer protection. Second, regulators often have their own agendas. For instance, regulators may be tempted to punish small companies so that they can achieve quick recognition for being tough, while leaving larger companies alone. It is curious that the SEC is choosing to go after Chinese companies when the regulator so conspicuously failed to prosecute the Wall Street firms, or their auditors, responsible for the financial crisis. Again, the ones who lose out are the entrepreneurs, investors and society at large, while the privileged few benefit. Uh, wow. Some real cognitive dissonance here. This whole dispute is about transparency and consumer protection. This benefits smaller investors more than the big boys, who should have sufficient resources to fully vet some of these dodgy Chinese companies. Ms. Lee is absolutely right that the SEC has been asleep on the job when it comes to prosecuting the folks responsible for the Great Recession, but how is that at all related to this dispute? Moreover, if some Chinese companies are forced to de-list as a result of this fight, how does this enrich the "privileged few" and deprive "society at large"? I'm genuinely puzzled by that statement. Rather than pick fights with everyone, US regulators should learn to see the wood from the trees. As the world gets smaller, we must all make a greater effort to get along with each other. Understanding and respecting each other's laws would be a good place to start. It is inevitable that at times the legal principles of two countries will clash. But in these cases a diplomatic solution ought to be the first course of action, rather than naming and shaming. Blah blah blah. Why can't we all just get along and sing kumbaya around the campfire? Please. The U.S. government is not picking fights with everyone, but it is trying to fix an outstanding problem that has already led to significant investor losses, not to mention across-the-board valuation problems for many U.S.-listed Chinese companies that have done nothing wrong (i.e., guilt by association). And what's this about respecting one another's laws? These companies are coming into the U.S. to avail themselves of the American capital market. Shouldn't they have to follow U.S. law? I've represented U.S. companies in China for well over a decade, and believe me, they all have to follow China law when they come here. What's the difference? Moreover, note that when Ms. Lee says that nations should respect one another's laws, in this instance she is really suggesting that the U.S. should defer to China's laws, but she has not explained why. Yes, there is a conflicting China law here, involving the disclosure of information that may be deemed state secrets. I personally think this state secrets argument is a pretext, but either way, if a compromise cannot be reached, we're dealing with U.S. listings, and U.S. legal concerns should prevail. Remember that the U.S. law at issue here is not discriminatory; it applies regardless of nationality. Finally, Ms. Lee talks about a "diplomatic solution" as the first course of action. She must have been busy or something, because the authorities in both countries have been discussing this issue and looking for a solution for a year already. So far, diplomacy hasn't worked, but it definitely has been tried. Try as I might, I'm not persuaded by any argument that places all the blame on the SEC and calls for some sort of unilateral disarmament. That might be acceptable to certain large, savvy investors, but not for everyone else. © Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us Post tags: accounting, SEC, securities law

Will Reform vs. Anti-Reform Define 2013? Posted: 27 Dec 2012 07:53 PM PST For The Wall Street Journal, Russell Leigh Moses of the Beijing Center for Chinese Studies explores whether a new political struggle is emerging between new Communist Party chief Xi Jinping, who has indicated a desire to push through reform, and the anti-reform allies of former leader Hu Jintao. Moses details the forces at play, and ponders Xi's next move: He could try to force a showdown with Hu and his allies on major issues. Or Xi and his colleagues might risk a bit of radical reform of some sort, to find support in the street, and try to capitalize on those parts of the society and the party that clamor for change, and are weary of waiting. Or Xi could wait a bit, hibernate until the spring, when Hu is scheduled to step down as president in March and the political path for the summer then a bit clearer. Xi could initiate some small change in the interim – perhaps speeding up the restructuring of the hukou system. But can reform wait even that long? Can the economy? Or Xi could move to find an accommodation now, working from the common ground that surely must exist–even after Xi's early sniping at the state of the party that he's had to inherit. It's not entirely clear if it's Xi's program that opponents object to, or more the speed at which Xi seems to be pursuing reforms. This much seems already true: that the handover to a new leadership was the easy part—a mere transition. The hopes—and the hazards — of a far greater transformation beckon. See also CDT coverage of an open letter released by on Christmas Day urging the new leadership to pursue political reform. © Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: CCP 5th generation, Hu Jintao, political struggle, reform, Xi Jinping Download Tools to Circumvent the Great Firewall

