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Volume No. 053 January 2013

SPECIAL REPORT Money Walks: China Goes Global


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: Lisa Gay 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: Jing Xiaolin, Wang Yongzhi, Sun Yuting, Ruan Yulin Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Zhang Wei, Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Wei Qun, Zhou Zhaojun Tokyo Office: Sun Ran Paris Office: Wu Weizhong, Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Zhao Shengyu, Huang Hongbin Moscow Office: Tian Bing, Jia Jingfeng Legal Advisor: Allen Wu ISSN 1943-1902

CN11-5826/G2

NEWSCHINA I January 2013

The key to fighting corruption is the effective supervision of government power

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n October 17, Premier Wen Jiabao said at a tion lies in that the government has a tangible presence State Council meeting that the government in all aspects of society, which provides ample room for would release an overall plan for “distribu- abuse of power. The government should streamline its tion of income” in the fourth agencies, transform its dictaquarter of 2012. Eight years torial administrative model, The current anti-corruption after Wen’s project to close drop redundant agencies, and China’s vast income gap was make its decision-making promeasures have utterly officially made policy, the govcesses at the local level more failed to effectively ernment was finally acknowltransparent. address the problem. edging the need for concrete Secondly, it is time to make action. asset declaration a requirement It takes time for words to of all officials. This measure become actions in China’s has already proven to be effeccomplex political arena. Withtive in curbing corruption. Alin one week of becoming Party Secretary, Xi Jinping though the Party has implemented an internal system has stressed the importance of fighting corruption on whereby all members declare their property holdings, several occasions. During the 18th Party Congress, top these declarations are withheld from the public, and puleaders past and present reiterated that failure to tackle nitive measures are rarely taken. Given the current scale corruption will ultimately lead, in the words of outgo- of the corruption epidemic, the Party should have the ing Party Secretary Hu Jintao, to the “collapse of the courage to institute an effective and public asset declaraParty and the fall of the State.” The Party work report tion requirement for all officials. submitted to its internal Commission for Discipline Thirdly, as many corruption cases involve nepotism, Inspection specifically warned senior officials to “rein the Party needs to promote internal democracy. Rather in their spouses, families, relatives and those around than appointments being determined by a very small them.” number of elite individuals, they should be collectively While fanfare around the Party’s ongoing war on made by Party committees, and at higher levels by the corruption may indicate serious efforts in curbing this Party congresses. In the meantime, the Party should increasingly embarrassing epidemic in the coming allow the National People’s Congress to take a more years, it also betrays its scale and severity. Even in the active role in official appointments at the top level. A Party’s own assessment, while a number of prominent tenure system is also needed - once in office, barring heads have rolled in the past, the overall situation is on poor performance, an official should not be tactically the verge of spiraling out of control. It is obvious that removed or repositioned before they have served a full current anti-corruption measures have utterly failed term. To systematically uproot the source of corruption, to effectively address the problem. The reason is clear – none of these measures target the fundamental cause the Party needs to go beyond internal investigations by of corruption, that is, the unchecked power of the gov- making rule of law the only rule for the whole of society – the Party included. This is the biggest hurdle to genuernment. To effectively tackle corruption, the government ine progress, requiring systematic reforms in the areas needs to put its grip on power under public supervision. of government transparency, the impeachment system, To achieve this, the government should take measures media freedom and judicial independence. Only when power operates within a transparent, in three areas. Firstly, it should retreat from areas where society can legally-binding framework, can corruption be truly self-govern. A major reason for the prevalence of corrup- tackled.

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Contents

Picking up the Pace

Photo by CFP

A new generation of Chinese leaders have taken charge of the world’s most populous nation and its second largest economy. Will politicians be able to keep up with progress?

Editorial

01 The key to fighting corruption is the effective supervision of government power politics

10 Provincial Governance : Express Delivery

Cover Story

society

12 Party Congress : People Aspire, Leaders Perspire/Ready for Action? 22 26 28

Child Abuse : Out of Line, Out of Reach Overseas Purchase Agents : Smugglers Caught Drug Rehab : Into the Light

feature

32 Chinese in Spain : Legitimate Businessman?/Image Crisis

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P32

P40 NEWSCHINA I January 2013


Contents

P52

P58 economy

38 40

Foreign Consumer Goods : The Empire’s New Clothes E-commerce : Single Currency

special report

42 Chinese Global Investment : International Rescue/Suspicious Binds

P22

history

61 Beijing Film Studio : Celluloid Cemetery outside in

64 67

Remote Langmusi : At World’s End Flavor of the Month : High and Dry

P42

environment

50 Snow Leopard : Cat’s Cradle

visual report

52 Logan’s School Run sports

56 Rugby Sevens : Playing Hardball

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 Yang Liping : Spreading her Wings NEWSCHINA I January 2013

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NewsChina Chinese Edition

Southern Metropolis Weekly

November 26, 2012

November 14, 2012

Messy Marine Management

Desperate Housewives? As busy careers take their toll on Chinese family life, a growing number of female white-collar workers, though as qualified as their husbands, are choosing to quit their jobs to spend more time with their families. However, the working mother model, popularized throughout China since the 1950s, has led Chinese housewives-by-choice to face criticism. Their parents complain about wasted university tuition fees, and others warn that shut-in housewives may be abandoned by their husbands. Media reports have urged society to respect housewives, and encouraged the authorities to establish “housewife-empowerment training courses.”

China’s poor management of its maritime resources has become a major obstacle to the country’s development plans, experts have warned. Critics argue that China’s current maritime management is simply an extension of its land management – the department in charge of fisheries manages marine fishing, that in charge of traffic manages marine traffic, and so on. Such a system, they argue, is ineffective, and often results in redundant construction and lax law enforcement. Lawmakers previously tried to legislate for a unified maritime management system, only to see the discussion end with various departments jockeying for power. Calls are now growing for a coordination committee led by senior officials to supervise these departments.

New Weekly

Century Weekly October 13, 2012

Underestimated Risk According to a report by China’s central bank, a pro-shadow banking system is taking shape in China, under which local governments expand their funding channels by issuing trust products. Statistics show that by September, Chinese local governments had issued US$70bn in bonds for urban construction, about US$6.7bn more than the whole of 2011. Analysts have issued a warning about this hugely underestimated risk, arguing that local governments take out loans on undeveloped land, but nobody knows how much the land will be worth once developed. Creditors gamble on local governments, backed by the central government, not going bankrupt. The central bank is now publicly calling for the government to establish a system of local government debt calculation, in order to correctly assess the risk of shadow banking.

November 13, 2012

Anti-Urbanization Pressured by a growing rural population who prefer to struggle for a better life in urban areas than farm in their villages, many Chinese academics are now promoting a new countryside campaign focusing on restoring China’s traditional culture of ancestor worship, which they believe could draw people back from overcrowded cities. Some pilot programs have been launched, calling for the urban elite to contribute to the development of their rural hometowns, while simultaneously introducing new production methods and global ideas to bring villages in step with modern times. The major problem lies in that the programs are usually restricted to grassroots organizations or NGOs which, due to lack of government support, are subject to financial and political barriers.

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Caijing November 11, 2012

Rural Financial Reform In order to facilitate rural financing, often obstructed by a lack of reliable mortgage options, the local government in Lishui, Zhejiang Province, launched a pilot program that allowed local farmers to request loans based on the operation of forest that they had contracted. From the end of 2008 to September 2012, the program had resulted in a tenfold increase in loans in the area. However, when the government planned to extend the mortgages to the land itself, they were told that it was illegal for individuals to mortgage land belonging to rural collectives. Analysts have argued that fundamental reforms should aim to break the monopoly of commercial banks, whose preference for State-owned enterprises means that individuals struggle to get loans. They suggest improving government-backed cooperative financial obtain loans, and setting up an independent credit appraisal system for rural areas. NEWSCHINA I January 2013


“The biggest failure of Chinese education is not that it curbs youthful creativity and curiosity – but that it falsifies these things to the point that the young will no longer blush when lying.”

“No matter what school you went to, your diploma is only a receipt proving that your family paid your tuition, not that you actually studied.” Jack Ma, president of Taobao, China’s largest

e-commerce website, on the relative value of a prestigious degree.

“Someone told me:‘Just sing. It’s not your business to think!’I replied:‘Up yours! Everyone has the right to express himself!’” Chinese rock star Cui Jian on the role of celebrities as opinion formers.

“I agree with Lee Kuan Yew. China looks for talent among 1.3 billion, while the US among 6 billion.” Zhang Yu, president of the China Performing Arts

Agency, invoking Singapore’s former prime minister in a discussion about China’s struggle to produce international stars.

“Some Chinese upstarts believe they can become aristocrats through an orgy of spending. In the West, however, social responsibility is also a feature of the aristocracy.”

Illustration by Wu Shangwen

Peking University economics professor Zhang Weiying on China’s education system.

“The further we go, the harder it becomes to reform ourselves.” Zhou Hanhua, a former advisor to the State Council, on the prospects for major political reform in China.

“Some official delegates don’t even wake up for applause.” Yuan Baocheng, mayor of Dongguan, Guangdong, on the lack of vigor among his colleagues.

“To turn to websites is better than to turn to the petition departments.” A designer surnamed Qi explaining his decision to give a migrant worker a chance to voice his demands in an online video.

“Rural graduates would rather struggle in urban employment than go back to their villages. If rural children only make it into high school or vocational school, they prefer to return to their villages.” Chinese People’s Political Consultative Conference delegate Wang Ping in a heavily-criticized remark which some took to mean he disapproved of the entry of rural youth to urban universities.

Academic Zi Zhongyun offering her take on would-be social climbers. NEWSCHINA I January 2013

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Top Story

China Finally Passes Mental Health Law On October 26, 27 years after it was first proposed, the National People’s Congress, China’s legislature, finally approved the country’s first law on mental health, which will take effect as of May 1, 2013. Although the law, according to medical experts, aims to “enhance people’s awareness of mental health,” the public and the media gave their most attention to the new “voluntary principle” which states that sufferers of mental illness can only be institutionalized without their consent if they are perceived to be a physical threat to themselves or others. “Healthy people will no longer be ‘mentally diseased,’” read one article from the State-controlled Xinhua News Agency, referring to the common practice of forcibly having petitioners and “inconvenient” people institutional-

ized to avoid having to deal with them. In 2008, China’s State media began exposing scandals involving lawful petitioners being forced into asylums by local officials or police in order to keep them quiet. In one particularly high profile case in 2010, Xu Lindong, a farmer in Henan Province, was incarcerated in a local asylum for over six years for trying to sue the local government. In 2011, Wuhan worker Xu Wu was apprehended after escaping from a secure facility where he said he had been forcibly detained for four months, again due to a dispute with the authorities. In rather insensitive language, a health laws professional Xie Zhiyong, who participated in the formulation of China’s draft 2010 law on mental health, told China Youth Daily that “the current law prevents the non-guardians

Business

Resources

iPhone Takes a Hit?

Uranium Ore Discovered in Inner Mongolia

Despite its long-term popularity in the Chinese smartphone market, Apple’s iPhone unexpectedly fell out of the top five in the third quarter of 2012, according to a report by industry watchdog Canalys. The report shows that Korean manufacturer Samsung’s range of smartphones has retained the highest market share in China (14%) for the third quarter, followed by Chinese brand Lenovo (13%) and another three domestic manufacturers. The report noted that China’s domestically-made smartphones, though often mocked as iPhone rip-offs, have narrowed the market share of imported equivalents with a combination of region-specific additional functions and cheap pricing. However, when the much sought-after iPhone 5 finally hits the Chinese market by the end of December, this trend may be reversed.

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of those suspected of mental illness from having them committed.” However, despite the new legal provisions, many believe that the focus on forced institutionalization in the new law draws attention away from the plight of China’s estimated over 100 million sufferers of mental illness, only 800,000 of whom are receiving treatment.

China has located what it claims is the world’s biggest single uranium deposit in Inner Mongolia, according to an announcement from the Ministry of Land and Resources in early November. China’s nuclear program is currently dependent on imported uranium, importing 15,000 tons in 2011, some 90 percent of the country’s total consumption, according to the China Bureau of Customs. Analysts see this Mongolian motherlode as key to weaning China’s nuclear industry off imports and onto domestically-produced uranium, though critics have warned of the risks of pushing ahead with a nuclear power station construction boom in response to the find. NEWSCHINA I January 2013


International

Economy

China will surpass Japan to Consumption Among Affluent Chinese be the world’s second big4 Total Private-household Consumption (US$tn) gest consumer market within three years, with the number 3 of affluent citizens growing to 2 280 million by 2020, according to a recent report by the 1 Boston Consulting Group 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (BCG), a global manageSource: The Age of the Affluent - The Dynamics of China’s Next Consumption Engine by BCG ment consulting firm. According to the report, China is now home to 120 million “affluent” citizens - those whose disposable annual family income reaches or exceeds US$20,000 dollars, which the report believes “represents the inflection points for sharply higher consumption.” The report predicts China’s affluent citizens spend about US$0.6 trillion annually, a figure slated to rise to 3.1 trillion by 2020, occupying 5 percent of global consumption – though, as Chinese people constitute almost one-third of the global population, this percentage is still seen as too small. In addition, key growth areas remain unchanged from previous years - cars, overseas tourism and luxury goods.

Policy

One Child Not Smart Under pressure from a rapidly aging population, the China Development Research Foundation, a State Council think tank, issued the findings of a large-scale investigative report on demographics in China this November, calling on the government to gradually lift the ban on couples having a second child. Citing the sixth national population census in 2010, the report warns that the number of Chinese nationals aged over 60 reached 178 million in 2010, nearly double the 1982 figure, while the number of those aged between zero and 14 years has reduced to 16.6 percent of the total population - down from over 33 percent 30 years ago. The report’s authors suggested a step-by-step plan to loosen the country’s controversial One Child Policy.

Culture

Panda Ambassadors China has selected a trio of international Panda Ambassadors after a closelyfought contest held at China’s foremost giant panda breeding center in Sichuan Province. Jerome Pouille (France), Melisa Katz (US) and Chen Yinrong (China) beat 13 other candidates in a final held on November 17, and will now assume their formal duties. Launched in September, the world-wide contest attracted over 60,000 entrants from some 52 countries and regions, with the finalists selected after a five-day crash course in panda care and wilderness training. The competition is now slated to become an annual event to raise awareness of the plight of China’s giant panda, of which only an estimated 1,600 remain alive in the wild. The current trio, along with US$20,000 funding, will join in a global tour in 2013 to further promote the world’s favorite bear. NEWSCHINA I January 2013

Step 1: Immediately lift the ban in the urban and rural areas that have until now had the strictest enforcement.

Step 2: By 2015, lift the ban in regions where couples are allowed to have a second child if their first is a girl. Step 3: Lift the ban

nationwide.

Chinese and American police forces have launched a joint crackdown on a major crime syndicate allegedly involved in producing and smuggling fake designer handbags. Launched in January, the campaign claims to have so far closed down 37 underground factories and seized over 20,000 counterfeit bags, including knock-offs of famous Louis Vuitton, Hermès and Gucci designs. So far, 73 people have been detained in connection with the case. According to a joint statement from both police forces, this particular “business” has been operational since 2010, and that its factories have produced nearly one million bags, most of which were sold to American and Middle Eastern consumers. Just prior to being caught, the suspected ringleader, a man surnamed Qian, had bought a large tract of land in Anhui Province which investigators believed was to become a new base of operations. Counterfeiting designer goods remains one of the world’s most profitable illegal enterprises, and is rampant in China. The estimated cost of production of a fake LV bag, for example, is no more than US$8, while the genuine article could sell for between US$2,000-3,000.

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Photo Credits: ICulture, Xinhua; Others, CFP

Knockoff Knockout

Consumption Up – Among the Rich


What’s Making China Sad ?

Poll the People A teacher walked into class in a French maid’s outfit as she had promised after the class topped the school’s performance rankings. What do you think?

Five boys, aged between nine and 13, died of carbon monoxide poisoning in Bijie, Guizhou on the night of October 16 after they hid in a dumpster to escape the freezing winter rain, lighting charcoal to keep warm. The boys were a group of brothers and cousins whose parents had migrated elsewhere for work.

What’s Amusing China ?

Respondents:

19,589 by November 19, 2012

7.3% 5.1%

I support her. The lady kept her promise. 17,159 (87.6%)

87.6%

I’m against it. It’s indecent for a teacher. 1,006 (5.1%) I don’t care. 1,425 (7.3%)

Source: www.weibo.com

Most Circulated Post Retweeted 101,302 times as November 19

A pig farmer from Ningxiang, Hunan forced his pigs into platform diving, claiming the practice enhanced the animals’ immune systems and made them grow faster. Also, pork from the diving pigs reportedly tasted better, selling for three times higher than average. Of course, it also created a spectacle for locals.

What’s Shocking China ? A Ms. Lin from Fuzhou, Fujian Province, had her cell phone stolen. When she called the phone, the thief said he was happy to give it back, since it was of too low a quality to sell. The two agreed on a meeting place, and the thief handed the phone back.

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More than 50 years ago, 20-year-old Liu Guojiang from Chongqing eloped to an uninhabited mountain with a widow 10 years his senior, since the couple’s fellow villagers did not approve of their romance. Liu had chiseled more than 6,000 steps into the mountain rocks, connecting their small cottage with the outside world, so that Jiang Chaoqing, his wife, could navigate the mountain safely. Liu died five years ago, and Jiang passed away October 30. NEWSCHINA I January 2013


Top Five Search Queries On

Over the week ending November 19 Xi Jinping 2,911,275 The new Communist Party boss

WHO’S

HOT?

