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HISTORY Bombs and Booze: Peace Hotel Shanghai ENVIRONMENT Stems Sell: China's Vanishing Orchids

NOW IT’S PERSONNEL China’s labor pool is drying up faster than even the central government had anticipated. But will industrialists, politicians or workers themselves be the ones to force change?

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Volume No. 056 March 2013

SOCIETY Pay or Pray: Etiquette of the Red Envelope


EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Directors: Liu Beixian, Zhou Jianming Editor-in-Chief: Wang Xiaohui Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Yang Yi Copy Editors: Jack Smith, Alex Taggart Lead Writer: Yu Xiaodong Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Li Jia First Reader: Sean Silbert Address: 5th Floor, 12 Baiwanzhuang South Street, Xicheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: readers@newschinamag.com www.newschinamag.com Art Department Art Director: Wu Shangwen Art Editor/Designer: Zhang Dawei Marketing Office China Newsweek Corporation President: Wang Xiaohui Chief Executive: Fred Teng Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: Suite 1101, 15 East 40th Street, New York, NY 10016, USA Email: readers@newschinamag.com Toronto Office Director: Lai Hailong Address: 51 Halstead Drive, Markham, ON Canada L3R7Z4 Tel: 1-905-604-6150 Fax: 1-905-604-6170 Email: canada@newschinamag.com Marketing Director: Wang Chenbo Account Manager: Ren Jie Tel: 86-10-88388027 Circulation Manager: Yu Lina Tel: 86-10-88311834 Advertising Director: Gao Weiwei Tel: 1-212-481-2510 Marketing Promoter: Jerry Meng Tel: 1-212-481-2510 New York Office: Wang Yongzhi, Ruan Yulin, Li Yang Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Zhou Zhaojun Tokyo Office: Sun Ran Paris Office: Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Huang Hongbin Moscow Office: Jia Jingfeng Manila Office: Zhang Ming Berlin Office: Huang Shuanghong Sydney Office: Zhu Daqiang Legal Advisor: Allen Wu ISSN 1943-1902

CN11-5826/G2

China Weekly is the Chinese Mainland edition of NewsChina magazine CHINA WEEKLY I March 2013

The fight against corruption requires a free media

I

n the West, the media is often referred to as empt from supervision, as Chinese journalists must “the fourth estate,” serving as a watchdog for carefully consider the sizeable risks they face when the three branches of government. In recent reporting on those in authority. years, the media (including Although China’s consocial media) in China also stitution promises the right appear to be gradually takto freedom of speech and of We must not overstate ing up the same mantle. Rethe press, in reality there are the media’s current level cent scandals that have led effectively no laws or regulaof influence in the fight to much public backlash, tions to protect the media. against corruption in including housing registraThe only one in existence is China. tion fraud cases involving in a government regulation government officials and on the Disclosure of GovState-owned enterprise executives, as well as the ernment Information, a clause of which stipulates various sex scandals involving senior city officials in that those obstructing supervision by the media Chongqing, were all exposed by the media. Many must be held accountable for their actions. This claim that China is entering a period of improved clause has never been invoked. transparency. There have long been calls to enact a press law We must not overstate the media’s current level to safeguard the media’s rights to report, criticize of influence in the fight against corruption in and supervise, as well as its right to information. China. Despite the apparent power the media has However, in the current political climate, many are exercized in recent scandals, all of these first came concerned that such a law may end up constrainto light through social media. Traditional media ing the media, rather than guaranteeing freedom remain constrained, and tend to report on a cor- of speech. rupt politician only when an official investigation Given that China’s new leadership has recently is already underway, particularly when high-level launched a new wave of anti-corruption measures, officials are involved. In exposing scandals, it takes it must also take effective steps to ensure that the great courage, and sometimes great sacrifice, on the media can effectively supervise the government. As part of a journalist or media outlet to genuinely ex- there are few channels through which the public pose government misdeeds. In the latest case, Zhu may voice their opinions, the government must reRuifeng, a freelance journalist who exposed the alize that the media plays an indispensible role in Chongqing sex sandals, was harassed by Chongq- conveying public opinion to the government. ing police in broad daylight at his home in Beijing. On February 6, Xi Jinping, the new leader of This perhaps explains why the media’s supervi- China’s Communist Party, told cadres that the Parsion in China is “cross-regional,” meaning that me- ty must “tolerate sharp criticism” from the outside. dia outlets only report on scandals in regions other It is a good sign that the new leadership is at least than their own, mostly for fear of retribution. The aware of the problem, but it will take more than result is that national-level leaders tend to be ex- words to safeguard the media’s rights.

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Contents

Love’s Labor’s Lost

Editorial

politics

Photo by CFP

As the generation that built China’s manufacturing miracle begin to plan for retirement, a dearth of younger replacements has led to calls to overhaul the country’s low-cost, laborintensive industrial chain. But are China’s captains of industry desperate enough to take a chance on change?

01 The fight against corruption requires a free media 10 24

Veto Items : The Power of Appraisal Political Reform : Reform or Repeat?

Cover Story

society

P54

12 Labor Deficit : Human Resources/Mechanizing Manpower

26 28 32

2

Gift Expenditure : Intolerable Courtesy Murder Mistrial : The Wrong Men New Lanzhou Project : Removing Mountains

P42 CHINA WEEKLY I March 2013


Contents

P32

P35 35 38 42

Train Tickets : Spring Fever Hukou Fraud : Invisible Billionaires Anti-Waste Initiative : An Affordable Feast

economy

44 47

Retirement Care : Old Folks, New Digs Investment : Telling Fortunes

visual report

50 A Long Road to Nowhere environment

54 Save the Orchid : Bloom and Bust

P50

history

61 Peace Hotel : Glamor, Gossip and Gin Fizzes outside in

64 67

P26

Chilling in Chengdu : Stop. Rest. Go. Flavor of the Month : Pucker Up

04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 49 China by numbers 66 real chinese 68 ESSAY 70 CULTURAL LISTINGS 72 Commentary

culture

58 Jia Pingwa : A Faint Light in the Dark CHINA WEEKLY I March 2013

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NewsChina Chinese Edition

Oriental Outlook

February 4, 2013

January 29, 2013

Tragedy for Chinese Comedy

Chinese Heat up Overseas Property Unnerved by rocketing housing prices at home, a growing number of Chinese real estate investors are shifting to the overseas market. Despite warnings from experts that taxes, fees and higher loan rates for overseas buyers could result in diminished returns for Chinese buyers, the trend shows no sign of slowing. Media have revealed that non-naturalized Chinese people accounted for over 40 percent of total house sales in Vancouver last year, and that one third of new apartments in London’s ritzy Canary Wharf were sold to Chinese buyers, pushing up housing prices in the area by 5 to 10 percent. Many governments in Western countries have issued policies to curb price hikes, which experts believe will further increase investment risks for Chinese investors.

Attheendof2012,theChinesecomedyLostinThailand shockedthecountry’smovieindustrybypullinginnearly1.2 billion yuan(US$189m)attheboxoffice,despitehavingbeen madeonashoestringbudget.Criticshaveattributedthefilm’s successtoitssimplicity,atthesametimequestioningwhether suchslapstickcomedies,whilebereftofsocialcommentary, weretrulyrepresentativeofChinesecomedyculture.Insiders explainedthatChinesedirectorsgenerallybegintheircareers makingcomedies,beforeshiftingtoothertypesofmoviesafter havingmadeanameforthemselves.Atypicalcaseisthatof populardirectorFengXiaogang,whosesatiricalcomedieshave failedtowinhimasinglenationalaccolade,despitehisawardwinningoutputinothergenres.Criticshavealsoarguedthat thetruevalueofacomedyliesinlampooningsocialproblems, somethingChina’scensorsarehesitanttoallow.

China Economic Weekly

Century Weekly February 4, 2013

Fuel Standards Debate Pressured by public anger over heavy smog caused partly by vehicle emissions, this February Beijing implemented a new emission standard, the “Beijing Standard V,” on all new cars sold in the city. The new standard, which bans fuel with a sulfur dioxide content exceeding 10ppm, brings the city in line with the European standard, the “Euro V.” However, China’s State-owned oil companies argue that upgrading the country’s fuel processing equipment, currently designed to produce high-sulfur heavy oil, will require time and investment. As a result, the introduction of the new Beijing Standard V fuel will see no reduction in price, despite its being linked to enginer knock. Critics have questioned why consumers had no say in defining the standard, despite having to bear the cost.

January 28, 2013

Inland Nuclear Goes Silent The Chinese government’s ban on inland nuclear power plants in its 12th Five-year Plan (2011-2015) has dashed hopes of restarting the three inland nuclear projects suspended in the aftermath of the Fukushima disaster. Staff and businesspeople associated with the obsolete plants are moving elsewhere, plunging local economies into difficulty. The developer behind the Taojiang nuclear plant in Hubei Province, for example, complained that it had already invested nearly 4 billion yuan (US$625m) in preliminary construction, only to have the project canceled. Meanwhile, the Taojiang government, having invested heavily in supporting infrastructure, has been forced to shift its development focus to other projects. However, Taojiang claims it will never give up its “crucial” nuclear power ambitions.

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Economy & Nation Weekly February 7, 2013

Dubious Non-performing Loan Rate Despite the growing number of private enterprises going bankrupt due to the sluggish economy, official statistics show less than a 1 percent non-performing loan rate at China’s banks, a figure analysts have been reluctant to accept. Industry insiders have revealed that in the first half of 2012 alone, China’s 16 listed banks saw an almost 126 billion yuan (US$20bn) increase in the value of overdue loans, indicating an estimated non-performing loan rate of more than 5 percent, with some ailing industries like steel and solar power exceeding 10 percent. The questionable figures are believed to be due to falsified statistics from local banks, for whom non-performing loans can result in official sanctions. Analysts are calling for higher tolerance to non-performing loans, and the establishment of a credit system. CHINA WEEKLY I March 2013


Illustration by Wu Shangwen

“It is unfilial not to have a girl or boyfriend, it is abnormal not to marry, and it is rebellious not to have a baby – this is the ‘constitution’ prevailing among Chinese parents.” Columnist Mi Meng on pushy parental attitudes to marriage. “I don’t think we should punish a single prostitute, as we cannot distinguish them from mistresses. As with the wholesale versus retail debate, mistresses are for long-term use and prostitutes are for temporary use, so how can we hunt down prostitutes while mistresses remain at large?” Sexologist Li Yinhe as part of her wider call to legalize prostitution in China.

“30 years ago, we got rid of the“Two Whatevers” only to find we now have another two:‘Stability Above All,’and‘Chinese Exceptionalism.’” Law Professor Jiang Ping comparing a short-lived official policy of following Mao Zedong Thought adopted 30 years ago to today’s paramount Party policies.

“Many children cannot read and write properly in Chinese, let alone use a calligraphy brush. More ridiculously, some are more proud of their English than their Chinese.” Peking University Professor Zhang Haixia worrying that China is losing its literary culture.

“I do not wish to go through the motions of offering up fragments of thought on that platform.” CCTV anchor Cai Jing explaining why she hasn’t started a microblog.

“When the old is demolished and then rebuilt, any“beauty”it has is only skin-deep. When an ancient city is demolished in the name of‘cultural protection,’it is like killing to create life.” Beijing Television Station anchor Lu Wenlong (AhLong) criticizing the demolition of ancient sites by local governments.

“You are, first and foremost, an artist, not a hero fighting the system. You need to show your skills at the right time, in the right way. Otherwise, sure, you might hit the big time - or lose everything.” Popular comedian Guo Degang talking cryptically about celebrities who take political risks.

CHINA WEEKLY I March 2013

“Nobody would invest here until Xi Jinping stopped by. Now, investors stream in every day.” Gu Rongjin, Party secretary of impoverished Luotuowan Village, Hebei, on the benefits of hosting an official visit.

“Some local governments make‘People’s Congress delegate’an award given to big taxpayers, sports stars, singers or comedians who have either no time or wish to fulfill their duties. This is irresponsible to the people.” Huang Zhizhong, a Guangdong provincial People’s Congress delegate, calling for change in assessment criteria for political representatives.

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Top Story

China Promotes Family Farms On February 1, the Chinese government published its first official document encouraging the development of “family farms,” a move analysts say could lead to the development of larger-scale agriculture and the emergence of a more prosperous rural class. According to the Ministry of Agriculture, a “family farm” would engage most members of a single family in agricultural production, allowing them to make farming their main source of income. This change is likely designed to prevent young rural residents from migrating into cities in search of better-paid work, after a separate Ministry of Agriculture report highlighted a shortage of both young farmers and farmers specializing solely in agriculture. “‘Family’ or ‘specialized’ farms centralize distinct plots of land to form a large-scale operation. Family farming is similar to a fixed profession, such as that seen in Western countries,” explained Guan Ruijie, a supervisor from the Ministry. This new strategy means that the freedom to transfer and consolidate land, a process

previously heavily restricted by the Chinese government, must be established in rural areas. Pledges to this effect were heard in the central government’s most recent working conferences and seen in the rubric of its latest plan for income distribution reform. Pilot land transfer schemes have been in operation in certain areas of China for years. Official data from the Ministry of Agriculture indicate that 33 pilot areas are now home to over 6,670 family farms, many of which operate between eight and 33 acres each, enjoying incomes several times higher than those of other farming families. Yet, despite their achievements, farmers in these pilot areas are now complaining about the rising price of land and a lack of skilled agricultural labor. “Different from traditional big households, family farms focus more on technology and management,” said Guan. “This is not a sudden leap, but something to be gradually pushed forward along with improvements in other supporting systems.”

Society

Fireworks Level Bridge A 23-meter-high expressway bridge in Henan Province collapsed February 1, leaving 10 dead and 11 injured after a truck carrying Chinese New Year fireworks exploded while crossing the bridge. According to media reports, the accident happened at 8:52 AM when the truck’s cargo

6

suddenly ignited, destroying it along with an 80-meter section of the bridge. Altogether six trucks and two cars were caught in the collapse. The official investigation team blamed the explosion on the owners of the truck, also claiming the firework manufacturer had not used fireretardant packaging for their product and that the

truck had been dangerously overloaded. However, public critics suspected the loss of life was due to the shoddy workmanship of the road bridge which had been leveled by mere fireworks. Many are now calling for a further enquiry to determine whether the bridge collapsed as a direct result of the explosion.

CHINA WEEKLY I March 2013


Politics

Economy

Wukan village in Guangdong Province, which won worldwide fame in early 2012 after the villagers ousted their unpopular Party committee and introduced direct elections after a lengthy standoff with the government, is once again making headlines. It appears the newly-elected officials, who pledged to wrest back landholdings embezzled by their predecessors, have so far failed to recoup all of the stolen land. Some of these leaders have in turn claimed that opportunistic villagers simply voted for the official most likely to favor their own interests, leading to nepotism and unfair practices. The new committee has also clashed with the “supervisory committee” consisting of ordinary villagers about the actual powers allotted to the village committee. With several officials resigning, worries are spreading that what was a beacon of hope for China’s democracy advocates might already have fallen foul of a much older, much more entrenched system of political selfishness.

According to China’s central bank, the People’s Bank of China, China’s M2 (Money & Quasi-money) trade stood at 97.42 trillion yuan (US$15.51tn) by the end of 2012, nearly one fourth of the global total. Analysts have attributed the rise in China’s stock to the fallout from the 2008 global financial crisis. Bank data revealed that China’s M2 had grown by at least 10 trillion yuan (US$1.6tn) year-on-year since 2009. Given that China’s currency has still not been floated on the global currency markets, analysts have warned that such huge stock will bring with it a high risk of high inflation and asset bubbles. Also, with China’s M2 growth outperforming GDP by almost two dollars to one, availability of capital is ceasing to be a driving force, with a desperate need for more effective re-investment.

China Tops in M2

Wukan’s Troubled Democracy

Policy

China Launches Income Distribution Reform Scheme After an apparent eight years in development, China’s State Council published on February 5 its plan for future income distribution reform. Aiming to narrow the country’s widening income gap, the scheme focuses on multiplying both urban and rural per capita incomes, reducing excessively high incomes among “privileged groups” and “standardizing” gray income. However, many observers remain pessimistic that without an overhaul of the country’s legal and financial systems, which continue to favor special interest groups, enacting these reforms is likely to be an uphill struggle.

Going Up Local minimum wage – raised to over 40 percent of the local average wage Dividends paid to the central government by State-owned enterprises (SOEs) by 5 percent

Going Down Salary cap for employees at the highest level of State-owned enterprises Pay increases for high-level SOE employees, bringing them below the average increases due to employees at lower levels

Brought Under Control Government expenditures on overseas official visits, official banquets and transportation Supervision on the reporting of the income, fixed assets and investments of officials and their families. Tax collection on high earners The collection of legacy tax

20 International

China Opposes North Korean Nuclear Test

CHINA WEEKLY I March 2013

15

Japan

0

US

5

Photo s by CFP

Great Britain

10

China

Chinese Foreign Minister Yang Jiechi summoned the North Korean ambassador on February 12 to express “strong opposition” to Pyongyang’s latest underground nuclear test conducted earlier that day, its first since 2009. China rarely condemns actions by its closest ally, instead preferring to urge its “old friend” to “stop exacerbating tension” and “return to the right path of dialog.” However, some analysts say that China’s patience with an increasingly unpredictable Pyongyang is wearing thin. The Chinese public have more recently joined the debate. A minority of pro-North Korean voices have been largely drowned out by those who claim that Pyongyang has “humiliated” its only major ally, and main supplier of aid, by undercutting Beijing’s official denuclearization stance, as well as risking Chinese lives by conducting tests close to the two countries’ shared border.

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What’s Making China Angry ?

Poll the People Do you think China needs its own Clean Air Law? Respondents: 56,866

Netizens launched a Chinese New Year campaign to post pictures of luxury cars bearing military license plates. Hundreds of pictures were uploaded, demonstrating a taste in China’s military for Audi SUVs, Porsches, Land Rovers, Bentleys and Maseratis, drawing fire from netizens despite some of the plates turning out to be fake.

Yes.

56,271 (99%)

Don’t think so. Not sure.

391 (0.7%)

211 (0.3%)

Source: www.weibo.com

What’s Amusing China ? Footage from CCTV news featuring a half-naked little boy who appeared to “moon” China’s Vice Premier Li Keqiang went viral. The child was seen sneaking out of a wardrobe and under a quilt in the background of Li’s interview with his grandfather during a photo-op at their home in Baotou, Inner Mongolia, early February.

What’s Shocking China ? A 72-year-old painter surnamed Peng from Shantou, Guangdong Province, handmade an offset plate before using it to print 210 million yuan (US$33.6m) in fake 100 yuan banknotes. Peng was detained late January after a manhunt that lasted several years.

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Most Circulated Post Retweeted: 280,047 times

A man from Chengdu, Sichuan Province offered a one million yuan reward to find his missing pet dog: The chow-chow we have kept for seven years, named Xiaoxiao, was lost at 2 o’clock, February 8. Whoever finds it and brings it back will be rewarded with an apartment in downtown Chengdu worth more than one million yuan (US$160,200). A family member is worth more than one million yuan. CHINA WEEKLY I March 2013


Top Five Search Queries On

Over the week ending February 18 Red Envelopes 1,328,542 Chinese New Year is the season for giving – usually cash wrapped in red envelopes, with some people handing over hundreds of dollars to offspring and relatives.

WHO’S

HOT? WHO’S NOT?

I Am A Singer 1,221,224 The hit reality show is proving popular in all quarters. Geng Yanbo 63,630 The iron-handed, culture-loving former mayor of Datong, Shanxi Province, was petitioned by Datong residents to stay after it was announced he would be leaving to become mayor of the provincial capital Taiyuan.

Ha Wen 11,450 The artistic director of this year’s televised CCTV Chinese New Year gala boasted that 750 million Chinese watched this year’s show, a figure widely rejected by the public.

Top Blogger Profile Zhou Xiaoyun Followers: 125,892

This freelance investigative journalist from Guangzhou, Guangdong Province has taken aim at corruption in official charity organizations such as the Red Cross Society of China and China Charities Aid Foundation for Children by combing their accounts and exposing misconduct on microblogging service Weibo. To protect himself from retaliation, Zhou has only appeared in public in sunglasses and a mask since exposing a senior official working for State oil company Sinopec who had spent 1.68 million yuan (US$270,000) on luxury liquor in 2011. CHINA WEEKLY I March 2013

Some of the pictures used in this section are from the internet

Spring Festival Rush 22,017 An estimated 3.4 billion individual journeys take place in China over 40 days from January 26 to March 6.

Jin Zengmin This entrepreneur from Zhejiang Province posted early February that he would pay a local environmental official 200,000 yuan (US$32,060) if he dared to swim in a local river that has become clogged with industrial waste.

Fire-eyed Mom A woman had her eyes set on fire while being treated at a beauty parlor, as shown in a picture posted online by her son.

Rested Government The township government of Shuichuan, Gansu Province gave its staff 48 days off work for Chinese New Year, despite the holiday having an official length of seven days.

Wired Gamer A staff member with the Shanghai Meteorological Bureau was accidentally filmed playing an online game while his colleague was being interviewed by local TV. The man was suspended from his post “for introspection” after the screenshot went viral.