Xinhua Profiles Project Human Side of Leaders Posted: 27 Dec 2012 07:29 PM PST The Wall Street Journal reports that Xinhua News this week published several "lengthy profiles" detailing the lives of China's new Politburo Standing Committee members: The profiles seemed to be a well-intentioned nod to lift the veil of secrecy long surrounding party leaders. The articles' obsequiousness, however, was a reminder how far Mr. Xi and other newly anointed leaders have to go if they're serious about following through on pledges to reconnect the party to the people. "From the Loess Plateau to the southeast coast, from localities to central leadership, Xi has had a well-rounded political career and has developed a deep understanding of the conditions of his country and people," gushed the Xinhua profile of Mr. Xi. The article's English version, published Sunday, sprawled some 3,000 words. The profiles' thrusts are all roughly the same: China's newest generation of leaders rose through individual hard work and sacrifice, but never lost their affinity for China's laobaixing, or common folks. To underscore the point, Xinhua published more than a dozen photos of Mr. Xi in his younger – and slightly trimmer – days that have been widely reposted on Chinese news websites. One photo shows Mr. Xi smiling with villagers in the northern province of Hebei, where he served as a young cadre. Another photo shows Mr. Xi bicycling with daughter Xi Mingze seated on the back, clutching at her father's waist. The New Yorker's Evan Osnos writes that the contents of Xi's profile "steered clear of surprises," but were worth noting in a country where "the people they rule know less about them than the average subscriber to the Times living in Armonk:" This is all part of Xi's concerted effort to project his human side—or what we might call his Theory of Deliberate Nonchalance. So far, Xi's propaganda system is heavily promoting the fact that he shies away from the traditional Presidential entourage, got rid of flowers on the dais and the flowery talk from behind it, and so on. (Skeptics abound, including David Bandurski, who notes that Xi's calls for people not to parrot each other is causing underlings to leap on the "anti-bandwagon bandwagon.") For my money, the most interesting part of the new profile is the photo album, a carefully curated dip into the archives that follows Xi from the Cultural Revolution to the present day. Better yet is the photo above, from the cover of China's Vista Magazine earlier this month. After picking it up from the newsstand because it had a cover story about Xi's first political tour, my wife, Sarabeth, noticed something potentially more surprising than anything inside: gray hairs. Is Xi testing the unofficial rule that Chinese men at the top of the government must dye their hair to look vital? Now that would be news. © Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: CCP 5th generation, Politburo Standing Committee, transparency, Xi Jinping, XInhua News Download Tools to Circumvent the Great Firewall

China’s GPS Alternative Goes Public Across Asia-Pacific Posted: 27 Dec 2012 05:25 PM PST China's Beidou satellite navigation system is now open to commercial use across the Asia-Pacific region one year after its civilian debut within China, offering an alternative or addition to the American-run Global Positioning System. From the BBC: A spokesman said that Beidou is targeting a 70-80% share of the Chinese market in related location services by 2020. The China Satellite Navigation Office added that by that time it also intended the service to be available across the globe. […] Six satellites are already in orbit, but officials said they planned to add a further 40 to the system over the next decade, according to a report by China Daily. Organisers have estimated that the market for transport, weather, and telecom spin-off services from Beidou's signals could be worth 200bn yuan ($32bn; £20bn) by 2015. However, it is widely thought another motivation for the project is China's desire not to be reliant on a foreign-operated system that could be turned off at a time of conflict. The South China Morning Post's Minnie Chan described Beidou's international launch as a milestone in China's campaign to establish an independent navigation system. Expanding into the Asia-Pacific region – from Afghanistan to the Western Pacific and Mongolia to northern Australia – puts the system on track to claim 15 to 20 per cent of the GPS-dominated domestic market by 2015, said Ran Chengqi , a BDS spokesman and director of the China Satellite Navigation Office. […] An early version has been used by traffic control systems in more than 100,000 vehicles in nine provinces and cities. […] The central government has spent billions on the system and in the coming decade plans to invest over 40 billion yuan (HK$49 billion) more, Ran said. […] An estimated 95 per cent of global-positioning equipment on the mainland still relies on GPS data, Xinhua said. Global Times described the system as the future "cornerstone of China's participation in the international advanced technology industry", and urged its widespread adoption and support: We […] appeal to Chinese consumers to firmly support BeiDou and be users of this system. BeiDou can represent China's advanced technology; it has improved the quality of China's modernization process. Support for Beidou can build the Chinese people's collective competitiveness. […] Some problems may be found in its operation because BeiDou is a new system. Chinese consumers should remain clear-headed regarding our country's long-term interests, and show tolerance toward the BeiDou system. In the final analysis, the strength of Beidou cannot be separated from broad participation from Chinese society. Besides market users, such participation should also include people supporting our country's scientific and technological progress. For China, which has developed later than many other countries, progress means challenging advanced global forces. The success of State-level projects depends on the determination and will of all of society. China's ability to compete with developed countries in terms of advanced technology is growing. BeiDou is one of China's players in this competition. All Chinese consumers should applaud it. The whole country backs the development of BeiDou. 'Beidou' 北斗 comes from the Chinese name for the Big Dipper or Plough constellation. © Samuel Wade for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: GPS, navigation satellite, satellite, satellites, space technology, technology Download Tools to Circumvent the Great Firewall

Guangzhou Reforms Public Kindergarten Admission Posted: 27 Dec 2012 04:28 PM PST The children of government workers and employees of public institutions in Guangzhou, Guangdong Province will no longer be given priority admission to publicly-funded kindergartens, Wang Dong, deputy mayor of Guangzhou said at a press meeting on Wednesday. (Global Times) The nexus of public sector, privilege, the income gap and education in China is fascinating, as this story from down south illustrates quite well. Good on the GZ government for trying to make the system more fair, although we'll see if this change actually does anything to ameliorate the situation. Keep in mind that privilege is not just about what position your parents hold in the government, but also how much cash parents can shell out for "extra" fees paid to schools or staff. Dealing with that sort of corruption is just as important, so let's hope that's on the agenda as well. © Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us Post tags:

