| Who Lost Canada? America’s Neighbors turn to China for Energy Deal Posted: 23 Jul 2012 09:37 PM PDT  After 1949 when the Communists defeated the Nationalists for control of China, the mournful refrain from Washington, D.C. was "Who Lost China?" This arrogant display of superpower Cold War finger pointing ended with a number of careers destroyed and an unfair smear on the U.S. State Department that in some ways has never been entirely eradicated.
In today's highly-charged political climate, it will come as no surprise when some U.S. politicians come down hard on the Obama Administration for what will no doubt be described as driving Canada's energy sector into the arms of China: Cnooc Ltd. (883)'s $15.1 billion cash takeover bid for Nexen Inc. (NXY) signals a Canadian shift toward China and away from the U.S. as the nation's traditional oil and natural-gas partner and main export market. Canada's oil sands reserves, the third-largest recoverable crude deposits in the world, were developed in part by U.S. money as companies such as California's Richfield Oil Corp. brought technology to extract bitumen from boreal peat bogs half a century ago. Now, for the first time, a Chinese company will own and operate oil-sands crude production as well as Nexen's shale-gas assets in British Columbia, along with leases in other parts of the world. [ . . . ] Chinese oil producers have turned more frequently to Canada after political opposition in the U.S. derailed Cnooc's $18.5 billion bid for Unocal Corp. in 2005, and after TransCanada Corp. (TRP)'s Keystone XL pipeline route south to Texas was blocked by President Barack Obama's administration last year. (Bloomberg)
The Nexen deal is important for two reasons. First, it potentially represents some absolution for CNOOC, which is best known in foreign investment circles as the company which botched the 2005 U.S. UNOCAL takeover, not taking into account American politics and the need for a public relations strategy. As the Nexen deal will require regulatory approval in several jurisdictions, we will see what lessons CNOOC has learned from the failed UNOCAL bid. Second, as Bloomberg points out, the deal represents a further shift by Canada away from the U.S. towards China. Another deal involving Sinopec and Talisman Energy was announced yesterday as well, and there have been other recent transactions, including CNOOC's takeover of Nexen partner Opti Canada. Why is this happening? The simple answer is that Canada is one of the world's largest energy suppliers, and rapidly-growing China is willing to pay a premium in the sector to diversify its holdings into a country that is politically stable. China realized years ago the political risks it was facing in the Middle East and set out to remedy the situation. It has succeeded. How important is this strategy to China? CNOOC's bid for Nexen's shares apparently represented a 61% premium. Nexen had to be pleased with that. And China isn't just getting oil for its money. If the deal goes through, CNOOC would also get some very attractive technical expertise, including know-how related to shale-gas extraction. Canada's traditional partner in this area has been the U.S., whose interest in Canadian development has been on the wane. Factor in the decision to reject the Keystone Pipeline project because of American environmental concerns, and China is starting to look better and better to the Canadians. If this investment trend continues, assuming that Ottawa approves the Nexen deal, perhaps in a few years we will all be talking about the new U.S. "Canada Pivot" policy. In the meantime, you can be sure that critics of the controversial Keystone Pipeline decision, particularly Republicans with ties to the oil and gas industry, will use this deal to beat up on President Obama.
© Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us
Post tags: CNOOC, energy, Nexen, outward investment
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| China Faces Shifting Dynamic in Middle East Posted: 23 Jul 2012 09:40 PM PDT The Diplomat's Minxin Pei writes that China faces an uncertain future with a "newly empowered" Middle East, not only diplomatically but also in terms of its domestic policies toward an increasingly dissatisfied Muslim minority: China's ethnic and religious policies in its western regions face a peculiar dilemma. If China tries to push economic development and Chinese nationalism too strongly, it inevitably provokes a religious-oriented backlash. Yet if China fails to invest enough resources in areas like development and education, this could give Sunnis and Shias abroad opportunities to exploit, as Chinese Muslims seek opportunities in those countries. China's west has already become the battleground of overt and covert struggles among various political and religious forces. China may therefore need to modify its religious and ethnic policies in order to keep up with changing times. If China fails to adjust its policies, the silence or murmurs heard among its Muslim population might gradually begin manifesting themselves in angry protests in the model of the Arab Spring. But another issue arises. Namely, if China carries out large-scale reforms and weakens its authoritarian rule, conflicts in these border regions might escalate with the ensuing instability undermining economic development. Finding a happy medium is a challenge that the government and indeed every Chinese citizen who puts their nation before other affiliations must grapple with. Happiness cannot just be measured in material goods but should also have a spiritual dimension as well. Perhaps to some extent, and for certain people living in certain regions, spirituality is of paramount importance.