WHO’S

NOT?

Gangnam Style 1,973,142 PSY’s hit K-Pop song also went viral in China

Spring Festival Gala Express 275,466 The talent show, on State broadcaster CCTV, selects performers for next year’s gala

Wall Walker Shi Liliang, a monk from the Shaolin Temple in Quanzhou, Fujian, claims to have perfected Matrixstyle “wall-walking” after years of martial arts practice.

Airshow China 2012 126,996 The show held in Zhuhai, Guangdong early November attracted 1.65 million military enthusiasts

Leonids 187,908 The Leonid meteor shower on November 18 excited China’s stargazers

Subway Bully A young woman lay down across two seats on the Shenzhen subway, then cursed at anyone who asked her to sit up, claiming that she was from Beijing, and related to a senior official.

Pu Zhiqiang Followers: 56,690 The 47-year-old is a prominent civil rights lawyer in China, having fought a number of high-profile cases concerning press freedom and defamation since he began practicing in 1997. His recent cases have mostly been in Chongqing, where he volunteered to defend a number of locals who were sent to forced labor camps for criticizing the disgraced former Chongqing Communist Party chief Bo Xilai. He fought to have their verdicts overturned, and sought compensation for them. NEWSCHINA I January 2013

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

Top Blogger Profile The Queen of Mahjong Jiao Linghua, a 57-yearold retired librarian from Shanxi Province, won her second consecutive Mahjong World Championship late October, beating more than 300 players from 19 countries and regions.

Taiyuan Sidewalks A 100-meter stretch of blind-friendly tiles on sidewalks in Taiyuan, Shanxi, contained 35 zigzags. It has been repaved after intense media coverage.

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politics

Provincial Governance

Express Delivery Focus on the “public good” has been added to the official list of criteria by which China’s local officials are evaluated by their paymasters in Beijing. But can such a concept be quantified as easily as GDP growth? By Min Jie and Li Jia

T

ime is money, and efficiency is life. This was China’s mantra throughout the 1980s and 1990s, when economic reforms unleashed a rush toward personal and, by extension, national prosperity. Nowadays, however, the ever-pragmatic Chinese citizen has begun to ponder the trade-off between an investment of time and the ultimate financial reward. Since 2011, Beijing Normal University began to issue annual reports on the efficiency of Chinese governance at the provincial level. Unlike perennial assessments of GDP growth, this research drew attention to how efficient provincial governments were at doing the job they were technically designed for – acting in the public interest. The latest such report, covering 2012, tells a familiar story. According to the rubric, China’s wealthier regions are more efficient in terms of governance than poorer areas. While this conclusion is unsurprising, the reasons cited for this efficiency gap have fueled a debate over whether China’s current model for creating a “moderately prosperous society” is the right one.

Too Poor to Grow

In China’s strict political hierarchy, provincial governments are the pivot which directly connects central decision making with local implementation. With no other comparable system to serve as a bellwether, efficiency is

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judged by the economic standard of relative input and output – in other words, how much bang the central government receives for its buck. Indicators of output include a wide range of public products and services, such as the ratio of education spending as a proportion of GDP, incidence of crime, investment in social security and infrastructure. How government spending translates into job creation, individual consumption and other positive development indicators, rather than short-term jumps in GDP, is now being seen as an important indicator of efficiency. This new report reveals some interesting patterns. China’s most prosperous eastern regions are also generally regions with a low ratio of State to private employees. The poorest western regions generally have a far higher percentage of people working in government jobs. Eight of 11 provincial governments in western China are ranked as the least efficient in the country. “Rich natural resources and cheap labor have not been turned into competitive advantages, making it less possible for their governments to improve their performance,” said associate professor Wang Hongxin, deputy director of the Academy of Government with Beijing Normal University. “Despite rapid urban expansion, heavy traffic and high housing prices, governments in the east have made more effort to improve their competence in providing public services

and undertaking social management,” Professor Tang Renwu, the principal author of the report, told NewsChina. The principal reason for this enduring “efficiency gap,” according to the report, is “institutionalized social fragmentation.” The most visible manifestation of this phenomenon given by the authors is the household registration, or hukou system. Rural residents who fail to secure urban residency permits are prohibited by law from becoming city residents or benefiting from any form of social welfare provision outside of their birthplace. Effectively a form of internal visa, the hukou is widely loathed for its perceived discrimination against poor, rural citizens – who make up the majority of China’s western regions. Within this already bifurcated national economic structure lies a further level of institutionalized fragmentation, a legacy of the planned economy era of the Cold War, which further undermines organic economic growth. Heavy industries, such as aviation, heavy machinery and power, were relocated en masse to the remote hinterland during the Cold War in an effort to protect strategic industries from Soviet or US attack. These various industries continue to operate in isolation, meaning that, despite being lucrative, profits are funneled directly to Beijing, and local communities benefit little, if at all. In other rural western areas, family-run micro-factories which stand side-by-side with local farmland are equally distanced from their immediate economies – oftentimes, the owner-operators of these factories are barely on speaking terms with the farmers growing crops within sight of their offices. The initial phase of Reform and Openingup, spearheaded by the developed coastal regions and former treaty ports, kept the focus squarely on China’s affluent east, which continued to attract the most favorable policies from the center. Western areas were either simply used as a recruiting ground for cheap labor or a source of cut-price capital and resources.

Institutionalized Inequality

To Chinese observers, the problem of the wealth gap is not a simple matter for economists to solve. Rather, it is an unwanted byproduct of Socialism with Chinese Characteristics. College graduates in China flock toward a precious annual crop of government jobs, even though they could earn double if they NEWSCHINA I January 2013


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Ranking of China’s Provincial Government Efficiency

Jiangsu Beijing Shandong Zhejiang Liaoning Shanghai Guangdong Tianjin Hebei Heilongjiang Anhui Hubei Henan Shanxi Inner Mongolia Jilin Fujian Shaanxi Sichuan Xinjiang Jiangxi Hunan Guangxi Hainan Qinghai Ningxia Gansu Yunnan Chongqing Guizhou Tibet

2012

2011

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

1 3 5 4 6 2 9 7 8 10 15 23 20 17 11 12 16 14 19 18 22 24 25 29 13 21 27 28 26 30 31

Source: Beijing Normal University Report on Provincial Government Efficiency in China 2012

went into the private sector. The reason for this apparently counterintuitive pursuit of less well-paid employment is that government jobs come with a number of invaluable perks including the guarantee of a job for life, subsidized healthcare, housing and pensions. Only the most elite private sector jobs offer such a generous welfare package. In a country where sudden illness, mortgage repayments, divorce and other expenses frequently bankrupt entire families, a government safety net is infinitely preferable to a fat salary with no security. The central government is not blind to this discrepancy, but has passed the responsibility for evening out China’s alarming wealth gap on to local officials. The same team from Beijing Normal University recently released a separate report which listed China’s provinces in order NEWSCHINA I January 2013

16 5

20

15

2

26

25

27

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of their effectiveness in distributing welfare to those who need it. Once again, the east came out on top, and the west brought up the rear. However, experts argue that simply injecting more capital into China’s already bloated welfare system is unlikely to lead to a redressing of the country’s chronic prosperity imbalance. Professor Wang Yongjun with the Central University of Finance and Economics warned reporters that the cost of providing for the public good has to be offset against how much debt an individual provincial government has racked up in the pursuit of short-term GDP gains. If these debts are ignored, and more public money is poured into inefficient and spendthrift provincial welfare schemes, he remarked, acting in the interests of public good could turn into “a tiger that, once released, is impossible to cage again.” The relentless pursuit of GDP growth in the past 30 years was always going to result in policies which primarily used provincial GDP as the sole measure of officials’ performance. Those whose jurisdictions showed bullish growth, regardless of whether or not that growth was engineered through investment in costly white elephants or even out-and-out fraud, were promoted. Those who failed to produce double-digit GDP growth figures, according to Professor Tang, remained stuck where they were. If the same standard applied to the measurement of government efficiency is applied to so-

3 1 11

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29

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30 Northeast East Middle West

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31 19

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cial policy, it will reinforce an existing tendency for local governments to “waste and abuse public resources,” said Professor Tang. This quantitative approach to judging the effectiveness of officials, already controversial, could be catastrophic if it becomes the gold standard for evaluating social policy. Changing the evaluation criteria for government officials has long been touted as a necessary step towards weaning China’s governors off their GDP addiction. Environmental protection, food safety and public health have already become compulsory standards for official promotion in many places. However, targets in these areas are frequently approached in the same way as GDP growth – officials strive to initiate more projects than anyone else, paying scant attention to the need for or effectiveness of said projects. “What is in short supply in China is neither capital nor technology,” argued Professor Wang Hongxin. “It is institutions which manage political and economic resources in the most efficient way possible.” As the public ultimately pays for their own “good,” any inefficiency in this area is going to damage a government charged with maintaining and ensuring the fair and equitable distribution of wealth. Unless this problem is solved, the relative scale of government will make no difference to its effectiveness in dealing with the social problems which increasingly threaten to derail China’s long-term development. 

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cover story

THE MAGNIFIC MAGNIFI China’s new leadership have inherited the Communist Party’s problems as well as its triumphs. Away from the pomp and ceremony, can this new generation of politicians continue to meet the expectations of an increasingly watchful public?

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NEWSCHINA I January 2013


The new Standing Committee of the Politburo meet the press in the Great Hall of People, Beijing, November 15, 2012 NEWSCHINA I January 2013

Photo by Xinhua

ICENT SEVEN

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Opening ceremony of the 18th National Congress of the Communist Party of China, November 8, 2012

Photo by Xinhua

cover story

NEWSCHINA I January 2013


Party Congress

People Aspire, Leaders Perspire With even China’s leading State broadcaster willing to depict confusion and disaffection with the status quo, China’s new generation of leaders must confront the challenges of governing an increasingly self-aware population By Yu Xiaodong

T

he conclusion of the 18th National Congress of the Communist Party of China (CPC) on November 14, with its main event the “unveiling” of China’s next generation of leaders, held few surprises. Inside the Great Hall of the People, shining red carpets, rows of identical dark suits broken up by the colorful, and

NEWSCHINA I January 2013

mandatory, traditional garb of official minority nationalities, and carefully-delivered speeches from leaders old and new, treated China to the exact brand of ritualized solemnity expected of CPC grand assemblies. Outside, tight security measures and meticulously filtered media coverage ensured a flawless show of absolute unity, both within the Party and among the Chinese people as a whole. In short, it was business as usual. Having led the country through three decades of unprecedented economic growth while consolidating and expanding its grip on power, the Party still faces serious challenges. Signs are emerging that China’s 1.3 billion people are growing anxious about the direction in which their country is headed, and some may have wished for a little more substance from the men and women at the apogee of its political scene.

‘Are You Happy?’

This anxiety can be best encapsulated in the example of a prime-time news show which, in early October, sent reporters out to gather warm and fuzzy vox pops from the men and women on the street in celebration of the imminent Congress. Each interviewee was asked a single question: “Are you happy?” Their responses, broadcast nationwide, sparked a complex and ongoing debate over the state of the nation. What made the show more astonishing was that it was broadcast on China’s main State broadcaster, China Central Television (CCTV), a channel renowned for its rigid adherence to the Party’s strict media policies. Far from editing the hours of footage to isolate the “happiest” interviewees, the show, broadcast during the National Day holiday week and only weeks before China’s once-ina-decade leadership transition, gave an equal platform to those who admitted, even on camera, to being less than satisfied with the status quo. Others were cryptic, or cunningly evasive, in their responses. CCTV claimed that its reporters interviewed over 3,350 people, broadcasting 147 of these interviews. By far the most-tweeted answer on China’s social media came from a 38-year-old migrant worker from Yunnan Province. “Don’t

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Photo by AFP

cover story

Leaders of the Communist Party of China at the closing ceremony of the Party Congress at the Great Hall of the People in Beijing on November 14, 2012

parents are healthy.” “But someone cut in line when I stepped out to answer your question,” he added, visibly irritated. These often irrelevant, evasive and even disoriented answers, collected from retired workers, students, tourists, and farmers, gave the serial feature the feeling of a satirical reality show – hardly the effect the producers were likely to have been aiming for. The fact that these mixed messages were anachronistically aired on CCTV, a station famous for its unwavering support of the Party and the government, added to the show’s popular appeal. Within days, the question “Are you happy?” became a popular phrase both on and offline, as the general public, excluded from mainstream politics, embarked on a week of soul-searching.

Photo by by AFP

Happiness

Outgoing party secretary Hu Jintao delivers his keynote address

ask me, I’m just a migrant worker.” One of the interviewees was a 73-year-old man, scavenging empty plastic bottles on the street in Haining, Zhejiang Province. “Are you happy?” asked the reporter. “I live on a government subsidy of 650 yuan ($104) a month,” answered the old man, “The government is good,” he continued, appearing confused. “My question is, are you happy?” asked the reporter. “I’m a little deaf,” replied the man. When asked: “What have been the happiest and unhappiest events in your life so far?” an 18-year-old college freshman fretfully queuing to buy a railway ticket in a crowded railway station in Zhengzhou, Henan Province, replied: “The happiest thing is that I’ve grown up and my

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How objectively “happy” China is has long been a topic of contention. A Gallup poll conducted between 2005 and 2009 ranked China at number 125 out of 155 countries in terms of life satisfaction, with only 9 percent of respondents of describing themselves as “thriving.” A domestic survey conducted by Horizon Group was more upbeat, with 69.8 percent respondents describing themselves as “relatively happy.” The results of a survey conducted by CCTV in 2010 fell between the two, with 44.7 percent of respondents describing themselves as “happy.” It seems that both who asks the questions, and how the questions are phrased determines how relatively happy Chinese citizens perceive themselves to be. The prominent role of the State in everyday life, paired with the relentless pace of change experienced by most Chinese people in the last several decades, has tied the average person’s sense of social satisfaction to their interaction with their external environment. This logic dictates that an individual’s attitude toward the organs of state, which play a central role in almost every aspect of a Chinese individual’s life, from housing and education to birth control and mass media, will determine their attitude to their own personal circumstances. Therefore, any debate over how “happy” China is has less to do with an objective notion of happiness and more to do with the level of public satisfaction with “the system” as a whole, and the individual’s role within it. An economic slowdown, widening income gap, and NEWSCHINA I January 2013


widespread polarization of political opinion have all contributed to public concerns over the sustainability of China’s growth model and the very future of the country. Moreover, the prominent role of the Internet and social media in disseminating a spectrum of viewpoints has given a public platform to these concerns, something unthinkable even the previous leadership transition in 2002. In a survey conducted prior to the Party Congress by the China Youth Daily and pollster minyi.net.cn, 11,405 respondents across the country were asked about their confidence in China’s development over the coming ten years. Just over half (56.6 percent) responded that they felt “confident about the country’s future,” while 47.4 percent said they “lacked confidence” in their “personal futures.” When asked to identify the social issues most urgently in need of improvement, the top five were healthcare, education, food security, income distribution and housing, followed by anti-corruption and the pension system. It is no coincidence that these five areas are generally the most singled out by critics of the status quo. “How can people be happy when they lack a sense of security?” asked 32-year-old Wang Nianfa, a Party delegate who trains rescue workers, in an interview with State news agency Xinhua. Being relatively young and in full-time employment, Wang is hardly typical of the 2,200 Party delegates who gathered in Beijing to oversee this year’s Congress. With an average age of 52, most of Wang’s peers are lifelong Party cadres holding powerful positions in their respective provinces. However, Wang is an important symbol of a changing China. His generation has grown up in a period of relative prosperity, and as a result, are better-educated and better informed. This often makes them more likely to be outspoken when it comes to their opinions and aspirations. Many young Chinese, both within the Party and outside of it, want their country to develop the kind of comprehensive welfare systems, egalitarian ethics and rule of law enjoyed in the developed world. Perceived shortcomings in the extant systems currently in force in China only serve to aggravate their frustrations.