Zhu Chengzhi, Yet Another Subverter? Posted: 27 Dec 2012 02:28 PM PST Zhu Chengzhi  (朱承志)'s offense has to do with the death of Li Wangyang (李旺阳), a labor movement leader during the June 4th movement in 1989 who had served two prison terms totaling 21 years. In the morning of June 6th this year, while receiving treatment for heart disease and diabetes in a local hospital in Shaoyang, Hunan (湖南邵阳), Li Wangyang was found hanged from a window frame by a strip of bed sheet. The 62-year-old Zhu Chengzhi is a retiree-turned-activist in Shaoyang and an old schoolmate and close friend of Li Wangyang. In the next two days following Li's death, Zhu Chengzhi took pictures, shot video, of the death scene, and published them online. Meanwhile, he provided updates on Twitter and called frantically for legal assistance to deal with local authorities who tried to thwart the efforts to find truth about Li's death. Zhu Chengzhi (right) with Li Wangyang in Li's hospital room just days before Li was found dead. On June 8th, Zhu Chengzhi was taken into police custody for "public order violations" (治安拘留). Shortly afterwards, he was arrested for allegedly "inciting subversion of state power," as a signature campaign, initiated by three overseas Chinese, gathered thousands of names and vigil and protests were held in Hong Kong. Zhu Chengzhi had since been detained. Over the past 200+ days, his wife was so threatened, and terrified, by security police that she severed all connections with lawyers and activists who tried to help. Lately there had been rumors that Zhu Chengzhi would be freed on December 25. But instead, on Christmas Day, his case was sent to the prosecutors for possible indictment. And all he had done was to publish news, pictures and a video about the suspicious death of his friend. According to the Notice of Investigation and Indictment Period by the local Procuratorate, the prosecutors will have one month to review Zhu Chengzhi's "case" and decide on whether to indict him. Zhu Chengzhi's lawyer Liu Xiaoyuan doesn't believe the prosecutors have a case, but then again, in China, they don't need to have a case to indict, try, and sentence someone. A laid-off employee of a state-owned enterprise some years ago, Zhu Chengzhi and others contracted a manganese mine in Yunnan. Later he became a petitioner against a court ruling about a dispute among the main shareholders.  In Beijing, he met with other petitioners, befriended activists, and gave financial support to a young, disabled migrant. He got involved in others' cases, and became a rights activist trying not just to defend his own rights but to change the society for the better. In recent years China has shown a mean pattern of making moves against political "criminals" on Christmas Day or around it so as to attract least attention from the media and public on holiday vacation. Three years ago on Christmas Day, Liu Xiaobo was sentenced to 11 years in prison. Last year, Chen Wei (陈卫) in Sichuan was sentenced to 9 years in prison on December 23rd, and then on December 26th Chen Xi (陈西) in Guizhou was sentenced to 10 years in prison, both for "inciting to subvert state power." Also in December last year, Gao Zhisheng (高智晟) was "returned to jail" for violating probation rules when he had not been disappeared for months and years on end. We have never heard about him anymore since last March when it was reported that his brother and relatives were granted a 30-minite visit. Filed under: Human Rights & Civil Rights Movement, Rule of Law, Uncategorized Tagged: June 4th, Li Wangyang, Shaoyang, subversion of state power, Zhu Chengzhi

Split Persona Academia Posted: 27 Dec 2012 12:04 PM PST On Violence Erik Loomis, an assistant professor at theRhode Island University, called for "Wayne LaPierre's head on a stick". Lapierre is the CEO of the National Rifle Association. Professors insisted Loomis's calling for Lapierre's murder was Freedom of Speech, and forced the Rhode Island University's president who initialized distanced the institute from Loomis's inciting violence to issue a statement to support Loomis.

TVs, Satellite Dishes Confiscated in Tibetan Areas Posted: 27 Dec 2012 01:17 PM PST Authorities in Qinghai are increasing patrols, confiscating TVs, dismantling satellite dishes and tightening travel restrictions in Tibetan areas in response to recent self-immolations and general unrest. From Brian Spegele at The Wall Street Journal: Growing unrest in Qinghai province in recent months apparently is worrying local leaders. Earlier self-immolations had been largely concentrated in the adjacent province of Sichuan. The uptick in tensions in Tibetan portions of Qinghai suggests deepening distrust of local party leaders. Tibetans activists lament what they describe as forced cultural assimilation, political and religious repression and environmental degradation as some of the problems that underlay the self-immolations and wider unrest across the region. Authorities in Huangnan are also pledging to "block harmful outside information," according to Thursday's state media report. It said authorities had already begun dismantling satellite and other equipment used to broadcast overseas programming. Authorities described the programming—much of it produced with the backing of Western governments—as "anti-Chinese" and vowed to increase access to Chinese state-backed programming instead. Reuters reports that 300 monasteries have been affected by the TV seizures: The government in Huangnan said its approach in tackling self-immolations comprised of "guiding public opinion on the Dalai issue", increasing patrols and "blocking outside harmful information", according to the news agency, which is managed by the Qinghai government. "At this critical moment for maintaining social stability in Huangnan prefecture … (we must) strengthen measures and fully fight the special battle against self-immolations," the article said. "We do not know anything about it," an official from the Huangnan prefecture government told Reuters by telephone, when asked to confirm the report, before hanging up. The efforts to guide public opinion have included a series of articles and videos distributed abroad through blocked services like Twitter and YouTube. A representative China Daily article, 'Monks vent anger at self-immolation', stressed the effects of self-immolations on local businesses, shocked passers-by, and scarred and reportedly repentant survivors, whom it portrayed as innocent dupes of the Dalai Lama and his manipulative and villainous agents: People used to gather and watch the acts of self-immolation, but now the act has been disguised, said Ngarnang, director of Aba county's information office. "We have seen a trend whereby the location of these acts has moved from the county seat to the countryside, because it is less public. After all, the Dalai Lama and his followers just need the photographs and videos to use in their propaganda campaign. They know they won't get any support from the local people." […] Lorang Konchok took advantage of his position as a Geshe, a name given to monks who hold an exclusive degree in Buddhist studies. He told local monks and followers that self-immolation was not against Buddhist doctrine and that those who performed the act were "heroes". However, he admitted that he had no intention of becoming a "hero" himself. "I won't self-immolate because I am scared of the pain," said Lorang Konchok at the detention center in Aba prefecture in early December. "I didn't regard them (self-immolators) as heroes until two other monks, Samdam and Dorah, told me so. They also told me they could help publicize those who set themselves on fire." […] Police later discovered that Lorang Konchok was behind five other acts of self-immolation this year, including that of a young man who also took his own life in March. Two people were also forced to flee their hometown to avoid Lorang Konchok, who harassed them and urged them to commit self-immolation. They did not return to their homes until Lorang Konchok and Lorang Tsering were apprehended by the police. Facts about the self-immolations in Tibetan Areas of Ngapayoutube.com/watch?v=ID1hI5… — Xinhua News Agency (@XHNews) December 26, 2012 See more on Tibetan self-immolations via CDT. © Samuel Wade for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: China Daily, Dalai Lama, qinghai, Qinghai Province, self-immolations, state media, Tibet, Tibetan protests, Xinhua Download Tools to Circumvent the Great Firewall