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politics

Veto Items

The Power of Appraisal The widely employed accountability system of “veto items,” which has become dogged by abuses and the widespread shirking of responsibility, has been singled out for attack by political pundits and the public alike

Photo by cfp

By Min Jie

Police in Jingdezhen city, Jiangxi Province, catalog counterfeit invoices, June 17,2011. Cracking down on such scams can, in some local jurisdictions, take priority over all other police work.

I

n the past months, a host of factors such as increased automobile usage, increased coal consumption due to cold weather and a low pressure zone over China’s northern and eastern regions combined to make China’s already appalling urban air pollution hit record highs week after week. In the face of a widespread public outcry, officials across the country reiterated their determination to curb air pollution. In many cities, leaders vowed to hold relevant officials accountable for failing to meet environmental protection targets. Many pledges have been made, and now the public is

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waiting for action.

‘Veto Items’

Yang Weize, Party secretary of Nanjing, the capital of Jiangsu Province, vowed to make carbon emissions targets a “paramount factor” in appraising the performance of local cadres. His pledge, following the example of Beijing officials, while probably attrctive to the ears of both his superiors and the public, is actually a continuation of the so-called “veto item” policy employed by governments at various levels in dealing with urgent crises.

By including an issue into the extant appraisal system for local government officials and identifying it as a “veto issue,” higher-level governments can essentially deflect responsibility onto lower-level governments. These governments are then expected to make the issue in question a priority in their work, as failure to meet an imposed target will cause overall performance to be deemed an abject failure, ruining the careers of local leaders. The underlying logic to this common practice within the Party is that by singling out a hot-button issue, be it corruption, air pollution or GDP growth, as the sole yardstick by which official performance is evaluated, said officials will devote themselves to resolving this particular issue successfully, winning a PR boost in the process. However, political analysts now argue that this simplistic approach has become counterproductive. Not only has it failed to solve the issues it was supposedly aimed at tackling, the single-minded pursuit of certain stats often breeds neglect and even corruption among officials in areas in which they are judged less harshly. “‘Veto items’ were designed to push lowerlevel governments to do their jobs well on toppriority issues, but in reality, this policy has backfired,” Professor Wang Yukai, vice-director of the China Society for Administrative Reform, told NewsChina. “Not only have some local governments, under extreme pressure, had to fake their accomplishments, but many have chosen to bend laws and regulations to suit their own ends in their efforts to meet their targets.” The most obvious example of this contradiction is social stability – a priority for local governments in every Chinese province. In the past decade, as complaints and resentment among ordinary citizens over a variety of social problems have continued to mount, the State Council issued a 2001 decree making social stability an official veto item. While the decree’s wording encouraged officials to tackle problems such as protests over forced demolition, abuse of power by police and cadres and workers’ disputes by investigating the source of these grievances, many officials instead chose to resort to heavy-handed tactics and brute force to suppress dissent. Under the terms laid out by the State Council, official evaluations begin by examining how many petitions and official complaints have been filed in a local government jurisdiction. Should this number be judged to be unacceptCHINA WEEKLY I March 2013


Accountable to Whom?

Apart from the four veto items officially identified by the State Council, provincial governments and prefecture-level governments have CHINA WEEKLY I March 2013

followed the top leadership’s example by formulating their own lists of non-negotiable targets and imposing them on their subordinates. In Jiangxi Province, for example, 62 “imperative tasks” have been set for all sub-provincial government departments, ranging from preventing “deaths during detention” (which are widely attributed to torture) to attracting foreign direct investment, protecting wetland habitats and even confiscating forged invoices. Often, the penalties for failing to meet these targets are far more harsh than the penalties for bending laws and regulations in order to deliver results. “Almost all departments are now striving to have their line of work identified as a veto item by their respective Party committee, as it would make it easier for them to do their jobs,” Li Jiancang, an official from Guangzhou’s Yuexiu District, told NewsChina. According to Professor Liu Xutao with the China National School of Administration, the result is that grassroots-level governments, possessing the least resources and the least power, bear the most responsibility for enforcing centrally or provincially-imposed targets. These targets often fail to take local circumstances into consideration. “With so many higher-level agencies and governments holding veto power over them, grassroots officials cannot afford to offend anyone, and instead have to go about fulfilling ‘imperative’ tasks imposed on them by authorities in all sorts of fields,” Liu told NewsChina. In contrast, by shunting pressure downhill, higher-level government agencies, possessing more resources and more power, are able to neatly pass the buck when an urgent issue lands on their desks. Moreover, with so many social problems being identified as “priorities” but the allocation of resources fairly stagnant, few lower-level governments are in a position to take priority items as seriously as their superiors demand. This may explain why eight years after environmental protection was made a top priority by the central government, air pollution in major cities has actually worsened. “The fundamental problem of these so-called ‘veto item’ system is that they make local officials accountable to higher-level officials, instead of to local residents,” Liu Xutao told our reporter. Liu believes that China’s current appraisal system, a legacy of

the Mao-era command economy, has become obsolete in the 21st century. “It is built on a system that follows the principle of ‘rule by power,’ which often conflicts with the principle of rule of law.” Liu pointed out that the National People’s Congress enacted the Population and Family Planning Law in 2002, and that this law has the highest authority over any issue to do with the One Child Policy. But when the State Council issued a decree on family planning policy in 2005, it trumped this law by default. A similar problem is also found in the governments’ approach to addressing social grievances. By pressing local governments to curb, rather than address, local complaints, the central government fails to acknowledge a major source of such complaints – the absence of genuine rule of law. When local governments resort to unlawful means to deal with petitioners, it further undermines the authority of the Chinese legal system, whose courts remain essentially subordinate to the Party. This, in turn, leads to more complaints and ever more violent clashes between the public and the authorities. Moreover, many legal activists in China have questioned the legality of the veto item policy itself. Despite its widespread adoption, the power to declare veto items appears to rest with just about any government department so long as it has a subordinate department it can impose these items upon. More often than not, a veto item is simply an arbitrary criterion imposed on a local government or agency by a higher-up, with the higher-up in turn likely frustrated by their own superiors’ imposition of seemingly arbitrary criteria upon them. “A sound appraisal system for officials should make them accountable to the people,” said Liu. “The government should reform the existing system and hand over the power to appraise official performance to society.”  illustration by adong

ably high, the local leaders in question will likely be passed over for promotion – essentially meaning the end of their political careers. While the central government may have hoped to press local governments to sincerely address the grievances of ordinary citizens, their policy instead kick-started a trend of “interception” of petitioners en route to Beijing and provincial capitals, with a whole network of socalled “black jails” set up in the suburbs of the capital to illegally detain legal petitioners (see: “Halfway House of Horrors,” NewsChina, February 2013). In the years following the creation of the veto item policy, the State Council further identified enforcement of the One Child Policy (2006), environmental protection regulations (2005) and carbon emissions reduction targets (2007) as veto items when evaluating officials from the provincial level downward. Yet as with the social stability criteria, officials became adept at fudging statistics and covering up abuses rather than genuinely tackling these issues in the manner intended. In the case of One Child Policy in particular, cases continually come to light exposing the ongoing practice of forced abortions, illegal under Chinese law, as a means to meet birth control targets. With less tangible targets, such as environmental protection, faking data has become a common practice for officials aiming to meet GDP growth requirements without attracting attention for environmental degradation. Until late 2012, officials in China’s biggest cities, including Beijing and Shanghai, refused to acknowledge the globally accepted measurement of the PM 2.5 (particles 2.5 micrometers in diameter) content of the air when monitoring air quality. Official air quality readings began to fall so far short of independent analysts’ findings that they became a laughing stock. In Shanxi, a coal-rich province which also has one of the world’s highest coal mine death tolls, officials have repeatedly been exposed covering up deadly pit collapses and gas explosions simply to avoid being penalized for failing to meet centrally-imposed safety targets. Few mining operations have chosen the far more expensive route of genuinely trying to improve worker safety.

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cover story

PERSONNEL PROBLEMS China’s two-pronged problem of an aging population coupled with a labor deficit now threatens to derail economic growth and development. While populists advocate an end to the One Child Policy as the only solution, the reality on the factory floor is much more complex. This month, NewsChina examines why it will take more than a quick fix to upgrade China’s industrial chain into an efficient, sustainable engine for long-term prosperity 12

CHINA WEEKLY I March 2013


Photo by cns CHINA WEEKLY I March 2013

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cover story

Labor Deficit

Human Resources

The dividends from China’s once seemingly bottomless pool of cheap labor are rapidly disappearing, leading many to point the finger of blame at the One Child Policy. Are things really that simple? By Li Jia

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Recruiters use billboards in a bid to attract jobseekers at a jobs fair in Yiwu city, Zhejiang Province, February 15, 2011 CHINA WEEKLY I March 2013


Photo by cfp

CHINA WEEKLY I March 2013

stream debate in China – relaxing or even ending the unpopular One Child Policy – is, however, unlikely to lead to a sustainable long-term redressing of China’s economic imbalances.

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hree weeks before the beginning of the official Chinese New Year vacation, some 50 migrant workers engaged in the manufacturing of doors and windows based in Putian city, Fujian Province had already returned home. For three years running they have all enjoyed an annual pay bump of some 10 percent – a deal their parents could have only dreamed of. Among them were several men in their 40s and 50s. Mr Huang, the owner of the factory, is equally incredulous that within a few years such long vacations, generous pay increases and the lowering of the maximum recruitment age have become essential to attract a sufficient labor force. “I try to make them happy; workers today are more like bosses than I am,” Huang complained. He told NewsChina that just a few years ago, any job posting would be filled almost instantly, with his own friends and relatives offering up candidates to fill any available post. Nowadays, he said, days go by without a single applicant. Where once crowds of young people from the country’s millions of villages flocked into cities in search of temporary work, their numbers are now thinning out. At a press conference on January 18, 2013, Ma Jiantang, director of the National Bureau of Statistics (NBS), called for “special attention to [China’s] first recorded decline in the working age population (15-59).” This 3.45 million drop in worker numbers, while it might be crippling in a less densely populated company, still leaves a labor force of 940 million. However, this decline in the numbers of China’s all-important labor force represents the beginning of a trend that Ma warned would continue “gradually and steadily from now until at least 2030.” Before that, according to NBS census data, the percentage of able-bodied working population to total population had already dropped from 70.1 percent in 2010 to 69.8 percent in 2011. This number dropped to 69.2 in 2012. It was widely expected that China’s working age population would not decline until at least 2015, despite media warnings both in State publications and the foreign press of an impending labor shortfall appearing as early as 2003. The new NBS figures are an admission by the central government that the long-anticipated demographic downward shift has hit China early. Given the historic role of cheap labor in creating the world’s second largest economy, economic planners and observers were shocked by the sudden downturn in the official numbers. The demographic solution that has been immediately proposed and currently dominates the main-

A jobseeker ignores two recruiters at a labor market in Zhuji, Zhejiang Province, January 31, 2012

Workers = Capital

China’s legendary growth over the past 30 years is significantly attributable to its use of a cheap, massive labor force. When China embarked on its program of market-oriented industrialization in the late 1970s, its huge population, a dividend from the Mao era when women were incentivized to give birth to large families, was the single resource available on a large scale at low cost. Capital was scarce and land, though owned by the State and available at a massive discount to businesses favored by the government, was largely tied up in guaranteeing China’s vulnerable food supply. Nobody was keen to see famine follow in the wake of industrial reform, as had happened in the late 1950s. Between 1987 and 2010, China’s working population expanded from about 700 million to 940 million to represent 70 percent of the total population, according to official NBS data. For the first time in history, this population surplus was channeled away from agriculture and into manufacturing. As Qu Hongbin, China Chief Economist and Co-Head of Asian Economic Research at HSBC explained at a January 26 forum in Beijing, it was the massive shift from farming toward mass production that created China’s growth story. This experience was a latter-day Industrial Revo-

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lution, mirroring the huge demographic shifts that took place in 19th century Britain, Europe and the US, and more recently in the Asian tiger economies of Japan and South Korea. The main difference was the sheer scale of China’s industrial boom, with its vast labor pool allowing China to go from an impoverished, agricultural nation to the world’s number one manufacturer and exporter in a few short years. No other nation could compete with China on both price and volume. Chinese assembly-line workers became

A worker controls the production line at a Babei Group textile plant in Shengzhou, Zhejiang Province, July 3, 2012

the source of the bulk of an entire planet’s consumer goods, while other major manufacturing nations saw their market share plummet. With salaried workers far outnumbering their dependents, and with huge investment in all industrial and commercial sectors matched by meager social security provisions, restrictive housing policies and relatively high taxation, turned an entire working generation was turned into an army of rainy day savers, a trend which spread to the highest levels of government and commerce. According to the IMF (International Monetary Fund), China’s net savings rate stood at more than 50 percent in 2012, compared with 36 percent in 1996 and with the world average of 19 percent. This tendency to save rather than spend provided the basis for the rapid expansion of Chinese investment as well as insulated China’s economy from global financial crises such as the 1980s Latin American crash, which was precipitated by the accumulation of foreign debt. The accumulation of wealth and the prioritization of maintaining political stability also helped China emerge as one of the world’s most attractive markets. In the 2013 Deloitte Global Manufacturing Competitive Index survey, 77 percent of CEOs worldwide ranked China joint number one alongside the US in terms of market appeal for multinationals seeking investment destinations. European and American companies operating in China have already shifted their attention towards serving the China market rather than continuing to rely on Made-in-China exports back home.

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Vulnerable Resource

Sewing machines stand idle in Ouli, an apparel maker in Enshi city, Hubei Province, due to the labor shortage

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The impact of China’s increasingly tight labor supply has, however, already been felt in the markets. China’s GDP growth fell to a historic low of 7.8 percent in 2012 amid official reports of endemic overcapacity. The Ministry of Human Resources and Social Security assured the world that there was no surge of jobless migrant workers like that seen in the wake of the Global Financial Crisis in 2008 and 2009. At that time some 20 million migrant workers returned home from factories, prompting the central government, fearing riots, to adopt a series of emergency policies to secure their jobs and land. The fact that workers were remaining at their posts in 2012 despite the GDP downturn was, to many analysts, a sign of a looming labor shortage. Many began to call time on China’s economic upsurge. Despite efforts to boost consumption, China remains heavily dependent on manufacturing and inCHINA WEEKLY I March 2013


vestment for its economic growth. In his article in the January edition of Social Sciences Today, Ba Shusong, a prominent economist with the State Council Development Research Center, attributed a well-documented drop in Chinese imports to the US and EU market share to China’s rising labor costs. He also stated that these rising costs were more driven by a shortage of labor than by increased productivity. This is good news for those economies shunted aside when China gained its place at the WTO. Mexico, for example, saw its share in the US imports market collapse soon after China’s accession to the WTO. Now, this trend is reversing. In his article, Ba warned of a “counterattack” on the US market by labor-rich Mexico, where under-29s represent 54 percent of the country’s 100 million population. Other populous developing nations with young populations like India, Russia and Vietnam are also on Ba’s list of potential competitors that could undercut China in the coming years. Indeed, Southeast Asian nations such as Vietnam, Cambodia and Thailand, none of which are facing a cheap labor shortfall anytime soon, have begun to attract low-cost manufacturers away from their giant neighbor. NBS annual report on China’s migrant worker population shows that 38 percent of Chinese migrant workers were aged over 40 in 2011, compared with 30 percent in 2008, with the average age of a Chinese migrant worker edged up to 36 from 34. This shift not only indicates a race towards fewer workers in the nearer than expected future, but threatens China’s investment capital. Wang Feng, director of the Brookings-Tsinghua Center for Public Policy, estimated that the number of people aged between 30 and 50, typically the people most likely to save money rather than spend it, will represent less than half of China’s population by 2020. While retirees are typically compelled to spend rather than save, thus boosting consumption, they generally don’t consume as much as salary earners due to restricted income. This is particularly true in China, where seniors, with the exception of retired civil servants, get no more than 60 percent of their pre-retirement salaries. Without significant State pensions to draw upon, most fall back on their families to support them, constricting, rather than boosting, consumption. Rising numbers of retirees leading to an aging population is widely feared in China, as it could lead investors to take their business to younger, greener commercial pastures. According to Wang, a “favorable demographic CHINA WEEKLY I March 2013

structure” has so far contributed 15 percent to 25 percent of China’s per-capita GDP growth year-on-year. Without this dividend, he argues, China’s economy will “slow down regardless of other factors driving growth.”

Populism or Pragmatism?

Looking ahead, there is little hope for any big rebound in China’s labor supply in terms of sheer numbers. Rural-urban relocation will continue, but not likely on the scale seen in previous decades. China’s remaining rural communities remain the country’s primary source of cheap labor, yet after years of massive migration they are populated largely by the elderly and the children of existing migrant workers. While the former have little desire or qualification for urban jobs, the latter is dwindling alongside the country’s nose-diving birth rate. In the whole country, the percentage of children under 14 years old who will constitute the workforce of the 2020s, 30s and 40s, has been consistently declining since 2000. As a result, the country’s birth control policy already in force for 30 years has once again come under attack from all quarters. Ma, head of the NBS, expressed “concerns” over the decline in the working population and suggested the investigation of a “scientific and proper demographic policy” in the context of the “changing situation.” The figures he released and his remarks were immediately highlighted by both Chinese and international media such as the Wall Street Journal. Voices calling for a final end to one of the Chinese government’s most unpopular policies dominated mainstream media. Some even warned that it was “already too late,” painting an apocalyptic picture of a deserted, childless China. Indeed, public resentment against the policy has intensified as reports of its brutal implementation, particularly forced late-term abortions, the condition of elderly parents who lost their only permitted child, and the skewed, inadequate national pension scheme have all begun to appear in national media. The media, aware of the growing cynicism among its increasingly well-educated target market, never misses an opportunity to press for a change, even an end to the policy. There are subtle signs that change at the heights of power may be coming. Outgoing President Hu Jintao, during his final work report to the 18th Party Congress on November 8, 2012, did not include “maintaining low fertility rate” as a strategic priority - the first time the One Child Policy has not been

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Total number of migrant workers 2006-2011 (millions) 300 250 200 150 100 50 0

2006 2007 2008 2009 2010 2011 2012

Percentage of migrant workers by age group in 2011

16-20 / 6.3% 21-30 / 32.7% 31-40 / 22.7% 41-50 / 24.0% 50+ / 14.3%

Number of migrant workers by age group in 2011

Manufacturing Construction Tertiary Wholesale & Retail Transportation, warehousing & post Catering Household and other services

Source: National Bureau of Statistics

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highlighted since 2000 when the average fertility rate dropped from 5.8 to 1.8 births per family. This was immediately interpreted by analysts as a signal of relaxing the policy. However, it is clear that even if the One Child Policy were abandoned today, factory bosses would have perhaps a twenty-year wait before they could reap another demographic dividend if at all. This makes the calls for removing the policy, while popular, economically irrelevant – at least in the short term. The effectiveness of lifting the One Child Policy in the economic sense is based on two assumptions. Firstly, that fertility rates will rebound sharply and immediately once the government is no longer restricting births, and secondly an economic growth model based on intensive, cheap labor will be both desirable and possible for China’s future. The “low fertility rate” of 1.8 claimed by the government has little traction among either advocates or detractors of the One Child Policy. The UN World Population Prospect Report of 2010 put China’s fertility rate at 1.67 between 2000 and 2010. This number was most optimistic of the independent surveys, most of which gave figures ranging from 1.2 to 1.6. China’s falling fertility rate is due to more than just the impact of the One Child Policy. As in all societies, urban Chinese women have a much lower average fertility rate than their rural counterparts. In Shanghai, where the average fertility rate is currently 0.8, for example, the only group that has reached the government’s targeted 1.8 fertility rate are women with no education. Shanghainese women with a postgraduate level of education have an average fertility rate of only 0.36, according to local statistics office figures released in 2011. As in developed countries, rising standards (and costs) of living and a tendency towards marrying later among young Chinese have hampered traditional enthusiasm for having more kids. Even researchers who oppose an immediate curtailment of the birth control policy recognized that there is little likelihood of a sudden baby boom once the control is lifted as urban, working women are unlikely to be eager to drop everything to give birth – halving their household income and doubling their costs in the process. As for the second assumption – that an end to the One Child Policy will allow China to continue to maintain a low-cost, low-value and laborintensive growth model indefinitely, is also based on a faulty understanding of economic trends. No worker or country in the world welcomes the idea of remaining at the low, cheap end of the global supply chain forever. No historical examples of sustained, low-cost, labor-intensive growth exist simply because growth is only sustainable if it is matched with corresponding rises in income and living standards. The only route towards prosperity is racing to the top, not staying at the bottom. China is already moving up the chain. In short, China’s most valuable resource, its population, is no longer sustainable or reliable, meaning an overhaul of the national development strategy is essential. Managing existing and future human resources, along with any demographic shifts, should remain at the core of this strategy. The secret to success will be both the government and captains of industry effectively repurposing China’s working population by rebalancing its entire economic structure. CHINA WEEKLY I March 2013


Labor Deficit

Mechanizing

Manpower Age has made China’s once mighty labor pool lose its value. What China needs now is to make its individual workers more valuable By Li Jia

CHINA WEEKLY I March 2013

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Applicants for the national civil service examination, Beijing, November 25, 2012

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J

ames Bond would be the perfect Chinese worker if it weren’t for his tendency to break the rules. In Skyfall, for example, the Daniel Craig incarnation defeats an armed squad of hit-men with nothing but a classic car, some gas canisters and a kitchen knife. A resourceful, efficient and dedicated one-man army loyal to his boss, Bond wouldn’t look out of place in China’s old-school industrial propaganda, though perhaps minus the tuxedo. Chinese manufacturers, mostly private small and medium enterprises (SMEs), could do with a few more Bonds on their workforce. Having wrested the world’s number one manufacturing spot from the US by exploiting Mao’s legacy – a massive pool of young, cheap laborers – the bulk of Chinese industrial workers are now entering late middle age. With a shortfall of young blood to replace them thanks to the One Child Policy and other factors, “upgrading” has now become the buzzword of the day.

end manufacturing powerhouse to the world’s number one economy. To set this combination at work, the almost nonexistent educational background of migrant workers needs to be improved, and young people with higher education need to be engaged in the creative side of the manufacturing process. This shift will take time and money. Greater urbanization and the relaxation of the retirement age – Chinese workers retire younger than most of their counterparts worldwide – are changes expected to help bring more rural residents into urban jobs. While capital was in short supply when Deng Xiaoping deigned to get the China train moving, now hard cash is abundant. So why do China’s captains of industry appear to be dragging their heels? It could be partly because they are presently not in a desperate enough situation to take a gamble on a new idea. China currently lacks sufficient incentives for market players to upgrade their businesses, or branch out into new areas. When a lack of skills is no obstacle to gainful employment, workers themselves are not incentivized to seek further education. Efficiency and innovation, arguably the two guiding principles of developed economies, are still not perceived as the best ways to get rich in China, either by workers or employers. The private sector, still the main driving force behind China’s economy, remains tightly restricted by policy favoring the powerful, but grossly inefficient, State sector. Nevertheless, creating a more educated workforce and a fair competitive market is unquestionably on the government’s to do list. But will the task get done before China’s boom hits the buffers?