Aspirations

China’s top leaders are by no means ignorant of these aspirations. Premier Wen Jiabao has directly addressed

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Poll: Issues identified as hindering China’s development in the next ten years Widening income gap 75.4%* Unchecked government power 59.4% Vested interest groups 52.8% Environmental deterioration 52.6% Infringement upon the rights of marginalized groups 50.3% Economic slowdown 31.3% International relations 28.2% The aging population 27% Others 4.1%

Poll: Areas identified as most urgently in need of improvement Medical system 68.8%* Education 62.8% Food security 60.3% Income distribution 56.7% Housing 53.5% Anti-corruption 53.4% Pension system 52.1% Social security 50.4% Environmental protection 46.3% Employment 43.5% * Percentage of respondents identifying with the issue Source: China Youth Daily

the question of “national happiness” in an online dialog with netizens, following his keynote speech on “a life with dignity,” delivered in 2010. During his dialog, Wen itemized the precise steps the government should take to help people enjoy a happy life, with “dignity and decency” being guaranteed through the liberties and rights enshrined in China’s constitution and law. He also acknowledged various social problems which have fueled public concerns, such as the widening income gap, rocketing housing prices and rights violations. Following his speech, the central government lowered

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Photo by CFP

cover story

Journalists wait for the newly selected members of the Standing Committee of the Politburo, November 15, 2012

its GDP growth target, a sign that the government was slowly turning away from its previous policy of GDP growth at all costs. In the same year, seven provinces established targets aimed at closing the income gap, beginning with the implementation of restrictions on housing prices. However, all of these measures, incremental and isolated, have yet to boost people’s confidence, and the income gap yawns wider than ever. This has led some to point to political stagnation as the root cause of China’s various social problems. The fact that even the State broadcaster has broken with tradition to highlight these problems indicates a certain degree of acceptance even in the upper echelons of the Party that for China to flourish, it will have to adapt. In the China Youth Daily survey, when asked to identify the issues hindering China’s development, the top five listed by respondents were the widening income gap, unchecked government power, vested interest groups, environmental deterioration and infringement upon the rights of marginalized groups. Economic slowdown, often held up as China’s most pressing concern, came a distant sixth, followed by international relations and the aging population. All but one of these five “most urgent” issues are seen as solvable only through political reform. In total, 72 percent of those polled said that they hoped for a “new round of reforms,” implying such reforms would be political in nature, in the coming decade. Acknowledging this desire for political change, Premier Wen, in his keynote speech during the 18th Party Congress on November 9, repeated previous pledges that the Party would devote itself to carrying out “three major tasks” in the next ten years. Firstly, the government

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will endeavor to increase average income while closing the income gap. Secondly, it will step up its crackdown on corruption, a problem Wen and other ministers have repeatedly identified as potentially severe enough to cause the collapse of the Party and the government. Thirdly, the Party will promote democracy and the rule of law. The precise meaning of the terms employed by Wen during his address, along with the details of any concrete policy objectives, remain, as ever, undefined. While this lack of specific detail is typical of the content of speeches made during major Party caucuses, it also contributes to public unease. Earlier, non-specific pledges for reform have frequently been shown to be simple bluster. More than three decades of breakneck economic growth, while improving the average quality of life for millions, has created a legion of powerful interest groups, who are likely to oppose any change to the system which created them. The income gap, by all accounts the average Chinese citizen’s primary area of concern, is the direct result of a system of heavy taxation, the protection of State monopolies in key industries and unequal access to public services. While addressing these problems has been the primary pledge of Party leaders for almost a decade, there are no signs of a shift in actual policy. In its latest effort to push ahead with reform, the State Council in early October again pledged to release a concrete grand plan on income distribution reform by the end of 2012. Since then, rumors have emerged that powerful agencies and business interests within the Party have strongly opposed this plan. Many looked to China’s recent leadership transition as a bellwether for reform. In his first nationally broadcast speech as Party chairman, Xi Jinping readily acknowledged these aspirations. “Our people have great enthusiasm for life. They hope for better education, more stable jobs, more satisfactory incomes, more reliable social security, medical services with higher standards, more comfortable living conditions and a more beautiful environment,” he said. Admitting that “there are many pressing problems within the Party that urgently need to be resolved,” Xi vowed to “deliver a satisfactory answer to history and the people.” Nobody could fault Xi’s objectives. However, it will be the concrete actions of the Party’s new chairman and his colleagues, and whether or not their actions bear fruit, which will ultimately determine the “satisfaction” of an increasingly well-informed and, crucially, expectant population. NEWSCHINA I January 2013


Party Congress

Ready for Action? Hope for change ran high during China’s leadership transition, but the Party kept its cards close to its chest By Yu Xiaodong

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his year’s leadership transition during the 18th National Congress of the Communist Party of China (CPC) has attracted far more worldwide attention than the last one in 2002. A major focus of coverage was whether this transition would reveal any signs of a major shift in government policy in the coming years. Despite three decades of economic progress, the country has been challenged by a litany of increasingly visible and chronic social problems. China’s next decade, and how it is managed, will have colossal impact both on the country’s 1.3 billion people and the rest of the world. While grandiose Party meetings haven’t typically included concrete policy pledges since the days of Deng Xiaoping, the choice of wording in official documents has long been used as a peephole into the substance of Beijing’s closed-door realpolitik. Behind the buzzwords and ideological assertions of the countless reports issued during the Party Congress, argue analysts, lie the top leaderNEWSCHINA I January 2013

ships’ assessment of their own performance, as well as future aims.

‘Consultative Democracy’

With a wide range of social problems and anxieties now accepted as part of modern Chinese life, Party rubric is being scrutinized more closely than ever for any sign that the principal grievances of an increasingly techsavvy and well-educated population are genuinely being listened to. In their keynote speeches, both the outgoing Party secretary Hu Jintao and his successor Xi Jinping warned of the dangers of corruption within the Party. Hu stated that corruption alone threatened “fatal damage” to the Party’s image, and if left unchecked could lead to the “collapse of the Party and the fall of the State.” These sentiments are not unusual, even when expressed at this level. The CPC has been waging an internal but highly-publicized war on corruption for decades. However, new cases of egregious embezzlement and fraud by Party officials surface on a daily basis, and the recent fall of Bo Xilai, to date the highest-level Party official to face criminal charges of corruption, has done little to assuage public concerns. In presenting the Party’s official work report during the Congress, Hu highlighted the importance of political reform. “We must continue to make both active and prudent efforts to carry out reforms of the political structure,” Hu said. In total, he mentioned the word “democracy” 69 times. However, few of those familiar with the CPC terminology would misinterpret this as a statement of support for a transition to a western-style, multi-party democracy. Any notion that the CPC might embrace such radical reforms was dispelled later in Hu’s keynote speech. “We should…give full play to the strength of the socialist political system and draw on the political achievements of other societies. However, we will never copy a Western political system,” he said. Instead, Hu’s work report calls for “consultative democracy.” “[The Party] will endeavor to perfect the institution of socialist consultative democracy, to improve the working mechanisms for consultative democracy, and to promote its comprehensive, plural and institutionalized

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cover story China’s new leadership – the Standing Committee of the Politburo

Xi Jinping, 59, from Shaanxi, Party Secretary, Chairman of the CPC Armed Services Committee, Vice-president, expected to succeed Hu Jintao as President in early 2013

Li Keqiang, 57, from Anhui, Vice-premier, expected to succeed Wen Jiabao as Premier in early 2013

development.” At a stroke, Hu’s work report made “consultative democracy” the Party’s new buzzword. However, the term’s specific meaning remains clouded. Chen Jiagang, a researcher with the Compilation and Translation Bureau of the CPC Central Committee, a Party think tank, told NewsChina that the concept of consultative democracy caught the Party’s attention in 2003, and entered Party textbooks in 2006. The official definition as set out in Party literature is “to carry out people’s rights through voting, and to conduct thorough consultation among the people prior to making decisions on key policies are two important forms of socialist democracy.” According to Chen, both “electoral democracy” and “consultative democracy” are endorsed as part of the ideal system of socialist democracy, and the highlighting of consultative democracy during the Party congress indicates that the party has made a choice between the two. “It is a realistic choice, given the aspirations for progress with political reform, and the perceived risks in launching large-scale democratic elections,” Cai Xia, a Central Party School professor, told NewsChina. According to Cai, the concept is aimed at canvassing a greater range of public opinion, while keeping decision making firmly in the hands of Party officials. In the past years, thousands of “mass incidents,” or violent protests against land appropriation and chemical plant projects that were seen as posing a health risk to communities, were seen as a consequence of local officials’ failure to consult with their constituents. Many are suspicious of the effectiveness of this approach. On the rare occasion when specifics are given about what “consultative democracy” would entail on the ground, it seems to have added little new to standard Party procedure. Public hearings have been long established by

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Zhang Dejiang, 66, from Liaoning, Vice-premier, former Party secretary of Chongqing

Yu Zhengsheng, 67, former Party secretary of Shanghai

decision makers in many of China’s cities, and are viewed with increasing skepticism as an effective forum for public opinion since many only take place once a decision has already been made. Many point to a pilot program in Wenling City, Zhejiang Province as a preferable model. In Wenling, a city with a population of one million, democratic consultative meetings are held to determine the budgets of some 30 city agencies. This approach has made citizens feel invested in their community, and has been widely touted as a workable model for the rest of China. However, Chen Jiagang believes that for a program like that in Wenling to be workable on a bigger scale, it requires a top-down approach, starting with the central government.

‘Scientific Outlook of Development’

One change highlighted in the State media coverage of the 18th Party Congress was enshrinement of the concept of the “scientific outlook of development” in the newlyamended Party constitution as an official guiding socioeconomic ideology of the Party (along with Marxism, Leninism, Mao Zedong Thought, Deng Xiaoping Theory and Jiang Zemin’s concept of the Three Represents). First raised at a Party meeting in October 2003, the concept preaches a human-centered comprehensive development model, incorporating sustainable development, social and cultural infrastructure and technological innovation. The concept has subsequently been cast as the contribution made by the fourth generation of Party leaders, led by Hu Jintao, to the development of Socialism with Chinese Characteristics. The clarification of the concept of the “scientific outlook of development” may indeed indicate a shift in priorities. In 2007, during the 17th Party Congress, “growth” was identified as the “primary meaning” of this concept. DurNEWSCHINA I January 2013


Wang Qishan, 64, from Shanxi, Secretary of the party’s Central Commission for Discipline Inspection, Vicepremier

ing the 18th Party Congress, however, “growth” found its place usurped by a goal of “the establishment of ecological civilization,” which is the theme of a separate chapter in the Party working report. The revision is believed to be a nod to growing public dissatisfaction with a development model prioritizing absolute GDP growth at the perceived expense of other forms of development. This approach is blamed for China’s widening income gap, environmental deterioration, food safety scandals, and shortcomings in the healthcare system. In the past a couple of years, NIMBY protests against chemical plant projects erupted in the cities of Shifang, Dalian and Ningbo, all of them decrying the environmental degradation associated with such projects. In outlining the government’s future economic goals, outgoing Premier Wen Jiabao also refrained from offering up new GDP targets. Instead, he pledged that the Party would “help to double the average personal income by 2020.” Again, this seems to be an acknowledgement of public anger over the discrepancy between the State and private sectors in terms of individual income, with government coffers swelling year-on-year while personal incomes, when adjusted for inflation, have stagnated. However, the remarks of outgoing Party officials are never seen as having the same level of significance for future direction as those of their replacements. All eyes were on the newly-anointed Party Secretary Xi Jinping to offer a glimpse of his generation’s strategy for managing China’s next decade. In his short keynote speech, Xi mentioned “the people” 19 times. In another speech, delivered two days later on November 17, Xi Jinping pledged that the Party would “ensure that the fruits of development will benefit all people in a fairer way.” Many remain unconvinced. After all, Xi’s pledge NEWSCHINA I January 2013

Zhang Gaoli, 66, from Fujian, former Party secretary of Tianjin

Photo by CFP

Liu Yunshan, 65, from Shanxi, former publicity minister

A man stops to watch TV coverage of Xi Jinping’s first speech as Party secretary, Beijing, November 15, 2012

was an effective repetition of the one made by Wen in 2010, when he promised to “let ordinary people share the fruits of development.” Since then, the income gap has further widened, and while national GDP growth has slowed, the government revenue stream continues to surge ahead. “The Party has done enough in raising lofty concepts, which is quite easy,” a local party official in Shandong province, speaking on condition of anonymity, told NewsChina. “It is now the time to do the difficult stuff – the real work.”

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society

Child Abuse

Out of Line, Out of Reach After shocking photographs of kindergarten teachers physically abusing their students went viral, China is having to confront some uncomfortable realities, chiefly its lack of a legal framework to prosecute child abusers

Photo by CFP

By Xie Ying

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NEWSCHINA I January 2013


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miling gleefully, a young woman lifts a five-year-old boy into the air by his ears as he, sobbing in visible pain, struggles to free himself. The boy’s classmates huddle, terrified, in one corner of the classroom. This shocking photograph recently swept the Chinese blogosphere, inevitably leading to a public outcry. An online “human flesh search” by outraged netizens soon identified the young woman as Yan Yanhong, a kindergarten teacher in Wenling, Zhejiang Province. Having located Yan, those seeking to punish her for her misdeeds were shocked by scores of blog entries in which she had proudly documented other “punishments” administered to other children in her care, accompanied with photographs. One picture shows a young boy’s mouth sealed with Scotch tape. In another, a different boy has apparently been hurled head-first into a garbage bin. “It is unbelievable that a teacher could abuse children so frequently, and yet no one ever tried to stop her,” ran one typical post on Sina Weibo, China’s biggest microblog platform, where the story initially broke. Yan Yanhong denied she had “abused” her charges. Her defense was, however, even more shocking. “I did it just for fun… I just thought it would be quite interesting if I had [these incidents] photographed… I underestimated the consequences,” she explained to the media. As a result of Yan’s statements, she found herself an instant hate figure, with many netizens calling her “brutal” and “a demon” who “treats children as toys.” Although her employer went to great lengths to inform the public that the kindergarten had fired Yan Yanhong on the same day the controversial images had appeared online, this did little to assuage the anger, with many linking Yan’s ability to abuse children with impunity to a general lack of standards in Chinese kindergartens. “Will the sacking be the end to this? What if this woman someday gets a job in another kindergarten and continues to abuse children?” questioned Ma Zhenguo, a popular online critic. “Those who have abused children must be heavily punished,” posted actress Yao Chen, one of China’s most-followed microbloggers. NEWSCHINA I January 2013

A boy’s mouth sealed with Scotch tape

A boy hurled head-first into a garbage bin

Criminal?

Wenling police, under pressure from a growing online campaign, detained Yan Yanhong for “stirring up trouble,” a charge with a broad range of applications in China which can range from assault to political protest. However, even this attempt to quiet critics was met with derision, with netizens criticizing the law itself as “ridiculous” when applied to a case of child abuse. “There is no such crime as ‘child abuse’ in Chinese law, and Yan’s actions do not fit into

Yan Yanhong lifts a boy into the air by his ears

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Photo by CFP

society

The kindergarten where Yan Yanhong worked has removed her photo from its faculty photo wall, October 30, 2012

other legal categories,” Lu Junxiang, a lawyer with the Beijing-based Crown and Rights law firm, told NewsChina. According to Lu, China’s Constitution and some other laws all include clauses which mention “protecting children,” but none of them is applicable in Yan’s case. “China’s Law Governing the Protection of Minors just covers dos and don’ts, without defining the subject of responsibility, making it impossible to enforce,” Lu told NewsChina. “Under China’s Criminal Law Statute, only family members [of the victim] can be charged with abuse – and students are obviously not family members of their teachers.” “Criminal intentional assault charges can only be alleged according to the injuries done to the victim,” Lu added. Wang Xiaoming, a criminal law professor with Beijing Union University, agrees that the relevant laws on child protection are not specific enough. “The crime of ‘stirring up trouble’ is actually a controversial ‘pocket crime,’ like the already abolished crime of

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‘hooliganism’ which, ambiguously defined, could be applied to many types of acts,” he told NewsChina. “It is really embarrassing that the police had to fall back on a controversial charge just to ease public anger.” Lu Junxiang believes that, from a legal standpoint, “stirring up trouble” may not be applicable to the Wenling abuse case, since the alleged crime “didn’t occur in public or disrupt social order.” It is this legal ambiguity which has led a small number of commentators and legal professionals to defend Yan Yanhong, in principle at least, as to convict her on the current charges could set a dangerous legal precedent. However, even Yan’s defenders seem unsure of their legal footing. “I bet Yan‘s acts do not violate [existing] laws,” said Wang Zhi’an, a CCTV anchor, on his microblog. “We should carry out further investigation,” he added. His posts almost instantly attracted widespread criticism and explicit verbal abuse, and he was forced to quickly delete them. The courts, however, sided with Yan, despite growing public calls for the harshest possible sentence. The procuratorate – a judicial intermediary body which determines which cases will go to formal trial – threw out the case on November 5 on the grounds that “further investigation and judicial expertise is required.”

Campaign

Yan Yanhong, while high-profile, is not the only person to be outed as a child abuser by China’s eagle-eyed blogosphere. In October alone, State media reported additional cases of alleged abuse in schools. One kindergarten teacher in the city of Taiyuan, Shanxi Province, was filmed slapping a student across the face over 70 times as punishment for answering a math question incorrectly. A second teacher in Wuhan, Hubei Province, reportedly rammed a disobedient pupil’s head into a classroom wall. A particularly shocking case emerged in late October, when media outlets revealed that a number of teachers in an upscale kindergarten in Shandong Province charging 20,000 yuan (US$3,125) in annual enrollment fees were pricking students’ legs with

needles whenever they misbehaved. “I couldn’t believe such a high-end kindergarten would treat the children with violence until I saw the spots of blood on my son’s legs, and the school’s surveillance video proved what my son told me,” Wei Chunlan, a mother of one injured student, told the local media. In their reports, the State media largely attributed these examples of child abuse to a lack of appropriate supervision and vetting of unlicensed schools and teachers. Reporters went so far as to claim that Yan Yanhong, for example, did not have a teaching certificate, and soon similar claims were made concerning the Taiyuan and Wuhan cases. However, some outlets were forced to retract their assertions when a further investigation into the Wuhan abuse case revealed that the teacher involved was once awarded the prize of “Outstanding Teacher” by their employer. “Given the alarmingly high rate of exposure when it comes to child abuse cases, I think it is time to criminalize child abuse in the existing Criminal Law Statute,” Zhang Xingshui, a researcher specializing in family law at the China University of Political Science and Law, told China Youth Daily. A survey accompanying the article indicated that over 95 percent of respondents agreed with his views. “The Criminal Law Statute is clearly applicable to the Shanxi and Shandong cases as obvious injuries had been inflicted,” said Wang Xiaoming, the law professor. “The real problem lies in how to deal with incidents that do not result in actual injury to the victim - as in Yan’s case.”

Tradition?