Chinese Taste for Fish Rankles Posted: 27 Dec 2012 10:56 AM PST Following the seizure of two Chinese fishing vessels by the Argentinian coast guard on Wednesday and a series of incidents in waters closer to home, Chuin-Wei Yap and Sameer Mohindru report at The Wall Street Journal on China's growing appetite for seafood, and its ecological and geopolitical effects. The episode comes as China's fishing boats increasingly find themselves embroiled in both cross-border and commercial disputes. Chinese ships fish in both international waters and under bilateral fisheries agreement in the waters of other nations. They work for largely private companies or for themselves, and aren't generally directed by Beijing. However, in Asian waters, fishing boats have become a proxy for China's sovereign reach in largely territorial spats. In cases farther afield, its fishing boats have been entangled in accusations of overfishing and harming local economies. […] China's hunger is growing at a time when around 87% of global fisheries are seen to be at full exploitation, overexploited, or depleted, according to the United Nations' Food and Agriculture Organization. China like other nations has signed international agreements that allow it to fish in global waters, and some fishing experts have praised Beijing for beefing up its statistics on fishing in some areas and for raising more fish in domestic farms. Still, a European Commission report this year said China reported just 368,000 tons of its 2010-2011 catch from the high seas compared with an estimated actual haul of 4.6 million tons. The height of the Diaoyu/Senkaku Islands dispute in the autumn saw forays into the islands' waters by fishing boats from Hong Kong and Taiwan, while China dispatched its own fishery monitoring vessels. Reports suggested that a thousand-strong armada of Chinese fishing boats would also converge on the islands, but this ultimately failed to materialise. © Samuel Wade for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: argentina, coast guard, conservation, diaoyu islands, fishing, Japan, marine economy, senkaku islands, south korea, Vietnam Download Tools to Circumvent the Great Firewall

Will 2013 Bring War Over the Diaoyu Islands? Posted: 27 Dec 2012 07:33 AM PST Defense Ministry spokesman Yang Yujun on Thursday said the Chinese military is on guard against Japanese jet activity near the Diaoyu Islands, according to Xinhua News: "We will decisively fulfill our tasks and missions while coordinating with relevant departments such as maritime supervision organs, so as to safeguard China's maritime law enforcement activities and protect the country's territorial integrity and maritime rights," Yang said. Yang said it is "justifiable" for the Chinese military to provide security in waters under China's jurisdiction, and other countries are "in no position" to make irresponsible remarks in this regard. "China-Japan defense relations are an important and sensitive part of bilateral ties, and the Japanese side should face up to the difficulties and problems that currently exist in bilateral ties," Yang said. While China and Japan have run patrol ships around the Diaoyus over the past few months, tensions escalated earlier this month when Japan scrambled fighter jets after it alleged that a Chinese surveillance plane violated its airspace above the territory. Observers have differed over whether China would use force over the islands. Australian academic Hugh White warned in the Sydney Morning Herald today that the U.S. and Japan could go to war with China over the islands next year unless each side overcomes the "mutual misconceptions" that have led to the current standoff: Where will it end? The risk is that, without a clear circuit-breaker, the escalation will continue until at some point shots are exchanged, and a spiral to war begins that no one can stop. Neither side could win such a war, and it would be devastating not just for them but for the rest of us. No one wants this, but the crisis will not stop by itself. One side or other, or both, will have to take positive steps to break the cycle of action and reaction. This will be difficult, because any concession by either side would so easily be seen as a backdown, with huge domestic political costs and international implications. It would therefore need real political strength and skill, which is in short supply all round – especially in Tokyo and Beijing, which both have new and untested leaders. And each side apparently hopes that they will not have to face this test, because they expect the other side will back down first. For The Diplomat, former Australian journalist and diplomat Rory Medcalf calls White's prediction "a big call indeed:"  Of course it would be folly to count on a prolonged crisis simply fizzling out. But both China and Japan are more than capable of strategic patience. Neither wants to force the issue in the immediate term. Each government has an interest in trying to exert greater control over the various institutional players — not just navies but also civilian maritime agencies — whose operational decisions could make the difference between calm and crisis. The good news is that Japan's newly-elected conservative Abe government has no pressing reason to pursue further provocation. And whatever its forceful rhetoric, the new Chinese leadership has little near-term incentive to prod Japan further; an armed confrontation with Japan that ended badly for China would be worse for the credibility of China's leaders than no clash at all. Doubtless there will be a need for cool heads and assiduous incident-management in the months ahead. But considerably more likely than war in 2013 is the possibility that, for all their tough talk, all sides are already working quietly to engineer a decent interval after which they can resume some serious diplomacy. See also previous CDT coverage of the Diaoyu Island dispute. © Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: diaoyu islands, maritime security, military conflict, senkaku islands, Sino-Japanese relations, Sino-U.S. Relations, sovereignty, territorial disputes Download Tools to Circumvent the Great Firewall

