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Blogs » Politics » China: NGOs Struggle Under the ‘Big Government'


China: NGOs Struggle Under the ‘Big Government'

Posted: 22 Jun 2012 10:44 PM PDT

Cui Yongyuan, a well-known China Central Television presenter, recently berated [zh] education officials in the Hunan Province, after they expressed their indifference to helping a rural teacher training project. On Sina Weibo, a Chinese microblogging website, Cui wrote that official correspondence from the Hunan education authority stated [zh] that "[we] do not oppose, support or [plan to] participate in the Rural Teacher Project."

Image of Cui's Weibo post that sparked debate.

Image of Cui's Weibo post that sparked debate.

The program, which aims to select hundreds of rural teachers from Hunan for training, is funded by a private charity run by Cui. In response to these 'three no's', Cui followed with his own furious response, "No effort, no principle, no face!" The entire account was republished on NDdaily [zh].

Big government

China has long been perceived as having a 'big government' and 'small society' but many citizens desire change. Most non-governmental organizations (NGOs) and charities in China are in their infancy and often have to seek government support to get work done.

But according to the 2011 China Charity Donation Report published on people.com.cn [zh], in 2010 more than 58.3% of private donations were channelled back to government or government-controlled charities, and only 1.3% trickled down to grassroots social welfare NGOs.

58.3 percent of private donations were channelled directly or indirectly to the Chinese government in 2010. Image source Digital Zhongguancun.

58.3 percent of private donations were channelled directly or indirectly to the Chinese government in 2010. Image source Digital Zhongguancun.

NGOs struggle

Cui's response quickly turned into a national debate over the relationship between the government and NGOs in China. Some criticized the Hunan authority for not supporting civic efforts while others disagreed with Cui Yongyuan's views.

The University of Hong Kong's China Media Project translated Chinese media researcher Yan Lieshan's opinion on this issue. Yan, who also has experience organizing rural education programs in China, believes that because the education sector is state-controlled, it is impossible to carry out any education-related project without government support [zh]:

没有湖南省教育主管部门的同意,也根本不可能进行。如果"越过"省教育厅,直接找"下边的"市县教育部门,"下边的"教育官员会为难;如果没有教育主管部门的同意,极少有校长敢"擅自"同意他的教师进京。什么叫"不反对"?人家免费帮助培训你辖区的教师,你有什么理由反对?说得倒好像他本来有权力反对,现在宽宏大量"不反对",小崔们应该谢恩似的, 人家做好事,你凭什么"不支持"?

This couldn't possibly happen without the agreement of the education authority in Hunan province. If Cui's program were to sidestep the provincial education authority and go directly to the counties, these lower-level officials would be in a tight spot. And without direct approval from the local education authority, few school principals would dare let their teachers attend. "What did they [the education authority in Hunan Province] mean when they said they "don't oppose" the training program? What reason could they have for opposing a program in which people pay to help train teachers in their area? They seem to suggest that they have the right to oppose it in the first place, as though Cui should be grateful for their restraint. When someone wants to do a good thing, on what basis would you "not support" it?

A question of independence?

In the Chinese daily newspaper Southern metropolis [zh], influential investigative reporter Guo Yukuan (郭宇宽) expressed a different opinion:

NGO是非政府组织,天然就和政府有一定距离,正是因为政府工作有其自身逻辑,NGO独立的探索才有其特别的意义。特别是乡村教师的培训,如果是教育厅牵头组织的,那一定是官方色彩非常浓厚的,民间的探索完全可以是个性化的。

NGOs should essentially keep a distance from the government. The government has its own way of doing business, which makes the independence NGOs more meaningful. Programs such as rural teacher training, if led by the government, tend to be bureaucratic and superficial. Exploring grassroots partnerships may be more helpful.

Current affairs commentator Wei Yingjie (魏英杰), echoed Guo's views [zh], emphasizing that NGOs should be an independent sector:

但要搞清楚的是,政府该如何支持民间公益。政府对民间公益活动,自然应持欢迎态度,并提供各种便利。在一些情况下,政府出资购买民间公益组织的社会服务,也不失为弥补政府职能欠缺的一种办法。但是让政府部门发公文,要求下属部门配合民间公益活动,或者直接参与其中,扮演民间公益组织的角色,这肯定不是合理途径。这样做,政府职能与民间公益只会重叠一起,使得民间公益变得面孔暧昧。其结果是,民间公益组织要么变成官方慈善机构,要么沦为政府部门的应声虫。

The point is how should the government support NGOs? Of course, the government should support them and provide them with assistance accordingly. Under certain circumstances, the government can even procure NGO services as a supplement to their own work. However, it is unreasonable to require the government to engage in NGO activities directly or to demand that subordinate agencies coordinate with NGOs, which would either blur the line between the government and NGOs or make NGOs completely dependent on the government.

[Note: The thumbnail is Cui Yongyuan. Image source: China Media Project]

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China, Bhutan Ready for Diplomatic Relations

Posted: 22 Jun 2012 10:15 PM PDT

Amid frustration at the outcome of the United Nations Conference on Sustainable Development in Rio—which The Guardian's gloomily compared with a 1930s League of Nations assembly—a side meeting between Wen Jiabao and Bhutanese prime minister Jigmi Y. Thinley does appear to have borne fruit. From the AFP:

"China is willing… to establish formal relations with , resolve the border issue between the two nations at an early date, strengthen exchanges in all areas and advance Sino-Bhutanese relations to a new stage," Wen said.