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Mind the Gap

A recruitment market held by the East China Normal University and Shanghai Jiaotong University, March 9, 2012

China’s chosen escape route is hardly being kept quiet. Industrial upgrading is never off the front pages of newspapers, the covers of academic papers of analysis or the minds of economic pundits. Chinese enterprises have begun to aspire to make workers more productive, and mechanization more widespread, both key elements which turned the US from a low-

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According to a 2011 National Bureau of Statistics (NBS) report, Chinese migrant workers have on average 9.4 years of education, with those born after 1980 achieving a slightly better 9.8 years. 69 percent had no technical training of any kind prior to seeking employment. While these qualifications meet the 9.1 year educational requirement of China’s low-end labor intensive manufacturing concerns (i.e. assembly line work), it lags far behind the minimum 10.4 years of compulsory education required by more capital and tech-oriented industries, according to Professor Cai Fang, director of the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences (CASS). When it comes to education, even a one or twoCHINA WEEKLY I March 2013


CHINA WEEKLY I March 2013

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A worker at Quanta, a factory making Hewlett-Packard appliances, sings karaoke in the company’s employee dormitory, Chongqing, November 27, 2012

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year gap between two competing workers can be a considerable handicap in terms of upward mobility. Between 1990 and 2010, the average time spent by adult Chinese in school increased by a mere 1.3 years, despite unprecedented financial and political support for further education. This is why Professor Cai is particularly concerned about what he called “negative incentives” when it comes to migrant workers’ attitudes toward their own qualifications. “This golden age of ample job opportunities and good salaries may pass very fast as companies are forced to upgrade their production process faster than ever,” he said to NewsChina. Cai’s worries are well-grounded in historical precedent. For many rural students and their parents, quitting school is the only way to maintain a meager household income. As the average cost of high schools and colleges has increased exponentially, many rural families simply prefer the immediacy of returns guaranteed by sending their children to work. A commentary in State mouthpiece People’s Daily in August 2011 claimed that one million high school students quit the national college enrollment examinations in 2010, most of them in order to enter the workplace. Rural students abandoning the schoolroom for the factory floor is such a problem in China that a series of high-profile awareness campaigns have been launched in recent decades in an attempt to slow down dropout rates. However, this tactic may indeed have had its day. Chinese factories have begun to install more advanced machines requiring trained operators with specific skill sets. Mr Huang, owner of a door and window processing factory in Putian city, Fujian Province, has already reduced his workforce by 10 percent after installing a line of expensive new machinery. 120 kilometers away in the city of Jinjiang, Mr Lin, manager of a paper packaging company, has recently considered doing the same, though he is currently agonizing over cost-benefit analyses. Huang found that most of his younger job applicants, with an average of only nine years of compulsory education, lack the “willingness and capability” to improve their skills. “When choosing jobs, they are more interested in where to have fun after work, rather than their learning curve,” he said. What is at risk is not only the job prospects of migrant workers. Watson Liu, senior partner and vicepresident with Roland Berger Strategy Consultants Shanghai, helps Chinese companies invest overseas. His clients had to give up their plans to bring their best Chinese workers over to their European plants

A Foxconn employee eats lunch under a picture of former Apple CEO Steve Jobs, Chengdu, Sichuan Province, November 29, 2012

after visiting factories in Europe. They had no choice but to hire much more expensive, but much more highly skilled, French, German or Polish workers. The Chinese alternatives would simply have cost too much to bring up to scratch. “With more graduates from Chinese and Western universities, the R&D gap between China and Europe is gradually narrowing,” Liu told NewsChina. “However, the gap [between China and Europe] when it comes to blue collar labor, the people who implement the products devised in R&D, is alarming; this is the real risk for China’s manufacturing.”

Hard to Match?

Away from the production line in China’s boardrooms, there is an argument to be made that China’s youth are already overqualified in relation to the average requirements of the labor market. Unemployment has soared among college graduates in recent years. Yin Chengji, spokesman of the Ministry of

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Human Resources and Social Security, stressed at a press conference in January 2013 that promoting employment for graduates has become a top priority for the government, the first time the State has favored graduates over migrant workers in its labor provisions. The ministry also called upon China’s SMEs to play a leading role in providing job opportunities for college students.

College students prepare for a graduate school examination

Despite government promises, Chinese college students and their parents remain wedded to the notion of holding down a coveted job for life in a Stateowned enterprise (SOE) or the country’s civil service. Second choice is a foreign company, most of which have more generous salaries, benefits and working conditions than home-grown alternatives. Few aspire to work at a Chinese company in the private sector, which is broadly seen as a dead-end, only good for skills acquisition, or as a stop-gap. “While waiting for replies to dozens of applications, I was so anxious that I just wanted to be alone,” said Wang Bo, a rural graduate working for a Danish fashion company in Beijing. “It’s not difficult for us to find a job, but very difficult to find a good job which can launch a career,” she said. A “good job” for Wang’s generation, as for that of her parents, means the public sector. SMEs simply don’t pay well enough, and few public sector employees are hired out of the private sector, Wang told NewsChina. SMEs, for their part, also don’t appear to be very interested in hiring from the growing pool of unemployed graduates. Experience teaches these entrepreneurs that many graduates only resort to private sector jobs in the hope that they will make their resumes sufficiently appealing to allow them to “upgrade” to a State or overseas post. Mr Yu, a manager working for a medium-sized textile plant told our reporter that “enterprises are reluctant to provide skills training to graduate students because they won’t stay long.”

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Others find themselves having to train their entire workforce from scratch, regardless of their qualifications. “They [graduates] know too little about the skills manufacturing enterprises need,” Mr Huang, the factory owner, complained to our reporter. Currently, neither side seems keen to change their habits. This is bad news not only for Yin Chengji’s vision of a private sector brimming with bright-eyed, college-educated go-getters. Private SMEs are the backbone of China’s manufacturing power, and the main architects of the country’s prosperity. Besides engineers, these companies need designers, accountants, lawyers, salespeople and managers who provide integrated services to build their brands on the market. Development of this manufacturing-oriented service sector, which is still disproportionately weak, needs a pool of highly qualified employees that China simply doesn’t have. Even in the US, where the share of GDP attributed to manufacturing has been down for years, the sector remains lauded for its innovation, and as the pride of US industry. In the 2013 Global Manufacturing Competitive Index survey by Deloitte, 58 percent of CEOs surveyed believed China was “very competitive” in terms of talent-driven innovation, a rate only slightly higher than that of India and 35 percent lower than the US. The Center for Strategic and International Studies (CSIS), a Washington-based think tank, concluded in its report in January 2013 on China’s competitiveness that, with heavy reliance on imported technologies, China “will not have a dominant position in the world economy, like the US did in the 1960s.” For graduates, the public sector may not be the best choice for their career. It is very common to hear young civil servants and employees of SOEs complain about the lack of a competitive dynamic in their organizations and the myriad “hidden rules” which value direct personal ties to higher-ups over ability in almost all cases.

Intervention

When the market remains unresponsive, the government must step in to correct its ‘failures,’” Professor Cai told our reporter. He argued that compulsory education should be extended to include at least three years of high school, and that college tuition fees should be reduced. These changes, though hardly sufficient to cancel out the immediate financial benefits of heading immediately into the workplace at 15 or 16, would at least incentivize higher education and skills training among young people, in his view. Wu Hao, a hairdresser in Beijing, has learned CHINA WEEKLY I March 2013


first hand the benefits of entering the labor market with qualifications. He left school from a village in Jilin Province in China’s northeast at the age of 16 right after his nine years of compulsory education, but found it difficult to take notes during a training course that used geometric principles to explain the construction of various hairstyles. “The cost of those courses is much higher than high school fees. If high school were compulsory, I would have enrolled,” he told NewsChina. “But for a rural family, even a small saving is very helpful.” The ratio of migrant workers with a high school or equivalent background in China rose to 23 percent in 2011, compared with 17 percent in 2004. The rise could have been greater if the law mandating free schooling was longer. The number of migrant workers with college degrees has also been rising, but the relative percentage of rural youngsters at college has been dwindling, an issue raised by Chinese Premier Wen Jiabao as early as 2009. The average cost of one year of college tuition (excluding living costs) in 2007, for example, was more than the annual income of the average rural resident. If parents weren’t certain their child would be guaranteed a public sector job after graduation, they would hesitate to make this heavy investment. This popular prejudice favoring State sector jobs remains a major hurdle for those who would restructure and upgrade China’s economy. Putting good resources into the most efficient part of the economy is the key ingredient for improving productivity, but as things stand, millions of qualified young people compete for a limited number of State jobs each year, while the private sector struggles to secure better-educated employees. Big companies well-connected with the government and in many cases treated to generous subsidies and tax breaks, either State or privately-owned, have a far better chance of attracting, and holding on to, the best resources in capital, land, and talent. These are not, however, generally the enterprises which are the most efficient, productive or innovative. This is simply because with government backing they don’t need to be. Even successful Chinese private manufacturing companies only enjoy an average 11.1 years of market life according to a recently released review of some1,000 well-established Chinese private manufacturers by GlobalMarket Group, an international trade marketing service. Various surveys by Chinese and international independent institutions found Chinese SMEs as a whole last no more than 4 years on average due to heavy taxes and limited access to market, financing and talent. CHINA WEEKLY I March 2013

Efficiency and innovation can only be made a genuine priority for corporate strategists if fair competition, not government relations or administrative orders, is permitted to thrive. In Professor Cai’s view, only when this happens, underpinned by enforceable legislation, will managers be motivated to concentrate on installing better machines and building a talent pool. Some believe that the creation of such a market would also spark an overhaul of China’s education system. In an article in the June 2012 edition of China Economic Quarterly, Dr. Wang Feng, director of the Brookings-Tsinghua Center for Public Policy, criticized China’s system as “better at producing bureaucrats than managers.” In such an environment, market performance, not the background of a company, will be the main consideration of a well-educated young person with career ambition. 

Ratio of non-agricultural payroll as a percentage of total population in 2010 80 70 60 50 40 30 20 10 0

China

US

Japan

Germany

Brazil

India

Source: Chinese Academy of Social Sciences

Educational background of migrant workers in 2011 80 70 60 50 40 30 20 10 0

Illiterate

Primary school

Middle school

High school

Above high school

Source: National Bureau of Statistics

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Communist Party members in Buyun Town, Sichuan Province, vote for their local party secretary, June 3, 2011

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politics

Political Reform

Reform or Repeat? The new leadership’s initiatives to improve the Party’s public relations have led some to believe that serious political reform may be on the horizon. NewsChina asks a senior member of the Party’s top think-tank whether or not the hype is to be believed By Zhang Wen

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aking the helm of the Communist Party of China (CPC) at a moment when the country faces a variety of urgent challenges both at home and abroad, Xi Jinping, with his relative personal charisma, has rekindled a modicum of hope for real progress in the arena of political reform after a decade of stagnation in this regard. As the new general secretary of the CPC Central Committee, Xi began his tenure

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with a series of attempts to improve the Party’s image and get closer to the people – he seemed to be trying to make amends for the many officials whose behavior has served to alienate the CPC from the masses. While these measures have been widely welcomed, many have expressed doubt that any real change is afoot. While many are optimistic that more serious reforms will follow, others remain suspicious that these initiatives

are much the same as those made by the previous leadership, all of which went cold after initial fanfare. To better understand the reform, NewsChina spoke to Professor Wang Changjiang, director of the Party Building Department at the CPC Central Committee Party School. NewsChina: How do you perceive the new leadership’s efforts to get closer to the people? CHINA WEEKLY I March 2013


NC: Does that mean we are about to see swift progress in the democratization process? WC: It is still hard to say. Whether it will lead to major political reforms depends on how the Party perceives the crisis it faces. On the surface, the new leadership appears to be using traditional and familiar methods in pushing forward relevant reforms [decrees, moral appeals and public calls to action aimed at Party cadres]. It is obvious that these traditional methods have their limits. Unlike in the 1980s, when China’s reform had just kicked off and the government could tinker rather safely with the periphery of politics, now 30-year-old reforms find themselves confronted with the very core of the country’s political system. Attempts at political reform will inevitably meet with increasingly tough resistance. The possibility should not be ruled out that the new leadership has no real agenda for serious reform. Instead, they may be urging serious political reforms as they take over, only to get stuck in the same old rut when meaningful results fail to materialize. However, it is also possible that the new leadership does have an overall strategy. By resorting firstly to traditional means, they can minimize the political risk of making too many enemies all at once. And when these approaches fail to deliver, they will be in an advantageous political position to launch more substantial initiatives to deal with the resistance. NC: What kind of resistance are you talking about? CHINA WEEKLY I March 2013

Photo by Li qiang

Wang Changjiang: I think it indicates a fundamental change in the Party’s basic attitude regarding its public relations. For a long time, the Party turned a blind eye to changes in social dynamics. Instead of adapting to these changes and responding to the public’s demands and aspirations, the Party had actually been trying to bend reality to suit its own ideology. Now, the Party’s new leadership has finally realized that this old path is a dead end, and any political party that is to survive in the modern day has to answer the needs and aspirations of the people. Xi’s recent initiatives to change the Party’s working style and improve its image signify a direct response to the simplest and most conspicuous complaints of the public against officialdom.

Wang Changjiang

WC: That from vested interests. The key to China’s political reform is to make officials accountable to the people, and the major change in this regard will be that many officials will lose much of their power. Under China’s current political ecosystem, only a tiny fraction of officials are pursuing their principles and political vision, and they may easily become trapped in the vast networks of powerful vested interests. Even China’s very top leaders have to reckon with these forces. NC: Does this mean that the prospect of change is very dim? WC: Not necessarily. There are actually incentives for change among officials, those at the county and township levels in particular. This can be attributed to the disparity in the sharing of power among the governments of different levels. Under the current arrangement, the central government retains 70 percent of power, while lower-level governments dispose of the remaining 30 percent. Generally speaking, the lower a government’s level is, the less power it possesses. In contrast, however, the sharing of responsibility and accountability is reversed. While possessing relatively little power or resources, lower-level governments shoulder unlimited responsibil-

ity and accountability. Therefore, grassrootslevel officials often find themselves caught in a very difficult situation in which they are under pressure both from above and below – from superior authorities and local residents, respectively. In these circumstances, what grassroots governments can do is break up the responsibility to be shouldered by a wider circle. This means allowing ordinary people to share more responsibility, taking into account that it is virtually impossible to make superior governments share more responsibility. Inclusion of ordinary people in the decisionmaking process at these levels means they are also held responsible for the decisions made, good or bad. As re-distribution of power between the central, provincial and local governments remains a distant prospect, some local officials in various localities have started pilot projects in this regard over the past few years, which have taken the form of direct elections, public hearings, and efforts to improve transparency. NC: The report of the 18th Party Congress held in November 2012 mentioned the idea of “consultative democracy,” which many believe is the new leadership’s answer to China’s democratization. Is this what you refer to? WC: According to some people, electoral democracy is unique to the western world, while it is consultative democracy that suits China. This is sheer nonsense. How can there be democracy when there are no elections? Consultative democracy can only serve as a supplement to electoral democracy, as a means to prevent tyranny of the majority. NC: What kind of electoral democracy are you talking about? WC: It is feasible to introduce inner-Party elections, in the place of thinly veiled or direct appointments, taking into China’s actual conditions. Inner-Party elections have been employed in many villages and townships and have turned out to be fairly successful. This type of election should be promoted at the county level, which I think is the most important level of government in terms of responding to people’s demands and aspirations. By holding county-level officials really accountable to local residents, tensions between the authorities and the people would be greatly eased. 

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society

Gift Expenditure

Intolerable Courtesy The obligation to give out cash gifts causes overwhelming financial stress for families in small-town China By Sun Zhe

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nexpected phone calls make Zhang Meijun nervous. She fears it might be bad news – or, perhaps just as ominous, good news. A message that someone has been born, died or has got married usually causes Zhang to look worriedly at her accounts. The invitation to the banquet for these occasions calls for a gift, in cash, of at least 100 yuan (US$16), about three days’ wages for Zhang. Without a regular job or pension, the 53-year-old from Changde, Hunan Province gets paid by the hour, packaging snacks at a local factory. When those extending these invitations are not especially close relatives or friends, Zhang simply sends the requisite red envelope via a co-invitee who does attend – she will be expected to cough up another 100 yuan if she shows up in person. “It is not impolite to be a no-show, as long as the money arrives,” said Zhang. In a year, Zhang gets through quite a few red envelopes.

Cause for Celebration?

Today, in addition to big ceremonies like weddings and funerals, a whole range of occasions now merit a banquet. Birthdays are the most common, with invitations being sent out when a new baby reaches one month, then on their 12th, 36th, 50th, 60th and 70th birthdays (in some places the interval narrows to five years). Moving into a new house, or even re-decorating an old one, is often celebrated with a lavish dinner party. Other occasions include the recruitment of one’s offspring into the military, or their admission into university. A few decades ago, only an offer from an elite university carried enough weight to warrant a banquet, but now, any old offer will do. Unsurprisingly, some parents have begun sending out party invitations upon receiving a letter of acceptance from a senior high school. In theory a risk-sharing mechanism in China’s traditionally collec-

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tive rural society, the custom of gift money is supposed to help fellow villagers, relatives or clan members through financial difficulties when starting a new family or caring for a newborn. It was a vital financial bond that had the added benefit of ensuring that all members of a community, often composed of a single clan, looked out for each other. But now, with changing attitudes towards money and individualism in Chinese society, some argue that the custom is out of control, and that celebrations are becoming little CHINA WEEKLY I March 2013


more than cynical profit-making exercises. Inevitably, the obligation to send out cash gifts hits low-income families harder than anyone else – the acceptable sum of gift money is based on the closeness of relations between the inviter and the invitee, regardless of the latter’s economic status. In 2011, cash gifts accounted for about 45 percent of family income for the poorest quarter of China’s urban households, according to a report by the

China Household Finance Survey (CHFS), a research body with the Southwestern University of Finance and Economics in Chengdu, Sichuan Province. In total, gift expenditure accounted for about 8 percent of annual outgoings for urban households, and as much as 11 percent for rural families.