Is Change Emerging in China’s Factories? Posted: 27 Dec 2012 06:45 AM PST Keith Bradsher and Charles Duhigg of The New York Times report that electronics companies such as Apple, which came under heavy criticism earlier this year for the working conditions on its Chinese assembly lines, have changed the way they approach social responsibility at the factories that manufacture their products: When Ms. Pu was hired at this Foxconn plant a year earlier, she received a short, green plastic stool that left her unsupported back so sore that she could barely sleep at night. Eventually, she was promoted to a wooden chair, but the backrest was much too small to lean against. The managers of this 164,000-employee factory, she surmised, believed that comfort encouraged sloth. But in March, unbeknown to Ms. Pu, a critical meeting had occurred between Foxconn's top executives and a high-ranking Apple official. The companies had committed themselves to a series of wide-ranging reforms. Foxconn, China's largest private employer, pledged to sharply curtail workers' hours and significantly increase wages — reforms that, if fully carried out next year as planned, could create a ripple effect that benefits tens of millions of workers across the electronics industry, employment experts say. Other reforms were more personal. Protective foam sprouted on low stairwell ceilings inside factories. Automatic shut-off devices appeared on whirring machines. Ms. Pu got her chair. This autumn, she even heard that some workers had received cushioned seats. The changes also extend to California, where Apple is based. Apple, the electronics industry's behemoth, in the last year has tripled its corporate social responsibility staff, has re-evaluated how it works with manufacturers, has asked competitors to help curb excessive overtime in China and has reached out to advocacy groups it once rebuffed. Foxconn, which manufactures electronics for the likes of Apple, Dell, Samsung and others, pledged earlier this year to improve conditions in its factories after the Fair Labor Association published a report finding violations of both Chinese law and industry codes of conduct. Apple also issued a statement to The New York Times in response to its questions for the article: "Apple takes working conditions very seriously and we have for a long time. Our efforts range from protecting to empowering to improving the lives of everyone involved in assembling an Apple product. No one in our industry is doing as much as we are, in as many places, touching as many people as we do. Through years of hard work and steadfast commitment, we have set workplace, dormitory and safety standards, sought help from the world's leading experts, and established groundbreaking educational programs for workers. Since 2008, more than 200,000 factory workers have taken free classes including college-level courses provided by Apple, and over one million employees have been educated on their rights through our worker empowerment training program. "We believe workers everywhere have the right to a safe and fair work environment where they can earn competitive wages and express their concerns freely. Our suppliers have to live up to that if they want to do business with Apple. … "Apple is in a unique position to lead and we have embraced this role since the earliest days of our supplier responsibility program. We do all these things out of respect for our customers and, most of all, the people who make our products." See also the New York Times' previous in-depth reporting on Foxconn as part of their iEconomy series: Part 1: How the U.S. Lost Out on iPhone Work and Part 2: In China, Human Costs Are Built Into an iPad . Read more about Foxconn, Apple and labor conditions in China via CDT, including, "This American Life's Foxconn Retraction: Reactions," which looks at recent coverage of Foxconn.   © Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: Apple, corporate responsibility, Foxconn, labor conditions, labor rights, manufacturing Download Tools to Circumvent the Great Firewall

The Personal Lives of China’s New Leaders Posted: 26 Dec 2012 11:11 PM PST Xinhua News has published[zh] a series of personal profiles of China's top leaders, including photos of their families, which was rare in Chinese media. The move was seen by many as another indication that China's new leadership may have a different management style from their predecessors. Offbeat China has more details. Written by Abby · comments (0) Share: Donate · facebook · twitter · reddit · StumbleUpon · delicious · Instapaper

Pictures: Elderly man raises national flags and pledges allegiance to protest against forced demolition Posted: 26 Dec 2012 06:09 PM PST An aged woman, surnamed Ji, raised six national flags and put up a banner that reads "I love Chinese Communist Party, I love Central People's Government" in front of his house in Dongying, Shangdong province, when a large scale of forced demolition is under way. Reportedly, the demolition started this March, and the old man has been protesting against it since then. In order to force him to relocate, the demolition team have cut off the electricity and water supplies, and built a 3-meter high wall to block his way out. The poor old man is living alone with his disabled wife, as their only son was drafted into the army in this January and is now serving in the South China Sea's Fleet. For survival, the old man has to climb up the wall and carry back the food and water from outside. But the old man believed that the government would not leave them there suffering. So he swore an oath to the bright five-star red flags every day.

Gas leaks as road collapses Posted: 26 Dec 2012 03:43 PM PST On December 26, a HUGE road cave-in occurred at the intersection of two busy streets in Taiyuan city, capital of Shanxi province, causing a bad traffic jam. The 15-meter wide collapse also damaged three gas pipes and a water pipe, affecting 12 thousand residents. The above picture shows that the firefighters diluted gas that leaked from the broken pipes.