China appreciated Bhutan's support for the "one China policy" which maintains that and fall under China's sovereignty, Wen said.

Bhutan has maintained very limited formal bilateral relations with other nations, according to The Hindu's Ananth Krishnan, though this has started to change:

Bhutan, which enjoys close diplomatic, political and military relations with India, has in recent years begun to widen its diplomatic engagement, establishing relations with another country in the region, Myanmar, earlier this year. Bhutan also has diplomatic ties with Nepal, Bangladesh, Sri Lanka, Pakistan and the Maldives, but does not have formal relations with either the United States or the four other permanent members of the .


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Sensitive Words: Chinese Flag on Hu’s Shoe

Posted: 22 Jun 2012 01:41 PM PDT

As of June 21, the following search terms are blocked on (not including the "search for user" function):

Hu Jintao "Picks Up" the Flag: Lining up for a photo at the summit, the sticker of the Chinese flag marking his place got stuck to his shoe. In addition to the below, footage of Hu's gaffe has been removed from video sharing websites.

  • Chairman Hu (胡主席)
  • pick up the flag (捡国旗)
  • make a show (作秀)
  • Reuters (路透): retest

."]

Post text: Kainy: Step on it! Let's all step on it together: "Video: G20 Leaders Photo full version" http://t.cn/zWZgn6U (via @YouKuInfo). Screen text: This video has been removed. Try searching here [link

 

Other:

  • wire story (通稿)
  • 9000 years old (九千岁)
  • toad (蛤蟆): retest
  • hunger strike (罢餐): retest. Students at the Beijing University of Aeronautics and Astronautics are on hunger strike to protest rising cafeteria prices.

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 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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The Status of Fakery in China

Posted: 22 Jun 2012 01:33 PM PDT

China is infamous for the production of counterfeit consumer goods that occurs within its borders. From high-tech electronics to wine, Renaissance-era fine art to shellfish, if there is a market for something, someone is likely trying to fake it. While the central government has made moves to curb this practice, a penny-wise public's desire to conspicuously consume keeps fake products flowing within China's shanzhai markets, and out into to the world. While the quality of counterfeited products usually pale in comparison to the real thing, many consumers sacrifice craftsmanship for prestige in their quest to "keep up with the Wangs". An article in The Economist explores the driving forces and overall implications of China's fake luxury industry:

Economists and policymakers around the world want China to consume more. They are eager for it to reduce its dependence on investment, which amounted to almost half of GDP last year. No economy that invests so heavily can possibly invest it all wisely. Economists therefore worry about a widespread misallocation of capital, or "malinvestment". But some of China's consumption is also a bit questionable.

[...]A Prada handbag is a bundle of two things: a well-made product and a well-marketed brand. But some consumers value prestige, not quality. Fakes allow shoppers to "consume" the prestigious brand without buying the high-quality good, as Gene Grossman of Princeton and Carl Shapiro, now of the University of California, Berkeley, pointed out in a seminal 1988 paper. This unbundling no doubt drives Prada and others mad, but it would seem to be a boon to consumers.

But it is possible that buying genuine luxuries imposes an externality of its own. Status, after all, is a "positional" good. To be top of the social heap, it is not enough to have fine things. Your things need to be finer than everyone else's. Someone who buys a more expensive watch or car to climb up the social ladder forces other social climbers to spend more to stay ahead. In making their purchase, they will carefully weigh how much prestige their big spending will buy. But they will not take into account how much extra everyone else will now have to spend to preserve their social position. As a result of these "arms races", China may be overspending on luxury goods. Its shoppers account for only 6% of the world's consumer spending, but, according to figures released by Bain Consulting last month, they now account for 20% of global sales of luxury goods.

A blogpost from The Economist covers the same topic, mentioning a paradox born from the desire to impress:

If a customer falls for a fake, they obviously lose out. That is a clear example of malconsumption. But many buyers are not duped by their purchase; they want their purchase to fool everyone else. No doubt they often succeed, passing off a counterfeit good as the real thing. But in China, fakes are so widespread, the opposite danger also looms: genuine articles may be mistaken for fakes. Yue Li of Nottingham University (Word doc) cites one Chinese shopper who wrote the following on an online discussion board:

 Even if I bought a real one, it's really embarrassed [sic] if other people think it's fake, should I explain to everyone that it's real?

A Global Times article briefly summarizes the topic, and provides some pictures of ambiguously branded products:

While China's rich rival their foreign counterparts in conspicuous consumption, poorer Chinese are no strangers to these brands, either. Fake products are easily available at street stalls and some big markets at very cheap prices. Other goods sell under domestic brand names, but are virtually indistinguishable from famous global labels.

The authorities have repeatedly launched anti- campaigns in recent years, but the effects so far have been barely visible in the marketplace.

So when somebody proudly brandishes their handbag or wears a new designer shirt, it might mean profits for Paris or Milan, or, more likely, another shanzhai product fresh off the line.

Chinese made fakes are not only found in upscale consumer markets. Practical and essential products and commodities like medicine or cooking oil are also reproduced. Sometimes, counterfeiters target foreign markets. ABC News reports on a shipment of fake train tickets found in Italy this week:

Italian police are not surprised when they find from China, but were taken aback to find $35 million worth of counterfeit train tickets for Rome's "Leonardo express" train on a ship that arrived from China.