In Xinjiang, where tensions have run high in the three years since deadly riots between Uyghurs and Han Chinese in 2009, Radio Free Asia reports that authorities have restricted the public observance of Ramadan: The government, which earlier this month stepped up security around the sensitive anniversary of the 2009 ethnic violence between the Uyghurs and the Han Chinese that killed nearly 200 people, has banned any public religious activities by the region's Muslims, according to a spokesman for the Munich-based World Uyghur Congress. "They have set up Ramadan stability groups in every official department and organization, and they have to select people to serve on them," spokesman Dilxat Raxit said. "Officials from these departments have to go and stay in mosques, so as to carry out personal surveillance work in all localities." The Muslim holy month devoted to dawn-to-dusk fasting, prayers and good deeds culminates with the three-day holiday of Eid al-Fitr. Meanwhile, teachers and professors, members of the ruling Chinese Communist Party and other civil servants in Xinjiang are barred from fasting during this year's Ramadan, which began Thursday and ends on Aug. 18, according to Raxit.
© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: middle east, Muslim Brotherhood, muslims, Uyghurs, Xinjiang
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| Bo, Murder and the Future of the CCP Posted: 23 Jul 2012 09:17 PM PDT For the Financial Times Magazine, Jamil Anderlini traces the rise and fall of former Chongqing party boss and Politburo Standing Committee hopeful Bo Xilai, and the tightrope the party must walk now as they decide how to deal with the fallout: Given Bo's enormous popularity among ordinary people, an unconvincing official account backed by threadbare evidence could lead many Chinese to assume the entire affair was a stitch-up and Bo was the victim of political infighting. On the other hand, if the case against him is presented too fully, with gory details of corruption, murder and plots, then the public may question how someone so craven and deranged could rise to the top of the political system, and scrutiny may turn to other senior leaders. For now, the once-in-a-decade leadership transition scheduled for October or November appears to be back on track. Some analysts are even saying that without Bo's destabilising presence, a more harmonious and effective leadership will emerge. "Bo and his ambition were seen as the most dangerous force in Chinese politics and people inside the party always compared him to Hitler," said one senior Chongqing official who worked closely with Bo. "He was a Marxist-Leninist who opposed western liberal democracy, but the irony is that if the Chinese people were allowed to vote, he probably would have been elected president."
In Beijing, meanwhile, the French Foreign Ministry denied that alleged Bo family acquaintance Patrick Henri Devillers had been detained upon his arrival over the weekend. From The New York Times: After news media reports on Saturday that the Chinese had taken the architect, Patrick Henri Devillers, 51, into custody, a spokesman for the French Foreign Ministry said that Mr. Devillers was being "housed" in "proper conditions" and that he was not in prison. "He is well; he's in great health," said the spokesman, Bernard Valero. An official at the French Embassy in Beijing said French diplomats would visit Mr. Devillers again this week. But officials did not specify his whereabouts or say whether he was free to leave China.
© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: Bo Xilai, corruption, France, gu kailai, murder, Neil Heywood, Patrick Henri Devillers, scandal
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| Proview Counsel Apparently Forgot the First Rule of Lawyering Posted: 23 Jul 2012 07:59 PM PDT  The First Rule of Lawyering, of course, is to make sure you get paid. Criminal defense lawyers know this. You may be familiar with the old line from Primal Fear, where attorney Martin Vail tells his client, who is up on 1st degree murder charges:
First thing that I ask a new client is 'Have you been saving up for a rainy day? Guess what? It's raining.'
Litigators in civil cases don't have that kind of leverage over their clients, but that kind of attitude is often quite useful. Consider our old friends from the iPad trademark dispute: Proview Technology, which just ended its dispute with Apple over the iPad trademark last month, found itself in another row on July 23 – this time with the law office that helped it win $60 million from the US tech giant. The Grandall Law Firm has sued Proview for defaulting on attorney fees of its case with Apple, which it claimed to be 15 million yuan ($2.5 million), said Xie Xianghui, a partner at the firm, according to a report by portal website ifeng.com. Proview Technology, a debt-ridden Shenzhen-based maker of computer screens and LED lights, defended itself and said the money is still at the court's disposal and will be used to pay debt back to its creditors. The law firm should apply with the court for its fees instead of asking the company for the payment directly, said Yang Rongcan, chairman of the Shenzhen Proview.
I can't say I know all the details here, but this doesn't look so good. Proview's financial position was common knowledge, so Grandall knew that these guys were functionally (if not legally) bankrupt. Ordinarily for a client like that, you'd expect a decent upfront retainer payment. I assume Grandall got something at the outset, but maybe not nearly enough. So the court brokered a settlement, and Apple paid the $60 million. The money is apparently sitting there waiting to be parceled out, but Proview owes anywhere from 220 to 400+ million U.S. dollars. That means a "fight" between the creditors, and between those that have some sort of secured interest (i.e. the banks) and Grandall, which just has a service contract, the lawyers may be shit out of luck. Now it's possible that Grandall knew this was going to happen all along, got just enough upfront, and figured that with the publicity and all, the risk was ultimately worth it. Let's hope they didn't seriously believe that Proview might actually get enough to pay off its debts from this dispute — that was never really a possibility, even with a favorable court judgment. I don't recall ever having worked for an insolvent client who wasn't already in bankruptcy proceedings (attorney fees are paid off the top when that happens), and I'm not a litigator, so I can't say what the best method is of avoiding this sort of trouble. That being said, this seems like a crappy result. A friend told me (I can't confirm this) that the same partner/team is now defending Qiaodan in the Michael Jordan trademark squatting case. Knowing what we do about that company's prospects post-judgment, let's hope these guys got a lot up front this time.
© Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us
Post tags: ipad, proview
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| Cartoon: “Sailing the Seas Depends on…”, by Hexie Farm (蟹农场) Posted: 23 Jul 2012 06:10 PM PDT |
| Destiny in the Flood Waters Posted: 23 Jul 2012 05:49 PM PDT  "Be moved! But more than that, move the sewers!" Beijing's floods are emblematic of government mismanagement. Chinese netizens are quick to make social critiques of disasters both great and small, and this most recent one has drawn out some dark, incisive jokes:
IMD__: There was a shooting in the U.S. What did the editor-in-chief say? "It should go without saying. Report on it as much as possible!" Now there is flooding in Beijing. What does the editor-in-chief say? "It should go without saying. Report on the U.S. shooting even more!" IMD__："美国出事了，枪击，总编什么指示？""这还用我说？全力报导！""北京出事了，暴雨，总编什么指示？""这还用我说？加大美国枪击的报导！" chuzhaoxin: There's a city that poured huge sums of money into the Olympics, a nation's capital. When it rained in this city, the streets flooded. People drowned in their cars. A policeman died of electric shock. This city is called Beijing. The country has sunk to this level. When the people can't make decisions and the city officials have no shame, what can you do? The spontaneous rescue efforts of the people have thoroughly discredited those whose reputations were already bankrupt. This country's hope lies not in a bureaucrat or an organization, but in every single individual. 褚 朝新：一个投巨资办过奥运会的城市，一个国家的首都，下场雨，居然有人在市中心的马路上开车时被淹死，有警察触电死。这个城市，叫北京。国家沉沦至此，民 不能做主，治理城市的官员毫无羞耻感，奈何？来自民间自发的各种相互救助，让信誉破产者彻底破产。这个国家的希望，不在某官某团体而在每个普通人身上。 WuyueSanren: Several events stand out from yesterday's storm and its aftermath: The first is that the early warning system didn't actually warn anyone early; the second, that the emergency response was slow to start; the third, that people who drove on the airport highway to pick up stranded passengers were charged tolls; the fourth, that neither the government nor public facilities opened their doors to those in need; the fifth, that drivers stuck in the middle of the road were fined for parking illegally. The only thing that functioned properly last night were the people of Beijing. 五岳散人：昨日暴雨以及今日善后有几个地方不能释怀：一是预警机制没真的预警；二是应急机制启动缓慢；三是机场高速对自发接滞留旅客的车收费；四是政府机 构、公共建筑没有开门为被困者提供庇护；五是很多被主人暂时停在路边的车被贴上了违章停车的罚款单。昨晚唯一合格的，是北京市民。 FinanceGossipGirl: In my brief existence, a once-in-a-century solar eclipse has happened twice, a once-in-five-hundred-year flood has happened ten times, and a once-in-a-millenium earthquake has happened twice. The only thing that hasn't happened is the once-every-five-year general election. Repost if you feel me~~ 金融八卦女：在我这短短的一生中，百年一遇的日全食遇到了两次，五百年一遇的洪水遇到十次，千年一遇的地震遇到两次，唯独五年一次的人民大选还没遇到。有同感的转~~ pufei: According to reports, the Beijing Sea and the Chengdu Sea are China's only undisputed maritime territories. Fisherman, please go to work at ease. No need to worry about foreign warships giving you trouble. pufei：据悉，北京海与成都海是我国领海中唯一没有与外国有海权纠纷的海域，请各位渔民放心捕鱼，无需担心外国军舰骚扰。 pufei: In the Celestial Empire, every natural disaster is a prelude to an award ceremony.* pufei：在天朝，每一场天灾都是一次表彰大会的序曲。 * Implies the Party will have a public back-patting for its flood relief efforts. hnjhj: Under a once-in-forever government, be it a once-in-a-millenium earthquake or a once-in-a-century storm, the Chinese people can face it with grace. hnjhj：面对万年一遇的政府，无论是千年一遇的地震，还是百年一遇的暴雨，中国人都能坦然面对了。 mynamexu: Superficially, what the storm brought to light was the problems of the Beijing sewer system. But we need only hold this question up to related issues to discover that the "sewer" is a metaphor for the unraveling of the China rising myth. Should a social storm hit, this regime, which cares so much about saving face and nothing about saving its ass, will drown in a puddle of its own making. mynamexu： 从表面上看，大暴雨揭穿的是被阳光给包裹起来的北京城市建设下水道问题，但是，只要把此一问题再与其它相关问题普遍联系起来观照，我们就会发现，"下水 道"应是中国崛起之神话面临破产的隐喻。倘有一场大的社会暴风雨来临，这个顾脸不顾腚的政权最终必淹死于自己亲手制造的水坑之中。
Via CDT Chinese.