THE NEW NPC DELEGATION: Another Sign of Things to Come? Posted: 26 Dec 2012 11:29 PM PST            Soon after reunification on July 1, 1997, Hong Kong conducted its "first election under Chinese rule."  Much excitement surrounded the historic possibilities of that election since, for the first time, Hong Kong was being allowed to choose its own delegation to the National People's Congress (NPC) in Beijing.  Fifteen years later, nothing better illustrates the dashed hopes of Hong Kong's once-confident democracy movement than a comparison between that first election, in December 1997, and the fourth, which was held last week, on December 19.  China's communist party-dominated legislature meets for a few weeks annually in March, but new delegates are only chosen once every five years.  Fifteen years ago, they were being elected for the 9th NPC.  The first annual session of the 12th NPC is scheduled for March 2013.            Before 1997, Hong Kong had been represented at the annual NPC gatherings but delegates were all appointed from within what was called the patriotic  [愛國]  community.  No one else paid any attention and they participated as members of the delegation from neighboring Guangdong province.  Delegates were tapped as a reward for loyalty, after recommendation by the local New China News Agency (NCNA) branch.   It served as Beijing's representative here, and also as cover for the underground communist party committee, until the year 2000 when these functions were transferred to the central government's Liaison Office.           By the end of 1997, the city was suffering what locals dubbed a "post-handover hangover."  After years of preparation for the historic day when capitalist colonia lHong Kong would cross the frontier into red Chinese territory, suddenly there was nothing to anticipate and nothing much to report.  That first election of a local NPC delegation filled the void and revived political spirits by providing the first direct opportunity to introduce Hong Kong's newly acquired democratic skills for use in a mainland setting. TESTING THE WATERS IN 1997          Actually, after re-reading an account of that election … activists' optimism was misplaced from the start, although it didn't seem so at the time.  The institutional links and underpinnings tying Hong Kong to the mainland people's congress system were all in place even at that early date.  Only the atmospherics then were different as local democrats, or liberals as they called themselves in those days, tried to adapt Hong Kong's new political ways to mainland means.  Reflecting that early optimism, I wrote not long afterward:  "Hong Kong had hosted the most open and competitive election for China's national legislature in that body's history.  Never had any provincial delegation been elected in so transparent a manner … but to say this was the freest and fairest such election is not to say it was either free or fair." *           Why the need for an NPC delegation when Hong Kong already had its own legislature and district level assemblies?   The answer contains clues to Beijing's long-term plans for the Hong Kong reunification project.  As a symbol of its return to China, the Hong Kong Special Administrative Region (SAR) had to have its own separate representation within China's "highest organ of state power," explained authoritative commentators.  But separate rules had to be issued for delegate selection since the SAR had its own elected bodies that were not "yet" part of the mainland's representative system.           This is also what gave pro-democracy activists the incentive to try their hand at proselytizing.  The mainland representative system is an integral whole with local assemblies that were, throughout the 1980s and 1990s, in the difficult process of becoming elected bodies … directly elected at grassroots levels, with delegates to the provincial and national congresses elected on an indirect basis by the congresses beneath them.  Initially, this reform held out prospects for a new liberal future.  Maybe it still does.  But now that the Chinese Communist Party (CCP) has been rebuilt from top to bottom after the traumatic changes of the 1976-89 years, these elections are all under firm party control.  Beijing was unwilling to allow Hong Kong's own Legislative Council to choose the SAR's national representatives, in the indirectly-elected mainland manner, because Hong Kong's council was not yet a full-fledged member of that integrated party-led system and so could not be trusted to elect the "right" sort of people.              Hong Kong was allotted 36 seats among the 3,000 total.  Responsibility for filling the 36 seats was granted to Hong Kong's 400-member Selection Committee that had been appointed in 1996 to authenticate selection of Hong Kong's first Chief Executive.  This committee was re-named an Electoral Conference for the purpose of NPC delegate selection.  It was made up of individuals from the old patriotic community and a sympathetic periphery of business and professional elites that had been organized around it to help Beijing lay the building blocks for all of Hong Kong's post-1997 governing institutions. OPTIMISM REBUFFED           To qualify as a candidate, hopefuls had to collect the signatures of at least 10 conference members.  An excess of candidates was allowed along with a preliminary run-off  if qualified candidates exceeded 50% above the 36 target number, which they did.  But the real drama was provided earlier by the Democratic Party.  In 1997, it still stood as the vanguard of Hong Kong's democracy movement and had, since 1989, been excluded from all the institution-building preparations for July 1, 1997.              During a brief honeymoon period afterward, intermediaries let it be known that bygones could be bygones and DP candidates would be welcome.  Wary of being tagged turn-coat capitulators, they held to their pre-1997 ideals of working for a democratic China and decided they would contest the election but on their own terms.  Most important in this respect was the Democratic Party's election manifesto.  It called, among other things, for the promotion of constitutional democracy in China; a separation of party and government; elevation of the NPC to true governing status; the formation of all congresses including national, provincial, and local by direction election; an independent judiciary; human rights protection; and an independent Hong Kong-style anti-corruption body.            In return for such daring, Hong Kong was given a crash course in the basics of mainland rule with special emphasis on its congress system.   The NPC was not a law-making body in the Western sense but a concentrated manifestation of state power, explained authoritative commentators.  Provincial interests were not so much represented there as reflected in the formal presence of their delegations.  But first and foremost, was the dominant ruling status of the CCP, which reflected not the people's will but the law of historical development.  The DP's manifesto presumed to challenge the very foundations of CCP rule by calling both for the separation of party and government, and for direct election of the congressional hierarchy through which the party governs.   When the nomination period closed in late November, the three aspiring DP candidates had secured a total of only five signatures from Electoral Conference members.           Once these most unsafe candidates had been dispatched, the next most difficult task for the election managers was to ensure that the right people won in the end since altogether 72 candidates qualified for the first round, and 54 for the second.  Journalists covering the event were key to explaining this step since they were able to produce candidate lists or ballot paper crib sheets, in order of sequence, for both rounds.  Each elector was allowed to vote for up to 54 candidates in the first round and 36 in the final.  Obviously, remembering so many names for those who took the assignment seriously would have been difficult.  But the lists just happened to appear in rank order of those determined most worthy of the honor including the NCNA director, NPC incumbents from the earlier appointed pool, and Electoral Conference members themselves.  