Police in the Tuscan port of Livorno discovered over 2 million Chinese-made counterfeit train tickets stashed in 28 cardboard boxes at the back of a container meant to be carrying office furniture and postcards.

The tickets were all for the Rome central train station-airport "Leonardo express" train which sells at 14 euros ($19) a ticket.

The National Journal reports on a new bill designed to keep nearly indistinguishable counterfeit microchips out of the US military's supply chain.

A flawed Department of Homeland Security policy has opened the "floodgates" to counterfeit microchips from other countries, Rep. Mike McCaul, R-Texas, said on Thursday as he announced a bill designed to stem the tide.

"This is a tremendous national security risk to our military and our intelligence networks," McCaul, who chairs the House Homeland Security Oversight and Investigations Subcommittee, said in a statement.

He said that in 2008, DHS officials stopped providing companies with photos, serial numbers, and other information needed to identity fake microchips.

That policy, McCaul said, allowed the United States military to buy nearly 60,000 counterfeit microchips from China in 2010. Corrupt microchips were discovered in Navy anti-submarine helicopters and aircraft, as well as military cargo planes, according to a Senate Armed Services Committee investigation.


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Aminta Arrington’s “HOME is a ROOF OVER a PIG, an American Family’s Journey in China”

Posted: 22 Jun 2012 01:17 PM PDT

In this delightfully written memoir, "HOME is a ROOF OVER a PIG, an American Family's Journey in China," Aminta Arrington details the experiences of her all-American family, from suburban Georgia, fully immersed in language and culture in Tai'an, a relatively poor city in China's Shandong Province. The title derives from the character, "家," which Arrington recounts someone explaining to her the top radical means roof and the bottom pig. Embedded in the Chinese characters are history and culture which she found fascinating. Her genuine interest in this ancient culture lead her to adopt a baby girl, and it was out of the desire to want to offer her a bond with her roots that ultimately brought the entire Arrington family to China.

She and her husband taught English at a local university where they mingled with students who came from rural areas as well other cities. Her family visited some of the students. That immersion meant the Arrington children also picking up some local habits, including dropping their pants on the side of the road to urinate. Arrington herself would be perturbed by complete strangers asking her about her salary, and to her own surprise, she succumbs, divulging it. When in Rome do as the Romans do! Her own parents would visit from America and while attending a Sunday morning church service, witness a fellow church goer sitting next to them clearing his throat, spitting, and then smearing it into the bare cement floor with his shoes. There are many such episodes in the book told delightfully.

I cringed and laughed throughout the book. I also felt warmed by the outpouring of hospitality shown to the Arringtons by the Chinese for I know that's ingrained in the culture.  I was happy to read about their three children thriving, though Katherine took a bit longer to come around.

Arrington completely gets the texture of everyday living correct in this tier 2 city, Tai'an. In my view, there are three types of China's.  Modern China is represented by tier 1 cities like Shanghai, Beijing, and Canton, with amenities not unlike New York or San Francisco.  Then, there is rural China where majority of Chinese still reside, though their numbers are in a dwindling trend. Remember, China is in the midst of an industrial revolution.  (See my prior article, "'Father's Prairie, Mother's River' – the feelings of one billion people on the move.")

The China in-between are represented by tier 2 cities such as Tai'an. That in-between China is where the bulk of the Chinese population modernize, albeit at a less dizzying pace compared to tier 1 cities. That is where the majority of peasants go in pursuit of greater material comforts. McDonalds, Starbucks, and Chinese chain stores will arrive in increasing numbers. It is also where unique customs give way to more popular ones. Eat mantou (steamed buns) or buy a happy meal at McDonalds instead? This is where Mandarin as the national dialect continues to entrench.

The book is also very much about Chinese perspectives, which I eagerly anticipated in each chapter. I credit Arrington for faithfully capturing what her English students or other ordinary Chinese told her when they debated, especially on issues related to ideology or politics.

In discussing her students perspective about individualism and freedom, her husband, Chris, observed that the Chinese simply don't proclaim those ideas as much as Americans do. She would explain that Confucian values help place one in society and thus there is perhaps less of a need for one to clamor for that heightened sense of unique identity.

Her husband's observation is the same as Henry Kissinger's. America view these values with missionary zeal. What is not said is that the Chinese not being zealous about them does not mean the Chinese are opposed to such values.

I was grateful to her attention to detail in faithfully capturing much of what her students said.

Remember though, Arrington is learning Chinese in Tai'an while teaching English. Much of her conversation on abstract ideas with her students were done with their broken English. So, if there is any shortcoming in the book, it is that the Chinese perspectives are not fully obtained. When she is more fluent in Chinese, she should then be able to more fully engage.

Leading up to the 2008 Beijing Olympics, riots broke out in Lhasa. Her students were angry at what they saw as fabrication in the Western media to smear China. Arrington in fact had an Op-Ed written and ready to submit to the NYT arguing why President Bush should not boycott the opening ceremony. She was saddened to read a piece had just published which argued the opposite.

Being a Westerner, she felt it was her responsibility to explain and defend the Western perspective in front of her students. That's out of the desire to want understanding for both sides of the aisle. Our readers on this blog should know, we aim to do the same by articulating the Chinese perspectives!

"HOME is a ROOF OVER a PIG, an American Family's Journey in China" is a book on Chinese society that I recommend enthusiastically.