© Anne.Henochowicz for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: Beijing, beijing flood 2012, disaster relief, floods, infrastructure, natural disasters, rainfall, sina weibo, weibo, Wuyuesanren, Yao Bo
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| Flood Brings Out Beijing’s Digital Samaritans Posted: 23 Jul 2012 02:02 PM PDT Netizens have reached out a digital hand to those left stranded by Beijing's torrential rains. There are over 7.4 million posts on Weibo on the subject (北京 + 暴雨), many of them calls for help—and answers. From a CDT Chinese screenshot: cellifa: I live near Tiantan East Gate. If anyone nearby needs to rest, you can come to my place. No gender preference, 2-3 people, direct message me. cellifa：家在天坛东门附近，附近有朋友需要休息可以来我家，男女均可，两至三人，需要的请直接私信联系。 J0j0JiaoJiao: Three to four girls can stay at my place. I have a hot shower, food, clothes and shoes. Any girls or older people who aren't afraid of cats and dogs can stay here for the night. Send me a direct message and I'll pick you up in front of the Xuantechenguang Police Station. J0j0娇娇：三四女生能住下，热水洗澡食物衣鞋都有，不怕猫狗的女生和老人可以安置。私信，炫特晨光警局在她楼下，私信联系可以去接人 XiaoqianME: My office is at Zuojiazhuang A2 Beijing Friendship Garden 1-6H. We have water, snacks, TV, computers, wifi, beds, sofas, Sanguo Sha and hot showers! All for free! For real! I'm not a bad guy! If anyone is stuck nearby feel free to duck out to my place! This is what a Beijinger can do! I will wait at my computer all night! Don't be a stranger! And I hope that people on the road are able to get home safely. @NumberTail Help spread the word. 小 谦ME：本人公司在左家庄街甲2号北京国际友谊花园1号楼6H,公司有水有零食有电视有电脑有WIFI有床有沙发有三国杀能洗热水澡！全部免费提供！不要炒作！不是坏人！困在附近的可以过来避难！都是北京人就想做点儿自己能做的！我会通宵守在电脑旁！不用跟我客气！同时祝赶路的朋友平安 @数字尾巴 大叔帮扩散 UncleFlower: Already contacted them, they can go now. // @Lonely_Epoch: I have a friend stuck at Chengshou Road who needs to get back to Lianri Ludao. Can anyone help her? One little girl and one adult, riding an electric bike, going in the direction of Lianri Ludao. Her cell phone number is 15175088361. Thank you! 如花二大爷：这个已经联系过，已经能走了 // @孤单_纪元：我一位朋友被困成寿路一带，要回恋日绿岛，现在应该在成寿路附近，有人能去帮帮她吗？一晚上了，一个小女孩和一个大人，骑电动车，方向是恋日绿岛，谢谢大家了。她手机号15175088361.谢谢！
While some embrace those in need, others have taken advantage of the chaos. Weibo user @SuYe reports hotel rip-offs, while @YanYaobin implores the government to follow the lead of ordinary citizens: SuYe: I drove two people who had arrived from Russia to Zhongguancun. As soon as we arrived at their place, the rain stopped. They said, "Without you guys, we would be finished. Other people at least have cover, we have nothing." We were very happy, even though it cost us a lot of gas  Hotels at Sanyuan Bridge jacked up their prices to over 2000 yuan a night, and some even dragged people to the Asian Games Village. There was a taxi driver who cursed at us from Sanyuan Bridge, "Messing with other people's business!" Good luck to you all. 苏 椰：送了两位从俄罗斯回来的人要去中关村。我们刚送完回来，雨已经停了。他们说："没你们，我们就完了，别人还有毯自，我们啥都没有。"我们都很高兴，虽 然损失了许多油 三元桥坐地涨价到2000多的酒店，还有三元桥上那个超高价拉人去亚运村，还骂我们是"吃饱了撑的"的出租车司机，祝你们好运。 YanYaobin: Netizens from Wangjing started a car team to take some of the 80,000 people stuck at Beijing Airport home for free. A lot of residents got in their own cars and into the street to help people back home. This is the Beijing spirit! You bring warmth to this night of pain. At this moment, I am seriously concerned about the 62,000-plus government-owned cars. Where are you? Do you have the guts to get out there and do something? I'm betting on you rushing out and filling the streets. We won't curse you tonight! 中 国经营报宴耀斌：为了首都机场滞留的八万人，望京的网友们自发组成车队免费接送。北京很多的私家车主将车开上街头，帮助大家回家。这才是北京精神！你们是 这个疼痛雨夜的温暖！此刻，我无比牵挂北京的62000多辆公车，你们在哪儿？你们敢开出来发挥一下吗？我就赌你们就是一拥而上，占据所有车道，今夜，俺 们也不会骂你！
At least 37 have died in the floods, including a number of police officers. This post about one of these officers on the official Weibo of the city Public Security Bureau (PSB) has been reposted and commented on over 593,000 times: PeacefulBeijing: On July 21, Beijing experienced its heaviest rainfall in over 60 years. The municipal PSB received many calls for help. At noon, Comrade Li Fanghong, chief of the Yanshan Branch Xiangyang Road Police Station, started to lead rescue operations in the rising water of Fenghuangting. He saved more than 50 people. At 5:20 p.m. Comrade Li went into the water again to rescue more. He touched a fallen electrical wire and made the ultimate sacrifice. 平 安北京：2012年7月21日，北京遭遇60年以来最大降雨，北京市公安局接到大量群众求助报警。燕山分局向阳路派出所所长李方洪同志从中午开始就带领民 警奋战在辖区积水严重的凤凰亭村，先后救起50余名被困群众。17时20分许，当李方洪同志再次冲入水中救助群众时，被一根落入水中的电线击倒，光荣牺牲。
Individual heroism mingles with stories of systemic neglect. The state-run newspaper Global Times has acknowledged that Beijing's under-built sewers are in part to blame for the mayhem, though it goes on to suggest "overhauling the entire network may be unfeasible, as it will take time and an enormous injection of cash." On Twitter, Beijinger @MissXQ shares dire stories and photos, including reports that more than 200 senior citizens died in an assisted living facility in Fangshan, a poor district hit hard by the floods: Source said more than 200 elders dead in a senior care center in Fangshan district in BJ due to the rainstorm. — XQ (@MissXQ) July 23, 2012