According to Chu Zhaohui, a researcher of the National Institute of Educational Sciences, a traditional tolerance for corporal punishment when administered by parents or teachers in order to discipline unruly children can often lead Chinese people to turn a blind eye to serious physical abuse. “Traditionally, Chinese parents believe their kids are their private property and there is no need to respect them. Some even question whether their kids have a distinct personality,” he told our reporter. NEWSCHINA I January 2013


NEWSCHINA I January 2013

Photo by CFP

A seven-year-old girl is scalded with boiled water by her father for allegedly refusing to help him shoplift, Guangzhou, August 23, 2011

Photo by CFP

“Take my school as an example,” said Cao Lin, a retired elementary school principal. “Many teachers, including me, beat students with sticks, made them stand upright in the corner of the classroom or made them do physical exercise or homework as a punishment.” “If it hadn’t been for microblogs, corporal punishment would have remained ignored until now, unless it resulted in serious injuries,” he continued. “It is worth noting that many parents request that teachers use corporal punishment in order to better educate their kids, which, I believe, partly serves to fuel child abuse.” A comprehensive survey carried out in 2005 by the UNICEF showed that nearly 75 percent of Chinese children had been “somewhat abused” by family members. In 2008, a child abuse prevention organization in Xi’an sponsored a survey of 300 school students which revealed that over 60 percent had been physically punished by their parents in the form of beatings, being forced to stand upright in a corner or by being deprived of food or sleep. Six percent said that they had been “seriously beaten” by their parents. When our reporter clicked on an online forum thread titled “Is corporal punishment child abuse?” on China’s biggest bulletin board tieba.baidu.com, they found little consensus on the issue, though a majority seemed to agree that “light corporal punishment should not be considered abuse.” “I sometimes slap [my son] on the palm of his hand. Is that counted as abuse?” Shi Qing, mother of a four-year-old boy living in Hangzhou, asked NewsChina. “Given that corporal punishment is very common in China, it would be very hard for lawmakers to clearly and correctly define what the crime of ‘child abuse’ is,” lawyer Lu Junxiang told NewsChina. “For example, on what level should corporal punishment be considered abuse? And should other acts such as verbal abuse or humiliation, as in the Yan case, fall within the [criminal] category of abuse?” While some are calling for Euro-American-style child protection laws, which tend to go into exhaustive detail about what precisely denotes abuse, Wang Xiaoming believes that this “might not work as effectively in China

A seven-year-old allegedly whipped by his stepfather, Dongguan, Guangdong Province, April 16, 2012

if copied mechanically.” “In the US, for example, someone can report a neighbor’s abuse of their child to the police, but in China there are no official procedures for the handling of such cases, even if such a report is received,” he said. “According to Chinese laws, abuse is defined by ‘self-accusation,’ meaning the wrongdoing has to be alleged by the victims themselves with the proviso that their injuries

are severe enough to warrant an indictment,” Lu Junxiang told our reporter. “How exactly is a child expected to understand this?” “Right now, China now lacks any legal framework for dealing with child abuse,” Lu continued. “The increasing level of importance attached to individual rights and interests is a global phenomenon. China, of course, should not duck its responsibilities under the pretext of ‘tradition’ or ‘culture.’” 

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society

Overseas Purchase Agents

Smugglers Caught After an air stewardess was sentenced to 11 years in prison for smuggled foreign cosmetics, “overseas purchase agents” across the country are thinking twice about running the customs gauntlet By Yang Zhenglian and Yuan Ye

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n China, a pair of Tod’s shoes will likely set you back around 4,000 yuan (US$635) from an official outlet. However, ask someone to buy the same pair of shoes abroad and bring them back to China, and you could get them for as little as 2,400 yuan (US$381). By far the easiest way to take advantage of such savings is through “overseas purchase agents,” gray-market importers dealing in everything from iPhones to baby formula. In recent years, the overseas purchase agency business has become hugely popular, attracting quality-conscious Chinese consumers by offering prices drastically lower than those found in official Chinese retail stores. However, the recent conviction of a former flight attendant running an overseas purchase agency sent shock waves through the booming industry, up-ending agents and disappointing hordes of consumers. On September 3, 30-year-old former flight attendant Li Xiaohang was sentenced to 11 years in prison and fined 500,000 yuan (US$79,000) by the Beijing Second Intermediate People’s Court, on the first ever charge of “smuggling ordinary goods.” According to the prosecution, Li Xiaohang and her two partners “smuggled” large quantities of goods into China from 2010 to 2011, evading a total 1.13 million yuan (US$179,000) in taxes. Li and her partners purchased cosmetics from tax-free stores in South Korea, then brought them back to China in their luggage without declaring them to customs, in order to sell them through Li’s online shop at prices much lower than in Chinese stores. Business was booming.

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“I just wanted to earn a living by myself so I didn’t have to ask my parents for money after leaving from my job…I didn’t think I was breaking the law,” said Li in court, through her tears. She left Hainan Airlines in 2008 before opening an online shop on Taobao.com, one of the country’s largest e-commerce websites. “I didn’t intentionally evade customs inspection,” she said. “I didn’t know that cosmetics needed to be declared.” Nonetheless, other agents are now waking up to the perils of the industry, and are avoiding the tag “overseas purchase agent.” According to data from the China e-Business Research Center, a third-party e-commerce research institute in China, China’s total volume of overseas purchases reached 26.5 billion yuan (US$4.2bn) in 2011. In 2012, according to the same data, it could hit 48 billion yuan (US$7.6bn). Yet, Li’s trial has served as a stark warning. It shows that the government’s tolerance towards the major profit source for these businesses – tax exemptions on goods imported for personal use – is coming to an end.

Good Times are Over

Li Xiaohang officially entered the overseas purchase industry in 2010. Before that, she had been running her Taobao store for two years, purchasing cosmetics from other online stores, marking them up and reselling them. Some of her suppliers were among the earliest overseas purchase agents. Li soon found her capacity as a former flight attendant to be a significant advantage – customers tended to trust the authenticity of her cosmetics, a category of foreign products particularly popular with Chinese online shoppers. Through her suppliers, Li met her business partner Zhu Ziqiao, a senior engineer at Samsung in South Korea. Li got into the business at just the right time – Chinese C2C ecommerce had hit full stride. Founded in 2003, Taobao had a total of 170 million registered users by 2009, with a transaction volume of 208 billion (US$33bn) that year. Shops on Taobao have created millions of jobs, and a fair number of millionaires. Meanwhile, the global financial crisis between 2007 and 2009 was the perfect storm for Li and her peers. In the West, an overstock of luxury products and other desirable goods resulted in a wave of heavy discounts. Meanwhile, the Chinese government was trying to spur domestic consumption due to the decline in exports. With the incremental appreciation of the Chinese yuan, Chinese consumers’ purchasing power for overseas products, especially luxury goods, saw an unprecedented increase. Many consumers chose foreign products online or in stores in China, then found agents to buy them abroad. In fact, overseas purchasers had already been operating informally for many years – Chinese students studying overseas would often purchase goods for their friends and relatives back home. Eventually, 10 percent became the standard mark-up, and with the arrival of C2C e-commerce, acquaintance-based transactions evolved into a miniature industry, with overseas students, workers and flight attendants becoming the major suppliers and middlemen. In August 2010, Li Xiaohang began working with Zhu Ziqiao, NEWSCHINA I January 2013


NEWSCHINA I January 2013

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Photo by Justin Tallis/AFP

exclusively focusing on purchasing cosmetics from South Korea and bringing them into China in their luggage. Zhu provided Li with an account at the Shilla duty free store at Seoul Incheon Airport, entitling her to a further five percent discount. Fueled by the price advantage, Li’s business flourished. At the end of 2010, her boyfriend Shi Haidong quit his job to join her. Both of them became frequent visitors to South Korea; by August 2011, Li had made some 29 round trips, and Shi around 17. Most of their cosmetics made it to China hassle-free. It wasn’t long before the large volumes of overseas goods entering China in suitcases began to cause worries over lost tax revenue. In August 2010, the General Administration of Customs (GAC) issued a regulation, stipulating that personal articles carried by Chinese shoppers crowd Selfridges department store in central London, December 26, 2011 passengers entering China would be taxed if their value exceeded 5,000 yuan (US$794). In September, the GAC revised the upper tax However, there are also complaints about the high tariffs imposed exemption limit for personal mail items from 500 yuan (US$79) to on imported goods, which vary by product category and place of ori50 yuan (US$7.90). However, the new regulations didn’t faze Li or her partners, even gin, according to Zhang. “Normally it’s around 10 percent, but more though they were caught and fined by customs several times. Their for luxury goods,” he said. With the addition of consumption tax and run of luck didn’t last long; on August 31, upon her return from value-added tax, the total tax rate on an imported product could exceed 50 percent. South Korea, Li was arrested by police waiting at Beijing Airport. With taxation tightening, agents’ profit margins have narrowed Zhu Ziqiao and Shi Haidong were also caught and sentenced to seven and five years in prison respectively, and fined 350,000 yuan considerably, and the market has begun to feel the pinch. “I’ve received feedback that some of the bigger agents are now considering (US$56,000) and 250,000 yuan (US$40,000). switching to other lines of business,” said Zhang Yanlai. Besides avoiding the term “agent,” some in the industry have also increased their Carrot or Stick? “Agents must run their businesses legally,” said Yang Ziliang, the prices, claiming that the new tariffs have to be properly reflected in judge who presided over Li Xiaohang’s trial. “They must declare their the price. Yet, as the industry’s turnover has grown so large, some believe the imported products to customs in accordance with the law.” Li is not the only agent to fall foul of the tightening restrictions, government should encourage its development, rather than restrict it. though many more go undetected. Data from the Shanghai customs Jiang Qiping, secretary-general of the Center for Information Study authorities indicate that 185 cases of “smuggling” were filed in the at the Chinese Academy of Social Sciences, said tax incentives – tax first eight months of this year, of which 108 suspects were passengers cuts and deferrals – should be applied to the industry so as to protect and 77 were aircrew. In one case, a passenger returning from Paris it. “In the United States, tax on e-commerce is deferred. The continubrought with him 247 luxury items including handbags, shoes, belts, ing deferrals almost equal tax exemption,” said Jiang. In his opinion, clothes and jewelry, mainly from top brands such as Hermès, Chanel since Chinese consumers’ desire for diversified products is likely to increase, the issue must be addresed clearly. “Whether they decide to and Prada. “A great number of the goods brought into China come through encourage or restrict, it should certainly be on the agenda.” these channels,” said Zhang Yanlai, a lawyer and member of the PolFor those in the industry, the biggest hope is for a clear, stable govicy and Legal Committee of the China E-Commerce Association. ernment policy. “Policies always have a strong influence on our inZhang said that as the industry grows, tax evasion could develop into dustry,” said Shi Yang, marketing manager of usashopcn.com, an indea chronic problem. “Paying tax is necessary. Otherwise, the loss of tax pendent online agent for US products. “There are always new policies revenue would be huge over time. Also, [tax evasion] would cause coming out, which often lead to losses in our business. Since the new disorder, and have a considerable negative impact on China’s foreign GAC policy [tax revision on mail] this year, we have been basically operating at a loss.” trade,” Zhang told NewsChina.


Photo by Wang Yan

society

Over eighty drug rehab workers eat lunch with their new colleagues at a packaging factory in Honghuagang, Zunyi

Drug Rehab

Guizhou’s top six counties and districts with the highest number of registered drug users

Into the Light

Since the 1980s, narcotics have made a comeback in Guizhou through neighboring Yunnan province, adjacent to Southeast Asia’s notorious Golden Triangle.

A widely praised new drug rehabilitation program is providing an alternative to China’s prison-like forced treatment centers. Can it last?

Qixingguan 5,788 507 Zhijin 10,159 806 Panxian 8,070 1675

Registered drug users Sunlight Projectassisted drug rehabs

Golden Triangle

By Wang Yan in Guizhou

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NEWSCHINA I January 2013


F

Xixiu 3,931 157 Yunyan 9,492 993 Nanming 7,619 1738

GUIZHOU

ormer heroin addict Zhang Min, 38, is finally able to enjoy the normal life she has been craving for the past 20 years. She now has a job, and a family. Having become a heroin user at only 17 years old, Zhang has been through China’s forced drug rehabilitation system three times. “Every time I was released, I tried to find a job. I once worked as a shop assistant in a local supermarket,” Zhang told NewsChina. “However, shortly after I got the job, the boss found out that I had been a drug user, and fired me.” Out of work and shunned by society, Zhang went back to her old friends, and soon relapsed. “Social prejudice against [drug users] and their own psychological reliance on the drugs combine to make it virtually impossible for them to remove themelves from this vicious cycle,” said Cui Yadong, chief of the Guizhou Provincial Police Bureau, in an interview with NewsChina. However, an innovative drug rehabilitation initiative in Guizhou Province is taking an altogether more holistic approach. Thanks to the Sunshine Project, launched by the province’s government, Zhang Min and thousands of other current and former addicts are being given another option. With financial and policy support from the local government, some local businesses have set aside a number of employment openings for the project’s participants.

Failing System

According to China’s Anti-Drug Law, enacted in 2008, anyone convicted of a first-time drug offence can opt to enter a year-long community rehab initiative, whereby addicts are monitored by family members and are required to report regularly to community anti-drug officers for urine tests. If they stay clean for a year, the process ends, but if they relapse, they are sent to a forced treatment center. Since these treatment centers are often incorporated into local detention centers, addicts are generally seen as criminals in the eyes of society. After a two-week course of medication, addicts spend two years carrying out manual labor, and are then required to enter a three-year-long community rehab process. According to Cui Yadong, 88 percent of those released nationwide relapse into drug use. Yang Kun, 36, who has an eight-year history of drug abuse, is currently staying at the Qingzhen

NEWSCHINA I January 2013

Compulsory Drug Addiction Treatment Center in Guizhou Province. He told NewsChina that this was his second spell in the center, and that his official record, like those of all registered drug users, now carries a permanent black mark. “I cannot find a job, even in provinces outside of my native Guizhou, since my national ID number indicates that I have been a drug user,” he said. “I was tired of life and relapsed into taking heroin, and my family sent me here.” His story is not uncommon. While police are reportedly scaling back the use of forced rehab, many families find themselves at a loss as to how to deal with an addict, and commit the person in question to a rehab center themselves. Also, desperate to avoid the temptation to take drugs, some addicts actively seek out the notoriously harsh centers. In the Qingzhen center, a four-story building is encircled by high, barbed-wire walls and shut off from the outside world by heavy iron gates, and 177 out of 200 detainees are recovering addicts. Zhang Yan’an, the center’s director, told our reporter that inmates spend their days carrying out menial tasks like sewing beads onto garments, assembling electronics, and breaking rocks. In reality, according to Cui Yadong, physiological rehabilitation is relatively easy, and can be completed in anything from two weeks to six months. “But once [former addicts] rejoin society, they face discrimination and a lack of understanding from their families,” Cui said to our reporter, “This is why they have a strong psychological dependency upon drugs.”

New Methods

Since China’s Regulation on Drug Abandonment came into effect in 2011, governments have been looking into less punitive methods of rehabilitating drug addicts, and helping them reintegrate into society. In Guizhou, employment of 50 rehab patients entitles an employer to 300,000 yuan (US$48,120) in government subsidies, a sum that doubles if the number of rehab patient-employees doubles. The local narcotics control department dispatches police officers to program participant companies for regular checks on employees’ urine samples, and also offers free methadone treatment. In June 2011, the Sunshine Project helped

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society

Zhang Min secure a job as a seamstress in at a garment factory in her home city of Qingzhen, 22 kilometers west of Guiyang, the provincial capital. Most of the 30 employees in the factory are former rehab patients. At lunchtime, a dose of methadone is issued free of charge to workers who need it. However, Huang Fei, the owner of the factory, admitted that the recovering addicts are not as efficient as their colleagues. After a few months on the job, they were only about 80 percent as efficient as workers who had not come from rehab. Also under the Sunshine initiative, Ye Kai, the general manager of a wine company in Zunyi, opened a packaging factory in the city’s Honghuagang district in July 2011, and recruited 100 local rehab patients. “The local government provided this factory building and invested 1 million yuan (US$160,400) in the project, and I personally invested 2 million (US$320,800) in interior refurbishment,” Ye told the reporter. While he admitted that the workers’ lack of education and skills meant that the quality of the products was still below standard, he was confident that with more practice, the company could break even in the future. “A few workers who couldn’t adapt to the work here have dropped out, but over 90 percent of them are willing to stay,” said Ye. The program was endorsed by Meng Jianzhu, director of the National Narcotics Control Commission and minister of Public Security, who in mid-2011 called on the whole country to learn from Guizhou’s experience. During the past year, Sunshine Project initiatives have cropped up across the province. According to the Guizhou Provincial Narcotics Control Commission, by November 2012, a total of 102 companies and factories in the province were involved in the project, and a total of 7,480 former rehab patients are currently employed under the program. The provincial police authorities have also reported significant drops in the local crime rate and the relapse rate in the past year.

A rehab patient employee receives a dose of free methadone at lunchtime in a packaging factory in Zunyi

Photos by Wang yan

Fanfare or Breakthrough?