To find out more, visit her web site at: http://amintaarrington.com/

Scenes From 21st Century China

Posted: 22 Jun 2012 11:21 AM PDT

Alan Taylor's In Focus, a regular photo blog on The Atlantic's website, put China in its frame for an edition earlier this week. By compiling a collection of powerful images caught by photojournalists over the past few weeks, Taylor provides us a glimpse into the diverse and captivating political and cultural landscape that makes up China. The images selected juxtapose an assortment of scenes from across the nation, showing beauty and inequity, the traditional and the trendy, the prosperous and the displaced, and more of the contradictions that make up modern China. From Taylor's intro:

China, the most populous country and the second-largest economy in the world, is a vast, dynamic nation that continues to grow and evolve in the 21st century. In this, the latest entry in a semi-regular series on China, we find images of tremendous variety, including astronauts, nomadic herders, replica European villages, pole dancers, RV enthusiasts, traditional farmers, and inventors. This collection is only a small view of the people and places in China over the past several weeks

The subjects of the 47 pictures included visually supplement much recent CDT coverage of China: Liu Ying – China's first female astronaut; Wang Jinxiang – mother of activist Chen Guangcheng, caught in the fallout of his recent escape; a Uyghur man in the ruins of his recently demolished house; victims of China's increasingly endemic obesity problem; a scene from inside China's clone of an Austrian world heritage site; a young Tibetan monk mourning a protester who died in self-immolation; a Hong Kong street brimming with protest after Li Wangyang's suspicious suicide; and much more.

For more photo-documentation of a changing China, also see In Focus's previous China slideshows: Tiananmen Square, Then and Now; A Look Inside China; Rising Protests in China; or 21st Century China.


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Test of Their Lives Over, China’s Youth Ask: Now What?

Posted: 22 Jun 2012 05:48 AM PDT

Emotions swept the Chinese Internet this past week as the dreaded gao kao, China's college-entrance exams, came and went, leaving nothing behind but gnawed pencils, tear-drenched tissues, and empty IV drips in its wake.

Preparation for the gao kao can dominate years of students' lives

Even though the vast majority of Chinese agree that the gao kao system needs serious reform, for the time being it remains the biggest determining factor in university placement, and plays a large role in placing students into majors. In the weeks leading up to the exams, thousands of stressed-out students vented on Sina Weibo, China's Twitter, commiserating over their packed schedules and aching brains. 

Let the celebration, or at least relief, begin

As netizens turned their attention from their studies back to Weibo, the expected chorus of revelers celebrated their new-found freedom, euphorically plotting how they will now spend their free time. The first and largest group were unequivocally happy to finish with this grueling chapter of life and move on to a largely idle summer.  

@黄豆苗 fondly remembers the moment he completed his exams. "In my view, two days of gao kao were simply hell. I barely remember the hellish exercises, but I'll never forget the sensation of stepping out of my final English exam and feeling like I had entered heaven! Remember right before the test started we tore up our books and threw them, celebrating wildly afterwards? That sure was a great summer vacation." [1]

@晴天莓子 celebrated her freedom in her own unique way. "My home is very close to school, and for the past two months I haven't even left this road. After the test, the first thing I did was run around in a circle!" [2]

With weeks before scores are received and college enrollment begins, many netizens look forward to kicking back. @2帆小萝莉 bemoans, "Can I sleep? 99% of my youth has been dedicated to studying. Any time left over is mine to hibernate!" [3] 

Glad it's over—now what?

Yet all was not unmitigated happiness. Many were disillusioned with the entire process. @大鹏-Andy quips, "Actually, before the test I always envisioned I'd be crazy happy afterwards. But now that I'm finished I'm tired to death, and still busy." [4] @相遇烟雨 also found little to celebrate. "Who says we can relax after the test. Waiting for the results is the most nerve-wracking!" [5]

Students tear apart their study materials in post-exam euphoria. From Xinhua

Beyond the immediate gratification, an existential anxiety could be detected among many Weibo users. After spending the better part of their conscious lives explicitly preparing for the exam, many are asking "…what now?" For these students, years of rote memorization leading up to this test aren't immediately rewarded by any clear path forward, leaving many with mixed feelings of nostalgia, self-doubt, and angst about the future.  

As a manifestation of the stress caused by the test, there are even stories of increased divorce rates among parents, and students turning to plastic surgery in the weeks after the exams. 

@若雪 frets, "After the gao kao, I went ahead and engaged in all sorts of rebellious behavior I had been planning, but now in my heart I still feel as empty as before. I feel like I'm on the edge of a cliff, have lost my footing and slipped. I feel helpless and hopeless, who will come save me?" [6]

@Maige的小屋 was particularly bleak, capturing a sentiment many of us have experienced after traversing one of life's major junctions. "Before the gao kao we had lofty visions, but after the gao kao, nothing seems as beautiful, and every day is like sleeping in the dark. I suddenly realized that studying was actually pretty good." [7]

@波波嘉 expresses similarly subdued nostalgia. "I've thought about this day for long time, spending time every day planning about the heaven of post gao kao life.  I wish I knew before how extremely boring it actually is, makes me want to return to pre-gao kao hell." [8]

With a nation of students who cram endlessly for one single examination, only to feel sadly nostalgic and anxiously powerless when faced with the responsibilities of adult life, might there be parallels with a rapidly developing China? China is in a position of newfound power on the world stage, and there is sure to be ongoing national pondering on how to deal with the consequences of maturity.     