The post abt over 200 elders dead in a senior care center in Fangshan had been deleted. — XQ (@MissXQ) July 23, 2012
Tea Leaf Nation has translated more Weibo comments on the flood, while Foreign Policy has created a slide show of the devastation. Read more on the floods and the aftermath from CDT.
© Wendy Qian for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: Beijing, beijing flood 2012, disaster relief, floods, infrastructure, natural disasters, rainfall, sina weibo, weibo
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| Hexie Farm (蟹农场): “Sailing the Seas Depends on…” Posted: 23 Jul 2012 08:25 AM PDT For his latest contribution to his CDT series, cartoonist Crazy Crab of Hexie Farm re-imagines that Gate of Heavenly Peace, or Tiananmen Gate, which holds a portrait of Mao flanked by the quotes: "Long Live the People's Republic of China" and "Long Live the Great Unity of the World's Peoples." In Crazy Crab's rendering, the ground is flooded, a reference to the recent devastating floods that hit Beijing, and Mao's portrait is replaced with that of a pancake turtle. The Chinese name of this turtle, "wangba 王八" is also a curse word meaning "bastard." The slogan has been replaced with "Sailing the Seas Depends on…" in reference to a famous revolutionary song, "Sailing the Seas Depends on the Helmsman [Mao Zedong]." The government has claimed victory in dealing with the massive floods, which killed at least 37 people, but posts expressing citizens' anger at the failure of the city's drainage system have been deleted. Reports about the floods have been censored and authorities have ordered news organizations to "emphasize the power of human compassion over the elements." 
Read more about Hexie Farm's CDT series, including a Q&A with the anonymous cartoonist, and see all cartoons so far in the series. [CDT owns the copyright for all cartoons in the Hexie Farm CDT series. Please do not reproduce without receiving prior permission from CDT.]
© Sophie Beach for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: beijing flood 2012, hexie farm, propaganda, Tiananmen
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| Directives from the Ministry of Truth: Beijing Floods Posted: 23 Jul 2012 07:14 AM PDT The following examples of censorship instructions, issued to the media and/or Internet companies by various central (and sometimes local) government authorities, have been leaked and distributed online. Chinese journalists and bloggers often refer to those instructions as "Directives from the Ministry of Truth." CDT has collected the selections we translate here from a variety of sources and has checked them against official Chinese media reports to confirm their implementation. The following directives were first posted on CDT Chinese on July 21, 2012: Beijing Municipal Committee Department of Propaganda: For public opinion guidance (舆论引导) concerning yesterday's rainstorms, all media outlets, including central news organizations, must emphasize the power of human compassion over the elements. All Youth League committees and branches must coordinate positive reports and information on the storm in their commentaries, forum posts, and reprints of articles. Public Weibo accounts, accounts of individual Youth League members and newly registered accounts must all complete report forms. 北京市委宣传部：关于昨日北京暴雨的舆论引导，要多报道暴雨无情人有情，包括中央媒体也要执行。各团委、团支部：对北京暴雨的正面报道和消息，组织好评论、跟帖、转发工作，已登记的公开微博用户及团员个人用户ID、新注册用户账号均需做好汇报表格。
Beijing Municipal News Office: Do not report on the collapse of the subway. (The floods caused the Jintai Road construction site on Line 6 to cave in [zh].) 北京市委新闻办：地铁塌方不能报道。
Beijing Municipal Office of Internet Propaganda Management: Remove Li Chengpeng's essay "Totem". 北京市互联网宣传管理办公室：李承鹏的《图腾》一文必须删除。
© Anne.Henochowicz for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: Beijing, beijing flood 2012, beijing subway, Directives from the Ministry of Truth, disaster relief, floods, infrastructure, Li Chengpeng, Ministry of Truth, natural disasters, public opinion guidance, rainfall, subway, weibo
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| The Daily Twit – 7/23/12: Beijing Dries Out, and a Pile of Wet Rocks Elects a Mayor Posted: 23 Jul 2012 05:37 AM PDT Most of the news I was wading through today (oops, that was actually unintentional) concerned the Beijing rainstorm/flood. We're still cleaning up parts of the city and outskirts, figuring out what went wrong and, as per standard operating procedure, already laying blame. Tiny echoes of Katrinaesque discussions flying around out there. I wonder if there's a "Heckuva job, Brownie" scapegoat waiting in the wings for the human flesh search engine to expose? Here are a few links to get you up to date, plus all the major papers have coverage: Danwei: The Beijing deluge of 2012 — the blame game begins. Wall Street Journal: Worst Rains in 60 Yrs Produce Fatal Floods in Beijing — More photos. Tea Leaf Nation: Torrential Rain in Beijing Brings Out Best and Worst in China's Capital — Personal anecdotes as told online by weibots. The Next Web: Sina Weibo, China's Twitter, comes to rescue amid flooding in Beijing — How social media was used for information sharing, rescues, etc. Bloomberg: China