No Escape

Very few dare to decline invitations to these occasions, because do-

CHINA WEEKLY I March 2013

ing so would bring the family into potentially irreversible disrepute. It is also damaging to one’s social standing to submit a sum that falls short of the going rate, a figure that is never expressly specified. “If you ignore a few invitations, people will stop inviting you, and eventually, they will stop coming to your events,” said Zhang, “and you’ll become detached from the community.” Being part of the clan or community is more important in small cities and the countryside, where people have few dealings with anyone other than their acquaintances. One missed social occasion has the potential to put an end to relations between two families. Like almost every rural and small-city household, the Zhang family has kept a meticulously detailed record of every red envelope sent or received, for future reference. Zhang Meijun is expecting her only son to get married soon, and hopes that the wedding will help recoup some of the family’s considerable expenditure on cash gifts over the years. But hosting a dinner party for the wedding will cost her a fortune, as a penny-pinching banquet is guaranteed to hurt a family’s reputation. It’s a tough calculation – guests expect a lavish dinner worth their gift money, while hosts expect to receive enough fat red envelopes to guarantee a profit from the event. As a result, both the cost of a dinner and the standard rate for a cash gift continue to spiral. “At the end of the day, you find that restaurants are the only winner in this game,” Zhang said. For some though, all the work of bookkeeping and calculation is just a little too farcical. Sun Yaoming, a 65-year-old architect from Yueyang, Hunan Province, has not hosted a banquet for many years, not even to celebrate his daughter’s wedding. Sun doesn’t receive many red envelopes. “It saves me all the fuss of accounting, and calculating gift money,” he said. However, he’s only prepared to stray so far from tradition – he still goes to others’ events, and he never shirks his obligation to send red envelopes. Over July and August each year, when Chinese universities send out their offer letters, there are so many celebration dinners that period that sometimes, Sun finds himself short of family members to dispatch to represent him at the various banquet tables. Sun says he is nostalgic for the 1970s and 80s, before China’s wealth gap began to open, when people were grateful for any gift, no matter how small, and when celebrations were less frequent, but more meaningful. The best gift anyone could expect was a dozen eggs, a kilo of brown sugar, or a few feet of cloth. At Sun’s own wedding in 1972, there were no dinner parties or cash gifts. His colleagues and friends pooled some money to buy Sun and his bride a few household necessities: two mugs, two washing bowls, two thermos flasks and few other basics. His guests were treated with a plate of candy. Sun cannot imagine a better celebration than his friendly, thrifty wedding. “These days, people give out so many expensive gifts, but relationships are nowhere near as close as they used to be.”

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society

Murder Mistrial

The Wrong Men 17 years after five men were hastily convicted of murder, new evidence has led to their cases being re-opened, laying bare an endemic disregard of legal process By Wang Quanbao in Zhejiang and Chen Wei in Beijing

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ith the discovery of new evidence, five men convicted of murder and robbery 17 years ago in Hangzhou, capital of the affluent province of Zhejiang on China’s east coast, will have their cases re-opened. The men are currently serving life sentences or two-year suspended death sentences (essentially the same thing), for two incidents that happened in what is now the city’s Xiaoshan District on March 20 and August 12, 1995, respectively, each involving the murder of taxi drivers. On the morning of January 19 this year, a

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single titbit of information sent shockwaves through China’s legal community. He Bing, deputy dean of the Law School at the China University of Political Science and Law, revealed on his microblog that the fingerprints of a recently arrested suspect matched those left at one of the two murder-robbery scenes in 1995, and that the five young men, after having served 17 years in prison, may have been wrongly accused. He also implied that the Zhejiang provincial judicial authorities were attempting to cover up what could prove to be a massive, and possibly intentional, miscarriage of justice.

Later that day, the Zhejiang Higher People’s Court released a statement on its website, confirming that the two cases in question had been opened for reinvestigation on January 4. “The police have discovered new evidence concerning the taxi driver murder that occurred on March 20, 1995, which may impact the previous verdicts for the five people [convicted],” read the notice. “The Higher People’s Court has therefore decided to review the case, based purely on the facts and in accordance with the law, and any wrongs must be corrected.” “Since the review process takes some time, CHINA WEEKLY I March 2013


we did not publicize the information immediately, and there was no intentional coverup of the facts,” Tang Xuebing, spokesman for the Zhejiang Higher People’s Court, told NewsChina on January 22.

Bum Wrap

According to the Zhejiang court’s announcement, the original police investigation quickly identified five local young men as possible culprits: Chen Jianyang, Tian Weidong, Wang Jianping, Zhu Youping and Tian Xiaoping. In July 1997, the Hangzhou Intermediate People’s Court gave the death CHINA WEEKLY I March 2013

“Damage has been done to the five convicts, mentally and physically.” penalty to Chen Jianyang, Tian Weidong and Wang Jianping; a two-year suspended death sentence (a sentence almost always commuted to life imprisonment) to Zhu Youping; and a life sentence to Tian Xiaoping. Four of the men made appeals to the provincial higher court, and in December 1997, the court’s final decision was that Chen Ji-

anyang, Tian Weidong, Wang Jianping and Zhu Youping would receive two-year suspended death sentences, and Tian Xiaoping would be given life imprisonment. A source from the Zhejiang higher court told NewsChina that there was dissent among the higher court judges when reviewing the three death sentences in 1997. Some of the judges on the panel found significant holes in the evidence collected by the police. For example, one vital piece of evidence was missing: any trace of the suspects’ fingerprints at the scene of the crime. “Wang Youzhang, deputy director of the

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society

Photo by Li Qiang

higher court when the case was first tried, raised the point that due to the lack of evidence, the case could not be concluded. The court has two options for the court – acquit all five suspects, or rescind the judgment. However, for unknown reasons, only the death penalties for three of the suspects were altered to suspended death sentences,” the source told the NewsChina reporter. NewsChina’s repeated efforts to reach Wang Youzhang, the current deputy Party secretary of the Zhejiang Higher Court, were unsuccessful.

Earlier Allegations

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The only picture of Chen Jianyang found at his home

Photo by Li Qiang

Wang Jianjun, Zhu Youping’s defense counsel at the original trial, sees the case as a standout failure in his legal career. In 1997, Wang, then in his early 30s, worked for the justice department of Xiaoshan (then a city in its own right, now a district under the administration of Hangzhou) and was assigned as the defense lawyer for Zhu Youping. After consulting the relevant files with other lawyers assigned to the case, Wang and his peers decided to make their defense based on “insufficient incriminating proof.” Wang Jianjun told NewsChina: “First, we decided to plead not guilty, as there was no proof that the defendants were guilty. Our decision was based on China’s Criminal Procedure Law, newly amended in 1996, which stated that the defendant should be presumed innocent until proven guilty or not guilty,” said Wang, “but we were concerned that the idea of ‘innocent until proven guilty,’ a brand new principle in China at the time, would be too much for the police and the prosecution, who were still under the sway of the traditional mentality.” Despite the defense of Wang Jianjun and the other lawyers, the five suspects were found guilty at a trial at which they were not present, despite the absence of any incriminating forensic evidence. “In the absence of vital proof, the verdicts were clearly unreasonable,” said Wang Jianjun. “None of the five suspects confessed in court.” According to Xu Xin, a professor at the Beijing Institute of Technology Law School, it is common in China for the opinions of criminal defense lawyers to be subject to the will of the judicial and law-enforcement au-

Chen Zhaohai, Chen Jianyang’s father

thorities, including the procuratorate, the courts and the police. “Despite the amendments made to the Law on Lawyers in 2012 to better protect the rights of lawyers, the situation has seen no significant improvement. It is still very hard for lawyers to access case files, or to meet with their clients. Particularly in [politically] sensitive cases, defense lawyers are forbidden to meet their clients or review their case files until just a few days before the opening of the court session,” Xu Xin told the NewsChina reporter in a recent interview. “The rights of lawyers are not guaranteed, and this is one of the major reasons for erroneous verdicts and unfair sentencing on the part of the court.”

Forced Confessions?

The emergence of the new proof con-

cerning the 1995 murder-robbery case has touched off heated online discussion, particularly since it brought to mind two equally astonishing cases of false imprisonment. In May 2010, 57-year-old Zhao Zuohai, a man who had served 13 years in prison for murder in Henan Province, was freed when his alleged victim turned up alive. It was proved that the police had used torture to extract Zhao’s confession, and Zhao later received compensation of 760,000 yuan (US$120,000) from the government. She Xianglin, of Hubei Province, received 420,000 yuan (US$67,000) compensation and was released in 2005 after spending 11 years in prison for the murder of his wife, who was later found to be alive. She Xianglin also alleged that he had been tortured into making a false confession. The new evidence in the case in Hangzhou has caused many to suspect that police extracted the five men’s confessions using torture. “They refused to confess to the crime at the first court hearing, and they all took off their clothes to show the wounds from having been beaten,” Tian Yongxiang, elder brother of Tian Xiaoping, one of the five suspects, recalled to NewsChina what happened at the court in 1997, claiming that the five were tortured at their police interrogation. Lawyer Wang Jianjun said to the reporter that he could not remember clearly if the defendants had showed their wounds in court, but he said that in the 1990s, he had more than once seen suspects undress themselves to show the judges their wounds, implying that police torture was common practice at the time. Tian Yongping, another elder brother of suspect Tian Xiaoping, told NewsChina that while visiting his brother in the detention center, the latter told him that they had been beaten by “someone,” and had finally confessed to the robbery and murders. Tian Yongping also recounted the scene at the court where all five took off their clothes to show the scars. “When I saw the scars, I reasoned that they could not fight each other in the detention center, so there must have been another cause for their injuries,” Tian Yongping added.

Repercussions

“In contrast to the Zhao Zuohai and She Xianglin cases, now only one of the two murCHINA WEEKLY I March 2013


CHINA WEEKLY I March 2013

Photo by Li Qiang

Chen Jianyang’s father still keeps the notice informing him of his son’s imprisonment for murder, issued December 5, 1998

Photo by Zhan Xiaodong

der-robbery cases in 1995 has been proven not to have been perpetrated by the five. So a simple correction rather than a complete turnover of the original judgment is expected,” the source from the Zhejiang Higher Court told the NewsChina reporter. The court said the newly discovered proof was related to the incident on March 20, 1995, and that it had organized a panel of judges to review the case files, investigate the facts and re-examine the five inmates. The investigation is expected to last three months, and the result will be made public at that time, the court said. Yet it remains undecided on whether or not it will launch a re-examination of the August 12, 1995 robbery-murder case involving the same five suspects. Wang Jianjun, the defense lawyer, told the reporter that the new evidence obtained by the police indicates that at least one of the two robbery-murder cases ended injustice. “Damage has been done to the five convicts, mentally and physically,” he said. Since the exposure of the She Xianglin and Zhao Zuohai cases, in which torture was used to extract confessions, China has taken gradual steps to address police brutality. In the past few years, China has released guidelines that define specific acts of torture for which police can be prosecuted, in an apparent attempt to rein in such abuses. Crucial amendments were made to the Criminal Procedure Law as recently as March 2012, including various major improvements on the previous version, last revised in 1996 (see NewsChina, November 2011: “Whose Law Is It Anyway?”). For example, in the chapter on evidence collection, obtaining confessions through torture is expressly prohibited. In the chapter on defense, it is made clear that the suspect has the right to engage the defense lawyer as early as the investigation stage, and the procedure for lawyers to meet with suspects and consult documents has also been improved and streamlined. However, while the acknowledgement of these problems is in itself a breakthrough, a sound accountability mechanism to prevent miscarriages of justice is still non-existent in China, according to Professor Xu Xin. Since the Zhejiang Higher Court began its review of the 1995 cases, Tian Weidong,

Zhejiang Higher People’s Court, which is reviewing Chen’s case

one of the five convicts, has reportedly been released from prison. At press time, the other four are expected to be released in early February. “I have been busy since getting out of prison on January 10, and I need to have my local residency registered, buy new clothes and organize everything necessary to start over again,” said Tian Weidong, now 41. “I’m still at a loss to figure out who I am, much less

how others will see me.” While Tian may have finally emerged from jail, China’s judges retain the right to overrule defence lawyers, no matter how persuasive their cases may be. With conviction rates an important factor in judging local justice system performance, those with the power to hand down prison sentences have little incentive not to convict the first people they find.

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society

New Lanzhou Project

Removing Mountains Thirsty for land for lucrative urban development projects, the Lanzhou city government plans to level over 700 mountain tops around the city, regardless of the financial and environmental risks By Qian Wei and Xie Ying

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hen the temperature drops to three degrees Fahrenheit, most of China’s construction companies pack up their equipment and suspend work. However, this winter in Lanzhou, capital of the northwestern province of Gansu, the noise of trucks, bulldozers and excavators roars out across the countryside, as the machines hack away at the region’s looming mountaintops. This is the site where a new urban area is expected to spring up on land reclaimed by a project that aims to level the region’s mountains. Li Ding, a researcher in human geography at Lanzhou University, stepped onto the flattened ground, only to see his foot disappear entirely into the piled dirt. He checked the altimeter in his watch and noted the reading: 1,700 meters above sea level. “This means the height of the mountain has been reduced by about 100 meters,” he told NewsChina. According to the program, initiated in October 2012 with the approval of the Ministry of Land and Resources, the first phase of construction will be completed by 2016, by which time over 700 mountaintops will have been leveled, yielding around 25 square kilometers of precious new land.

Land Shortage

Bordered on all sides by mountains, Lanzhou, a city squeezed into a narrow 50-kilometer strip of land along the Yellow River, has been suffering from a severe shortage of usable land for years. The city’s

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airport, for example, had to be built 75 kilometers from the downtown area. The surrounding mountains choke the city’s airflow, giving rise to pollution so serious that some joke that Lanzhou is invisible on satellite images. For the past five years, Lanzhou has remained one of the poorest cities in the country, while its housing prices have continued to keep pace with China’s first-tier cities. Limited urban space has resulted in traffic jams, making it the only city in the country where even taxis are subject to city traffic rules that restrict some vehicles in China’s big cities from traveling on certain days. “At present, only 1.3 square kilometers of land is available each year for urban construction in Lanzhou, the smallest area of any city throughout the country. Given the current pace of urbanization, Lanzhou will have no land for construction within five years,” Li Changjiang, vice-director of the Lanzhou Land Resources Bureau, told the media. In fact, Lanzhou began leveling mountains as early as 10 years ago, with the launch of the government’s Daqingshan Project in May 1997. The project aimed to tackle air pollution by removing the 1,689-meter-high Daqingshan Mountain to the east of the city, freeing up 2 square kilometers of construction land in the process. However, the project was abandoned halfway when funding sources dried up. In the following years, Lanzhou tried several similar yet smallerCHINA WEEKLY I March 2013


Plateau. The future New Lanzhou will feature both aqueous cape and desert-oasis landscapes, as elements of both Venice and Las Vegas will be incorporated into our project,” he added.

Photo by Ma Jun

Dubious Returns

scale programs, until Zhang Jialiang, a land reclamation manager in the city’s Chengguan District, paid an official visit to Hong Kong. “Hong Kong reclaimed an airport from sea, why don’t we reclaim land from our barren mountains?” he reportedly proposed at a government meeting upon his return, causing concern among the city’s leadership. In 2004, the Lanzhou municipal government kicked off its Dalanggou Project, planning to turn a total of 41 square kilometers of mountains to the north of the city into the country’s largest man-made plain. The project was aborted soon after, for undisclosed reasons. Yet, despite repeated failures, the government, pressured by the worsening scarcity of land, never completely abandoned the concept of land reclamation. After a string of development companies dropped out after submitting their draft plans, Pacific Construction, a private company known for building public works and infrastructure, took up the challenge. The reclamation effort was given a rather grandiose new name: the New Lanzhou Project. “Pacific will input a total of 70 billion yuan (US$11.1bn) in the project, with first-phase investment amounting to 22 billion yuan (US$3.5bn),” Yan Jiehe, head of Pacific Construction, told NewsChina, revealing that the program would proceed in several stages, including reclamation, forestation and infrastructure construction. “Pacific will be the first company to build a new city on the Loess CHINA WEEKLY I March 2013

Despite Yan Jiehe’s grand designs, the “New Lanzhou” project, in the eyes of many locals, is no different from the Daqingshan Project, which, they say, was simply an effort to fill official pockets by selling off the reclaimed land to property developers. Many locals are even unclear about where exactly this “new city” is to be located. According to official Gansu Province statistics, Lanzhou is home to two national-level and over 10 provincial-level industrial development zones, most of which deliver lackluster economic returns and have poor development prospects. The once-promising Daqingshan Development Zone is now a ramshackle street market. “Lanzhou’s Daqingshan Project should be a cautionary tale for policymakers…we cannot jump rashly into any construction project, especially in the country’s western regions, which are so poor that they cannot afford to waste a single penny,” said a commentary in the People’s Daily in 2000. Yan Jiehe, president of Pacific Construction, tried to ease such worries, citing Pacific’s “build-transfer” model, meaning that the local government would pay nothing up front, with Pacific covering the cost of the project before selling the reclaimed land back to the government upon completion, when land prices are expected to soar. “The cost of the project will be fully shouldered by Pacific, so the government is protected from any financial risk,” Yan told NewsChina. “Once the land is reclaimed, the government will benefit greatly from post-reclamation development. It is indeed an ‘other people’s money’ project for the government,” he continued. Yan told the media his expected return on the first phase of construction was about 50 percent, about 20 percent per year, and Pacific would make 10 percent profit. “Ten percent is an absolute minimum, given such a huge investment,” he said. According to Yan, Pacific itself will bear 75 percent of the total investment, with the other 25 percent coming from the pension funds of Dubai and Qatar, Pacific’s longterm cooperators, according to Yan. The media are not so optimistic. Many have referred to an incident in 2007, when Pacific was brought before the courts for defaulting on its capital supply obligations. Yan was ordered by the court to sell 12 of his apartments to pay off his bank loans. Although Yan claims that Pacific is now financially robust enough and free from any debt, he admits that if local governments change their construction policies or fail to settle their invoices in time, Pacific would suffer huge losses. A Pacific business report shows that a number of the company’s joint projects with local governments, most of them worth several million yuan, have been making losses for the past two years. “There is no obstacle to Lanzhou reclaiming land from its mountains, as long as the plan is tethered to finances and resources,” Liu Fuyuan, former director of the micro-economics institute under the National Development and Reform Commission, China’s highest economic body, told NewsChina. “It is quite risky for a business to blindly follow local policy, which is liable to change at any time,” he warned.

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Photo by Xinhua

society

Photo by Ma Jun

Affordable housing under construction in Lanzhou, Gansu Province, December 7, 2012

A worker at the New Lanzhou Project site, Lanzhou, Gansu Province, December 27

However, Yan Jiehe said he has full confidence in the Lanzhou government’s reclamation policy, which he believes is supported by the central authorities’ strategy of stimulating domestic demand through urbanization. “Many other local governments have invited us to participate in similar programs…and Lanzhou will demonstrate a good example for the world,” he told NewsChina.