If this is too heavy, here's a reassuring story also making the rounds: After the gao kao, young lovers are booking hotel rooms.

 

[Thanks to author Ben Sangree, who leads marketing efforts for Fluentflix. FluentFlix is a new way to learn Chinese through authentic video content like music videos, movie trailers, news, and inspiring talks. With engaging and immersive content, it empowers users to learn with fun videos exhibiting the diversity and vibrancy of modern Chinese culture. Learn more at FluentFlix.com.]

Footnotes    (? returns to text)
  1. 对我来说,高考那两天简直就是地狱,可如今已经不记得在地狱试练的感觉,倒是考完英语出考场立马从地狱到天堂的感觉一辈子都忘不了。还记得我们考前疯狂撕书扔书,考后可劲狂欢的情景吗?那个暑假,貌似我们天天都有活动噢?
  2. 话说我家离学校很近,连续两个多月都没有走出那条大街。考完第一件事就是逛了一圈?
  3. 睡觉可以吗 我的青春几经注定百分之九十九奉献于学业了 剩下的留给自己夏眠一下吧!!?
  4. 其实啊,考试前总是憧憬着考完之后可以疯狂happy,可是考完了之后还累得要死……..忙死了……?
  5. 谁说考后就可以放松的??扯·····,成绩才是最担心的··?
  6. 高考结束后,各种想像中的叛逆行为都进行过了,可心里依旧觉得很空…好像走在悬崖边却失足跌落…那样的无助与绝望…谁能来救我?
  7. 高考前憧憬的一切,在高考结束后,觉得没有那么美好,每天睡得昏天黑地。突然发现,上学挺好?
  8. 以前想了一大堆,天天挤时间谋划考完后天堂的生活,我要早知道考完后是这么无聊到死,让我回地狱吧.?

The Daily Twit (@chinahearsay links) – 6/22/12

Posted: 22 Jun 2012 06:10 AM PDT

We're sliding into a holiday weekend here in China, so rev up your Dragon Boats, eat some sticky rice, and try to ignore the stifling, pollution-choked air. For some holiday fun, check out the doodle over at Baidu; it's interactive and festive.

Or you can just read some news:

Time Cover Story: The Cult of Apple in China — I spent a bit of time myself today responding to one sentence in that article that suggests China doesn't want foreign companies to succeed. Weird. You can read my post here.

Reuters: China's Evergrande mulls legal defense against fraud accusations — You recall the story of Citron Research victim Evergrande from yesterday. Today's news is the "equal and opposite reaction" in the short selling universe. There's only a remote possibility Citron will actually get sued, but if they do, no need to worry. I assume they have good lawyers and suitable insurance.

China Economic Watch: The Chinese Growth Model: Before and After the Crisis — What will this latest economic downturn mean for China's traditional investment-led growth model? Everyone's been waiting for rebalancing, but I don't think we're going to see it this year.

Bloomberg: China Said to Propose Limits on Local Government Loans — Be thankful you're not in charge of China's economic policies. On the one hand, the government needs to stimulate the slowing economy. One way of doing that is to encourage infrastructure investment. On the other hand, the nation is still suffering a hangover of nonperforming loans from the 2008/9 round of stimulus that did that very thing. So Beijing is going to try targeted stimulus while restricting the local guys. Good luck.

Silicon Hutong: China's Shipyards on the Ropes — More effects of the economic downturn. Shipyards are hurting, and the Navy could be the beneficiary. An angle I never would have considered.

Forbes: Donations to charity in China dropped by nearly 18% last year amid scandals — You might know about China's various "confidence" problems. Folks don't trust local government, the food they eat, etc. But because of some very well publicized scandals involving charitable organizations, this confidence crisis is having serious effects. And this was before the economic slowdown.

Jack Perkowski: Behind China's Rare Earth Controversy — I know I hit on this topic a few days ago, but this is a great backgrounder on the topic and also explains why China's quotas might not be much of a headache for the U.S. in the very near future. As to why the U.S. might still file a dispute with the WTO anyway (or at least keep threatening to do so), here's my take on the subject.

Economic Observer: Cops In China Use Public Humiliation As Crime Deterrent – And Have Fun To Boot — If you've dealt with a lawsuit over here in China, you might have some experience with the "public apology" remedy. Still popular in the Middle Kingdom. As this article shows, the criminal justice authorities have also not given up on public humiliation, including classics like locking folks up outside in public, and parading criminals through the streets in chains.

Xinhua: China arrests suspected foreign robber — Oh boy. Being an expat has been more difficult than usual this year, given new "show us your papers" laws, a few nasty incidents involving foreign assholes, and of course the rants by famous nationalist jackoffs. Then we had the expat who was beaten to death, which sparked a protest. And now, in the same province, we've got this arrest of two "dark-skinned" expats accused of being armed robbers.

China Daily Show: Self-immolating monk sacks publicist — Something fun to get your weekend started. It's funny 'cause there's a little bit of truth there.

By the way, this is the end of the first week of the new and improved The Daily Twit. Seems like the number of links has been hovering around 10 most days. I'd change the name to "Top Ten" or something catchy, but top ten lists are the kind of things put together by search engine optimization douchebags, so I'll hold off on that for the time being.


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Why Are We Still Talking About China’s Rare Earth Export Quotas?