A garment factory in Qingzhen opened in mid-2011 now employs more than 30 drug rehab patients

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In Huaxi District, on the outskirts of Guiyang, the “Sunshine Home,” a Sunshine Project-affiliated development, is a farm covering 13 hectares of land nestled in the hills, and employs thirty rehab patients aged between 30 and 60. Every morning, a shuttle bus takes them from downtown to the farm, where they work until 5 PM. The farm sees regular visits from groups of volunteers, including artists, dancers and singers, who instruct former addicts in the arts. Well-constructed buildings, pleasant NEWSCHINA I January 2013


decoration, neatly arranged flowers and and a softly lit therapy room make the place seem more like a resort than a treatment center or a place of work. Yang Huangfang, head of the Huaxi District Narcotics Control Department, told NewsChina that the local government and the farm’s owner had invested 700,000 yuan (US$112,280) and 2 million (US$321,078) in the project respectively. “The farm is yet to see profit, so the government has been issuing salaries to the employees for the first few months.” “It needs to make a profit so as to be a viable business, but these people are slow to adapt. My patients and I are uncertain how long it will last. The only thing we can do is to continue our journey and make it work well,” said Li Meng, a psychotherapist employed at the Sunshine Home. “I don’t have high expectations for the project. I will be satisfied if these 30 patients get trained in farming here, and can start small businesses of their own.”

with NewsChina, “The practice is a new effort and it needs more policy support in order to be perfected.” But while it may not be enough to solve the problem, the Sunshine Project is shedding light on the need for a more practical approach to dealing with China’s drug addicted population.

Drug Abuse in China by substance, 2011

Heroin Other opiates Amphetamine Marijuana Ketamine Ecstasy Other

Viability Issues

The Guizhou provincial government is considering ways to make the Sunshine Project sustainable. Cui Yadong told NewsChina, “Once the practice is consolidated by government-issued regulations, jobs can last longer. The work of preventing former drug users from returning to drug use is very important to social stability, so we cannot afford to slack off.” Li Meng has been contacting manufacturing companies in various cities, looking for job opportunities for the program’s participants. “So far, every company has turned me away when they learned that my people have been addicts,” sighed Li. “Drug addiction can be given up, but it takes a long time for a society to drop its deep-rooted bigotry.” “This is not a matter of sympathy, but one of patience and tolerance. There are 1,000 registered drug users in Huaxi, and if we fail to change our attitudes toward them, they could pose a threat to social stability,” she said. “There is no law or regulation that can prohibit someone from discriminating against drug users,” continued Li. “We cannot change a person, but we can help change their social environment. Seeing patients weaning themselves from methadone and communicating well with their families, I feel gratified to be a part of the project.” “Certainly, there are always those who are willing to put their lives back on track, and what the government can do is to set up a platform and provide an opportunity for those who have the will,” said Chen Yun, director of the Qingzhen Narcotics Control Office, in an interview NEWSCHINA I January 2013

Number of registered drug users 2007-2011

China’s heroin market saw a moderate decline in recent years, while sales of synthetic drugs are on the increase 2000000

Registered drug users Heroin users

1500000

1000000

500000

2007

2008

2009

2010

2011

Source: 2012 Annual report on drug control in China

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feature

Chinese in Spain

Legitimate

Businessman? In a massive police operation in Spain in October, Chinese trader Gao Ping, among others, was detained on suspicion of being the mastermind behind the biggest money laundering network Spain has ever seen By Liu Wenlong in Madrid and Li Guang, Yang Di in Zhejiang

O

n October 17, more than 500 Spanish policemen cordoned off and raided the Cobo Calleja industrial estate in Fuenlabrada, 23 kilometers from Madrid, where over 370 Chinese wholesale distributors are based. A few hours earlier, 45-year-old Gao Ping, owner of the International Trade City Group, the largest business in Cobo Callejia, had been apprehended at his home by police on suspicion of tax evasion and money laundering. The action was part of a nationwide sweep at dawn code-named “Operation Emperor,” targeting what were alleged to be “Chinese criminal

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gangs.” When wads of money and caches of diamonds were discovered in his mansion on the outskirts of Madrid, Chinese businessman Gao Ping and his considerable wealth grabbed front-page headlines across Spain. According to Spanish newspaper El País, more than 11 million euros in cash was seized in Operation Emperor – 5.3 million of which was reportedly discovered in one of Gao’s offices in Fuenlabrada – as well as 200 vehicles, various firearms, items of jewelry and valuable artwork. “In Spain, the maximum amount of cash anyone is permitted to

hold without declaring it to the authorities is 100,000 euros (US$128,880), or 10,000 euros (US$12,888) when exiting the country,” said Ji Yihong, a Chinese lawyer based in Spain.

Order No. 4

Operation Emperor was carried out under order of the National Court, and was the last phase of a comprehensive campaign against corruption and organized crime. Chinese businesspeople in Spain are not unfamiliar with this sort of police raid. In the summer of 2009, for instance, 750 policeNEWSCHINA I January 2013


Spanish police display the evidence collected during “Operation Emperor”

men were dispatched to Mataro, Barcelona, a place famous for its clothes manufacturing industry. The aim of the raid, code-named “Operation Wei,” was to crack down on the illegal employment of unregistered immigrant workers in Chinese garment factories. The 77 arrested Chinese “bosses” were finally released, but 500,000 euros’ (US$637,000) worth of merchandise was confiscated. Thousands of illegal Chinese workers lost their jobs, and many staged marches of protest in the streets. According to information released by the Madrid police, the roots of Operation Emperor could be traced back to a robbery case three years ago, when a Chinese man reported to police that the 5 million euros in cash he had left on a truck had been stolen. During the police investigation, however, the man refused to disclose where this suspiciously large sum of money had come from. Their suspicion aroused, the police began tracking the man. Over the past two years, they had planted undercover agents inside various large-scale Chinese companies, tapNEWSCHINA I January 2013

ping the phones of many Chinese businessmen. The action paid off, and in recent years, Spanish police have uncovered a number of cases by catching Chinese people carrying large amounts of undeclared cash when passing through customs in airports or border checkpoints. At midnight on October 17, Fernando Andreu, the National Court Judge of Spain, made the decision to enforce “Order No. 4,” an order activated when a situation involves either racism, terrorism, or international regulations or conventions, according to an employee at the Spanish Immigration Bureau. “The police were crazy, breaking open the doors with crowbars and storming in. It looked less like a search and more like an attack on terrorists,” a Chinese woman in Madrid, surnamed Li, told our reporter. NewsChina received confirmation from various sources that Gao Ping’s two children had been taken away by police during the operation, but had been released by October 23. Some also claimed that a ten-year-old child had been handcuffed during the raids. Fernando Andreu categorized the police raid on Chinese traders in Spain as a counterterrorism operation, and at least six different departments or organizations were involved, including the Anti-Corruption and Anti-Organized Crime Office, the Drugs and Organized Crime Unit, the Economic Crime Unit, the National Police Corps, and Interpol. The total number of detainees in the action amounted to 83, of whom 58 were Chinese, 17 were Spanish, and eight were of other nationalities. The police recovered 11.6 million euros (US$14.8m) in cash, and froze the bank accounts of over 1,000 people. The detainees were charged with crimes of money laundering, document forgery, blackmail, organizing prostitution, bribery, and drug and human trafficking, among others. Ignacio Cosidó, director-general of the police, later praised Operation Emperor as a historic success and added that it was “very important in the fight against economic crime.” “We have made an important contribution to the smooth functioning of the economic system,” said the police chief. According to Jorge Fernandez, the Spanish minister of the interior, the mission was “an emblematic example of this government’s fight against fraud

and tax work,” and described the gang network as “a pyramid organization focused on evasion and money laundering, that caused real unfairness to small businesses.”

Expanding Business

Gao Ping, the boss of International Trade City Group, currently the largest wholesale market in Spain, was the primary target of the Spanish police raid. Gao was born in Xiangcun village in Qingtian, Zhejiang Province in East China, the origin of many of Spain’s Chinese immigrants. Due to its remoteness and hilly, barren land, Qingtian remains an economic backwater. Many locals venture abroad in search of a better life, and most head for European countries. In 1989, Gao Ping emigrated to Spain to work as a cook. After three years working in a local restaurant, he opened his own business, a fast-food restaurant. Then in 1995, he shifted his focus to selling French-branded handbags. “Gao made millions of euros out of this business,” said Lin Qing, a childhood friend of Gao’s, and now vice-chairman of Qingtian’s Chamber of Commerce. “He is very persuasive, and skillful at conducting business negotiations.” Apart from his inborn gift for doing business, another reason for Gao Ping’s success, according to his fellow villagers, was the help of his wife Yang Lizhen, whose family had set up a booming business in Spain long before Gao and Yang were married. In 1999, having accumulated considerable wealth, Gao Ping stepped into the wholesale market. Together with a co-founder surnamed Xia, Gao set up International Trade City Group, and rented a warehouse with a total floor space of 1,000 square meters in Fuenlabrada. His company engaged in importing cheap daily commodities to Spain from Yiwu in China, among other places, and targeted low-income Spanish consumers. In 2004, he expanded his warehouse space to 4,000 square meters, and then to 60,000. His procurement people in Yiwu now numbered over 200. Chinese-owned companies dominated Spain’s bargain store market with a total of 9,000 small shops across the country, and Gao Ping’s company reportedly held a complete monopoly on supply to these stores.

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feature

High Profile

Spanish TV news clips of “Operation Emperor”

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In a 2008 interview in Beijing, Gao told El País that his dream was to establish a dynasty of industrialists and philanthropists. He started setting up art galleries to facilitate cultural exchange between China and Spain. So far, he has opened the Center of Contemporary Iberian Art in Beijing’s well-known 798 art district, and Gao Magee, a 700-square meter gallery next to the Reina Sofía Museum in Madrid. According to Gao, his intention was to display works by young Chinese artists in Spain, and masterpieces of such legendary Spanish artists as Dalí in Beijing. “People know about China’s economy, but not its culture. And getting to know Chinese contemporary art is crucial to understanding the country’s transformation,” he said. “People who knew him told me they were surprised by the news of his arrest,” Jorge Garcia, a Madrid-based consultant who chairs a Spanish-Chinese chamber of commerce and works with investors in both countries, told AFP during an interview following Gao’s arrest. “He is a businessman who started from the bottom, with a small shop, and his business grew. He was a philanthropist who helped a lot of people in need, and he had been the face of Spanish art in China in recent years,” he added. “Gao Ping is different from other overseas Chinese that I have met. He is not only keen on profit, but also aims to position himself on a higher level. For example, he tries to improve the cultural knowledge of other overseas Chinese,” said Xia Jifeng, manager at the Center of Contemporary Iberian Art, told our reporter. Xia continued, “Gao did not confine himself within the Chinese community, and he established very good connections with the local Spanish elite.” Chen Siyuan, a business partner of Gao Ping told NewsChina that Gao’s chain stores are supported by a rich Spaniard living in northern Spain, who owns over 900 chain stores. Apart from being a businessman and Chinese art dealer, Gao Ping’s other titles include chairman of the Association of Chinese Commercial Companies in Spain (ACCCS), vice chairman of the Zhejiang Association of Overseas Entrepreneurs, and a member of the Zhejiang Provincial Committee of the Chinese People’s Political Consultative Conference. On September 16, 2004, Gao Ping, as the newly elected executive chairman for the ACCCS, immeNEWSCHINA I January 2013


diately got involved in providing legal rights protection aid for Chinese traders who were seen to be victims of discrimination. He and the other 60 Chinese businessmen in the organization donated a total of 600,000 yuan (US$96,000) to sponsor a shoe shop owner and pledged help in a resuiting lawsuit, eventually resulting in compensation (see: “Image Crisis,” page 37) Because of his high-profile role in the Chinese community in Spain, Gao was invited by Spanish monarch King Juan Carlos to join the royal delegation on a 2007 visit to China. In 2011, Gao was awarded a prize for “Contributions to Sino-Spanish Cultural Exchange” by the Spanish government and the Reina Sofía Museum. According to Lin Qing, the Qingtian Chamber of Commerce vice-chairman, Gao was likely targeted as a result of his highprofile behavior in recent years. In 2009, Gao exchanged his old Mercedes for a Maserati. Later, his father-in-law received a phone call threatening to abduct Gao Ping’s child. “It was only after his family’s persistent persuasion that Gao finally agreed to drive a Mini Cooper instead,” Lin Qing recalled. Gao himself also claims to have been the victim of a spate of robberies, once losing 40,000 euros. In 2010, Gao planned to list his company on the London Stock Exchange, but his family members disagreed, arguing that remaining unlisted might help the company pay lower taxes, and avoid the additional scrutiny that the listing process would inevitably entail. Lin Qing alleged that Gao’s biggest problem was his tax evasion, and it was his attempt to get his company listed that exposed this to the Spanish authorities.

Politics

In both China and Spain, doubt has been expressed over the real motives behind Operation Emperor. On October 24, 48 Chinese detainees in Spain were transferred with other local inmates to a new prison. The Spanish nation-

NEWSCHINA I January 2013

als involved were released shortly afterwards, among them Fuenlabrada’s councilor, José Borrás, and Ignacio Gonzalez, president of the Madrid regional government. A rising political star in the Spanish Socialist Workers’ Party, 57-year-old Borrás was arrested when police found a 2,000 euros in cash and four pairs of chopsticks at his office and home. He was released after being charged with various crimes including accepting bribes and embezzlement. On October 19, Borrás resigned from his government post, but denied any wrongdoing. “Instead of addressing the high unemployment rate and voter grievances, [the Spanish government] is trying to dramatize and politicize this issue, in an attempt to shift the public’s attention from domestic social problems onto the Chinese community. This is not what a government is supposed to do,” said Xu Songhua, president of the European Federation of Chinese Organizations (EFCO) to NewsChina. In the context of the ongoing economic crisis in Spain, the end of 2011 saw the rightwing People’s Party win the election against the Workers’ Socialist Party. However, since then, the Spanish economy has continued to deteriorate. According to the latest figures released by the Spanish government, the unemployment rate had hit 25.02 percent in September of this year, putting the total number of unemployed people at 5.78 million. The government’s approval ratings have dropped to a historic low. “This is a well-planned and organized operation, and its scope is disproportionately larger than any action designed to bust economic crime,” Xu Songhua continued. According to AFP, defenders of Gao Ping said Spain’s large Chinese community, which owns many wholesale distributors and bargain-basement shops in major cities, is an easy target at a time when the Spanish population is angry with the government due to the worsening recession. “The government doesn’t want to touch the big tax evaders, because they are friends of the state – bankers, politicians and business-

Gao Ping after his arrest

men,” Jorge Garcia told AFP. “Blaming the Chinese mafia for the fact there are 5 million unemployed in Spain is a little ridiculous.” In early November, China’s Foreign Ministry spokesman Hong Lei told international media that China is “deeply concerned” about Chinese businessmen affected by the crackdown in Spain. “China respects the judicial independence of Spain and understands its need to fight crime,” Hong said. “However, it must be recognized that most Chinese in Spain conduct business legally, try hard to integrate themselves into the local community and have made positive contributions to the economic and social development of the country.” “We hope Spain will take effective measures as soon as possible to protect the legal rights of overseas Chinese in the country and maintain friendly cooperative ties between China and Spain,” he added. Currently, Gao Ping remains in a cell in Madrid waiting to stand trial, accused of heading a gang that laundered millions of euros. A guilty verdict would have serious implications for the Chinese community in Spain, and may result in even greater scrutiny on their business operations. The alternative, however, could embarrass the Spanish authorities even more.

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feature

Chinese in Spain

Image Crisis

While Chinese businesspeople have won a hefty share of Spain’s everyday commodities market, their sometimes controversial behavior is giving them a bad name By Liu Wenlong in Spain and Zhou Wei in Zhejiang

I

36

ever, when the crisis came, the image of the Chinese plunged in tandem with the Spanish economy.

Photos by AFP

Chinese Community

Local Chinese in Madrid celebrate Chinese New Year with a lantern dance

Photos by AFP

n the wake of Operation Emperor, the police crackdown that swept Spain’s Chinese-dominated trade markets in mid-October, the term “Chinese mafia” frequently appeared in Spanish media, directly associating the country’s Chinese community with blackmail, bribery, prostitution, illegal gambling, and human trafficking. “Suddenly, my Spanish colleagues’ attitudes toward me changed. I could see suspicion and resentment in their eyes. I didn’t understand why until I read the newspapers. I was dumfounded. Why were we being called mafia all of a sudden?” said a young Chinese woman working at a luxury store in Madrid, speaking to NewsChina on condition of anonymity. Many locals still remember when, even before Spain had hit serious economic troubles, Madrid’s mayor called on citizens to “work like the Chinese,” referring to their hardworking spirit. That was in 2010. How-

Chinese-owned clothes stores are a common sight in Spain

In a district in south Madrid, just outside the Usera metro station, is a cluster of over 6,000 Chinese-owned stores, accounting for 85 percent of the total number of retail outlets in this neighborhood. “This Chinese community formed in less than 10 years. In this area, you can feel that everything is Chinese,” a local restaurant manager told our reporter. According to Wang Lingzhou, head of the Qingtian Townsmen Association in Spain, almost every big city in Spain has a Chinatown, and Madrid and Barcelona are the two cities with the most Chinese immigrants. Statistics from the Spanish Immigration Office indicate that immigrants from China rank as the seventh largest immigrant group in Spain. AcNEWSCHINA I January 2013


cording to the Spanish Labor Ministry, among the total 5 million immigrants in the country, 175,000 are Chinese who have obtained a legal status, together with another 100,000 who are in Spain illegally. The crime rate in the Chinese community is six times higher than the overall crime rate in Spain.