The lists and final results were an almost perfect match (Wen Wei Po, Nov. 29, 1997; Hong Kong Standard, Dec. 6, 1997).         Those who had been excluded nevertheless remained free to kibbutz and protest throughout.  They denounced the exercise in no uncertain terms as a "farce" and perversion of the electoral exercise.  Even some sympathetic participants disparaged the "mess" as NPC officials, sent from Beijing, improvised step-by-step in their effort to adapt mainland conventions to Hong Kong's new political culture.  But all agreed it was early days … only the first such exercise … with many more opportunities to come. REFINING THE RULES        Today, 15 years later, far from inspiring Western-style political reforms within the mainland people's congress system as local democrats had hoped to do in 1997, pressures for political change have since moved mostly in the opposite direction.   Between then and now, Hong Kong's NPC delegate selection has been slowly but surely "mainland-ized," as the local saying now goes.   Pro-democracy activists have all but given up on that particular front and so have local journalists whose determination to ferret out every behind-the-scenes detail is a mere shadow of what it once was.          In December 2002, delegate selection for the 10th NPC initially seemed like progress from a liberal reformer's point of view. Hong Kong's Chief Executive Election Committee had been regularized and expanded into a slightly smaller version of what exists now.  Henceforth, until further notice, it seems destined to serve as the basis of NPC delegate selection.  But except for the addition of all Legislative Councilors, who included pan-democrats, committee members were still drawn mainly from conservative business and professional circles.         Five democrats threw their hats into the ring and this time secured enough signatures to qualify as candidates.  Two of these  –  Anthony Cheung Bing-leung and Frederick Fung Kin-kee  –  took care to distance themselves from the others.   These were again DP hopefuls with a platform that again called for an end to one-party rule.   But all five were treated alike and none made it through the first round.         Unlike 1997, the presidium managers refused to organize pre-election forums so candidates could introduce themselves to electors.  Spokesmen also again warned that candidates who were not patriotic and who called for an end to communist party rule should not be elected.  The NCNA had been replaced by the Liaison Office and there were many reports about its lobbying efforts on behalf of certain individuals.  The 36 seats were filled primarily by pro-Beijing candidates and only nine were not incumbents. **   A deliberate effort also seemed to have been made to apply the old organization tactic of interlocking memberships since eight NPC delegates were concurrently Legislative Councilors.   Still, this could be seen as a modest improvement, compared to the old habit of rewarding only old-style loyalists with appointments.         To secure similarly safe results, however, delegate selection for the 11th NPC needed further refinements.  Pan-democrats had worked hard to win enough representation on the Chief Executive Election Committee in order to field a candidate of their own for the March 2007 election.  This they did and the Civic Party's Alan Leong Kah-kit secured 132 nominating signatures from the 795-member committee.             In response to the enhanced democratic presence on that core committee, Beijing topped up its NPC delegate selection panel with an extra 300 appointed conservative members.  The first round of voting was also abolished and careful management paid off.  All electors had to vote for 36 candidates … no more, no less … to produce a valid ballot.  Candidates were kept to the manageable minimum of 50, including 20+ incumbents and four democrats.  The latter were all defeated (Wen Wei Po, South China Morning Post, Jan. 26, 2008).        The "bridging" function was also strengthened.  Six of the 36-member HKSAR delegation were concurrently Legislative Councilors, as were another 12 safe appointees.  These latter joined Hong Kong's contingent to the NPC's united front companion body, the Chinese People's Political Consultative Conference (CPPCC).  THE 12th NPC DELEGATION                     After the 1997 selection, I also wrote that, "Beijing will probably never be able to hold a pure mainland-style election in Hong Kong."  …   Never say never because this year's exercise came close.  …  Only two token democrats bothered to apply.  Frederick Fung said he had twice done his best to make himself acceptable and was twice rejected so he would not try again.  Toward what end, asked one of the DP's past candidates.  We didn't expect to win, but only to present our ideas for China's future political development.  Yet even that had proved impossible because electors were not interested and pre-election forums were now strictly in-house affairs.        One of the two token democrats, who had collected enough signatures to qualify as candidates, complained that he was unable to lobby for support because he couldn't even find out who all the electors were.  Had he been reading the right newspapers last September, he would have seen the new NPC Delegate Election Committee list, topped up from 1,200 with another few hundred unheralded safe appointees.  The new total is 1,620 (Wen Wei Po, Sept. 1, 2012).           Ultimately, the 52 qualified candidates included 23 incumbents and 29 newcomers.  Among the latter was a past secretary for security, Ambrose Lee Siu-kwong, who collected the most nominating signatures … over 700, when only 10 were needed.  He is among the few ranking local figures who openly advocate the sooner the better for passage of Article 23 national security legislation, which may account for his popularity among electors (Hong Kong Economic Journal, Dec. 12, 15).         The usual rumors circulated of a master list prepared by the Liaison Office in advance.  But unlike 1997, no one has provided proof.  The rumors were all blandly denied and the exercise proceeded like clockwork.  All 23 incumbents were re-elected.  Ambrose Lee sailed home with the second highest number of votes:  1,387.   Nine of the winners are concurrently either legislators or members of CY Leung's Executive Council cabinet (Ming Pao Daily, Wen wei Po, Dec. 20).   The full extent of the bridging function, between Hong Kong and the national legislative system, cannot be calculated until Hong Kong's new CPPCC appointees are announced before the March 2013 meetings.          As for pan-democrats, their NPC ambitions may have been modest in 1997, but hopes were high and all have failed to materialize.  More surprising, under the circumstances, is their failure to try and make a political issue of the contradictions built into the Hong Kong NPC delegation's role.  With completely straight faces, official managers continue to insist that because of the one-country, two-systems formula governing Hong Kong's autonomy, NPC delegates cannot play any direct role in Hong Kong's government and politics as NPC delegates.  Hence they are not allowed to have offices or websites in that capacity.  But the beauty of being able to wear two hats is that the wearers can take off one and don another as their dual roles demand.          In past years, there have sometimes been too few Legislative Councilors present to muster a quorum during the March NPC/CPPCC meetings.  Rita Fan Hsu Lai-tai was not only a legislator and NPC delegate but served concurrently as President of the Legislative Council and as a member of the NPC Standing Committee.  Yet no one has ever openly debated the contradiction or challenged NPC delegates for violating the two-systems ideal.  The lapse is maybe related to a more basic contradiction between acceptance of the idea of eventual political integration with the mainland, and delay in confronting the reality of what a two-systems merger is actually going to mean. *  S. Pepper, "Hong Kong Joins the National People's Congress:  a first test for one country with two political systems," Journal of Contemporary China (1999), 8(21), p. 321. ** Full account in:  D.W. Choy and Fu Hualing, "Small Circle, Entrenched Interest," Hong Kong Law Journal (2007), vol. 37, part 2, pp. 579-603. suzpepper@gmail.com