Posted: 22 Jun 2012 05:51 AM PDT

China's big media push justifying its rare earth export limits is a few days old, but I wanted to briefly revisit it to recommend Jack Perkowski's Forbes column on the subject:

The timing of the WTO action by the U.S., the EU, Japan and Canada is curious, though, because it appears that market forces are already correcting the current imbalance. Molycorp is in the process of modernizing and reopening its Mountain Pass mine, which is expected to come online later this year. A study by the U.S. Defense Department published in March, the same month that the WTO complaint was filed, found that the stranglehold that China has on rare earth production could be coming to an end with the opening of new production facilities in North America.

If the WTO dispute is unnecessary, why might it still go forward? I can think of three good reasons. First, you never know. Sure, it looks like North American rare earth supplies will solve the problem, but it hasn't happened yet.

Second, and more important, legal precedent. Just as the raw materials case set a precedent regarding export quotas, a rare earth quota win would seal the deal, making it very difficult for China, or anyone else, to institute a similar program in the future.

Third, if the U.S. thinks that it has a strong legal case and has the evidence to back it up, why give up on something that can be used as a bargaining chip? China doesn't want to lose the case and suffer a public loss of face backtracking on a policy that it just this week so strongly supported. If I'm a U.S. trade negotiator, I want the threat of a WTO dispute like this in my back of tricks when I come to Beijing for bilateral talks.


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Apple’s China Success: TIME Asks the Wrong Question

Posted: 22 Jun 2012 03:21 AM PDT

This week's Time magazine cover story is entitled "The Cult of Apple in China" and includes, from what I can tell, a decent rundown of the reasons behind Apple's strong performance in the Middle Kingdom. I haven't actually read the full story, since it is available only to subscribers and it's been many years since I bothered paying for a news weekly. Plenty of other folks have reported on the article, though, and Time itself has published a companion piece.

Without knowing the complete context within which this sentence appeared, I was nevertheless taken aback when I saw the following excerpt:

How much longer will an increasingly nationalistic government allow foreign companies like Apple to profit so handsomely on its shores?

Fascinating. The implication here is that Beijing will only permit foreign companies a modicum of success before it firmly places a Communist boot on that foreign investor's neck, putting that company in its rightful place. Well yes, that certainly has happened in the past to some foreign firms here, but how likely is it that Apple will suffer the same fate?

Before we can answer that question, we have to look at what has happened to other foreign enterprises that have experienced catastrophic problems in China. Entire books have been written on this subject, so allow me to generalize a bit. Why do foreign companies fail in China? Of the myriad business and legal difficulties, we should probably zero in on issues directly or indirectly related to government action. After all, the rhetorical question posed in the Time cover story suggests that it is the government itself standing by and monitoring Apple's profitability, and waiting for the right time to strike.

So what can the government do if it wishes to sabotage a foreign company? Quite a number of things of course. First of all, every company in China, foreign or domestic, must pass an annual review. If the government was hell-bent against a foreign investor, it could simply instruct local officials to withhold the green light on that annual review. That being said, the government simply doesn't do that sort of thing. Too obvious, too in-your-face protectionist. Most governments are smarter than that.

Similarly, many companies can only maintain their operations because of one or more regulatory licenses that they hold. Indeed, Apple, either directly or through its distributors, is beholden to the government in this regard. You can't do much as an electronics/telecom company without securing one or more regulatory licenses. So there is that.

Have other foreign companies been essentially shut down over the failure to renew regulatory licenses? Certainly some have, but I wouldn't call that tactic common when it comes to government intervention into a specific sector or with respect to an individual company; even Google has had some of its licenses renewed since its much-publicized tiff with Beijing over Internet censorship. The government is much more likely to proactively set up high barriers to entry in a specific sector using regulatory licensing, and this kind of licensing regime is usually tied in to other policy initiatives. I'm thinking, for example, of what happened with online video file sharing a number of years ago, where an entirely new set of requirements and rules were set up to restrict investment and monitor operators.

Alternatively, the government could selectively enforce any number of laws. The Time cover story mentions labor issues a number of times. If the government really wanted to smack Apple around, couldn't it go after Apple's local manufacturing partners, such as Foxconn? Yes, I'm sure there are some labor violations going on down south that could come into play, but remember that Foxconn is a huge employer and taxpayer in Guangdong and elsewhere. Moreover, if the government went after Apple's partners and not other labor law violators, the charges of selective enforcement and protectionism would be nasty. I don't think the government really wants to mess around in that sandbox.

Where else can we look for possible government meddling? If we want to focus on the most likely kind of foreign company that can run into trouble in China, we have to talk about patented technology. As I've written about for years, China's economic planners have established a certain number of key industries important to the nation's future and continued development. In each of these sectors, national champions have been established in a variety of ways; these are pretty much always State-owned enterprises.

What happens to a foreign company that has the ability to compete against one of these national champions? Well, first of all, foreign investment restrictions usually take care of the problem at the outset. However, if the sector has not been closed or restricted, there are indirect measures that can be taken to ensure that a national champion maintains its dominance. As it so happens, many of these key sectors involve high-tech products, many of which are patented. A lot of this know-how or patented technology has therefore been brought onshore and transferred to Chinese companies. In some instances, the patents of foreign entities have even been invalidated.

We begin to get a good picture of what kinds of companies the Chinese government will not, to paraphrase the Time cover story, allow to flourish. So what about all the rest? Surely there are a whole lot of foreign companies that are doing quite well here. Why are they allowed to profit when a Chinese domestic counterpart could be substituted in its place?