Ecological Nightmare

Compared to Yan Jiehe’s high profile, the Lanzhou officials are much more cautious about their public remarks on the subject, and

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few accept interviews. An anonymous local official told Time Weekly: “It is hard to say anything specific, since many details have not yet been finalized.” According to Jiang Juntao, the program’s general designer, the precise details of the New Lanzhou project are still under debate. “The final scheme has not been approved yet, it has not even been decided exactly which mountain tops are to be removed,” he told NewsChina. “Meanwhile, a panel of experts is still examining the ecological impact of the project.” Li Changjiang, the local land resource official, admitted that the developer has now begun first-phase construction, even before experts have concluded their environment assessment. “The part of the project on which work has already begun is a pilot project that is permitted to begin [before all the assessments are complete],” he explained. Meanwhile the written reply from the Ministry of Land and Resources to the New Lanzhou program states that “no pilot program should be commenced before the relevant departments finish their assessment on its environment and ecological impact.” Yan Jiehe does not think the environmental impact will pose a big problem. “Lanzhou’s environment is already bad enough, how could it be any worse?” he told NewsChina. On the contrary, he believes, the shaved-down mountains will allow for better airflow, and thus ease the city’s pollution. Ecologists disagree. Zhang Mingquan, an environmental professor at Lanzhou University, told our reporter that his team had conducted airflow research on several dozen mountain tops around Lanzhou, and found that leveling them would have little effect on airflow – in fact, he believes that the process would create a heightened risk of landslides. “Lanzhou frequently sees airborne dust and mudslides. The gullies and ravines on the surrounding mountains now serve as natural outlets, but what if the reclamation clogs these ‘safety-valves?’” he said. Yang Yongchun, another environmental professor at Lanzhou University, also expressed his concern about the program’s safety, as he revealed that Lanzhou’s airborne dust and mudslides are caused by the soil on its mountains, which is generally too soft to build on. Although Li Changjiang, the land resource official, has promised that the soil from reclamation will only be used for forestation, Yang Yongchun called for the government to “conduct a very careful review and examination” of the program. “All the hidden dangers and risks can be eased by technical means, but the crux of the matter is whether and how we carry out such [technical] measures,” he said. According to Yang Yongchun, Lanzhou previously had its fingers burnt in a similar endeavor. Several years ago, the local government filled in a Yellow River tributary in order to free up land for construction, only to find that the soil around the tributary and the subterranean water, rapidly salinized. In order to protect the city’s sole source of drinking water, the government eventually had to re-excavate the filled river. “The ecological impact of an engineering project usually will not show up for several years. That is why opposing voices against a project often sound feeble and powerless when the project is about to begin,” he told NewsChina.  CHINA WEEKLY I March 2013


Train Tickets

Spring Fever Nothing tests the innovative capabilities of the Chinese people than the rush to secure precious train tickets home for the Chinese New Year vacation. As hundreds of millions of Chinese take to the rails, ongoing supply shortages continue to stoke resentment toward the powerful Ministry of Railways

Photo by CFP

By Yuan Ye

CHINA WEEKLY I March 2013

Guangzhou Railway Station is crammed with migrant workers heading back home over the Chinese New Year rush in 2008

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society

O

n January 12, a migrant couple These public outcries come every year as move all barriers to the smooth purchase of in Foshan, Guangdong were ar- hundreds of millions of Chinese vie for a train tickets during the Spring Festival rush. rested after police discovered limited number of train tickets prior to the This pledge has been made before. In they had been illegally selling train tickets Spring Festival rush, the largest annual hu- 2007, the MoR promised to have solved the to other migrant workers, adding a 10 yuan man migration in history. ticket supply issue by 2010. In 2009, this was (US$1.6) service charge to each purchase. The MoR, despite opening hundreds of adjusted to 2012. In 2011, the deadline was However, a public outpouring of sympathy new lines, investing heavily in high-speed extended to 2015. for the couple, who defended their actions rail, moving its bricks-and-mortar ticket While online retail has largely eliminated by claiming that, with neither Internet access purchase and distribution system online and the vast queues which formerly appeared nor free time to stand in line to acquire these releasing batches of tickets incrementally in outside official ticket resale agencies and at all-important pieces of paper, there was no the weeks leading up to the rush, has never railroad stations across China in the run-up other way for impoverished migrant workers managed to escape blame for the continuing to the festival, many in sub-zero conditions, to get home. difficulties faced by travelers during this brief it has added a whole new raft of problems However, while rogue ticket agents were period. All the goodwill the Ministry has to the MoR to-do list. While the physiearning public support, China’s powerful earned for improvements made to China’s cal queues may have died down, demand Ministry of Railways (MoR) found itself sub- vast rail network, the world’s longest and remains as strong as ever. On January 15, ject to intense scrutiny. Its recently launched most-trafficked, evaporates over the course of 2013, 12306.cn became the busiest and online ticket purchasing service, funneled a month, as, regardless of the number of in- most overloaded website in the world, with through the website 12306.cn, was plagued novations or restrictions introduced, millions the State-owned Xinhua News Agency reby technical faults as millions of people com- still fail to secure a ticket home. porting 1.51 billion hits on the website on peted for tickets. that day alone. On January 22, amid a Of these 1.5 billion, 17 milHow are the Chinese getting their hands on train tickets? cacophony of consumer lion users finally managed to complaints, two purchasing log in, purchasing over 2.6 Automated ticketing machine contracts between the MoR million tickets, or one ticket and one of its suppliers were secured for every 577 hits. disclosed online by an invesWhen ticket agents and teletigative reporter named Zhou sales are factored in, a total of Xiaoyun. Zhou used previous6.95 million train tickets were 4.5% Over the counter ly publicized documents and sold on January 15, meaning independent sources to show 38.2 percent of these were that the MoR had spent over online sales. Also, the traffic MoR 35.9% 500 million yuan on 12306. to 12306.cn had seen a daily website cn, the website being targeted increase by 20 percent in the 52.1% by disgruntled would-be travweek before January 15. With elers. word getting out that tickets 7.5% Consumers reported error were disappearing fast, the messages whenever they tried traffic was growingly heavier in to access the MoR website. Fithe following days. nally gaining access after severAccording to a Xinhua inTelephone al hours, More often than not terview with Wei Ruiming, all tickets would be sold out. vice-director of the Operations Other news outlets reported Department of the Transport that some enterprising hackers had managed 1.51 Billion Hits Bureau of the MoR, this year’s Spring Festival The MoR has so far failed to deliver on re- passenger traffic volume will hit 3.4 billion to bypass the online booking system’s firewall and reserve tickets before they officially went peated pledges to eradicate the competition journeys, equivalent to everyone in China for tickets during the Spring Festival rush. taking two separate journeys. 220 million of on sale. Those who attempted to book their tickets According to a 2011 interview with vice these journeys will be by rail, an increase of through the MoR telephone booking system minister Wang Zhiguo, the Chinese govern- 4.6 percent on 2012. With this year’s Spring Festival peak travel fared little better, with operators unreachable ment’s 12th Five Year Plan, which officially concludes in 2015, included a pledge to re- season lasting for 40 days – from January 26 for days in some cases.

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CHINA WEEKLY I March 2013


to March 6, 2013, with most journeys taking place during the two weeks surrounding the day of the Lunar New Year, 6.95 million ticket sales per day is simply not sufficient to meet demand.

Photo by CFP

Photo by cns

avoiding waste. China’s overreliance on its floating population is also seen as a major contributor to Spring Festival travel blues. Su Hainan, vice chairman of the China Association of Labor Studies, said that once the maScarcity jority of migrant workers As increasing numbers of manage to settle in their Chinese people have found adoptive cities, the gridlock themselves with the means that currently cripples Chito travel, particularly with People line up to buy tickets in Hefei Railway Station, Anhui Province, January 16 na during public holidays ticket prices deliberately will become a thing of the kept low through favorable past. “When the urbanizagovernment policies, China’s rail network has tion rate reaches at least 70 percent, the floatstruggled to keep pace with the market. ing population will be reduced by half. Thus In the early 1980s, less than two million the pressure of Spring Festival traffic will also migrant workers, the people most likely to be reduced,” he said. travel over the Lunar New Year, resided in The MoR itself, however, remains a popChina’s cities. In 1995, this floating popuular outlet for public grumbles. Founded lation had reached 80 million. According in 1949, the MoR has long been under atto data released by the National Population tack, accused of acting as an “independent and Family Planning Commission, by 2011, kingdom” in relation to other ministries. An the total migrant population in China’s cities administrative body with its own judiciary, stood at 230 million, meaning that 17 perpolice force and paramilitary wing, the MoR cent of the country’s population would likely also operates as a monopoly enterprise with return to their respective birthplaces during little oversight from higher agencies. With the compulsory New Year vacation. two million employees, the MoR runs hosAs this floating population has boomed, pitals, kindergartens, schools, factories and train tickets, once relatively easy to acquire crematoria on top of its own police, courts even at peak times, have dried up. The MoR and procuratorates. has adopted certain measures to adjust the Major restructuring of the MoR, sepamanagement of what is arguably China’s rating its administrative functions from its most in-demand seasonal resource. In 2012, commercial functions, is seen as the ultimate a trial scheme launched in 2010 which resolution to many of its problems. Already, boy falls asleep on his father’s lap in the quired travelers to present ID when purchas- A the MoR has courted private investment in clogged aisle of a train bound for Chengdu from ing rail tickets went national, dealing a major Qingdao, January 31 its high-speed rain network, with minister blow to China’s vast network of rail ticket Sheng Guangzu stating at a January 17 Nascalpers. tional Railway Work Conference that 2013 As early as 2001, the MoR had also flirted continue to argue for a MoRe market-ori- would be the “year of reform” to push China’s with allowing ticket prices to fluctuate dur- ented floating fare system. Economist Mao railway toward “all-round market-oriented ing the Spring Festival peak, with most sell- Yushi is a particularly high-profile advocate development.” Talk of a merger with a new, ing at a 15 to 20 percent markup. However, for marketization. He argues that simply beefed-up Ministry of Transportation is also this did little to reduce traveler numbers, and increasing capacity to cope with Spring surfacing in some media reports. instead resulted in accusations that the State Festival demand will only cause the MoR However, breaking up one of China’s most monopoly over rail tickets ran contrary to the to struggle with overcapacity for the rest enduringly powerful institutions will take public interest. In 2007, the MoR withdrew of the year. Instead, in his opinion, a more time. Until then, the chaos of the Lunar New the policy. flexible and comprehensive fare pricing Year will continue to test the patience and However, some Chinese economists system would reduce pressure while also ingenuity of China’s millions of travelers. CHINA WEEKLY I March 2013

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society

Hukou Fraud

Invisible Billionaires A spate of scandals regarding the hidden real estate of government officials and executives of State banks, allegedly purchased using false identification, has caused a public backlash By Yu Xiaodong

A

s far as most ordinary Chinese people are concerned, the hukou, the country’s household registration system, is infamously rigid. Dividing the population into urban and rural residents, it serves as a platform for the issuance of identity cards and passports, entitlement to public services, and a major tool in the enforcement of the One Child Policy, requiring a long list of documents and various lengthy procedures to either register a newborn or to relocate. Given the system’s controversial nature, it is no surprise that a series of hukou fraud scandals in recent months, mostly involving government officials and State-owned enterprise executives with large real estate holdings incongruous with their official salaries, have infuriated the public.

ID Fraud

Among the dozen or so cases to have come to light recently is that of Zhai Zhenfeng, former director of the real estate bureau of Erqi district in Zhengzhou, capital of Henan Province. Following rumors on Weibo, China’s Twitter, an official investigation found that four of Zhai’s family members had two separate hukous and national ID cards each. While official records showed that Zhai himself did not own any real estate, a total of 29 properties were found under the IDs of his wife, adult son and daughter. Zhai is also accused of granting the majority of government real estate development contracts issued during his tenure to a company owned by his wife.

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Other cases include Zhang Yan, the wife of a police officer and herself an anti-corruption official in Shanxi Province, who was found to have two hukou and two IDs, and to be in possession of more than a dozen real estate properties. In Guangdong Province, Zhao Haibin, a township government official, was found to have acquired 192 properties with two different IDs, an astonishing number given his comparatively low position and official salary. In north-eastern Heilongjiang province, Zhang Xiuting, a senior anti-corruption official, was found to have bought 14 houses in his wife’s name and then divorced her, apparently to hide his paper trail. By far the most sensational case is that of 49-year-old Gong Aiai, an executive at the State-owned Agricultural Bank of China in Shenmu, a coal-rich county in Shaanxi Province. Nicknamed “house sister” by netizens, Gong was found to have four hukou attached to four different IDs in three provinces, including one in Beijing, where she owns 41 properties reportedly totaling over 1 billion yuan (US$160 million), along with millions of yuan of investment in various enterprises. While Gong argued that her assets came from proceeds from her “family businesses,” it is suspected that her wealth was mainly the spoils of her role as an executive of a State bank with deep ties to the booming coal industry. Coming at a time when China’s new leader Xi Jinping has heavily ramped up anti-corruption measures since taking the reins of the Communist Party last November, the scandals have provoked a strong public backlash. CHINA WEEKLY I March 2013


Four different ID cards used by Gong Aiai

For many, the scandal has simultaneously laid bare many of China’s domestic problems, such as the huge wealth gap, widespread corruption and spiraling property prices, exposing a sharp contrast between those with power and those without. While many Chinese people are often denied public services, cannot afford even a modest apartment and have few prospects in life, government officials with multiple hukou and dozens of properties have inevitably caused an uproar.

Sluggish Investigation

Despite high-profile anti-corruption rhetoric among the Party’s new leadership, local authorities have been rather slow to react. The response in most cases has simply been to remove the officials in question, avoid media attention and offer little information regarding either their investigation into the ID fraud or the source of the income. In the case of Gong Aiai, the police in her hometown of Shenmu tried to shrug off the case when she was initially found to have only one false identity. The local police explained that Gong’s additional hukou was “due to a typo,” and blamed a deceased police officer for the mishap. Only when Gong was found to have two other identities and a large number of properties in Beijing, prompting the local police to launch a formal inquiry did the Shenmu police move to investigate. According to a statement released by the Ministry of Public Security (MPS), seven people, including four police officers in Shaanxi and Beijing, have been detained for helping Gong obtain her multiple identities. In the same statement, the MPS claimed that it had punished a total of 121 police officers for hukou fraud in recent years. However, given the numerous scandals over recent months, the problem may be far more serious than the authorities are prepared to admit, perhaps the real reason behind the hesitancy of local authorities to make a serious investigation. In Shenmu, Gong’s hometown, a coal mine owner who asked to remain anonymous given the sensitivity of the issue, told NewsChina that having multiple identities is very common among local businessmen and officials. Yang Liping, Gong’s fellow bank executive, for example, is also reported to have multiple hukous, as well as 12 properties in Beijing. “You don’t need to have ‘special connections,’ as there is an estabCHINA WEEKLY I March 2013

Hot Property Li Yunqin (“House Auntie”) Retired senior engineer with a State-owned housing developer in Guangzhou Owns 24 apartments totaling 1,600 square meters in Guangzhou Local government verified that Li’s real estate was purchased with legal income Zhou Weisi (“House Grandpa”) Neighborhood committee official in Shenzhen Reportedly owns 76 properties and 20 luxury cars Detained and put under investigation in late 2012 Gen Xiaojun Former head of Bureau of Landscape and Forestry in Huangshan, Anhui Province Owned 38 properties Received a life sentence in May 2010 for embezzlement and accepting bribes Hao Penjun Former head of coal mining administration in Puxian, Shanxi Province Owned 35 properties Sentenced to 20-year imprisonment in August 2010 Guan Jianjun Former senior police officer in Yangquan, Shanxi Province Co-owned 27 properties and ran an organized crime ring with his younger brother Sentenced to 15 years in prison in January 2012

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Photo by Xinhua

society

Shenmu County, Shanxi Province

and pass undetected through China’s existing anti-corruption and border controls. According to a 2010 report by the State-owned Xinhua news agency, more than 4,000 officials have fled overseas over the past 30 years, each taking with them an average of more than 100 million yuan (US$16m). It is believed that many fled the country with illegally obtained passports. Gao Yan, former Party secretary of Yunnan province who fled to Australia in 2002, for example, was found to have three IDs and four passports under at least three different names. For this reason, when Gong went missing for 19 days after reports of her wealth began to break online, it was rumored that she may have fled the country, until she was arrested on February 3 on a charge of “forging official documents and stamps.”

Photo by CFP

Property Declaration

Photo by CFP

Construction of a building in Xi’an with investment from Gong Aiai has ceased, January 24, 2013

One of Gong Aiai’s properties in Beijing has been rented to a company as office space, January 21, 2013

lished black market where you can simply buy one,” said the coal mine owner. He added that the price of a hukou varies according to the level of public services available where it is registered. “For example, the price of a hukou in central Beijing last year was 800,000 yuan (US$128,000), while a hukou in Shanxi province can cost only thousands, even hundreds of yuan.” he said. The prevalence of hukou fraud may also explain how corrupt officials have been able to flee overseas, often with large sums of money, a chronic problem for China’s anti-corruption efforts. Multiple hukou allow an individual to hold multiple passports under different names,

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As the scandals lead to increasing public pressure on China’s new leadership to step up its anti-corruption efforts, there are renewed calls to implement a property declaration system for government officials, which some argue could provide an effective solution to China’s corruption problem. Experts are arguing for the establishment of a unified national property ownership database, making it easier to track down an individual’s property ownership status. Currently, property ownership databases are city-specific, and in some cities records have not yet been transferred to computers, meaning that finding out how many properties someone owns means scouring the systems of every city nationwide. In fact, a systemic upgrade has been on the agenda for several years. A national information database on property ownership covering 40 major cities, scheduled in China’s latest Five-year Plan for completion by June 30, 2012, has yet to pick up momentum. Currently, the system only includes six cities. It has been widely reported that the project has met with strong resistance from local officials, who are afraid that such a system will be used to expose their illegal assets. Gong Aiai’s properties in Beijing, for example, were revealed after the Ministry of Public Security authorized the media to consult the database. Following the scandals, many local governments are reported to have tightened their control on “unauthorized search” over property ownership. With Gong Aiai now in custody, the People’s Supreme Procuratorate has announced that it will be overseeing the handling of the case. The Ministry of Public Security has pledged to step up supervision of the household registration system and correct false or duplicate records. Although new hukou scandals continue to come to light, there is still very little to suggest that the resulting public outrage will cause any systemic change, or do anything to curb the country’s corruption problem. CHINA WEEKLY I March 2013


CHINA WEEKLY I March 2013

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society

Anti-Waste Initiative

An Affordable

Feast

Thanks to a ban on extravagant official banquets, times are getting tough for businesses that used to profit from the government’s expensive tastes By Min Jie and Liu Ziqian

Z

hou Shaoqiang, former Party secretary at a State-owned enterprise (SOE) in Zhuhai, Guangdong Province, picked exactly the wrong moment to show off his refined taste in wine. At a feast hosted by Zhou at a local private members club in early January, the 12 bottles of vintage French wine on the table struck something of a contrast with strict austerity measures introduced by China’s top authorities less than a month earlier. Unfortunately for Zhou, one of the 16 other officials at the table took a photo of the feast and posted it on WeChat, a popular instant messaging app in China. The picture, captioned “Hangover worries after 12 bottles,” showed a bleary-eyed Zhou behind an array of empty bottles. The photo soon went viral, infuriating China’s netizens, including a wine specialist who estimated the total value of the bottles to be around 80,000 yuan (US$12,800), equivalent to the annual income of a Chinese whitecollar worker. The disciplinary inspection commission, the Party’s anti-corruption arm, launched a probe into the case, and revealed the cost of the dinner (not including the wine) to be 37,517

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yuan (US$6,000). The sum was large enough to cause Zhou to be removed from his post in early February. SOE bosses and government officials around the country have been erring on the side of caution since the launch of the “eight rules and six bans,” a set of regulations issued at the end of last year by Xi Jinping, the new Party general secretary who took office early November, which demand that officials at all levels be more frugal with taxpayers’ money. Lavish official dinners, extravagant receptions and even overly flowery speeches have been banned.

Big Chill

The new rules have brought a chill to various industries that facilitate government ostentation, such as conference hotels, and dealers of cigarettes, liquor, tea and even flower bouquets. December and January, in the run-up to the new calendar year and Chinese New Year, are normally the busiest months of the year for conference hotels in China, as most government departments and SOEs tend to host lavish celebrations and dinner parties. In the past, it was so difficult to book a venue at a confer-

ence hotel that reservations for January often had to be made six months in advance. Zhang Hong, marketing director at a major conference hotel in suburban Beijing, said that more than 70 reservations had been cancelled in January this year, resulting in losses of 20 million yuan (US$3.2m) for the hotel. Zhang said that government departments and State-owned enterprises normally accounted for more than one fifth of their revenue, and if the “eight rules and six bans” were to be permanent, China’s conference hotels would be hit hard. One such hotel in Shijiazhuang, capital of Hebei Province, used to play host to 700 conferences a year, about 500 of them sponsored by local government departments, according to Wu Shaoyuan, deputy director of the Alliance of China Conference Hotels (ACCH). Income from government conferences accounted for about half of the income for these hotels in 2011, according to a report by the ACCH. Sales of premium liquor brands have also slowed since the “eight rules and six bans” were launched. Prices of Moutai and Wuliangye, China’s CHINA WEEKLY I March 2013


two top liquor brands, have been dropping since the regulations were formulated, dragging their share prices down with them. According to the Beijing News, government departments, SOEs and the military count for more than half of consumption of premium liquor brands nationwide. Both Moutai and Wuliangye have seen dramatic revenue growth over the past decade, but many are now predicting setbacks for the two companies. Cigarette dealers have also felt the pinch. Zhao Pengjie, a high-end tobacconist, had stocked up on premium cigarettes long before the end of the year, in anticipation of the heightened demand from conferences and meetings. But this year, bulk orders from his government clients failed to materialize, throwing his yearly budget into chaos. While dealers of long-life products like liquor, tobacco and tea still have time to adjust their business strategies, florists’ fortunes are withering just as quickly as their chief commodity. Jia Xuebin, a florist who supplies several government departments and SOEs, saw average annual sales of around 3 million yuan (US$481,000) over the past few years. This CHINA WEEKLY I March 2013

year, his business has been stagnant. Few of his old customers have placed orders – the new regulations have forced many to re-think their traditional ornate flower displays on their conference stages. Worse still for Jia, some of his government clients have refused to pay for flowers purchased for last year’s conferences. “If they ultimately refuse to pay, I can’t even kick up a fuss,” Jia said. “We will still be looking to make deals with them in the future, after all.”

Root Causes

Huang Weiting, a researcher specializing in anti-corruption efforts with the Party central committee journal Qiushi, suggested the “eight rules and six bans” have yet to dig at the roots of dinner-table extravagance. “We need to plug the leak in the system,” said Huang. There are a variety of factors that fuel banquet extravagance. Firstly, the detailed expense ledgers of government entities are rarely made public – they draw up and execute their budgets under little scrutiny. Even more problematic, government officials rarely believe there is anything wrong with

Photo by CFP

Photo by cns

In Zhejiang Province, this year’s annual government meeting was noticeably more austere than those in previous years

Leftovers in the dining hall of the Gansu Province representative office, Beijing, January 25, 2013

throwing a lavish banquet – while corruption is illegal, squandering public money, at least technically, is not. Besides, whenever a large local engineering project is due to launch, local officials come to Beijing to lobby, and showing central government officials a good time is often an important part of this, according to Huang. This means expensive feasts, premium liquor and cigarettes. Many business deals are struck at the dinner table, and regional governments are keen to set up their representative offices in Beijing in an effort to maintain good relations with central government ministries. “In other cases, officials looking for a promotion are keen to treat visiting superiors to dinner,” Huang said. In the aftermath of the fine wine scandal in Zhuhai, all the diners, including the dismissed Zhou Shaoqiang, were made to split the dinner bill. The “eight rules and six bans” may do little to combat the root causes of dinner-table extravagance, but one group of diners certainly learned one thing: next time they sit down to an official meal, they’ll likely switch off their cell phones before the wine is served.