Uphill Struggle

Wang Xiaoying, chairwoman for the Chinese Women’s Union in Spain and manager of the Shenzhou Hotel in Valencia, still remembers her early days in Spain vividly. Leaving her hometown in a small village in Qingtian, Zhejiang Province, she arrived in Spain on May 11, 1985. “Without friends in Spain and not knowing the language, it was extremely hard for me to find a job. I felt lonely and bored. It really was a nightmarish experience,” recalled Wang, who was only 21 years old at the time. With the help of fellow Qingtian migrants, she finally managed to start up a hotel of her own in the suburbs of Valencia. To keep costs down, she employed a skeleton staff, and worked over 15 hours per day herself. Many of Spain’s Chinese community have a similar story to tell – in the mid-1980s, large groups of Qingtian natives poured into the country, and in 1991, in the run-up to the 1992 Barcelona Olympics, Spain granted amnesty to illegal immigrants, which served to draw a large influx of Chinese from other European countries. Zhou Feng, secretary-general of the Qingtian Townsmen’s Association, told NewsChina that in the 1990s, a prospective migrant to Spain had to pay 100,000 yuan (US$16,020) to a middleman, a mammoth sum for the average Chinese at the time. Those who could not afford it would resort to human traffickers. Wang Lingzhou said that the peak of human trafficking from Qingtian to Spain was in 1985. “That year, around 20,000 to 30,000 Qingtian people entered Spain on false visas.” For most Chinese, life in Spain follows a similar pattern: starting off as an illegal worker, becoming a legal employee, then finally starting their own business. Most who try to open their first business seek financial support from a local Chinese-run chamber of commerce. If their business succeeds, they NEWSCHINA I January 2013

then lend money to new Chinese startups. According to research carried out in July 2012 by the Spanish Immigration Office, Chinese people in possession of the five-year residence permit required to open a business account for over 50 percent of the total Chinese population in Spain. Almost all Chinese immigrants work for Chinese business owners, thus forming a self-contained Chinese community isolated from mainstream Spanish society. “I went from one Chinese restaurant to another looking for a job when I first came here,” said Wang Xiaoying. Chinese immigrants in Spain are reportedly slow to learn the local language. A Spanish survey of 267 Chinese found that only 27 percent were able to speak and write Spanish. Even those who have obtained permanent residence in Spain prefer to send their children back to China for their education. Most younger-generation Chinese immigrants drop out of school and take over their family businesses, and young Chinese who do otherwise have struggled to find a job during the ongoing economic crisis. After Operation Emperor, Chinese-operated company International Trade City was sealed up. On October 22, 235 of the company’s former employees took to the streets, marching from Atocha Station to the Workers and Trade Union Confederation, the largest worker’s union in Spain. They held banners with slogans such as “I need a job,” and “We want to survive” in Spanish. “The boss and many Chinese employees at International Trade City were arrested, yet we were not formally fired, so we cannot apply for unemployment benefit. It’s hard for us to survive amid the economic crisis,” a Chinese employee of the trade center told our reporter. During the police raid, workers’ cash, mobile phones and laptops were confiscated, with no notice given about when they would be returned.

Disputes

When the case hit news headlines, many Chinese business leaders in Spain criticized the arrests, saying they “showing unprecedented discrimination against the Chinese.” Indeed, the behavior and business practices of the Chinese community have become

somewhat controversial in Spanish society. Local media reported in 1994, for example, that a Chinese man killed five Chinese workers in Valencia because of “troubles with his girlfriend.” This proved a blow to the traditional image of the diligent, reticent Chinese worker. In 2004, the infamous “shoe burning” incident, in which a group of Spanish people burnt shoes at a warehouse owned by a Chinese shoe dealer during an anti-Chinese protest in Elche, drew international condemnation. The arrival of many shrewd Chinese dealers in Elche with cheap “made in China” products had caused several century-old local shoe factories to close down, leaving thousands of Spanish people jobless. In February, 2011, a city in the Sevilla region even enacted a law to prohibit Chinese people from setting up new stores in the downtown area, in order to protect the interests of local shop owners. Xu Songhua, president of the Association of Ethnic Chinese in Spain, told NewsChina that some Chinese businessmen were known for their improper conduct, including selling counterfeit and low-quality goods, operating without proper licenses, hiring illegal workers, tax evasion, carrying large sums of undeclared cash, and unfair competition. A 2008 investigation into 47 Chinese clothes manufacturing companies in Barcelona found that the majority of them were unlicensed, and were staffed by illegal Chinese workers. “Some Chinese businesspeople have destroyed their own image by exploiting loopholes in the law, and abusing others’ trust,” one Chinese trader in Spain told NewsChina.

Waiting Game

A Chinese woman working at a Madrid branch of MoneyGram, an international money transfer company, told NewsChina that her husband was still in prison. “He has neither been tried nor convicted yet, and so far no Chinese have confessed to the charges. The court has reduced the initial 13 charges to three,” she said. She also claimed that the mobile phones of all the Chinese people involved in Gao’s case had been tapped. The Chinese detainees are provided with three meals a day, are allowed to make one phone call per week, and can see family members once every month.

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economy

Foreign Consumer Goods

The Empire’s New Clothes

Due to lax product quality regulations and a preference for foreign goods, Chinese consumers are paying over the odds for shoddy merchandise. But who is to blame? By Sun Zhe

W

hile Nike’s Chinese transliteration nai-ke literally means “durable,” many who have bought the shoes the brand sells on the China market would likely disagree. Wang Ke, a 33-year-old Beijinger, owns a pair of Nike basketball sneakers, bought in the US, that have lasted for seven years. He told NewsChina that the Nike shoes he had bought from an official dealer in Beijing had worn out after two or three years. Wang had an inkling that Nike had been cutting corners with their products sold on the China market. He appears to have been right – citing a particular model of Nike sneakers that contained two air cushions on the overseas market but only one when sold in China. In late October authorities in Beijing handed Nike a 4.87 million yuan fine (US$780,000), pocket change for the world’s biggest sports apparel brand. The US company was found guilty of false advertising, as its Chinese advertisement posters were not altered to reflect the discrepancy. Indeed, a slap on the wrist seems to be the standard punishment for foreign brands caught fleecing Chinese consumers. In March 2010, authorities in Zhejiang Province enforced recalls on several items from high-end clothing brands, including Hugo Boss, Versace and Tommy

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Hilfiger, citing various failures to meet product quality standards. In a statement on its website, the Zhejiang Administration of Industry and Commerce claimed that international brands were “blindly worshipped” by Chinese consumers, yet were “unsuitable for China.” Quality disparity between products from foreign brands sold inside and outside China is not exclusive to Nike – it has been found to extend to almost all consumer goods, most noticeably cosmetics, beverages, clothing, and automobiles (see “Safety Second,” NewsChina 051, October 2012). Charles Ding, director of industry research at Shanghai-based consultancy Topretailing, believes this is due to the comparatively lax quality standards in China. “Even factory-rejected products from China’s exportNEWSCHINA I January 2013


oriented garment and shoe factories sell very well on the domestic market,” said Ding. “People are aware that shoes and clothing bound for Europe and the US are of higher quality than those intended for sale in China.”

Dubious Premium

To the further irritation of Chinese Nike fans, the shoe that caused Nike to be fined, which sells for around US$80 on Amazon or eBay, carries the hefty price tag of around 1,300 yuan (US$207) in Nike’s Beijing store, despite being one cushion short of its American counterpart. Hiking up prices for the China market is common practice for many foreign brands. A survey conducted by China’s Ministry of Commerce compared the prices of 20 high-end foreign brands of consumer goods sold in China, including watches, liquor and clothing, and found that their prices in China were on average 51 percent higher than in the US. Though China is expected to overtake Japan as the world’s largest luxury market this year, most Chinese still choose to buy their luxury goods in the West. According to the World Luxuries Association (WLA), Chinese tourists spent a total of US$50 billion on luxury goods overseas in 2011, four times as much as their luxury spending at home. About 70 percent of them chose to buy overseas because of lower prices, according to a WLA survey. The luxury goods sold in China are an average of 30 percent more expensive than in the West, mostly due to heavy import duties and luxury goods taxes. However, many tax-exempt foreign products are just as expensive as those that are taxed. According to a survey by the University of International Business and Economics in Beijing, imported perfume, which carries a 30 percent consumption tax, is about 30 percent more expensive in China than in the West. Meanwhile, imported handbags and skincare products, which are exempt from consumption tax, are also around 30 percent more expensive than on the overseas market. These mystery gaps are often due to foreign brands exploiting a lack of consumer awareness in China, according to Ding of Topretailing. “When an international label enters the China market, it will often shift its brand towards the high end,” he said. For instance, Coach, a second-tier luxury handbag brand in the West, has succeeded in penetrating the upper echelons of China’s market simply by placing its NEWSCHINA I January 2013

outlets next to brands such as Prada and Louis Vuitton in China’s department stores.

Caught Unawares

“To Chinese consumers, foreign brands carry connotations of quality, durability, fashionable design and status, and this mindset has enabled foreign brands to reposition themselves,” said Ding. “Chinese consumers are increasingly in favor of international brands, as the brand value of domestic brands has yet to catch up with Chinese buying power.” Around half of consumers with an annual income above 250,000 yuan (US$36,800) prefer foreign brands, compared to only 37 percent who favor Chinese ones, according to a McKinsey report released late 2010. Predictably, many Chinese brands have adopted pseudo-western names in order to capitalize on this preference. The popular Chinese fast-fashion retailer Meters/ bonwe is perhaps the most successful example of this – a report by the Harvard Business Review found that 90 percent of consumers surveyed believed it was a foreign brand. But while token fines and sporadic product recalls may be bad publicity for pricehiking foreign labels and their Chinese imitators, they do little to deter companies eager to take advantage of China’s booming market and relative lack of consumer awareness on the high-street, particularly when it comes to luxury brands. Without strictly enforced product standards, Chinese shoppers may remain victims of their own brand worship.

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economy

E-commerce

Single Currency

How an unofficial holiday became the biggest event in the history of Chinese e-commerce By Sun Zhe

Singles’ Day sales from Taobao and Tmall over the past three years 200

Shopping around the clock: sales over the 24 hours of November 11 from Taobao and Tmall 200

150

150

100

100

50

50

0

2009

2010

2011

2012

0

0:10

0:37

2:19

8:16

11:24

13:38

16:26

Source: Alibaba

S

hort of finding a partner, is there a cure for a lonely heart? This question was well and truly answered by Chinese online retailers this November, as they succeeded in turning Singles’ Day, a recently-invented, unofficial festival celebrated by China’s large population of single people, into what may have been the most lucrative day of online shopping ever seen in China. All of the 50,000-plus merchants on Tmall, a retail portal under the auspices of e-commerce giant Alibaba, were offering discounts of at least 50 percent off, resulting in total sales of 19.1 billion yuan (US$3bn) in the 24 hours from midnight November 10th, about

40

20:52

one third of China’s average daily retail sales total. November 11 was first dubbed Singles’ Day by college students in the 1990s, simply for the fact that the date is composed entirely of the number 1. Also known as guanggunjie or “Bare Stick Day,” the meme has gone on to become a major social trend, aided by social media and the estimated 180 million single young men and women in China. In addition to unfettered online consumerism, the day is also celebrated with singles events

around the country. Tmall began its first Singles’ Day shopping frenzy in 2009, and it is now the site’s most profitable day of the year. Other retail portals, like Suning, 360buy and Amazon’s China site, have since followed suit, offering attractive discounts for China’s foremost Hallmark holiday. In the first minute of November 11, more than 10 million shoppers logged into Tmall, and 10 minutes later, sales had already hit 250 million yuan (US$40m). So many transactions were processed in such a short time that Tmall made some buyers wait more than half an hour to pay with their online bank account, to keep online payment NEWSCHINA I January 2013


Photo by CFP

A few days after Singles’ Day, a courier’s warehouse is still backed up with undelivered packages

systems from crashing. Long before the clock ticked to midnight on November 10, many shoppers had composed extensive wish-lists so they could snap them up as soon as the discount window opened. “We had to prepare enough shoes, but not too many, in case we overstocked. It’s quite hard to handle,” said Xu Songmao, chief executive of Skomart, a shoe store on Tmall. The store had bought in one million pairs of shoes for the Singles’ Day rush. Skomart sold more than 70 million yuan’s worth (US$11.2m) of shoes on Singles’ Day, about three times last year’s Singles’ Day sales figure, and more than 20 times an average day’s takings. Couriers were also put to the test. A total of 158 million separate orders were made, heaping pressure on delivery services, who had to hire thousands of part-time couriers to deal with the mountains of packages. At close of business on Singles’ Day, Tmall, China’s largest businessto-consumer retailing portal, had done four times as much business as it had on the same day last year. This may have been partly due to the fact that last year’s Singles’ Day came on a Friday, so had to compete with office hours, while this year it was a Sunday, meaning that shoppers could stay at home all day to battle it out online. The huge discounts, many of which were simply crafty markNEWSCHINA I January 2013

downs on recent price hikes, took advantage of China’s fervent online shoppers. Chinese people, especially the country’s youth, have embraced web shopping as a lifestyle, with more than 70 percent of web shoppers falling in the 18 to 35 age group, according to industry consultancy iResearch. As of June this year, China had a netizen population of 538 million, the world’s biggest, about 193 million of whom shop online, according to the China Internet Network Information Center. According to the State Bureau of Statistics, retail sales of consumer goods in China have seen an average annual growth of 16 percent since 2007, while that of online retailing is 77 percent. In 2006, online retailing only made up 0.3 percent of the total consumer goods sales, but this figure had grown to 4.3 percent by the end of 2011, according to the Ministry of Commerce. While Chinese people spend less money online than Americans and Japanese due to their relatively low average income levels, China is expected to be the world’s biggest online retailing market in the next three years, as the country’s latest five-year economic plan in 2010 set the goal of quadrupling its annual e-commerce volume to 18 trillion yuan (US$2.9tn) by 2015. This, however, is unlikely to help the country’s lonely hearts – currently, there is no five-year plan to match up singles.

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SPECIAL REPORT

Chinese Global Investment

International Rescue After ten years of growth, China’s outbound investment has begun to make its presence felt in the global economy in more areas than you might think

Photo byBosideng UK

By Li Jia

The Bosideng flagship store at South Molton Street, London

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NEWSCHINA I January 2013


Sectors holding total FDI from the Chinese mainland by the end of 2011

NEWSCHINA I January 2013

25 20 15 10

W ho les Lo ale gis an tic d s M re an tai uf lin ac Re g tu al rin es g O tate th er and s co ns tru cti on

30

Le as Fin in ga an ce nd M bu in sin in g es s

J

ust outside one of the exits to London’s bustling Bond Street Underground station is an unfamiliar three-story boutique, within sight of iconic department stores such as Selfridges, Harrods and Harvey Nichols. This particular store stands out from its neighbors as it is the only property on this heavily-trafficked shopping street with Chinese characters above the doorway. “You will find the three Chinese characters – Bosideng – on every tag, from a pair of socks for 15 pounds (US$24) to a leather jacket for 900 pounds (US$1435)” Wayne Zhu, CEO of Bosideng UK, proudly told our reporter. “Our products are designed by our British designers and made in European factories, with only minimal materials from China,” he added. Officially opened in October, Bosideng Bond Street is the first overseas flagship store launched by this Hong Kong-listed Chinese company based in Jiangsu Province and known in China for its mid-range padded winterwear. Zhu, along with some 30 colleagues who he claims speak 15 languages as well as English, are trying to promote this difficult-to-pronounce brand in the UK after its pivot to London. Their target market? Young professionals. While the EU’s appetite for Chinese-made clothing has until now been insatiable, its member states’ appetite for Chinese-branded clothing has yet to develop. However, Chinese characters looming over London’s answer to Fifth Avenue is a sign that China is on the move. Although its outbound foreign direct investment only accounted for 2 percent of the world’s total by the end of 2011, new investment in 2011 originating in China made up 4.4 percent of global outbound FDI, putting China in 6th place. More international investment agencies have chosen China, rather than the US, as the “most promising source of FDI in the medium term [2012 – 2014],” according to the

se rv ice s

35

5 0

United Nations Conference on Trade and Development (UNCTAD)’s World Investment Report released in July 2012. Chinese investors have also developed more diversified tastes, with private investors in particular drawn to developed markets, by necessity as much as desire. Under the mantra “go global,” Chinese companies are driven by incentives as diverse as their products and services, meaning it is becoming increasingly difficult to characterize the origins, nature and business models of China’s global businesses.

Bewildering Banquet

In his keynote speech at a Hong Kong business forum, Supachai Panitchpakdi, Secretary-General of UNCTAD, claimed that between 2001 and 2011, outbound investment from the Chinese mainland increased by some 25 percent annually, compared with the 9 percent world average and 6 percent for traditional major global investors from developed countries. At the same event, deputy director general of the WTO Harsha Vardhana Singh told reporters that even if China

only manages to maintain one-third of that growth in the coming years, it will still play a crucial role in the global economy. 11 percent of China’s FDI had gone into developed markets by the end of 2011, compared to 7 percent by the end of 2009 and 9 percent by the end of 2010.The European Union is the main beneficiary of these Chinese dollars, receiving more than 56 percent of China’s investment in developed markets in 2011, and 44 percent of the total over the years. Although growth was down by 30 percent over the first three quarters of 2012, few investors are anticipating a prolonged slowdown. In its report China Deals: A Fresh Perspective issued at the end of October, PricewaterhouseCoopers concluded that increasingly active Chinese investors in Europe have been narrowing the gap with their European counterparts. A survey by Ernst & Young in August 2012 stated that Western Europe and North America are identified as the best sources of growth opportunities for the next few years by 32 percent and 22 percent of companies

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SPECIAL REPORT

in the Chinese mainland respectively, showing a distinctive shift away from China’s traditional investment destinations in East and Southeast Asia. The varieties of investment being lured to Europe and North America also deserve attention. Although billion-euro energy and financial projects have attracted nearly all the media attention, said the PwC report, a large percentage of M&A deals by Chinese mainland companies in Europe were deals valued at under 100 million euros, with most of them focused on industrial products. In the US, Chinese investment has been concentrated in manufacturing, according to annual reports from the Chinese Ministry of Commerce. However, manufacturing is not even in the top five most significant destinations for China’s total outward FDI stock. So where is this money being spent?