Plans to Put Garrison on Disputed South China Sea Island — Nice way to reduce tensions! Yay, diplomacy! Global Times: Mayor elected in China's newly established Sansha city — Not to waste any time, the city government of the disputed pile of rocks was formed. I assume they were given a deal similar to that of Hong Kong and Macau, in this case a guarantee that Atlantean law would apply for the next 50 years. By the way, the first mayor is apparently a chap named Arthur Curry. Financial Times: Chinese nationalists eye Okinawa — Uh, I think someone needs to call a time out. Reuters: China eyes new strategic industries to spur economy — In addition to other economic stimulus policies, apparently Beijing will be further strengthening its key sector champions. I guess this is what industrial policy looks like during a recession. Also Sprach Analyst: Wave of business owners running away re-emerges in Yangtze river delta — Your daily dose of scary economic news. Ken Rapoza: In China, Why Piracy Is Here To Stay — Ken talks to Tom Doctoroff about China piracy and he/they fall into a familiar trap, generalizing from digital media infringement. Tsk tsk tsk. Why is all the news today bad? I am now officially bummed out. Nothing left to do but try and cheer myself up with an episode of Red Dwarf.
© Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us
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| Beijing Falls Back on Industrial Policy During Downturn Posted: 23 Jul 2012 04:45 AM PDT I assume heads exploded in D.C., New York and London when this was reported: China will step up efforts to boost the development of seven strategic emerging industries to cushion downward pressure on the world's second-largest economy, a senior official of the country's top planning agency said on Monday. "When the economic outlook is not good, developing strategic industries will definitely help alleviate downward pressure on the economy," said Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission, in an online interview published on the central government's website, www.gov.cn. (Reuters)
Not exactly a new policy, but perhaps a renewed emphasis. When in doubt, let's prop up those key national champions and make sure that at least those guys are doing OK. This is known variously as "industrial policy," "picking winners and losers," "protectionism," or "strategic planning," depending on your particular biases. For companies in these sectors, which include energy, environmental technology, and information technology, competition may have just become that much more difficult, if that is even possible. Good luck, private enterprise.
© Stan for China Hearsay, 2012. | Permalink | One comment | Add to del.icio.us
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| Extrapolation Error: Adidas Factory Closing and China’s FDI Flight Posted: 23 Jul 2012 02:32 AM PDT  Adidas recently announced that it would be closing its last China manufacturing operation. I didn't write a post about this news since ultimately it wasn't all that surprising. For some time now, companies here with low profit margins and/or those in sectors where labor is a significant component of total costs have been facing difficult times. The first round took place because of the Great Recession, with a lot of export-oriented assembly operations and textile shops going bust.
Since then, we've had serious wage inflation and now another drop-off in demand. Scary stuff for manufacturers, but what does it mean, if anything, for the overall foreign investment picture in China? An editorial in the Global Times makes some unfortunate assumptions and comes to the wrong conclusions: Some may worry that this [Adidas] closure could lead other major foreign firms to pull out of China, further damaging the country's economy as growth slows. However, if one looks at the reasons why foreign businesses are shifting their manufacturing bases out of China, this new development may actually have a positive effect on the country's investment environment. [ . . . ] Along with hikes in salaries, foreign companies have been losing interest in investing in China since the end of 2010, when preferential policies which allowed them to pay less in taxes than domestic enterprises expired. But while the policy support and working conditions which lured so many foreign companies to China's shores are now coming to an end, the nation has little to grieve over. Ultimately, the model China relied on for so long to absorb foreign investment is not sustainable and came at the expense of local workers' and indigenous companies' interests. It is unavoidable that wages will increase in China with the country's rapid economic development and attempts to hold back wage growth will only delay future economic growth by deflating consumption. Also, the favorable treatment many foreign companies received created an unfair business environment which stymied domestic competitors. Thus, the withdrawal of some foreign companies is a necessary price for China to pay as it transits from being the world's factory to an economy focused on technical innovation, and a positive sign that China is on its way to adopting a healthier and more sustainable development model.