There are two answers. The first is that many successful foreign invested enterprises in China have strong brands and are expert at marketing. For example, there are numerous cola products out there in the marketplace, but Coca-Cola is doing just fine all over the world. Certainly the product itself has something to do with this, but branding and marketing are just as important, if not more so. The "domestic alternative" approach was tried by a cola company a few years ago, and its marketing campaign failed miserably.

Which brings us to Apple. There are many iPhone competitors, for example, and there are many iPhone copycats. Why does the iPhone continue to sell so well in China? Several reasons no doubt, but a lot of the success relates to branding, marketing, image, and consumer trends amongst the upper and middle classes here. Are these things that the government could easily take away, substituting a domestic competitor in Apple's place? I don't think so.

The second answer, and my general response to that key line in the Time cover story, is that the government here has no problem with foreign companies being profitable. The situation with key industries and national champions are special cases, not the rule. Why are companies like Coca-Cola, Unilever, and Nike allowed to do so well in China? For the same reasons that they do so well in many other countries.

There is no Communist cabal in China waiting in the wings to sabotage every successful foreign invested enterprise. Even that suggestion smacks of ignorance and misguided ideology. Apple is not being "allowed" to do well in China, it simply is doing well.


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Ai Weiwei Refuses to Live in Fear

Posted: 22 Jun 2012 02:04 AM PDT

Writing at The Guardian, Ai Weiwei reflects on his 81-day detention, which ended a year ago today.

I often ask myself if I am afraid of being detained again. My inner voice says I am not. I love freedom, like anybody; maybe more than most people. But it is such a tragedy if you live your life in fear. That's worse than actually losing your freedom.

[…] Reflect on 's case, 's and mine. We are three very different examples: you can be a high party member or a humble fighter for rights or a recognised artist. The situations are completely different but we all have one thing in common: none of us have been dealt with through fair play, open trials and open discussion. China has not established the rule of law and if there is a power above the law there is no social justice. Everybody can be subjected to harm.

I'm just a citizen: my life is equal in value to any other. But I'm thankful that when I lost my freedom so many people shared feelings and put such touching effort into helping me. It gives me hope: Stupidity can win for a moment, but it can never really succeed because the nature of humans is to seek freedom. They can delay that freedom but they can't stop it.

Ai's one year probation has now been lifted, according to Edward Wong at The New York Times:

"They told me they had lifted the probation because I had behaved well all year," he said in a telephone interview as he was dining at a restaurant in Beijing's Sanlitun neighborhood. "It really surprised me because I violated almost every rule they imposed."

Before Mr. Ai was released from last year, the police said he had to refrain from talking to foreign journalists and could not use Twitter. But Mr. Ai regularly talks to journalists and uses Twitter daily.

Mr. Ai said the police did not give him back his passport. "You don't need it," Mr. Ai quoted one officer as saying. The officer then said that on Monday the police would return the passport and computer equipment they had seized.

Despite the promised return of his passport, Ai has been told that he still may not leave China as he may face charges of pornography, bigamy and illicit exchange of foreign currency, as Reuters' Sui-Lee Wee explains. The charges revolve around images, posted online "as a joke", of Ai posing naked with a group of women. When the threat of prosecution first emerged late last year, supporters posted a barrage of nude photos online, while the original images sparked further controversy by tripping Facebook's nudity alarms.

"We never even touched each other," Ai said. "It's nothing. Nobody will say that's pornography. I asked them why this is pornography. They said under our policy, if there's nudity, if people try to open a file many times, like over 1,000 times, that's pornography. They have a law like that, which is ridiculous."

Ai, who is married, also denies the charge of bigamy. He openly meets a girlfriend and has a three-year-old son from that relationship.

On the possible charge of "illicit exchange of foreign currency", Ai said police told him that it concerned a project in 2008, when he invited 100 foreign architects to Inner Mongolia and arranged for a Swiss gallery to pay them in euros, while he got yuan currency in return.

Last July, Ai accepted a visiting lecturer post at the Berlin University of Arts, even knowing that once outside China, he might be unable to return. The continued bar on international travel will postpone this still further, but Ai may in any case now be less inclined to take the attendant risk. He told The Telegraph's Malcolm Moore recently that "'it has never been important to stay, until now …. When I went to New York in 1981, I vowed never to come back.' But he has now become so emotionally involved, and has such faith in the twin powers of the internet and globalisation to change China, that he cannot bring himself to leave."

The expiration of Ai's probation coincided with a hearing in his lawsuit against local tax authorities, whose case against him, he claims, was riddled with procedural irregularities. Ai was prevented from attending the hearing. His legal advisor went missing, and was then forced to leave Beijing; potential supporters were placed under watch and, in Hu Jia's case, reportedly beaten; posts about Ai including some memorable photos of him posing in a police uniform were removed from Sina Weibo; and in the courtroom itself, his lawyers were prevented from giving evidence, while all public seating was filled with paid attendees to keep supporters out. From NPR's Louisa Lim:

On Wednesday, a Beijing court heard Ai's challenge to tax authorities demanding almost $2.5 million in back taxes. Ai was ordered to stay home, so he missed the eight-hour-long hearing. He said the court did not allow his lawyers to read the existing evidence, submit new evidence or call witnesses. Ai noted the irony of a public hearing in which the defendant wasn't allowed to attend and the public seats — all five of them — were occupied by people paid to be there.