Bloomberg: “Revolution to Riches” Posted: 26 Dec 2012 11:36 PM PST Back in June, an in-depth report on the accumulated fortune of those acquainted with newly appointed CCP general secretary Xi Jinping prompted China's infamous Internet custodians to block the Bloomberg website. Now, Bloomberg has added two new articles to launch a series probing into the elite "princeling" class. The series is supplemented by an infographic mapping out the aristocratic weave of family and business guanxi  between descendants of the "Eight Immortals" – those veteran revolutionaries who maintained party power after Mao's passing. Bloomberg provides a series overview: Bloomberg News series "Revolution to Riches" lifts the veil of secrecy on China's princelings, an elite class that has been able to amass wealth and influence because of their bloodline. Mapping the family trees of China's "Eight Immortals," founding fathers of Communist China who later led the country's economic opening, Bloomberg tracked 103 descendants and spouses — from the powerful leaders of state-owned conglomerates to their jet-setting, Prada-accessorized grandchildren. The extended family of another princeling, China's new leader Xi Jinping, amassed a fortune in assets and real state, reporting by Bloomberg shows. The identities and business dealings of this red nobility are often hidden behind state censorship and complex corporate webs. To document them, Bloomberg scoured thousands of pages of corporate filings, property records, official websites and archives, and conducted dozens of interviews from China to the United States. The first article in the Bloomberg series highlights the ideological dissonance between the PRC's revolutionary forefathers and their affluent offspring, walking us through changes in China's economy and introducing prominent princelings: Lying in a Beijing military hospital in 1990, General Wang Zhen told a visitor he felt betrayed. Decades after he risked his life fighting for an egalitarian utopia, the ideals he held as one of Communist China's founding fathers were being undermined by the capitalist ways of his children — business leaders in finance, aviation and computers. "Turtle eggs," he said to the visiting well-wisher, using a slang term for bastards. "I don't acknowledge them as my sons."[...] In the next article, we meet the U.S. assimilated children of PLA general Song Renqiong: At least five of the general's eight children have lived in the U.S., with three daughters becoming citizens and a son obtaining his green card. Their family is the most extreme example of the pull that the U.S. — "beautiful country" in Chinese — has on the Immortals' descendants.[...] The siblings found opportunity in the U.S., not just to educate their children and themselves, they say, but to start businesses and leave behind the chaos and trauma of the Cultural Revolution. In the country held up as the antithesis of China's ideals, they could lead anonymous and simple lives that adhered, ironically, more closely to the values of public service and egalitarianism espoused by their Communist parents. Their choices in many cases contrast with those of some other Immortal families, who pursued lives of privilege after Ivy-League educations and Wall Street training. [...]Song Kehuang, who spends time in the U.S. twice a year at his family home in Irvine,California, says he regrets the fact that the wealth and power of the princeling class made some of his counterparts forget their roots.[...] Elsewhere in recent western coverage of princelings, the contrasting experiences of Bo Xilai and Xi Jinping – both sons of "immortal" revolutionary heroes – have been in focus. At the Atlantic, Damien Ma recalls Bo's fall and Xi's rise, and the Financial Times' Jamil Anderlini has dubbed 2012 the "year of the princeling". Also see prior CDT coverage of China's princeling generation.   © josh rudolph for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us Post tags: Bloomberg, Bo Xilai, guanxi, investigative journalism, princeling, princelings, wealth, wealthy, Xi Jinping Download Tools to Circumvent the Great Firewall

You are subscribed to email updates from Update » Blogs » Politics To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610