Big Players

According to a survey published in April by the China Council for the Promotion of International Trade (CCPIT), three key factors motivate Chinese businesses to launch overseas operations. State-owned resource enterprises are interested in upstream resources, hi-tech companies in global competition and technology acquisition, and labor intensive companies (also China’s main exporters) like to be close to their customers and, in light of recent clashes with US and EU regulatory authorities, have the option to sidestep potential trade disputes. For example, trade investigations and punitive tariffs imposed by American and European regulators on China’s solar panels, for example, have dampened growth in the country’s nascent solar power industry. Some Chinese producers are already preparing to move their operations overseas to avoid these pressures. Research published in February by Standard Chartered highlighted a 20 percent share in the South Africa Standard Bank by the Industrial and Commercial Bank of Chi-

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na in 2008 and a boom in manufacturing investment concentrated on China-funded special economic zones in sub-Saharan Africa, particularly in Ethiopia and Nigeria. In an article in the State-owned China Daily in June 2012, Bank of China chairman Xiao Gang stated that Chinese banks must “follow their customers overseas.” His bank expects to receive 30 percent of its profits from overseas operations in the next few years, compared with its current rate of 23 percent. The idea that now is the time for Chinese private companies to buy cheap, high-quality overseas assets has led to a series of megadeals such as the acquisition of Germany’s Parchim Airport by Henan-based LinkGlobal Logistics, and Swedish automaker and Ford subsidiary Volvo by Zhejiang’s Geely. China Investment Corporation (CIC), China’s State-owned sovereign wealth fund, has shown more interest than ever in tangible assets, as proved by its recent investment in London’s Heathrow Airport and utilities giant Thames Water, rebounding after losses from its previous portfolio investment in Black Stone, a US private equity firm, as well as Freddie Mac and Fannie Mae. In the financial sector, the Shanghai-based Fosun Group, an investment company, set up a private equity fund with US-based global investment giants Carlyle and Prudential Financial in 2010 and 2011 with an eye to tapping business opportunities in and beyond China. Limited resources have always been, and will remain, the main weakness of China’s State monopolies. Since 2004 Australia has been one of the top five destinations for Chinese investment, mostly mining concerns. Africa’s abundant natural resources and investment-hungry governments have also become popular with Chinese investors. Largely as a result of this unquenchable thirst for resources, China’s State-owned enterprises (SOEs) with their vast, State-backed asset pools, have so far dominated China’s overseas

FDI expansion. By the end of 2011, Hong Kong, the Cayman Islands and the British Virgin Islands had pooled a staggering 74 percent of total Chinese investment. Normally, international investors incorporate in these territories for the sake of tax evasion, loose supervision and ease of access to other foreign markets. Some Chinese companies, particularly resourceheavy SOEs, use these subsidiaries for a different purpose – to give the appearance of independence from the Chinese state, and thus facilitate international acquisitions that might otherwise be blocked by potentially hostile governments. For example, in 2010, Sinochem, a State-owned oil company, bought a 40 percent stake in Brazil’s Peregrino field, operated by Norwegian giant Statoil through a Hong Kong subsidiary. Chinese internet companies such as Alibaba and Sina get access to international capital markets by listing their Cayman-incorporated subsidies in Hong Kong or New York, at a stroke turning them into global corporations, and, at the same time, their domestic operations in China into “foreign-funded companies.”

Private Eyes

While China’s State monopolies may be looking to secure much-needed resources as well as feather their nests with lucrative overseas deals, they remain in pole position at home due to their favored status with the central government. Private enterprises, on the other hand, are increasingly forced offshore simply to maintain growth. In China, rising costs, increasing competition and difficulties in accessing domestic market resources are beginning to drag private businesses down. In March 2011, some 900 well-established Chinese private companies joined the Aigo Entrepreneurs Alliance, an organization designed to facilitate the process of going global for Chinese companies. “After years of develNEWSCHINA I January 2013


Photo by Getty

An employee inspects a solar panel on the production line at the Suntech Power Holdings Co. facility in Goodyear, Arizona, June 18, 2012

opment, many top Chinese private companies are eager to have their brands not just purchased, but respected internationally,” Feng Jun, initiator of the alliance and chairman of Aigo Digital Technology Co., told NewsChina. The increasing interest in developed markets also reflects Chinese companies’ atNEWSCHINA I January 2013

tempts to move up the value chain, says the PwC report. Moreover, relocating outside of China gives some companies the opportunity to reinvent themselves – this was the principle reason for Bosideng’s move to London. The company’s executives sought to lift their terminally middling Chinese clothing brand into a chic alternative for the fashion-

conscious European. “You must bear in mind that customers hold on to their money in a crisis. Without taking your global strategy seriously, you can hardly carry on, much less be a success,” Zhu told our reporter. Zhu claims that Bosideng spent five years preparing for the establishment of its UK presence before finally opening its London flagship store. Having an “international presence” also allows Chinese companies to promote their brands at home – some companies go “global” simply to boost domestic sales – Chinese consumers overwhelmingly prefer international labels to domestic ones. Others pay lip service to globalization for even more cynical reasons. Migrating to other countries, particularly Canada, Australia and the US, is increasingly popular among Chinese entrepreneurs. The easiest way is to meet the investment thresholds in those countries. The Wealth Report released in July by Rupert Hoogewerf, the man behind China’s rich list, and GroupM, a media investment management company, shows that more than 60 percent of Chinese citizens with US$1.7 million in fixed and investable assets had already migrated or were considering doing so in 2011. While their business operations remain in China, these CEOs move their families abroad for the same reasons as any other Chinese emigrant – the desire for a better life, and better opportunities for themselves and their families. From the scramble for resources by Statebacked leviathans looking to carve an even greater slice of the pie to the mass flight of successful entrepreneurs tempted by the American (or European) dream, analysis of China’s outward-bound FDI statistics lays bare the stark contradictions that continue to lurk at the heart of the country’s bullish growth. Indeed, when the numbers are dissected, they tell the complicated ongoing saga of China’s economic miracle – warts and all. 

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SPECIAL REPORT

Global Investment

Suspicious Binds

While Chinese overseas investment continues to spread, international partners are growing wary. How can China’s entrepreneurs earn the trust of their prospective non-Chinese clients and consumers? By Li Jia

A

t least one Chinese entrepreneur is pleased with Barack Obama’s re-election. “Our defendant is still around; otherwise, I would have worried,” Liang Wengen, chairman of Hunan-based heavy machine producer Sany and one of the richest men on the Chinese mainland, said during a recent press conference in Beijing. Ralls Corp, Sany’s American subsidiary, has filed a lawsuit against President Obama and the Committee on Foreign Investment in the United States (CFIUS) at the district court in Washington DC. The company claims that the Obama administration collaborated with the CFIUS to illegally block Ralls’ acquisition of a wind farm near a US navy testing site, citing concerns over national security. “We will fight to the end,” Liang pledged.

Prejudice

While Sany is pursuing a lawsuit against the US presidency which few expect to suc-

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ceed, two other vast Chinese conglomerates - telecommunications equipment manufacturers Huawei and ZTE - have finally had to give up on their mutual dream of entering the US market. In October, Congress concluded that using products manufactured by either company in the continental US telecommunications network “could undermine core US national security interests.” Even bankrupt nations are resisting investment from China. Across the Atlantic in Iceland, another prominent figure on the Forbes China Rich List, real estate tycoon Huang Nubo, chairman of Beijing’s Zhongkun Investment Group, has been kept waiting on the “schedule of the Icelandic government.” After being given the brush-off by the Icelandic authorities when he attempted to purchase a large tract of land in the country for development as a tourist resort, Huang attempted instead to obtain a 99-year lease on the same area. However, as of October, the

Icelandic government had yet to sign off on the lease, citing national security concerns. The reason for this distrust of Chinese enterprises looking to establish a physical presence on foreign soil is that the distinction between commerce and politics, blurry across the globe, is particularly obscure in China. Huawei founder and chairman Ren Zhengfei, Liang Wengen and Huang Nubo all have documented ties, past and present, with the Communist Party, leading to speculation that their businesses are at the beck and call of the Chinese authorities. Although China’s State-owned enterprises (SOEs) have traditionally been the principal targets of such distrust, some nominally independent Chinese companies, particularly those involved in strategic industries, are now facing a similar degree of prejudice. This does not mean that all Chinese enterprises struggle to gain a foothold overseas – indeed, the vast majority, whether private or NEWSCHINA I January 2013


Photo by Getty

Eastern Cape Premier Noxolo Kiviet with the Vice President of First Automobile Works Jin Yi at a ground-breaking ceremony for a US$67 million plant in Port Elizabeth, South Africa, February 28, 2012

State-owned, are welcomed as essential partners boosting struggling economies. Take the example of Sinopec, one of China’s three State oil monopolies, a company which supplies 60 percent of China’s oil products. Sinopec announced at least two acquisitions of US and British North Sea oilfields in 2012, putting Chinese investors in charge of major strategic resources in both countries. During a visit to Beijing in September, Polish Foreign Minister Radosław Sikorski openly requested greater Chinese involvement in Poland’s nascent shale gas extraction program. Why are some Chinese companies faced with obstructions wherever they go while others, even State-owned monopolies, receive the red carpet treatment? As with most issues which interfere with the routine of international trade, the roots of disagreement are nourished by more than just partisan politics. NEWSCHINA I January 2013

Selective Welcome

“Recently the UK government was showing potential Chinese investors around our nuclear power stations,” said Peter Manning, head of international trade with Essex County Council. His Nanjing office works closely with the Jiangsu provincial government to attract Chinese companies to eastern England. He added that both Huawei and ZTE already had several operations in the region. Manning is in a unique position to evaluate the respective strategies of Chinese businesses attempting to go global. One problem which he believes continues to dog Chinese investors is the failure of Chinese entrepreneurs to adapt to an unfamiliar business culture. “With the Chinese competitive model in their minds, [Chinese investors] could position themselves incorrectly in the market, focusing perhaps on being a low-cost leader rather than a quality brand,” Manning told our reporter.

Some business figures in China have noticed this problem, and are seeking to solve it. A consortium of about 200 members of the Aigo Entrepreneurs Alliance, an elite club of top Chinese private entrepreneurs interested in a global strategy, has been touring Europe, Southeast Asia and the US over the past few months. Feng Jun, initiator of the club and chairman of Aigo Digital Technology, told NewsChina that the delegates were impressed by the warm reception extended by business communities and governments in all the countries they visited. More than 80 percent of Chinese companies with an overseas presence described the business environment in their host countries as “fair and friendly,” according to a survey released in April by the China Council for the Promotion of International Trade (CCPIT). However, sometimes investors are surprised by the sudden appearance of trade barriers, even in countries famed for their openness to Chinese investment. Australia is a good example of this. China was Australia’s 13th largest source of investment by the end of 2011 according to a white paper published by the Gillard administration on October 28. China owns major stakes in Australian fossil fuels and mining concerns, and while tensions have flared over environmental and tax issues, the business relationship between the two countries has continued to boom. However, Huawei executives were left reeling when their company was slapped with a ban preventing it from bidding for Australia’s national broadband program. Canada, another major destination for Chinese investment, has also attempted to selectively obstruct Chinese acquisitions in its domestic oil industry. Ottawa has repeatedly delayed finalizing the acquisition of Canada’s Nexen by the State-owned China National Offshore Oil Corporation (CNOOC). A number of high-profile fraud cases involving some small Chinese companies listed in Canada were cited as a reason CNOOC found itself under particular scrutiny from regulators.

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SPECIAL REPORT

Top 10 destinations of total investment from the Chinese mainland by the end of 2010 South Africa 1%

“There is concern that Chinese SOEs may pursue national strategy over commercial interests, even if many SOEs are listed on overseas markets,” a Beijing-based consultant specializing in globalization told our reporter. The US government, while outwardly inviting foreign investment to boost its reindustrialization and as pivot to high-tech industrial manufacturing, remains vigilant when it comes to potentially troublesome competitors entering its domestic market. Professor Sang Baichuan of the University of International Business and Economics told NewsChina that, by keeping Huawei out, the US is attempting to avoid having to extricate the Chinese giant from its telecommunications network in the future. Most analysts agree that it is easier to keep a company out of a market in the first place than to remove them once they have become established. At a press conference in October, Chinese Commerce Ministry spokesperson Shen Danyang urged the US to “return to the right track,” citing the much slower growth of Chinese investment there than in most other major economies for the first three quarters. Han Xianbao, chairman of the Henan-based crane manufacturer Weihua Group, told our reporter that he sees Sany’s cold shoulder treatment at the hands of the Obama administration as a learning opportunity for his own company’s global strategy.

The Pizza Hypothesis

A key millstone round the neck of Chinese entrepreneurs is that few can claim no past or present association with the government. Quite apart from the direct involvement of the Communist Party in the management and oversight of business, many of China’s top earners made their fortune after giving up government jobs and entering the business market in 1992 in response to pro-reform remarks from then-leader Deng Xiaoping. This so-called “92 group,” comprised of former soldiers, cadres and civil servants, has gone on to dominate countless sectors of Chinese industry, from soft drinks manufacturing to property and finance. If a CEO’s past or present association with the Communist Party is seen by foreign regulators as

48

Luxembourg 1.7% Singapore 2.5%

Australia 2.6%

Russia 0.9%

Canada 0.9%

The United States 2.1%

Cayman Islands 5.1%

Hong Kong 61.6% British Virgin Islands 6.9%

reasonable grounds to block investment or acquisitions, few of these companies would be able to confidently present a clean record. Even in sectors dominated by private interests, the hand of the Chinese government can be a hindrance as often as a help, at least in terms of developing a global market share. Chinese solar panel exporters, mostly private enterprises, receive generous subsidies from Beijing as part of the government’s green energy drive. These subsidies, which have propped up an industry already struggling to compete in a saturated domestic market, are what have allowed the US to accuse Chinese solar panel manufacturers of unfair trade practices. More important, in an economy where the State has a strong grip on market resources, from finance to energy, and a final say over which enterprises are permitted to enter the marketplace, it is almost impossible for companies to survive and thrive without good connections with the government. Professor Sang believes that the only viable solution is to reduce or even eliminate government involvement in the management and operations of private businesses. Others advocate stronger and more open diplomatic ties with key partners like the US and EU, in

order to foster a greater level of mutual political tolerance and understanding. Chinese investors themselves also need to adjust their business practices for the global marketplace. SOEs have so far struggled to convince prospective partners that they genuinely practice modern corporate governance, at least in their overseas operations. Consultants also advise a scaling-back of ambitions – rather than constantly pushing for 100 percent buyouts of overseas competitors, which looks like an attempt at establishing monopoly powers. Chinese companies should learn to live with smaller stakes and focus on cooperation with international partners, they say. Bosideng UK, a China-funded, Londonbased menswear retailer, found themselves in a very complicated and different legal system when they landed in London. After carefully negotiating England’s labyrinthine planning laws in order to acquire a property near London’s Bond Street to house their flagship store and offices, executives found they had to compensate three parties in a neighboring building for their loss of “rights to light,” due to their decision to add an extra three stories to the existing structure. This was a wake-up call for a company used to doing business in China, where entire residential NEWSCHINA I January 2013


china

communities are routinely or bulldozed in a matter of hours to make way for developers, with former residents entitled to meager, if any, compensation. “Forget about the personal connection-oriented mindset that often works in China, always follow the rules and resort to local professionals, lawyers, surveyors,” said Wayne Zhu, CEO of Bosideng UK. “Then everything is not as difficult as expected.” Feng Jun, initiator of the Aigo Alliance and chairman of Aigo Technology Co., is vigorously touting his concept of turning Chinese business culture from “baozi” – meat-stuffed steamed buns popular in his home country to “pizza.” The biggest difference between them, he explained, is that one keeps its “meat” hidden, while the other displays it in the open. “Most Chinese private companies deal in consumer products, which means everyone can see what we make, and that we face our customers directly,” he told NewsChina. “This means we are born to be better prepared than SOEs – people can see us, and thus trust us.” Feng identified this transformation as the biggest challenge for Chinese investors when it comes to building confidence in host countries. He believes this stems from a fundamental cultural difference, which prejudices Chinese people against strangers who appear to wear their hearts on their sleeves. He believes that voluntary commercial organizations like the Aigo Alliance can help to inform as well as protect investors when entering the global marketplace, helping Chinese business leaders, like Olympic athletes, learn to do business rooted in teamwork, openness and respect for the law. He calls this notion his “Olympic model.” The globalization of Chinese businesses remains in its infancy, which makes teething problems inevitable. While both Chinese investors and their foreign partners may express a desire for greater understanding, there remains the issue of who backs down first. Unless this problem is resolved, regardless of how shaky the global economy continues to be, it will be tough for either side to reap the full rewards of a more internationalized and perhaps less politically isolated Chinese business community.  NEWSCHINA I January 2013

bynumbers 9.0%

Data 2001-2011

Percentage of claims on central government of the central bank and other depository corporations in 2011, up from 8.6 percent in 2010. The claims include loans to central government institutions minus deposits. It is an indicator of monetary supply.