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economy

Retirement Care

Old Folks, New Digs By Han Yong

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Photo by CFP

As China’s senior citizens warm to the idea of paying for a comfortable retirement, the country’s nursing home industry may be on the verge of a boom

CHINA WEEKLY I March 2013


W

hen the Beijing Municipal Bureau of Land and Resources (BMBLR) announced that the details of its plan for Beijing’s first piece of subsidized land reserved for the exclusive use of senior care services would be released in early 2013, Zhu Fengbo was understandably excited. Zhu, chairman of the board at Beijing Sun City Group (BSCG), had been waiting for this announcement for almost a decade. In 2001, he applied to the government for a piece of land for the exact same purpose, but was roundly rejected. That year, Zhu started his Sun City real estate project, a housing community geared towards providing care for the aged. With the newly favorable policy, and astounding growth in Zhu’s target market, he’s unlikely to miss his chance this time around.

Needs Must

When Zhu Fengbo debuted his idea of “retirement care real estate” in 1999, it was a brand new concept for China. At the time, “elderly care” meant spending a lonely retirement in the family home, or, in a tiny minority of cases, moving to a State-run retirement home. At the time, there were three types of nursing home in China: welfare houses, retirement homes and military retirement centers. Military centers were reserved for army veterans, and retirement homes only accepted those who had qualified for State assistance. While welfare houses took in State-assisted seniors, they were also permitted to accept paying customers. Zhao Liangling, former director of the Fifth Social Welfare Institution of Beijing, told NewsChina that there were three of these welfare houses in Beijing. In 1988, the First Social Welfare Institution of Beijing became the first to launch a paid service, but failed to gain interest from its target customers. In its first two years of operation, it brought in almost no business. The problem was not the lack of a market – by the end of the 1980s, Beijing was already beginning to develop an aging population problem, with one million citizens over the age of 60. According to the internationally adopted standard for elderly care, roughly 4 to 5 beds are required for every 100 elderly members of a population. That is to say, Beijing was in need of 40,000 to 50,000 beds, and falling worryingly short. Industry insiders say that it was Chinese social norms that were keeping the country’s aged CHINA WEEKLY I March 2013

As China’s baby-boomers grow old, the senior care industry is expected to see massive growth

from moving into welfare houses. In China, a country whose traditional culture puts great emphasis on filial piety, sending one’s parents to a welfare house was an act tantamount to betrayal. Yet, as parents of China’s “only child” generation, the product of the One Child Policy, grew older, their children began to have difficulty finding the time to take care of their parents while working to raise their own children. Pressure forced the beginnings of a gradual change – to lessen the burden on their children, some elderly people decided to try the paid services at welfare houses. After running for two years, business finally began to pick up at the First Social Welfare Institution. In 2000, the State Council issued a notice encouraging the privatization of governmentowned welfare houses. Private investment was absorbed into the industry, and Zhu Fengbo’s business began to take off.

Experimentation

Born in 1957, Zhu Fengbo was the youngest of seven siblings in his family. Growing up in such a big family, he says he gained a deep understanding of the mentality of elderly Chinese people. In his opinion, the nation’s elderly would rather save their money than spend it, and those who open their wallets tend to spend money on their children rather than on themselves. With their frugal habits, most Chinese seniors would only choose to move into any sort of care home if they were unable to take care of themselves.

However, currently, nursing homes are not particularly welcoming to those who are likely to rely heavily on the care workers. Zhao Liangling explained that since most nursing homes had limited resources, they were doing their best to minimize risk. In many cases, nursing homes spend heavily on their hardware, investing most of their money in their buildings and interior decoration. In the view of both Zhao and Zhu, if the service itself is not improved in accordance with the practical needs of the elderly, this “high-end investment” was a complete waste. NewsChina found that this trend had resulted in high vacancy rates in many high-end nursing homes. At a home in Beijing charging around 10,000 yuan (US$1,610) per person per month, the vacancy rate was 90 percent. When planning the Sun City project 10 years ago, Zhu placed his emphasis on practical needs. He spent much time conducting firsthand market research – he would visit a senior citizens’ choir at weekends to ask for their advice, and consult with various experts in the elderly research departments of top universities and research institutes. In 1987, a family misfortune resulted in what Zhu calls his “lifelong regret.” When his father suffered a heart attack, Zhu took him to the hospital, before leaving to go to work. While riding the bus home from the hospital alone, his father had another heart attack, and died. Zhu blamed himself for the tragedy, and claims the experience taught him to appreciate the impor-

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economy

Over 60s in the national population (total in millions)

144.08

149.01

153.40

159.89

167.14

177.65

184.99

Source: Ministry of Civil Affairs

Elderly residents of Beijing’s Sun City Hospital perform a revolutionary drama for their neighbors

tance of hospitals and first aid care for the aged. Later, while planning his “retirement care real estate” project, he included not only a hospital, but an entire system to provide health care for old people. In 2004, the Sun City Hospital was built in the Sun City International Compound for the Aged in northeast Beijing. The first-class hospital covers an area of 10,000 square meters, with an emergency call system that ensures an emergency vehicle can reach any apartment in the complex in five minutes or less. Also, the health records of every elderly person living in the compound are kept in the emergency room, allowing hospital staff to distribute medicine accordingly. The compound itself covers an area of 300,000 square meters, of which 70 percent are residential buildings for sale, and the rest are ancillary buildings, including the hospital, a supermarket and a nursing home with beds for rental.

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In total, there are 1530 residential apartments for sale in the compound, and 1200 beds for rent in the nursing home. Zhu hopes to provide “continuous care” for the aged: apartments for when residents are healthy, hospital treatment for when their health begins to deteriorate, nursing care for when they are unable to take care of themselves, and hospice care for the terminally ill. The model has seen a positive market response. Currently, both sales and rental rates in the compound are at 100 percent. Zhao Liangling said that in the nursing homes or communities with ancillary health care facilities, the mortality rate is lower. However, with limited land resources and the high professional threshold, only slightly more than 20 percent of the 400 nursing homes in Beijing have in-house infirmaries.

Lost Time

Though a large number of China’s elderly are

notoriously frugal, others are displaying a newfound desire to spend money on a comfortable retirement. In recent years, “retirement care tourism” is gaining popularity, as Chinese people born in the 1950s begin to enter their twilight years. Zhu Fengbo and most of his siblings are among this generation. He said that having spent their youth amid the economic hardship and political turmoil of the Cultural Revolution (1966–1976), many of his generation plan to make up for their lost childhood in their retirement. Zhao Liangling told our reporter that thanks to China’s economic boom over the last few decades, this generation has a comparatively high income. Added to which, most have only one child, upon whom they do not expect to be able to rely in their old age. In Zhu’s opinion, these people have learned to spend money on themselves. Many of them like to go on vacation with friends of the same age, a phenomenon that Zhu predicts will become a major trend over the next decade. He also expects these people to move into nursing homes together, and to spend more on highquality care. He is in the process of establishing a national society of nursing homes to provide a combination of retirement care and off-season tourism. Zhao Liangling said this generation would really open up the market for aged care in China. “The current demand for aged care is mostly out of necessity. But in the future, the demand will become more and more active,” he said. The generation born in the 1950s is gigantic. With a policy to encourage birth in the first 10 years after the founding of the People’s Republic of China in 1949, the population increased from 450 million that year to 660 million by 1959. There were a total of 210 million people born in that decade. Figures from the Ministry of Civil Affairs indicate that by the end of 2012, there were 3.9 million beds for aged care in China, equal to 20.5 beds for every 1000 senior citizens. Compared with the internationally adopted ratio, this leaves a shortfall of about 4 to 6 million beds. With supply falling so drastically short of this rising demand, Zhu Fengbo will by no means be the only entrepreneur who has noticed the gap. In the coming years, the battle for the real estate market may be won or lost on care for the elderly. CHINA WEEKLY I March 2013


Investment

Telling Fortunes NewsChina gets down to brass tacks with Forbes China editor-in-chief Zhou Jiangong and top Hurun researcher Rupert Hoogewerf to ask which sectors are worth banking on in the Year of the Snake By Han Yong

change. The Internet is profoundly changing China’s modes of consumption, entertainment and communications. Concerns over energy security and environmental degradation have tarnished the gleam of the country’s economic boom. While the rapid industrialization of agriculture has enriched the dining tables of ordinary Chinese, corner-cutting and a lack of regulatory enforcement have led to a series of stomach-turning food safety scandals. The real estate industry, once a beacon of hope for frustrated private investors frozen out of other sectors has now become a breeding ground for speculation and graft. The demographic challenge of an aging population has also materialized before per capita GDP has reached a level to adequately compensate. While China might now have more millionaires than anywhere else on earth, some believe that the gravy train may be grinding to a halt. Even those who have made their CHINA WEEKLY I March 2013

NewsChina sat down with Zhou Jiangong, editorin-chief of Forbes China magazine, and Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, a monthly periodical best known for its “China Rich List,” to try to get a glimpse of China’s future. NewsChina: Under what conditions can industry produce large numbers of business tycoons? Zhou Jiangong: First and foremost, there needs to be a large market. Secondly, you need favorable conditions for start-ups. Thirdly, the market should be in its adolescence. A mature market is comparatively stable, which means less opportunities for cultivating the nouveau riche. In China, market access is still a problem for aspiring entrepreneurs. Let’s make a comparison between China and India. In India, many millionaires appear in the fields of energy, telecommunications, aviation and finance. However in China, private access to these sectors is restricted. Rupert Hoogewerf: In my view, a business’s Photo by Getty

T

he only thing certain about China’s coming century is

fortunes from the country’s three-decade economic boom are now looking for a safe, lucrative place to invest their capital. The economic and social challenges facing China in the coming years are both immense and unprecedented. Which way now for China’s first and second generation of entrepreneurs?

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Photo by CFP

Photo by CFP

ECONOMY

Rupert Hoogewerf, chairman and chief researcher of the Hurun Report

Zhou Jiangong, editor-in-chief of Forbes China magazine

potential consumer base is also very important. Any industry with huge potential for consumption is one which can breed tycoons.

and consumption significantly. What do you think? ZJ: Many people in the solar energy sector have fallen off the rich list. I’m not very optimistic about organic agriculture either. In many parts of China, the earth, water and air have all been polluted. In the strict sense, there is no organic agriculture in China. To produce real organic food, the soil needs to be prepared without pesticides – an expensive process. The Chinese market is unlikely to be able to afford even more expensive food on a large scale.

NC: What sectors in China measure up to these criteria, in your opinion? ZJ: We may draw a comparison between China and the United States. Many people think today’s US could be tomorrow’s China. India is also an important reference point. Its population size and development level are similar to China’s. I believe real estate is still a very important sector, plus its related industries. In India, the real estate sector has generated plenty of tycoons, while in America the number is much smaller due to the more advanced state of urbanization. The urbanization process in China will still continue for some time, which will directly benefit these industries. As in America, service and retail sectors come as a by-product of urbanization, and these sectors also create wealth. In China, these sectors are a good source of start-ups. With the savings rate still high, finance and investment will continue to be important. Pharmaceuticals and healthcare will develop as the population ages – in this respect, India is more developed than China. The Internet is also a promising area. It’s still the most active sector in terms of creating

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millionaires. New concepts and novel things keep emerging - mobile Internet, cloud computing and megadata. Artificial intelligence may be next. One sector is difficult to be judged – traditional media. America and India have plenty of media tycoons, but in China it’s not clear in which direction the traditional media is heading. Restrictions on the media have stayed in place. Were this area to open, however, it could be a key growth sector. RH: I’m optimistic about the service sector, media and online retail. Finance is also a promising area. Many children of China’s first generation of entrepreneurs are studying finance abroad. They believe that without good financial knowledge, one would not be able to grow a business There’s an expectation that in the future, many entrepreneurs will switch to the financial sector. I’m also optimistic about the Internet. Across the globe, online retail is leading the closure of many brick-and-mortar stores. When the Internet and, say, biological science are integrated, there’s great potential for growth. The same goes for healthcare and education. NC: The potential of new energy and organic agriculture is a popular talking point in China right now. Many believe these two sectors will influence China’s modes of growth

NC: We have noticed that many in the manufacturing sector are now shifting into investment sector. It seems that the first-generation rich are all now engaged in investment. ZJ: This does happen in some areas of the manufacturing sector, especially in labor-intensive industries and the industries that rely heavily on exports and export tax rebates. You cannot turn a blind eye to the phenomenon in Guangdong and Zhejiang, where private manufacturers have either gone bankrupt or switched to investing in other sectors with their existing capital. Younger-generation entrepreneurs, however, don’t seem keen on manufacturing. This phenomenon is worrying. There are still many opportunities in the sector, particularly CHINA WEEKLY I March 2013


NC: So what would you choose to invest in? RH: Personally, I would like to invest in real estate. However, as a foreigner, I could only purchase one apartment in China. If there weren’t these limitations, I’d surely buy another one on top of my apartment in Shanghai. There, the price of luxury real estate has risen to 100,000 yuan (US$16,130) per square meter, but it’s still half the price of real estate in London. This shows there is still large room for price rises. If I were rich, I think it’d be worthwhile to invest in China, though I’m not much good at stocks – I’ve lost money in the past! CHINA WEEKLY I March 2013

0.482

0.5

China’s average Gini coefficient over the past ten years, measuring the inequality of income distribution among the population. By United Nations standards, the figure reflects a large income gap.

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0.4

Source: National Bureau of Statistics

56.4%

X4

The ratio of net imports in China’s crude oil apparent consumption (production plus net imports) in 2012, up from 55 percent in 2011.

Gold consumption in China reached 832 tons in 2012, quadrupling the 207 tons consumed in 2002.

8 7 6 5 4 3 2 1 0

Apparent consumption: 476m tons, up 4.9%

China’s crude oil supply and demand in 2012

Export: 2.4m tons, down 3.5%

NC: Mr. Hoogewerf, in 2011, you pointed out three areas likely to create the nouveau riche in China – urbanization, new technology and domestic consumption. Will the pattern change in the future? RH: I think these are still the three main directions. Urbanization will still be a massive force in the future. There are millions of rural people waiting to be turned into urban residents, huge potential to be tapped. If your brands haven’t become widely recognized yet, you’ll find the going gets tougher. For example, though macro-controls on the real-estate sector remain very tight, large developers such as Vanke and Wanda still enjoy rapid growth. In the future, the real estate industry will become more and more concentrated. Developers ranking outside of the top 20 will have very limited space for growth.

bynumbers

Import: 271m tons, up 7.3%

NC: Will the model for generating wealth in the future be different from what it is today? RH: If you are smart enough, you’ll get rich quicker than in the past. Traditionally, you needed to make your first pile of gold. Now, you just need to find a good business model, and then find an angel investor.

china

Production: 207m tons, up 1.9%

when low-end manufacturers decide to go high-end. Take kitchenware maker Supor for instance. In 2007 the company sold its manufacturing business to a French company, yet recently returned to manufacturing, producing high-quality stainless steel faucets to compete with imported brands. RH: I have also noticed this tendency. Many entrepreneurs have sold their enterprises or withdrawn from daily management to concentrate on investment.

Source: National Development and Reform Commission

12.1% The growth of China’s tax revenue in 2012, lower than in 2010 and 2011, due to the drastic slowdown of all corporate taxes and individual income taxes.

Source: China Gold Association

2% The record high share of spending on research and development projects in China’s total GDP of US$8.3 trillion in 2012. Source: Ministry of Science and Technology of China

Breakdown of China’s tax revenue 2012

Value-added: 421 bn, 26.2% Consumption: 125 bn, 7.8% Operating: 251 bn, 15.7% Corporate income: 313 bn, 19.5% Individual income: 93 bn, 5.8% Land and housing: 135 bn, 8.4% Import and export: 114 bn, 7.1% Others (stamp duty, vehicle purchase et al): 150 bn, 9.5% Source: Ministry of Finance

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visual REPORT

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1. Wang Shanyun and his belongings in Shenzhen, July 16, 2012 2. A statuette of the Goddess of Mercy is, according to Wang, his main sounding board when he faces difficulties 3. Wang arrives in Chongqing’s Wanzhou District at 6:30 AM on Februray 1, 2013. There are still many miles to go before he reaches his home village 4. Transferring at the East Railway Station of Yichang, Hubei, Wang moves along with the crowds, January 31, 2013 5. After a large number of passengers have diesmbarked at a city in Hunan. Wang finally finds a seat and takes a nap 6. Wang and his son discuss their route at Yichang’s East Railway Station 7. On the morning of February 1, 2013, Wang finds some space beside the train’s bathroom to store his luggage 8. There are still two hills to climb before Wang and his son arrive home, February 1, 2013 9. After staying in their old house in the village for a while, Wang and his son go outside for a cigarette 10. The living room of Wang’s old house is almost empty 11. On February 1, 2013, Wang pays a visit to his farmland, which has been left uncultivated for years

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CHINA WEEKLY I March 2013


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CHINA WEEKLY I March 2013

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environment

Save the Orchid

Bloom and Bust Despite an international ban on the trade of wild orchids, spiraling demand from the Chinese diaspora has led to the widespread illegal harvesting of these rare and beautiful flora By Wang Yan in Guizhou

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very weekend, dozens of farmers from rural areas surrounding Guiyang, capital of Guizhou Province, come to Guigang flower and bird market to sell prized wild orchids to urban collectors. Aware of the illegality of the trade in wild flora and fauna, reporters are typically shunned at such gatherings. However, one trader in her late thirties agreed to speak with us. “Normally, my husband and other family members spend weekdays in the mountains, collecting hundreds of orchid stems before returning home on Friday,” she told NewsChina. “Sometimes, they bring back thousands of plants. I am responsible for selling these plants at weekend markets.” Enterprising rural residents have discovered that the lucrative wild orchid trade is far more profitable than conventional farming. Individual wild orchid stem can be sold for anything between 5 yuan (US$0.80) to 800 yuan (US$128.40) and more for the most coveted varieties. With law enforcement largely disinterested in cracking down on this vibrant local trade, the main problem black market orchid traders face is the finite nature of their product. Delicate wild orchids grow and reproduce slowly under very specific conditions. Large-scale harvesting can

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quickly eradicate entire species. The solution? Harvest the wild orchids still growing in neighboring counties. Monday through Thursday, the Guigang trader’s family members all go to Duyun, a city some 80 kilometers away from their township in Longli County, to scour mountain forests for wild orchids. They used to search closer to home, however, the trader told our reporter that “Wild orchids on our neighboring mountains have declined for years because of their overexploitation by local farmers.”

Demand

The collection and cultivation of orchids has been a prominent passion in China for hundreds if not thousands of years. Since the mid1980s, when commerce ceased to be taboo, until today, China’s wild orchid market has enjoyed a continuous boom. Apart from orchid lovers who purchase wild orchids for academic or esthetic reasons, many more have waded into the industry as speculators and investors. It was reported that in 2006, one wild orchid plant was even sold for 14 million yuan (US$2.25m) at a black market auction Wuhan, capital of Hubei Province. CHINA WEEKLY I March 2013


Photo by Fotoe

Wild orchid hotspots under threat

Wild orchid in full bloom found in one of the nature reserves in Guangxi, January 1, 2013

In traditional Chinese culture, the unique shapely fragility of the Chinese orchid clinging to rocks or tree bark symbolizes the cave-dwelling hermit detached from the mundane world. Strongly associated with Taoism and Zen Buddhism, the cultivation of orchids, both wild and domesticated, has been popular with Chinese scholars Paphiopedilum armeniacum, one of the rarer wild Chinese orchid species, throughout recorded history. Extinctions first described in 1970 China also has a 2000-year With an estimated 25,000 to tradition of the use of orchids 30,000 known species worldand orchid-derived botanicals in wide, orchids are possibly the most diverse flowering plant family. Distinct species of Chinese orchid traditional Chinese herbal medicine. According to Luo Yibo, about 350 alone, generally sleeker, less colorful and less showy than their Southeast species (25 percent) of Chinese orchid are used medically, 97 of which Asian and Latin American cousins, currently number at least 1,388, with are unique species. 491 unique species. In the late 1980s, demand for rare wild Chinese orchids from the CHINA WEEKLY I March 2013

Photo by Fotoe

“Peasants never tire of scavenging wild orchid in anticipation of chancing upon one unique specimen with morphological variations that will attract orchid collectors who might pay millions of yuan for it,� Luo Yibo, president of the Orchid Society of China told our reporter.