"Those five seats they assigned to their own people," he said. "After three hours, these five people, they completely have no interest in case. They ask can they leave, 'We didn't know it would last for so long.' And the court tells them that no, you cannot leave, you have to stay here until the case finishes and we'll pay extra money for it. So they just take a nap in the court."

So far, there has been no verdict from the hearing.


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Bo Xilai and The Cultural Revolution

Posted: 22 Jun 2012 01:01 AM PDT

As China's top leaders decide the fate of disgraced former party chief and one-time Politburo Standing Committee hopeful , and as observers debate his legacy, Chris Buckley looks back to Bo's childhood and explores how the chaos of the Cultural Revolution may have shaped his rise and fall. From Reuters:

At the start of the , the man at the centre of China's worst political in decades was a student at the Number Four High School in Beijing, an elite cradle for "princelings", the sons of Communist leaders who had risen to power with Mao.

The school became a crucible for conflicts unleashed with Mao's call to rebel in the name of his unyielding vision of communism. The era paralyzed the country politically, trigpicturgering social upheaval and economic malaise.

One day in 1967, Bo and two brothers were paraded at the school by an angry group of student "Red Guards", and accused of resisting the Cultural Revolution just as their father, Vice Premier Bo Yibo, had been toppled along with dozens of Mao's former comrades and accused of betraying their leader.

Their persecutors twisted their arms behind them and pressed their heads nearly to the ground while pulling back their hair to expose their faces, Duan Ruoshi, a fellow student at the Number Four school, wrote in a memoir published last year.

"Despite the shouts of condemnation from all sides, Bo Yibo's sons exuded defiance and twisted their bodies in defiance against their oppressors," Duan wrote in the memoir published by "Remembrance", an online magazine about the Cultural Revolution.

The ordeal was a lesson for Bo in the capricious currents of Communist Party power, which only a few months before seemed to promise him and other princelings a bright future as inheritors of the Chinese revolution.

The accounts in the report serve as a reminder that Bo has seen his share of turmoil in the past and any jail sentence that might result from the present investigation would not be his first. One retired academic who overheard comments from Bo's wife's sister told Buckley that Bo had "been through much worse than this. He's been through the Cultural Revolution. This is nothing."

Separately, The Wall Street Journal profiles Chinese Billionaire Xu Ming and details his ties to the Bo family from their time in , ties which likely led to his detention shortly after Bo's sacking in March. Xu's fortunes have risen and fallen along with Bo, a common feature of the grey area between Chinese business and politics:

Many business leaders in China rely on close relationships with party officials, who have sweeping powers to set policy, allocate government contracts, distribute credit from state banks and control the police, media and . The business leaders often nurture these relationships with various gifts and favors.

Such relationships rarely are exposed, under a system in which the party forbids public scrutiny of its affairs. Business ties are often hidden through shell companies and offshore vehicles.

The close relationship of a businessman with a political leader "was not anything unique to Bo Xilai," said Victor Shih, an expert on Chinese politics at Northwestern University. "It happens at every level of government. Find me a Chinese mayor who doesn't have these special relationships."

The risk the entrepreneurs run is that when the party does periodically make an example of someone, as it has now with Mr. Bo, the person's associates and relatives are compromised as well.

See also a report, via CDT, that Bo's wife has confessed to the of British businessman .


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Report: Gu Kailai Confesses to Heywood Murder

Posted: 22 Jun 2012 12:05 AM PDT

The Asahi Shimbun is reporting that Gu Kailai has confessed to killing British businessman Neil Heywood to keep him from revealing the details of her large and illegal overseas remittances, according to sources with knowledge of the investigation:

The sources, who have read an interim investigation report circulated among senior party officials, said Gu, 53, admitted to killing her former associate after feeling "driven into a corner" by the investigation into her financial dealings and had provided a specific explanation about how she killed Heywood.

The General Office of the Communist Party Central Committee, which serves as a secretariat for the party's General Secretary –who is also China's president–drew up the interim report and the sources said officials have decided to indict Gu following her confession.

The authorities are also investigating whether Bo, 62, was aware of his wife's deeds, the sources said.

They have detained dozens of people associated with Bo–including his chauffeurs, close aides and secretaries from his time as mayor of , Liaoning province–and have also questioned hundreds of people who dealt with him, including corporate executives and entertainers.

They believe Gu was receiving undeclared income from the early 1990s and that she transferred $6 billion to accounts in the names of relatives and acquaintances in the United States, Britain and elsewhere to conceal her illegal earnings. Heywood is thought to have helped her open accounts and exchange currencies.

Meanwhile, the Cambodian government announced that it will not extradite French architect , who reportedly has ties to the Bo family and was arrested last week at China's request. A Cambodian Interior Ministry spokesman told Bloomberg Businessweek that Devillers has yet to be charged with a crime:

" decided to keep him in ," he said by phone today. "Concerned authorities are investigating into the case right now."

China, Cambodia's biggest investor, is investigating accusations that Bo committed disciplinary violations in relation to his wife, , who was arrested in April on suspicion that she was involved in the death of a British businessman. Devillers, an architect, had business ties to Gu, Britain's Telegraph newspaper reported in April.

Cambodian authorities earlier said they would wait for China to submit evidence on Devillers before making a decision on whether to send him to Beijing. Under the two countries' treaty, China has 60 days to provide evidence of a crime and Cambodia then has 60 days to respond, according to Khieu Sopheak.


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