Woof. A few issues here. First, the assumption here is that foreign investors come to China because of cheap labor and l0w tax rates. This was indeed the case, but quite a long time ago. I don't recall seeing a mass exodus of foreign companies after the tax rates were harmonized in 2008. Moreover, labor costs have been going up for a while now, particularly in places like Dongguan, where shortages and cost concerns have been on the minds of my clients for a decade already. Second, the author seems to think that having these cost-conscious shops leave the country is a good thing. Puzzling. Wouldn't it be better if these companies were somehow able to absorb higher costs, reinvent themselves, or somehow figure out a way to maintain employment of hundreds of thousands of Chinese workers? I agree that a country doesn't want to be stuck with low wages, but we've already seen plenty of wage inflation. It's not an "either-or" situation where you either have low wages or no jobs. Sometimes yes, but not always. So while the wage hikes are a positive step, the loss of jobs, some of which may be inevitable, is certainly something "to grieve over." Third, this set of assumptions is just plain wrong: "the model China relied on for so long to absorb foreign investment is not sustainable and came at the expense of local workers' and indigenous companies' interests." Please. Not only do I think the author doesn't understand what that model truly was, but he/she also has no clue how that investment benefited the country as a whole, workers and local companies. China originally encouraged foreign investment for a variety of reasons, including building up foreign exchange reserves and technology transfer. I don't have a citation for this, but I believe that wages in foreign-invested enterprises, on the whole, have been consistently higher than domestically-owned factories. Moreover, where would some of China's key industries be without foreign investment? Ask BYD and SAIC how they'd be doing without Sino-foreign automobile joint ventures. Fourth, this is also downright false: "attempts to hold back wage growth will only delay future economic growth by deflating consumption." The suggestion here is that somehow foreign investors, stuck on "low wage" mode, are actively trying to hold down wage growth in this country. Any evidence of this? No, I didn't think so. Fifth, another whopper: "the favorable treatment many foreign companies received created an unfair business environment which stymied domestic competitors." The only thing I can think of as an example is the favorable tax treatment foreign companies received prior to 2008. That's over with. And anyway, even with those tax breaks, I don't think local companies were being driven out of business as a result. The author of this article apparently doesn't understand that just being a foreign company here carries with it risks and costs not borne by domestic firms. Sixth, and finally, that insane final paragraph I quoted above. China should apparently celebrate the departure of foreign invested enterprises, since it somehow indicates that the country has "moved on" and is developing rapidly from a manufacturing to an innovation economy. This is really awful. The suggestion here is that foreign companies have no reason to be in China once wages are higher. That seems to be a combination of inaccurate beliefs: 1) that China no longer needs/benefits from foreign companies and expertise; and 2) that foreign firms may wish to be here for reasons other than tax breaks and low wages. Outrageously bad column. Around the same I read this last night, I noticed that Global Times also published "4 Die During Pig Rescue and "Goat Man Seen in Utah." I might have been better off with one of those.
© Stan for China Hearsay, 2012. | Permalink | 7 comments | Add to del.icio.us
Post tags: foreign investment, labor costs, taxation
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| Heavy Rain Kills At Least 37 in Beijing Posted: 23 Jul 2012 01:50 AM PDT Rainfall of up to 18 inches brought death and disruption to Beijing over the weekend. From Andrew Jacobs at The New York Times: The heaviest rainfall in six decades caused widespread havoc in this capital over the weekend, killing at least 37 people and forcing the evacuation of 50,000 others from waterlogged neighborhoods and villages, according to the state news media. More than six inches of rain fell overnight Saturday into Sunday, collapsing roofs, downing power lines and turning highway underpasses into ponds that engulfed scores of cars and buses. About 80,000 passengers at Beijing Capital International Airport were stranded overnight after fierce thunderstorms forced the cancellation of 500 flights, the state-run Xinhua news agency said.