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environment

Photo by Guo Jinjia/cns

newly-opened mainland initially came Lu added that two particularly from Taiwan, with collectors desperate popular species indigenous to Yunto acquire specimens that had been nan Province — the Golden Slipper impossible to obtain during the Mao Orchid and Silver Slipper Orchid — era. In less than five years, wild orchid cannot be cultivated in the northern resources in Guangdong, Yunnan and climate at all, but continue to be sold Guangxi were almost entirely eradion the black market. cated. While many species have become No Protection increasingly scarce, the demand esIn 1975, all species of wild orchid sentially has remained steady until the were listed in the CITES (Convention present day. Luo recalled that when a on International Trade in Endangered particularly exotic-looking and rare Species of Wild Fauna and Flora), orchid species was found on tiny indicating any form of international Zhoushan Island, Zhejiang Province traffic of wild orchid species could be in the late 1990s, hundreds of thouprosecuted under international law. sands of farmers rushed onto the small However, domestically, China’s own island combing every inch of forest in Regulations of Wild Plant Protection the hope of finding orchids in blos(RWPP), enacted in 1998, does not som. include the orchid family in its appenCheng Jin, an orchid expert from dix on plant species. “We’ve been conBeijing Forestry University told the On March 20, 2010, an orchid sold for more than 10 million stantly petitioned to have the orchid reporter that the excessive excavation yuan (US$1.6m) at the 10th Annual Asia Pacific Orchid family given Grade II protection, but of orchid plants is prevalent every- Conference held in Chongqing our petitions have been ignored,” said where where wild orchids are found in Luo Yibo. nature. “Prices for rare species or common species with morphological In consequence, so long as Chinese orchids are sold within China (invariations are irrationally high, and people dive into the orchid market as cluding Taiwan), and not overseas, the trade is legal under Chinese law. if they’re investing in the stock market,” Cheng told our reporter. Thus, local forestry bureaus cannot crack down on the domestic trade in “Through years of observation, I have noticed the obvious decline of wild orchids. Various websites including “Orchid Trade” (www.Hmlan. wild orchid populations,” Cheng continued. “Despite the presence of com), “China Orchid Market” (www.orchid-lanhua.com), “China Love forestry management officials and the existence of official protection, it is Orchid” (www.lanhuas.com) provide open online platforms for the wild hard for such a limited number of rangers to supervise the wild resources orchid trade, even holding online auctions. of orchids in such vast areas of forest.” E-commerce dealers post photos of their orchids online to attract poYachang Orchid Nature Preserve in Guangxi, the only national na- tential buyers. Online bidding wars frequently see specimens sell for tens ture reserve in China which prioritizes orchid conservation, according of thousands of yuan. “Once I saw the sale of a whole piece of tree trunk to Cheng, is the only safe haven remaining in China for orchids and with an orchid growing on it,” Lu Ning told our reporter. “Apparently botanists. someone had cut an entire tree down for the sake keeping the orchid Lu Ning, an orchid lover in Beijing told NewsChina that in spring, intact.” China’s modern orchid harvesters are a world away from the monthe flower markets in Beijing are typically awash with hundreds of boxes of wild orchids (known as xiashan lan – “down-from-the-mountains or- ocled, tome-wielding botanists of the 19th century. Few have any real chids”), transported from other provinces and sold at wholesale prices knowledge of what they are collecting, and instead uproot every specimen they find, at all stages of the life cycle, in the hope one of the plants to locals. Lu told our reporter that many orchid lovers don’t really know what might be valuable. Only one or a handful of plants taken from the averthey’re buying, or how to care for these incredibly delicate plants. Wild age orchid transportation truck might be of value to professional orchid orchids sourced from China’s lush, humid and temperate southern re- collectors or traders. Most end up as cheap, temporary home decoragions only bloom well in their natural habitat. Transplanted to the heav- tions, or compost. This trend has spread into neighboring Southeast ily polluted, arid and inhospitable climates of northern China is often Asian countries, particularly Vietnam, Laos, and Myanmar, devastating populations of unique and beautiful species in these areas simply to feed tantamount to a death sentence. “Wild orchids can barely survive due to the lack of humidity in dry a wasteful marketplace. “This is why Chinese wild orchid resources have been consumed alplaces like Beijing,” said Lu. “Even with attentive care, they may survive, but are unlikely ever to bloom.” Orchids which never bloom will typi- most to the brink of extinction over the past three decades,” commented Luo. He added that some particularly rare species are only found in specally be viewed as duds by unscrupulous collectors, and thrown away.

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CHINA WEEKLY I March 2013


cific areas, meaning the risk of a “single harvest causing the extinction of an entire species” is very real.

Photo by Liu Ronghai/cns

cheaper, hardier, easier to care for and typically more esthetically pleasing than their wild ancestors. Recently, a few scholars including Protection Initiative Luo Yibo from Beijing Institute of Facing the severe threats of wild Botany, Liu Hong from Florida Interorchid overexploitation, some sponational University, and Liu Zhongjiradic initiatives at the provincial level an from the Orchid Conservation & have been launched to protect China’s Research Center of Shenzhen jointly dwindling wild orchid population. proposed a new model for the culAccording to Luo Yibo, Hainan, Futivation of dendrobium catenatum jian and Jiangxi provinces have either (known in Chinese as tiepi shihu – set up or are considering enacting loironskin dendrobium - due to its rustcal regulations to protect their orchid colored sepals), an endangered orchid resources, banning the harvesting prized for its botanical properties. It and trade of wild orchids within their is usually consumed directly as tea or provincial territory. However, the remixed in soup, and was popularized as sults of these initiatives have yet to be tonic for vocal performers before being proven. touted as a preventative treatment for The Yachang Orchid Nature Precancer. According to Luo Yibo, many serve, located in a remote area of populations of these species have been Guangxi Zhuang Autonomous Re- A wild orchid vendor in Liu’an City, Anhui Province, February exploited to the brink of extinction. gion in southwestern China is an ex- 2011 In the subtropical southwestern ceptional success story. In 2005 the China, limestone landscapes have Guangxi provincial government apengendered unparalleled biodiversity, proved a proposal to make the former state forestry farm a provincial especially among orchids and a few other plant groups. But these karst orchid nature reserve. The reserve was elevated to a National Orchid landscape features also limit arable land resources, meaning a low income Nature Reserve in December 2008, a status that comes with national for residents. Orchids have proven a nice little earner for these impoverfunding for protection and management. ished farmers. Some observers and government officials claim that any Nearly 140 species grow in this 220 square kilometer area of sparsely ban on orchid harvesting would affect the livelihoods of these urban resipopulated forest. The most extraordinary feature of Yachang is the sheer dents, and with officials jittery over the possibility of social instability, few scale of the orchid populations – with dozens of species allowed to grow are willing to take the risk. on trees and from the forest floor largely unmolested. With this in mind, conservationists have proposed alternative strateEstablishing protected areas is one of the most important and proac- gies for preserving these heavily exploited orchid species, advocating that tive strategies for conservation. However, the temptation to profit from smallholders living in and around karst nature reserves in the south rethe growing hunger among increasingly upwardly-mobile Chinese to gions to cultivate medicinal dendrobium orchids in their natural habitat visit “unspoilt wildernesses” often leads to funding shortfalls, with nature while also allowing for sustainable harvesting of wild varieties. According reserve managers encouraged to develop the tourist trade as a source of to this proposal, the operation would be done under the guidance and revenue. While the Chinese government has set up over 240 national supervision of either the nature reserve or an independent entity capable nature reserves, most within the last two decades, funding remains tight, of supplying seedlings with appropriate genetic provenance, as well as with many allowing developers, industry and tourism to ruin vast tracts training and supervising farmers in orchid cultivation. of land (see: “Protecting the Protected,” NewsChina, December 2012). “Since medicinal dendrobium orchids planted on trees are valued more than those grown in shade houses, this model could both realize New Introductions the conservation of endangered species and natural habitats while simulWith the government seemingly inert when it comes to conserva- taneously helping alleviate poverty,” said Luo. tion, many botanists prefer to fight the decline in Chinese wild orchid Pilot schemes similar to this proposal have already gotten underway in populations with their own secret weapon – horticulture. “For ordinary Yunnan and Guangxi. In Luo’s eyes, if properly implemented, this “speconsumers, cultured orchids look no different to wild orchids,” Cheng cies reintroduction” method has genuine economic and ecological value. Jin told NewsChina. While he admits that the cultivation of previously However, ultimately, most conservationists want to see an end to the wild species of orchid won’t dampen collectors’ enthusiasm for genuinely trade in wild orchids. “Our final goal is to wean our country off its adwild species, it could at least alleviate the widespread and unscrupulous diction to wild orchids,” said Luo. “This is an urgent issue, and should harvesting of wild flora to feed the mass market. Cultivated orchids are be resolved as early as possible before more orchid species go extinct.” CHINA WEEKLY I March 2013

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culture

Jia Pingwa

A Faint Light in the Dark Chronicling the daily life of a female grassroots official in his new book, realist author Jia Pingwa illustrates the painful social transformations taking place in rural China By Xie Ying

Jia Pingwa in his study

A

s new General Secretary of the Communist Party of China Xi Jinping continues to hammer home the importance of social stability, Jia Pingwa, one of China’s most celebrated realist authors, recently released his new book Dai Deng, the story of a female rural official enforcing this policy at the lowest level. As a social stability enforcer, the eponymous Ms Dai is charged with preventing unrest in her township. Famous for his commentaries on rural life,

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Jia’s latest book is once again set in a poor countryside region, this time the semi-fictional Ying township in his native Shaanxi Province, and touches upon many of the destructive issues affecting contemporary China, including police brutality, forced abortions and evictions, political reform, environmental pollution, and suppression of dissent. “[China] is like an old spider web from which dust will fall when you touch any part of it,” Jia, 60, writes in Dai Deng.

“In this transitional period, China is suffering from an array of problems, many of which do not exist in other countries…and these are what I, as a novelist, should tell my readers about,” he claimed at the book’s launch event.

The Real Dai Deng

Dai Deng, literally meaning “to bring a light” is Jia’s first ever female protagonist. According to Jia, the character is based on a reallife woman who often sends him text messages CHINA WEEKLY I March 2013


Photo by Liu Caixia

and letters, detailing the countless problems and worries arising from her daily work of settling disputes between farmers and intercepting petitioners. “I thought I would soon tire of her, but I found her words so surprisingly precise that I would look forward to her messages and letters,” Jia wrote in the book’s afterword. As they became increasingly familiar, the woman started to mail Jia various government documents related to her work, parts of which Jia published in his book. “She wrote to me every day, rambling on at me just like my niece…I suddenly had an impulse to write about her,” Jia said in the afterword. In order to experience the life the woman described, Jia went to visit her at work. She took him on a tour of the villages under her

administration, showing him how she settled feuds between locals and scared away petitioners. During her free time, he went with her into the mountains, where he witnessed her transformation into “a pretty girl wandering in the hills, picking flowers, eating wild fruit and sleeping on the grass.” “Dai Deng was like a wild flower on the mountain, pleasant and clean, wise and aloof. But it happened that this independent woman had been thrown into the quagmire of grassroots officialdom, and had become polluted,” Jia wrote in the afterword. “As I delved deeper into the circle [of rural officials] with my writing, I felt increasingly sad about Dai Deng, the embodiment of [the predicament of] a rural grassroots official, torn between pressure from her superiors to maintain social stability, and her own sympathy for the farmers,” he continued.

Photo by cfp

Barcelona Style

Jia Pingwa shows the manuscript of of his Mao Dun Prize-winning book Shaanxi Opera, October 2008

CHINA WEEKLY I March 2013

Jia’s sympathy for Dai offended a number of critics, who accused him of “portraying rural officials as chaste little fairies, while painting farmers as stupid, greedy rogues.” His narrative style, with its excessive detail and overabundance of characters, also came in for heavy criticism. “The details in Dai Deng are no more exciting than those in the daily news. Jia neither turns insight into art, nor adopts a clear and critical standpoint – this ‘light’ is too dim to brighten China,” wrote critic Cai Jiayuan in a local newspaper in Hubei Province. “My style is similar to that of the Barcelona soccer team,” Jia argued. “Different from traditional teams that are clearly divided into offensive and defensive players, the Barcelona players, no matter what position they play in, make a complex series of passes before suddenly scoring…The details in my book are like these passes.” This description is actually more applicable to Jia’s previous work Shaanxi Opera, a novel portraying rural life in the early 21st century. Although the book won China’s prestigious Mao Dun Prize for Literature in 2008, it was heavily criticized for its “confusing details” and “obscure local dialects,” with many critics com-

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Photo by Fotoe

culture

The launch event for Jia Pingwa’s recently de-blacklisted book Abandoned City, 1993

Dai Deng herself, her name evoking a flicker of light in the darkness, is perhaps the book’s most conspicuous metaphor. In order to evoke the disconnect between Dai Deng’s reality and her ideals, Jia dots the book with excerpts from her letters to a provincial official from Ying township, Tianliang, meaning “daybreak,” with whom she secretly falls in love. She pours out her troubles, her worries, her love and her dreams in flowery, pretentious language that contrasts sharply with her exposition in other parts of the book.

Faint Light

plaining that they had to read the book several times before understanding Jia’s message. In Dai Deng, Jia experimented with a more prosaic narrative style, replacing near-incomprehensible dialect with clear, simple wording. More remarkably, he parses confusing dialog with detailed footnotes, a move he claims was inspired by the Old Testament. “It is a turning point in my literary career. Though [my achievement is] not so great, I have worked so hard that I feel I have outdone myself,” Jia wrote in the afterword.

Metaphors

Jia’s critics were unmoved: “Jia Pingwa remains hung up on his complicated details and seemingly trivial exchanges, which lack logical connection,” said a commentary in the People’s Daily, the Party newspaper. “Yes, he eventually ‘scores,’ but not powerfully or impressively.” In the view of some critics, Dai Deng compares unfavorably with a similar novel published around the same time. In I Am Not Pan Jinlian, Liu Zhenyun, another famous Chinese realist author, tells the story of a village woman

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petitioning higher authorities layer by layer, beginning in her village and working up to the capital Beijing, exposing a string of corrupt officials along the way. “My works do not rely on fierce or violent plotlines, which are easier to write and more suited to readers’ tastes. My writing style is less like fire, and more like water – seemingly calm, but with huge waves rolling beneath the surface,” Jia told the Beijing News. Unlike his shocking 1993 novel Abandoned City, approved for resale in 2009 after a 17-year ban for its use of “explicit sexual description” to expose the empty inner world of intellectuals, Jia now prefers to “hide implications and wisdom among words,” a style that leaves him comparatively inaccessible. Dai Deng is rich in metaphor, according to Jia. At the beginning of the book, Ying township becomes infested with lice blown in from a neighboring mining plant, a clear allegory for the problems plaguing modern Chinese society. While Dai initially tries to exterminate the lice, she is eventually forced to change tactics in order to protect herself from them.

Dai Deng ends in tragedy – she sustains a serious head injury while trying to stop a bloody fight between two local families over sand resources, and is made a scapegoat for her failure to keep the peace. Her removal from the post ultimately breaks her spirit. “Dai Deng’s inner world is purely backed by her illusory ideals which remain far from reality…After all, a firefly only gives off a faint glow, which encapsulates Dai’s tragic destiny,” Jia explained. This subtext of helplessness runs throughout Dai Deng, as Jia shows the various conflicts and contradictions of China’s transformation, such as those between humans and nature, and between farmers, rural officials, and their superiors. When asked at the book launch about his failure to prescribe a cure for society’s ills, Jia replied that a novelist has no power to judge or cure anything, but can only “give off a faint light” by “going deep into human nature.” “It seems everyone is both innocent and guilty, but where are these problems rooted? In society? In the system? Or somewhere else?” Jia, through the medium of Dai Deng, gives voice to his own uncertainty. CHINA WEEKLY I March 2013


OUTSIDEIN perspectives from within China

Getting There: As the provincial capital and major transport hub, Chengdu is a hotspot for far more than food: there are daily flights in and out from nearly almost every Chinese city, as well as from international destinations such as London, Vancouver and Abu Dhabi. Train travel is also a popular option, with a high-speed rail link connecting Chengdu with Shanghai in only 10 hours.

Where to Stay: Chengdu is a major city, with the accommodation to match, from backpacker holes to glitzy five-star resorts. Even some of the smaller hostels boast staff speaking remarkably good English, due to Chengdu’s historic position as an entryway to the Hump over the Himalayas. For that same reason there is a plethora of quality hostels that offer private rooms for as low as seven US dollars per night, such as the fantastic Chengdu Mix Hostel on Xinghui Xi Lu.

Chilling in Chengdu

Stop. Rest. Go. Chengdu is a city that dances to the beat of a slower drum. Our writer had to learn to appreciate this lazy rhythm... and fast! By Sean Silbert

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Photo by CFP

Ancient Traditions

CHINA WEEKLY I March 2013

Photo by Sean Silbert

Photo by cns

Photo by CFP

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he sun had already set by the time that I arrived, still humid despite the late fall chill in the air. There was no sound, save for an odd tapping sound emanating mysteriously from an old man sitting in front of a convenience store next to my hostel. I groggily wandered a nearby tree-lined avenue, eyes streaming from the wafting spice aromas drifting out of the front door of one of the city’s ubiquitous hot-pot restaurants. I had nothing to do. For a Beijinger, this is a crisis. For the denizens of Chengdu, it’s business as usual. Most of the year, Chengdu is swathed in a dreamlike blanket of fog, which swirls around buildings and blocks the view of the imposing mountains on the horizon. It emphasizes the stereotype, really: Chengdu is a city of lotus-eaters, where the clock moves slower and the rest of the world is shut out. Southern Chinese cities awake differently from northern ones. While Beijing might jolt up with a start, Chengdu slowly rolls out of bed to begin the day. Even on a weekday, when commuters scurry along and mothers drag their chil-

dren towards school, there is no element of rush. The air is warm enough to allow even the most hard-pressed account manager to wander aimlessly in the mistwreathed center of town. On my first morning I paused to watch a group of women gossip as they peeled glossy green vegetables in the middle of the street. Their restaurant, at the mouth of the illustrious Wenshu Temple, stood completely empty despite the prime time hours. I wandered inside, seating myself and ordering a simple bowl of noodles. They arrive in true local style – crimson and thickly layered with mounds of chilli flakes. Steam emerging from the thick bowl almost immediately dissipated into the thick air. Chengdu’s local Sichuanese cuisine can be almost unbearably fiery – everything is spicy here – and is as likely to put the unseasoned traveler into a coma as it is to wake up the groggy backpacker. Outside, a gaunt figure was attempting to sell a live turtle dangling from a string. Nobody seemed anxious to buy. It was still before 8 AM, and the huge entrance to the Wenshu Temple, flanked by terrifying grimacing deities, has none of the austere officiousness of other religious sites

in China. As a monk meticulously kept rhythm by striking an ancientlooking bell, an audience of equally venerable grandmothers chanted along with him. This is no place for chattering tour groups, but also no place for putting on airs. We’re all the same in the eyes of the Buddha. Behind me, a mother demonstrated to a little girl how to properly pray to the Buddha – a long kowtow, tap the head three times on the ground in veneration. The girl proceeded to tap her forehead to the ground, and then repeated her genuflection about thirty times before looking up at her unimpressed mother with a snarky grin. A man nearby, on a break from lighting incense in a massive copper vessel, grinned as the mother yanked the child up by the arm to be dragged away for further religious teaching, this time without the sarcasm.

City of Letters

Chengdu’s now built-up city center once housed an ancient palace. The city’s name itself – literally “Become Capital” refers to a dusty old proverb that this conurbation would one day rise to rule the Middle Kingdom. While Chengdu may have fallen short of this goal, for thousands of years the city was

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a hub of culture and sophistication, protected by towering parapets decorated with blossoming pink hibiscus. Chengdu remains a city of poetry, with not one but two of China’s greatest sons of letters calling the city home, and one of these poets – the Tang Dynasty master Du Fu – still has his cottage preserved on the edge of town. Chengdu was a city of art, a capital of beauty hidden in the foothills. Those flowering walls were destroyed years ago, and on the site of the ancient palace China’s highest statue of Mao Zedong now stands, a 35foot image frozen mid-wave. Not far from his visage is People’s Park, where a former military warehouse now serves as the central gathering point for most of the city. By the time I arrived at this hub of activity, the ear-cleaners were just beginning their shift. I meandered past flailing ribbon dancers and water calligraphers marking the ground with indescribably elegant flourishes that will evaporate in minutes. I passed through an impromptu bookstore, casually browsing through their selection of textbooks and Chinese classics sitting incongruously alongside biographies of Steve Jobs. I needed some more peace and quiet, so I sought respite in a traditional teahouse located in the park. It could have been any one of the hundreds of teahouses throughout the city, where lo-

cals sipped to a soundtrack of clicking mahjongg tiles and go pieces. Many spend their entire day in teahouses like this one, gossiping about their neighbors and in-laws under the shaded verandahs, avoiding the punishing summer heat. The clientele begin to change during the lunch rush – stylish leather shoes of the nouveau riche begin to tread the piles of sunflower seed and peanut shells and fruit rinds littering the ground. There is a buzz in the air of such places, adding to the endless hum of birds chirping, the slurps of tencent cups of tea, the chatter of the clientele.

Fiery food

By early afternoon, I had still not eaten. A short walk away was Chengdu’s old town, a stretch of preserved narrow alleys and twostory stucco houses that are popular with tourists. Among the vendors selling mass produced garbage there is an opportunity to try some of Chengdu’s local cuisine, renowned for its heat and flavor. There are cities of industry and cities of politics, but Chengdu is a city of epicureans. Sichuan’s capital was bestowed with the title of Asia’s first city of gastronomy, with its local culinary treasure trove distinguished by the liberal use of the indigenous Sichuan peppercorn. Fragrant enough to be used as a perfume in antiquity, both fresh and dried varieties of this inconspicu-

ous pellet numb the human mouth sufficiently to still be used by some rural dentists as anesthetic. As I tucked into spicy rabbit heads, I noticed a nearby man beating a drum advertising his cellophane noodles. I approached, but my mandarin could not match up to his mellifluous dialect, and I had to resort to hand-waving to secure my bowl of noodles. I repeated this process time and again to get samples of every snack on sale – rice noodles, vegetables and meat simmering in a hot broth, glutinous rice balls – all were sold by heavily-accented locals unused to dealing with foreigners. It is here, amid the bustle of the food market, that I learn that the Sichuanese of Chengdu take time to enjoy life because here, in this misty, crowded and often ugly metropolis, life can be so thoroughly enjoyable. As I slurp my way through a toothsome bowl consisting of strips of meat resting in a mild sauce, a vinegary, savory dish first created by a husband and wife team on a Chengdu food cart and so good it now bears their names, I realize that this is why people never seem in a hurry to get anywhere in Sichuan’s capital. There’s simply nowhere more relaxing to be, if only you let it in. My eyes closed. I inhaled deeply. Then I resumed my hand-waving – I wasn’t about to leave without trying a bowl of spicy mapo tofu.

real chinese

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gǎo

E’gao Spoof

Beware when uploading photos to the Internet – China’s netizens might spoof them. Whether adding a comedying beard to a solemn portrait or parodying an entire movie. In China, Internet parodies are known “e’gao.” With “e” meaning “spiteful” and “gao” meaning “play,” e’gao aim to make people laugh by parodying someone or humorously altering a picture or video clip, a popular trend in the Chinese Internet community. The original e’gao is believed to be an

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online short A Murder Caused by a Steamed Bun, made by ordinary netizen Hu Ge who re-arranged clips from The Promise (2005), a famous flop of a fantasy epic by renowned director Chen Kaige, into a police thriller, adding his own comedy narration in the style of an official legal news broadcast. The short went viral, ironically receiving a far better reception than The Promise itself. Since then, China’s netizens have been going e’gao-crazy. For example, netizens photoshopped an image of a fat little boy

with a scornful expression into posters for popular movies like Titanic and Braveheart. However, the more popular memes are generally those satirizing social problems. E’gao culture is so widespread that some of the most popular ones have been made into products, such as paid ring-tones. Although critics have warned of the dangers of personal attacks or copyright infringements resulting from e’gao, supporters argue that ordinary Chinese people need an outlet for creativity. CHINA WEEKLY I March 2013


flavor of the month

Pucker Up By Stephy Chung

CHINA WEEKLY I March 2013

it generating the similar, satisfying appeal of sea salt & vinegar potato chips. The other starter, loosely translated to “fish-like roots,” was less of a success. I was intrigued by the purported medicinal benefits, but didn’t get past a few bites. The same pickled vegetables were accompanied by skeletal white roots that chewed like straw and tasted far too bitter. Better kept for the medicine cabinet. Guizhou’s picturesque terrain boasts many freshwater rivers and lakes, so local foods naturally feature wet market specialties. Not wanting to miss out, we chose a traditional hot and sour fish soup, and a bullfrog dry pot. Spicy chilies, whole garlic cloves and tangy vinegars made for the tomato-based broth. I enjoyed how the punchy flavors masked the usually fishier-tasting catfish. But, as the soup simmered, the dish was less enjoyable, becoming too oily and acidic. This was my first try at bullfrog – I figured a disassociation with Kermit was easier made when the creatures were hacked up beyond recognition and mixed with sliced lotus root and potatoes. But, as obvious “parts” revealed themselves – a webbed foot for instance – I found the dish hard to stomach. I’d say the meat itself is a cross between chicken and a tougher white fish, but there’s a startling number of bones that you have to pick through. Not sure if this was the result of preparation or if it’s the actual fault of the bullfrog, but the entire pot tasted to my mind like rancid barbecue. Thankfully, the deep-fried glutinous black sesame rice balls came to the rescue, quickly erasing my amphibious unease. It is, hands down, the best re-invention of this common dessert that I’ve ever eaten. Conventionally, these sticky-rice balls would be boiled like dumplings – yawn. In this version, the translucent nuggets are deep-fried and topped with imported Guizhou preserved vegetables, Chinese chives and red chilies. The crisp of the deep-fried batter, salty with the pickles, bites down to a sticky, warm black sesame stuffing. The effect is four-fold – salty, sour, spicy, and sweet, all in one mouthful. With a little push, I could see more Guizhou restaurants opening around this winning dish. Skewer it, and Beijing’s tired old lamb kebabs will have some real competition.  Photo by Stephy Chung

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eijing is a good indicator of what China’s favorite regional cuisines are – the city is flush with restaurants to meet the voracious and diverse appetites of some 20 million people. The ubiquitous “Chengdu Snack” joint, which far exceed the numbers of Starbucks in Manhattan, is the likely winner. On the other hand, the distinct lack of Guizhou eateries suggests that its flavors are either much more divisive, or much tougher to reproduce. Guizhou Province, located in the southwest region, is overshadowed by three gastronomical powerhouses – Yunnan, Guangxi, and Sichuan, celebrated for their Southeast Asian flavors, rice-flour noodles and tongue-numbing peppercorns, respectively. As for Guizhou, its claim to fame is largely due to its production of Moutai – the country’s most iconic brand of sorghum-based baijiu liquor. During his 1972 visit, even President Richard Nixon swigged this fiery, oddly savory liquor, sharing toasts with Premier Zhou Enlai. But, not won over by its historic status, I’m of the opinion that Moutai still tastes like petroleum and is every bit as vile as foreigners seem to find it. More reason then to turn to Guizhou’s food, rather than its drink, for inspiration. Like its neighbors, the province’s humid, sub-tropical climate warrants the liberal use of chilies and pepper. The belief is that the extra heat helps cool off the body. Setting it apart then, are the distinct, sour flavors found in its signature dishes. Da Gui restaurant has been the capital’s trusty Guizhou go-to since 2005. Snug among alleyways, the inviting little eatery employs chefs brought from Guizhou itself and makes a concerted effort with its rustic, wooden interior and Miao minority styled tie-dyed drapes, to make the place homey. Unless languidly taking your order or doddering dishes out to tables, these two are for the most part hunched over, glued to their boxy television set, engrossed in period dramas. To start, we chose two cold dishes. Homemade, sour pickled vegetables made for a good indoctrination. Fresh cabbage, radish, and cucumbers are first dried and then soaked for a few days in brine. Once perky in texture, the chopped veggies are reduced to the appearance of limp sewage. Appearances deceive – served with cilantro, mint, red peppers, and a squeeze of lime, the combo is delightfully light and addictive. I found

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essay

Going Meat-free is Murder Recently, I met a long-lost friend for an overdue dinner. When I entered the room, the table was absolutely groaning with meat. Big chunks, fine flakes, legs, thighs, bellies, pigs, chickens, cows, stewed, fried, grilled and all sorts of other permutations, and there, at the head of the table, my dear friend, beaming with delight at the fine feast he had ordered to welcome me back into his life. Clearly this friend had forgotten something about me. I surveyed the table nervously, looking for something that hadn’t been bounding across the land a few days previously. Nothing Not even a morsel of seafood, which I am, as a naughty little pescetarian, able to eat. There was nothing to do about it, as there was nothing that I could eat, but remind him as gently as I could that I didn’t eat meat. His face fell. I felt terrible. The vegetarian, or even the pescetarian, is still a rare bird in China. From Guangzhou right up to Xiahe, I have gotten strange looks when I have explained that no, I don’t actually want any meat in my dish. In McDonald’s, where as a hangover cure, I ordered a burger with no meat and extra pickles, the staff simply fell about laughing. Fair enough, I suppose. Upon arrival in Shanghai so many, many moons ago, I was kind of prepared, after all, every Chinese restaurant I had ever patronized had been stacked floor-to-ceiling with live fish in tanks. I imagined that in China proper there would be diminutive pigsties and cow pens out front, allowing the discerning glutton to pick their own. While this didn’t prove to be the case, I was still utterly unprepared for the snakes in baskets on the floor of my university’s attached hotel, or more precisely, its restaurant. Nor was I ready to face the live rabbits, chickens, cats and dogs all waiting obediently in cages outside restaurants in Guangzhou. Nor a pyramid of live turtles being slow-cooked in front of me. Those Cantonese! One of my sympathetic colleagues came to the rescue, bearing what would become one of

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Illustration by Xiang Zhaohui

By Elyse Singleton Okuda

The tofu was actually chicken. I mentioned this to the waitress, adding that I had asked for no meat. I got the completely deadpan reply, “It’s not meat. It’s chicken.”

all-time-favourite treats – shucai baozi – veggiestuffed steamed buns which, along with vegetarian fried noodles, became my go-to staple. At the buffet, I turned a blind eye as the tongs that were used to pick up the greasy, saucy bits of meat were then re-used for my tofu. And of course, I learned early on to never, ever ask what the sauce or broth for my “vegetarian” dishes was made from. I didn’t want to starve. One popular cafe on Shanghai’s Huaihai Road, catering more to the foreign palate, once offered me a “semi-vegetarian” risotto made with chicken stock. I informed my server that I’d rather not have known. Sometimes, however, this “don’t ask, don’t tell” policy has been abandoned through my own skittishness. Having been assured a dish is meatfree, more often than not I will locate tiny specks of minced something-or-other concealed under

mushrooms and greens. Usually, it’ll be pork, which Chinese chefs love for its versatility and range of flavors, honoring the pig by ensuring its presence in most every dish ever devised. When the servers are confronted about this or that piece of minced pork lurking in my dish, I am admonished for my histrionics. “Oh, it’s only a little bit of meat!” Sometimes, the specks are fibrous, gelatinous chunks. On one occasion, while happily tucking into another favourite - homestyle tofu, hold the meat, I found the tofu was a little bit too... meaty. The tofu was actually chicken. I mentioned this to the waitress, adding that I had asked for no meat. I got the completely deadpan reply, “It’s not meat. It’s chicken.” Of course, it could be worse. I could be a vegan. In my first year at the university, there was a vegan amongst the staff, so out and proud he sported a green ribbon tattoo. Oh dear. After a few months, he was really beginning to look awful. Thinner, more pale and with big dark circles under his eyes. In the end, he had to start eating eggs just to get his strength up. Actually, a lack of strength is one of the major concerns I hear from the locals about my food choices. Apparently, I need meat to be healthy and grow. Hm. At 170cm and 65kg, I don’t think that’s really a problem. However, I do give thanks for the Buddhists. Dotted around Shanghai are fantastic restaurants that are strictly vegetarian, some even going the whole vegan hog (pun intended). Many don’t even serve dishes with garlic or onion because of their supposedly “stimulating” properties. That’s hardcore. I once had a meat and alcohol-free birthday party at my favourite of these Buddhist hangouts, much to the horror of my friends – I’d omitted all the hallmarks of a Chinese celebration bar the saccharine birthday cake! But they survived. And, indeed, I took a certain amount of perverse pleasure in introducing them to my world – one which didn’t include the pleasures of the flesh. CHINA WEEKLY I March 2013


Air Today, Gone Tomorrow The pollution in Beijing through January was so bad that it prompted pretty much every expat (and a good many locals) in the city to begin asking various existential questions, the most poignant of which was “why am I [still] here?” Angst and despair, two adjuncts to the aforementioned philosophical quandary, also featured prominently, particularly when the US embassy’s air quality index surged to a record breaking level of near 900 (on a scale of one to 500). Many of the expats who lived in Beijing before the 2008 Olympics evolved a different philosophical approach to Beijing’s air quality issues, that of the Stoics. Back then, there was little that could be done about the smog, so most of us just knuckled down and got on with things, listening to the complaints of newcomers with steely-eyed impassivity, or at least an even-tempered insouciance. But the acrid, throat-burning, eye-irritating haze that descended on Beijing last month could not be ignored. Graphics like those issued by Bloomberg showing the putrid air was worse than that found in an airport smoking lounge were unnecessary. Like an unwanted guest crashing the party, elbowing its way to the front and dominating the conversation, this “airpocalypse” demanded a brusque response. Expats and Chinese alike descended on local department stores in droves, rushing to buy a dwindling supply of air purifiers, as evidenced by the threefold spike in on-the-year sales of the units at various outlets in the capital. Those who could afford to do so installed devices in every room, but at near US$1,000 a piece for some high-end models, not including filters that must be replaced every few months, it’s fair to say they were a privileged few. The rest of us resorted to towing our purifiers around the house, treating them like the faithful electronic pets of some dark dystopian future, or huddled around their life-affirming torrents like cavemen around a fire. Meanwhile, leading multinational companies CHINA WEEKLY I March 2013

Illustration by Xiang Zhaohui

By David Green

The acrid, throat-burning, eyeirritating haze that descended on Beijing last month could not be ignored. with offices in the city responded to calls from the perennially pesky fourth estate (myself included) demanding to know what exactly was being done to protect their staff. The correct policy was, of course, to be installing (or have already installed) purifiers in offices, as has been done by various embassies, the European Chamber and companies such as BMW and Toyota. Others including JPMorgan distributed facemasks to their employees. The same applied to the city’s leading hotels, with boutique establishment The Opposite House moving to set up air purifiers in their rooms as standard, while others including the Hilton Wangfujing claimed their building already incorporated sophisticated air-conditioning systems that also purified the air. At Parkview EAST, the city’s premier new development and the first LEED Platinum certified building to be opened in China, the general manager told me the air was purified to the same extent as that inside a top Western hospital. With rents in the building close to the highest available in the city, one would certainly hope so.

I also visited a so-called “pollution dome” at Dulwich College Beijing, a leading international school in the city’s Shunyi District. This turned out to be an inflatable structure built over a concrete foundation that houses a sophisticated PM2.5 filtration system, allowing the kids to play various indoor sports irrespective of how bad the pollution is outside. Walking through the sealed double doors was like entering a brave new world. My ears popped due to the higher pressure inside, and on the day I visited the air was noticeably cleaner and easier to breathe than that swirling in the snow-drizzled gloaming outside. Recognizing Dulwich was on to a good thing, the International School of Beijing followed suit, recently opening two of its own, even larger domes. For its part, Harrow International School said an air filtration system that will encompass the entirety of a new campus they will move to in March was the single biggest item of expenditure involved in the relocation. Harrow’s approach, cocooning its schoolchildren inside an entirely regulated and purified bubble, calls to mind a bleak future world in which those who can afford it move between highly regulated and insulated spaces because the atmosphere outside, in which the common man is forced to live, is toxic: imagine waking up in an air-purified house, driving to your LEED-certified office in the comfort of your air-conditioned and purified car, before working out within a top gym’s heating, ventilation and air-conditioning (HVAC) system, and then picking up your kids from their hermetically sealed school. You know, while their nanny chokes to death on her bicycle. But this is not some Ballardian vision, but the reality of life for Beijing’s richest. One thing all the above places have in common is their expense, or at least the paying power of their owners, raising the intriguing possibility of China’s capital being the first place on earth where clean air is a commodity available only to those who can afford it. And that, much like Beijing’s bad air, leaves a very nasty taste in the mouth. 

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Cultural listings Cinema

Off Screen, On Form While veteran Hong Kong comedian Stephen Chow does not show up on screen for even a second in his latest movie, the film is unmistakeably Chow’s work. Journey to the West: Conquering the Demons, written and directed by (but, surprisingly, not starring) Stephen Chow, was released in China on February 10, the first day of the Chinese New Year vacation, to great commercial and critical acclaim. Adapted from the 16th-century classic Journey to the West, one of China’s most beloved works of mythological fiction, the movie tells the story of the legendary Buddhist monk Xuanzang, who vanquishes three demons, makes them his disciples and takes them on a pilgrimage to India to obtain sacred sutras. Chow has already paid tribute to the myth in the form of A Chinese Odyssey, a pair of 1994 movies whose highly subversive characters and storylines won Chow a massive cult following in later years. This time, while staying off the screen, Chow makes various nods to his own oeuvre, perhaps making Journey to the West: Conquering the Demons something of a tribute to himself.

Music

Book

Sound of the Underground

Literary Memoirs

More than 100 musicians and artists participated in a two-month music and art festival held by the Post Mountain Art Space in Beijing. From December last year to the end of January 2013, the MOMA-Post Mountain Music and Art Festival showcased some of China’s best independent music, arthouse movies, modern dance, stage drama, installation art and photography. Over the past decade, spaces featuring mainly independent music and avant-garde art in various media have been growing in major cities in China, and now contribute heavily to the development of Chinese underground music and art.

Exhibition

The Art of Reflection A recent exhibition entitled The Ode to Elegance attempts to review the development of art in the past fifteen years in Guangdong Province, the front line of China’s policy of Reform and Opening-up. Though widely known for its strong business culture, the province has long been one of the most active centers of cultural exchange between China and the rest of the world. Held from February to March, the exhibition showcases selected works from the Guangdong Museum of Art from the past fifteen years, and is divided into three sections, focusing respectively on reflections of common people, intellectuals and the State consciousness.

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By Mu Xin (compiled by Chen Danqing)

In 1989, Mu Xin began his series of “literary lectures” in New York in the apartments of his “students,” most of whom were newly-arrived young artists from the Chinese mainland. He was already 62 years old at the time, having been in the United States for seven years. At first scheduled to continue for one year, the series went on for five. Yet, few on the mainland knew about this Chinese literary scholar in the new world. A well-educated painter born in 1927, Mu was detained for 18 months during the Cultural Revolution (1966-1976), during which time his works were banned and all of his paintings burned by the authorities. Before he fled to the States, Mu had been under house arrest for a further three years. Yet the young art students, many of whom later became famous in China’s contemporary art scene, loved his lectures. Chen Danqing, one of the most influential among the students, kept five notepads of lecture notes. By November 2011, when Mu Xin passed away, he had gained widespread recognition among mainland readers. The scribblings from those five notepads, compiled by Chen, have now become the Literary Memoirs of Mu Xin. CHINA WEEKLY I March 2013


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Commentary

China needs to establish “special political zones” China’s economic take-off began with “special economic zones” three decades ago. Its political reform should follow the same blueprint. By Li Yongzhong

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s Xi Jinping, the new leader of China’s Communist Party Meaningful reform must overhaul the currently centralized power (CPC), warned that corruption may lead to the collapse structure within the government. China’s current power structure of the Party and the fall of the State, it became the con- follows that of the former Soviet Union, which put the powers of sensus within the Party that it is now decision-making, implementation critical to implement serious political and supervision in the hands of a With decades of stagnation in political reform, or the CPC may eventually single entity, the Communist Party. reform, it has become increasingly collapse like the ruling communist If China does not change this strucparties in the former Soviet Union ture, it will eventually collapse. difficult for the Party to push for and much of Eastern Europe over Moreover, reforms must be made progress, as powerful vested interests the last century. to the current personnel system, have become established in the However, with decades of stagnawhich is based on appointment interim. tion in political reform, it has become rather than election – a fertile breedincreasingly difficult for the Party to ing ground for corruption. With push for progress, as powerful vested interests have become estab- the establishment of SPZs, direct elections should be initiated at the lished in the interim. township and county levels within two to three years, either within In search of a solution, a number of pilot projects have been the Party or beyond, later expanding to the city and provincial levels. launched in various localities in recent years. Despite some success, The first SPZs could be regions of relative economic prosperity and these efforts have failed to deliver results. liberal politics, such as Shenzhen in Guangdong Province, which was To a large extent, China’s political reform has reached a deadlock. also China’s first SEZ. Additionally, different SPZs should be allowed Although both local and central governments are calling for change, to follow different approaches, just as SEZs were. For example, SPZs both are waiting for the other to make the first move. While local could choose to follow either the Hong Kong model of governance, governments look to the central government to make changes to the the Singaporean model, or even the Taiwan model. political system, the central government is awaiting the results of “sucA major concern that prevents the Party from launching serious cessful experiments” at the local level, to prove that change is feasible. political reform is that if reform goes out of control, it may lead to In reality, without determined political will from the central govern- political upheaval. With the establishment of SPZs, however, the risk ment, there is no way that pilot projects at local level can expand to a of political chaos can be contained. There are about 2,800 counties broader scale, as this would require isolated local officials to challenge or county-level regions in China, and if 28 of them are chosen to bethe entire heirarchy of officialdom, an effort that would be sure to fail. come SPZs, they would account for only one percent of the country. To break the current deadlock in political reform, China needs to The Party must realize that while serious political reform may be set up “special political zones” (SPZs), just like the special economic risky, doing nothing will be fatal. zones (SEZs) that kick-started China’s rapid economic rise three decades ago. Unlike the current pilot programs, these SPZs must be (The author is a professor and the vice-director of the China Discipline granted considerable independence. Inspection & Supervision Institute)

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April 2013