China Real Time Report, QQ.com, the BBC and Beijing Cream have all posted photo galleries of the floods, with Beijing Cream also sharing video of firefighters and civilians struggling to rescue stranded drivers while drunken foreigners frolicked elsewhere. Fangshan, to the southwest of the city, was hit hardest. The heaviest rain there in 500 years forced over 20,000 from their homes and flooded a major expressway, stranding hundreds of passengers. Parts of Fangshan, according to Bill Bishop at Sinocism, "are so rural and poor that they make Appalachia look almost like Westchester County. Fangshan is a stark reminder of the close proximity of the first and third worlds in China, and given the topology, the deforestation and the poor infrastructure in parts of Fangshan things could really be quite bad there." Global Times reported that mudslides had killed at least one person in the area, while floods had left many others without shelter, power or clean water. The Telegraph's Malcolm Moore later tweeted from the scene, however, that the situation there, "apart from Jingshi expressway, [is] not as bad as feared. Lots of damage, but not many victims, say locals." Although the weekend's weather was exceptional, the failure of drainage infrastructure to cope with the deluge sparked widespread anger. Some accused the authorities of spending billions on cosmetic development projects while neglecting the less glamorous basics. From Josh Chin at China Real Time Report: Among the sharpest criticisms came in the form of a series of photos, posted to Sina Weibo around midnight, contrasting Beijing's flooded streets with images of sewer systems in other famous capitals, including Tokyo's massive "Underground Temple" flood prevention system. "Sewers are not a face-giving infrastructure project," artist Li Yijia wrote in response to the images, repeating a sentiment widely expressed elsewhere on the site. "Beijing's glossy appearance can't withstand the erosion of a bout of heavy rain," wrote another Sina Weibo user. "In just a few hours, Beijing is washed back into the old days. The city government hasn't stopped rebuilding this city, but they can't even deal with getting waterlogged."
A Global Times op-ed agreed that the rain "exposes holes in [China's] modernization drive", and described the city's lack of preparedness as "unforgivable". The record precipitation did expose a coarse facet of Chinese modernization. There is an unofficial but interesting criterion in judging whether a city is developed or not: After three hours of rainfall, if you walk in the street and see slow but moving traffic, roads that are slippery but not swamped, then this is generally a developed place. For a while, China was seen as entering the ranks of developed countries. However, Chinese cities are apparently unpracticed in facing disasters such as Saturday's torrential downpour. If so much chaos can be triggered in Beijing, the capital of the nation, problems in urban infrastructure of many other places can only be worse. […] The disaster of Saturday was particularly unforgivable, given that Beijing's inadequate drainage system and emergency response mechanism were already exposed in the downpour on June 23, 2011.
Another target was the lack of timely warning of the disaster. From Charles Custer at Tech in Asia: So why didn't the Meteorological Bureau send out text warnings to Beijingers beforehand? It seems like texts would be a remarkably effective method of issuing a warning given that more than 95 percent of Beijingers own mobile phones and people are more likely to check text messages than they are to turn on the radio, watch TV, or look up weather on the web during any given day. But Bureau director Qu Xiaobo told the Beijing Morning Post that warning Beijingers by text was technologically impossible. While the Bureau does have a client for sending text-messaged weather alerts, it apparently sends just 400 text messages per minute, meaning that it's essentially useless for warning Beijing's population of more than 20 million. […] China Telecom has officially stated that there would be no technological problems with sending a weather warning text to all the Telecom subscribers in Beijing. However, company officials said, Telecom did not issue such a warning because they are not allowed to without being directed by the relevant government department. So why didn't the Meterological Bureau tell telecom companies to issue the warning themselves?
There were also, however, tales of city workers and police officers braving the elements to help people in trouble, with one policeman among the dead in Fangshan. Many private citizens and businesses also went to great lengths to help others, according to Stephen Chen at the South China Morning Post: Hundreds […], including many from the Wangjing residential area near the Beijing Capital International Airport (SEHK: 0694), took to their cars in attempts to help some of an estimated 80,000 stranded travellers get home, as taxi and bus services had stopped, according to China Central Television. There were no reports online of people being charged for the rides. It was undoubtedly a dangerous offer, as almost every expressway into and out of Beijing was jammed and covered in standing water. Several entrepreneurs stepped up in answer to cries for help, offering free shelter, drinks and food to people who were trapped on roads. Zhu Guofan, the owner of Beijing's biggest spa franchise, Liangzi, announced on his microblog account that anyone who could not make it home on Saturday night could walk into any of the company's 21 locations and receive free food, drinks, showers and a place to rest.
And from Tea Leaf Nation: Of course, Weibo also became an important frontier for information sharing. Over the course of the evening, Weibo was flooded with tweets asking and giving help. Netizens tweeted weather forecasts, traffic updates and safety tips. Some even offered their apartments to those who could not get home. @书盟 is one of them. "I have a car and an apartment that can accommodate five people. I can provide food, drinks, Internet access and a change of clothes all for free." He also tweeted his address and cell phone number. Many said that they were moved by and proud of the love and bravery shown by citizens. Xu Xin (@徐昕), a legal scholar,comments: "I'm sleepless tonight thinking about the heavy rain, the lives lost, the injured people and the police's rescue efforts; I'm also thinking about so many asking for help on Weibo, and so many offering their help. The spirit of Beijing is not reflected by grand, meaningless words but by the pictures of Beijing tonight. The carrier of the spirit is Weibo, on which energy of kindness is being paid forward."
© Samuel Wade for China Digital Times (CDT), 2012 |
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