12

Source: World Bank

10 8 6 4 2 0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

87.5

50

The Small and Medium Enterprises Development Index (SMEDI) for the third quarter of 2012, including indicators like profitability, business confidence, enterprises’ investment and costs. It is the lowest since data was first released in the second quarter of 2010.

The number of orders placed for the C919, the China-built large passenger airliner, at the Air Show China in Zhuhai, November 2012, including 10 from GE Capital Aviation Service. The jet’s total orders now stand at 380.

SMEDI Q2 2010-Q3 2012

120

Source: Commercial Aircraft Corporation of China

100

96th 80

2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3

Source: China Association of Small and Medium Enterprises

US$-85.4bn China’s capital and financial account deficit for the first three quarters of 2012. Major items include direct investment, portfolio investment, foreign deposits and loans and trade credits. Source: State Administration of Foreign Exchange

China’s ranking on Forbes’ list of the best places for business in 2012, among 141 economies. The US took 12th place. Source: Forbes

Quarterly data 2012

Q1 US$ 56 bn Q2 -US$71.4 bn Q3 -US$70 bn -80 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60

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environment

Snow Leopard

Cat’s Cradle S

China is home to more snow leopards than any other country in the world, but still lacks both academic understanding and concrete protection efforts

ince 2011, Shi Kun, a wildlife researcher from Beijing Forestry University, has been happy to see more and more sightings of snow leopards, his specialism, in China’s western regions. One was spotted roaming in the Urad Natural Reserve, one on Gangkar Mountain Reserve in Sichuan, and a total of seven have been sighted this year in western China’s Qinghai Province, where the Yangtze, Yellow and Lancang (the upper reaches of the Mekong) rivers originate. In early November, Shi held a symposium in Beijing on the “protection and monitoring” of the snow leopard. The event, also the launch ceremony for the second nationwide wildlife resource research project, was a sum-

50

By Li Guang and Geng Haotian

mit for researchers concerned with the snow leopard, the threats it faces, and how best to protect it. While extremely rare, the snow leopard is known for its broad range, meaning that tracking is no easy task. The species can be found across more than ten central and south Asian countries, including Mongolia, Pakistan, Bhutan and India. Listed as “endangered” on the International Union for Conservation of Nature (IUCN)’s Red List, the leopard is sparsely distributed

within its range. In China, it is found in Xinjiang, Qinghai, Gansu, Sichuan, Tibet and Yunnan provinces, all the way from the far northwest to the southwest, and sitting as it does at the very top of the food chain, its existence is vital to the maintenance of the region’s ecological balance. According to Shi Kun, despite the fact that China boasts more than one third of the total number of snow leopard species in the world, its protection is far from sufficiently enforced when compared to international standards.

Roaming Back

Shi Kun’s shift from ornithologist to snow leopard researcher was, in his own words, a NEWSCHINA I January 2013


coincidence. One day in 2007, while he was working as a volunteer teacher in Xinjiang, a local shepherd sought Shi’s help when a snow leopard got into his sheep enclosure and was driven up a tree by locals. After witnessing the elusive creature, Shi immediately switched his research focus. Luckily, he won a research grant of 80,000 yuan (US$12,832) to further his study. Zou Xiaolin, deputy director of the Inner Mogolia Wildlife Protection Center, told NewsChina that she had once spotted the snow leopard on the Gobi in the Urad Natural Reserve. On April 11, 2011, local herders reported to Urad Nature Reserve staff that they had caught a wild animal that they were unable to identify - it turned out to be a small snow leopard. “It was 90 centimeters in length, and 40 kilograms in weight. Three days later, we released it into the mountain forests.” said Zou. According to Zou, snow leopards were rare on the reserve, since the animals normally remain in high-altitude areas, between about 3000 to 5500 meters. “But the scientists couldn’t give a reasonable explanation why the snow leopard had appeared on the Gobi, below the snowline,” Zou told our reporter. After extensive tracking work, Shi noted that the snow leopard would only attack livestock when it lacked prey in the wild. “Normally, it tears open the necks of cows or sheep, and drinks their blood. When it has had enough, it walks away with a strange, almost drunken gait.”

Kill and Trade

Across the Himalayas, snow leopards are hunted for their coveted pelts and bones, and sometimes attacked to prevent them from preying on livestock. Zhou Minghua, head of the Gangkar Mountain Reserve, admitted to NewsChina that inside the reserve domain, there were generally three to four poaching attempts each year. According to the Hohhot Evening News, on October 11, 2012, the local customs bureau busted an international smuggling ring trading in snow leopard pelts. It was estimated that the pelts could have been sold for 100,000 yuan (US$16,037). Zhu Chunquan, IUCN China representative, told NewsChina that in 1972, snow NEWSCHINA I January 2013

leopards were listed as an endangered species, and in the early 1980s, they were listed on the Convention on the Conservation of Migratory Species of Wild Animals, and classified as “most endangered” by the United Nations Convention on International Trade in Endangered Species (CITES). However, the illegal trade in snow leopards and their body parts still continues today. Snow leopards are solitary and secretive by nature, and are therefore scarcely seen in the wild. The total snow leopard population has been on the decline in recent years – the International Wildlife Preserve Organization estimates the total global population to be between 3500 to 7200, and China, one of the major regions for snow leopard habitation, is home to 2000 to 2500 of them. According to Zou Xiaolin, trafficking of snow leopards is a regular occurrence in the border regions. Aside from poaching, conflict between local nomads and the snow leopard is another reason for the decline in numbers. In 2004 in the Qilian Mountain Reserve, a local was found to have killed a snow leopard in retaliation after the animal killed some of his sheep. The nomad was sentenced to seven years in prison. Cai Ping indicated that in the last decade, enforcement of wildlife protection in Qinghai Province has resulted in a rising number of Tibetan gazelle and kiang (Equus kiang, the largest of the wild asses in the Qinghai-Tibetan region). With an increasing prey base, the number of snow leopards has also increased. On the other hand, some argue that mining, road construction and tourist development are impacting heavily upon the habitats of snow leopards.

Plan of Action

Almost all of the countries within the snow leopard’s range have expressed concern about the threats contributing to the decline in populations, and have taken steps to protect them. However, because of their reticence and inaccessible, remote habitats, virtually nothing is known about the ecology or behavior of snow leopards. Shi Kun told our reporter that international cooperation is very important in the leopard’s preservation.

Through joint efforts from the World Bank and the Snow Leopard Network, the International Snow Leopard Forum will be held in Kyrgyzstan in December, where it is expected that conservation of the species will be written into the cooperation framework of the Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization including China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. In the eyes of Philip Riordan, director of Wildlife Without Borders, the enhancement of international cooperation cannot hide the fact that inside China, the protection of this species is yet to reach an acceptable standard. Riordan told our reporter that countries including Kazakhstan, Pakistan and Uzbekistan have finished mapping their action plans. However, the action plans from China and other countries involved are still in the phase of data collection and project discussion. “I hope that China can frame its national snow leopard action plan as early as possible.” As a member of the IUCN Cat Specialist Group, Riordan also pointed out that in India, the earliest country to promote the action plan, there have been ten protection assignments since 2002, including measures aimed at reducing manmade pressure upon nature resources and the promotion of local protection incentives. “Without political support, protection will be ineffective, and without the participation of the local community, protection won’t be implemented.” Wang Weisheng from National Forestry Bureau said to the reporter: “Compared to the preservation of the giant panda, our knowledge of the snow leopard is still very limited…only when we can revive the general environment, can we start to talk more about the protection of this species. ” However, in Wang’s opinion, the issue appears at least to be on the Chinese government’s radar. A report released at the 18th National Congress of the Communist Party of China this November stated: “Faced with increasing resource constraints, severe environmental pollution and a deteriorating ecosystem, we must raise our awareness of the need to respect, accommodate and protect nature.”

51


visual REPORT

Three children travel on their mother’s electric bicycle, Weifang, Shandong Province, December 2012

LOGAN’S SC 52

NEWSCHINA I January 2013


Lu Siling’s mother takes her, and the desk, to school in Shunhe Town, Hubei Province, on September 1, 2012

CHOOL RUN T

he unchecked growth of China’s urban sprawl and its horrendous traffic has made the transportation of schoolchildren to and from class a quasi-military undertaking. In the country’s cities, whole families are frequently mobilized to manage a single youngster’s school run. Each day, parents

NEWSCHINA I January 2013

and grandparents employ cars, motorcycles, electro-tricycles and bicycles, depending on their income, to deliver hordes of children to the gates of elementary, junior and high schools, creating logjams of vehicles and bodies which the children themselves then struggle to navigate.

Parents waiting to take their children home in September 2012, Shiyan City, Hubei Province

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visual REPORT

1

2

54

3

NEWSCHINA I January 2013


4 1. Three parents take their children home from school on a snowy day in Xuchang, Henan Province, December 2004 2. Leaving kindergarten, a child sits in a stroller steered by his father, Guangdong, October 2012 3. Parents and their vehicles crowd in front of an elementary school in Langxi County, Anhui Province, September 2012 4. A brother and sister on their way to school in Yinchuan City, February 2012 5. In Beijing, two children take an electric tricycle home, October 2006 6. An old man takes his granddaughter to school on a December morning in 2011, Feng County, Jiangsu Province 7. A grandmother carries the school bags of her twin granddaughters, December 2010, Jiaxing City, Zhejiang Province

5

6

NEWSCHINA I January 2013

7

55


sports

Rugby Sevens

Playing Hardball

China’s sports authorities have recently caught rugby fever. NewsChina finds out why By Tang Lei and Yuan Ye

T

he two sets of soccer goals at the Kunshan Sports Center in Kunshan City, Jiangsu Province, have recently been replaced by H-shaped rugby posts, an unfamiliar sight in China. This is where the men and women of China’s national rugby teams assemble for training. With the women’s team away competing at an invitational tournament, the men’s team have the 80,000-square-foot field to themselves. Since the announcement that rugby sevens, the 7-man variation on the traditional 15-man game of rugby union, had been granted Olympic status for the 2016 Olympic Games in Rio de Janeiro, the sport has become an immediate priority for the Chinese sports authorities. Having previously failed to gain any mainstream interest on the Chinese mainland, rugby has now been put on the fast track – since 2009, when the International Olympic Committee announced that sevens was to become an Olympic sport, rugby teams have been springing up from the provincial level upward. Yet for the 2016 Olympics, it may be a little too late. Though introduced into the mainland in the 1990s via Japan as well as Hong Kong, then a British colony, it has totally failed to gain any popularity with Chinese youth, and the country had no official league until two years ago. On the whole, locals remain largely oblivious to the sport. Struggling with a knee injury, star player Wang Jiacheng struggled his way through a speed and agility test at a national team training

56

session. Aged 28 and weighing 105 kilograms, Wang is the oldest and one of the strongest players on China’s limited roster, and also serves as assistant coach. “Don’t push too hard, or it’ll get swollen again,” Zhang Zhiqiang, the head coach of the men’s national team, told Wang. The already depleted team cannot afford to lose any more players to injury - they need at least 18 even to carry out an effective full-contact training session. On November 1, the 13-strong men’s national team flew to Singapore for the qualifiers of the Rugby World Cup Sevens 2013 in Moscow. The past few years have seen undeniable progress – they brought home a bronze medal from the 2006 Doha Asian Games, and on the global scale, they have defeated Scotland and Canada, ranked 7th and 8th in the world respectively. But still, to enter the ranks of the top 12 in the world, and to qualify for the 2016 Olympics, will be a tough task for both the men’s and women’s teams.

First Steps

After 13 rounds of sprint-pass training, the team gathered in a circle. “Get close in, huddle up with your teammates,” shouted Zhang Zhiqiang, who emphasizes a collective spirit, perhaps the key element of a successful rugby team. Most of these young players are converts from less contact-oriented sports like track and field, and basketball. For some of them, the transition to the rough-and-tumble grit of the

rugby field has been something of a struggle. “Currently, there are just over a dozen players who can properly represent the national team in high-level international matches,” said Zhang Zhiqiang. “For the Singapore qualifiers, seven of our key players could not go because of visa problems, since they are in the army [and therefore banned from traveling abroad by the Chinese government].” Zhang admits that he is unsatisfied with the current lineup: “Ours is currently a ‘half-team’ made up mainly of second-tier players.” 24-year-old Liu Guanjun has just been made the team’s captain. Half a year ago, he was in the second string. Yet compared to the three or four converts who have been playing rugby for under a year, he’s already a veteran. At the 2012 Asian Rugby Sevens Series, these young players claimed fourth place. “Of the top four Asian teams, the Chinese mainland players are the thinnest. Their muscle thickness is the smallest, much smaller than those of the players from Japan, South Korea and Hong Kong,” Zhang Zhiqiang told NewsChina. “Most of our players started playing rugby at about 18 or 19. The better part of our time is dedicated to skills training. I used to play rugby in England, and at age 19 to 22, their players spend 8 hours a day beefing up their strength. ” “The national team is still in its infancy,” said Zhang. They lack some of a rugby team’s most basic needs, like reliable equipment, medical personnel and a complete coaching staff. “I’m in charge of everything. The management and NEWSCHINA I January 2013


Photo by Su She

China’s national men’s rugby team train at the Kunshan Sports Center, October 28, 2012

operation of our team is rather amateurish. Rugby teams abroad usually have more than 10 coaching staff,” he said. “I hope we will have sufficient hands on deck to help prepare for competitions linked to the next Olympics.”

Turning Point

Zhang Zhiqiang, 39, a former basketball player, entered China Agricultural University (CAU, then named Beijing Agricultural University) on a sports scholarship. He was picked by Zheng Hongjun, the first and current general coach of China’s national rugby teams, including the women’s team. The first rugby team in China was founded in 1990 at CAU, with assistance from Japan, and Zheng Hongjun, then a track and field sports teacher, was appointed coach. Students at the university showed enthusiasm for the game, resulting in a turnout of 40 to 50 players at the team’s training sessions. Spurred on by CAU’s burgeoning team, more than 10 other Beijing universities founded their own rugby teams in the following two or three years. But as the sport was yet to enter the Olympic Games, it commanded little attention from China’s sports authority, the General Administration of Sport (GAS). In 1997, rugby players from the CAU and two other universities finally formed China’s first national men’s rugby team, and went abroad for their first international competition. One year later, Zhang Zhiqiang was appointed head coach.

NEWSCHINA I January 2013

Over the following decade, the sport remained “unofficial.” Though the Chinese Rugby Union (CRU) was founded in 1996, it was not registered at the Ministry of Civil Affairs until 2009, meaning that before then, neither the organizers nor the players received any formal State recognition or support. The majority of financing came from foreign sponsorship. For a long time, players received a paltry 20 yuan (now US$3.20) per daily training session. “Rugby is a truly meaningful sport,” Cui Zhiqiang, former vice chairman of the CRU, told NewsChina. “It helps to build a strong body, and it nurtures a spirit of cooperation. I did my best to advocate the promotion of rugby in universities and in the army, and came up with many measures to push for the sport’s development. But it wasn’t easy.” Fortunately, with the 2016 Rio de Janeiro Olympics fast approaching, rugby sevens may have received its big break in China. It has been officially listed as an event at China’s 2013 National Games, whose events Coach Zhang Zhiqiang

correspond directly to the Olympics. For provincial-level sports bureaus, winning out at the National Games would mean a bigger share of the country’s Olympics-oriented sports funding. Besides founding their own rugby teams at city and provincial levels, local sports bureaus have begun offering various incentives for gifted players. Experienced players and coaches have suddenly become hot property. However, Cui Zhiqiang is skeptical about the real benefits of the fad. “It would be better to find a different way to develop rugby,” he told NewsChina. “The traditional method is a pyramid system, with city- and provincial-level teams at the bottom. If the development of rugby treads that same old rut, all the old problems will repeat themselves.” He suggested that rugby teams should be based at universities, allowing players to continue their education while training. China’s national rugby sevens tournament held in August saw 11 provincial and army teams in competition, and second- and thirdtier teams are cropping up all over the country. In October 2011, 21 teams from 11 cities in Anhui Province participated in the region’s inaugural Youth Rugby Sevens competition. “Of course, the [physical] training in the professional teams is best. But the players shouldn’t give up on their schooling,” Zhang Zhiqiang echoed Cui’s opinion, “Education gives the athletes better ability to think and analyze, things which are required of rugby players.” Zheng Hongjun is now the general coach of the national rugby apparatus. He has Zhang Zhiqiang coach the men, while he focuses on the women’s team, whose strong recent performance means they stand a stronger chance of making it to the Rio de Janeiro Olympics than their male counterparts. While Olympic gold remains a very distant prospect, Zheng and Zhang can only hope that those in charge share their long-term vision for the sport. Rugby is a hard game, but for this coaching duo, tackling China’s sports bureaucracy may be the bigger challenge.

57


culture

Yang Liping

Spreading her Wings Yang Liping became a smash-hit for her delicate and agile performances imitating the movements of a peacock. With her dance drama The Peacock about to end its run, there are signs that this icon of the performing arts is keen to break free of the confines of the stage By Wu Ziru, Nan Mo and Yuan Ye

The Peacock staged in Yantai City, Shandong Province, November 13, 2012

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NEWSCHINA I January 2013


A

s the curtains were drawn aside, several birdcages descended from the flies, accompanied by the sound of the warbling of birds and gurgling mountain streams. The packed National Centre for the Performing Arts fell silent as the noise of traffic, ringtones and machinery suddenly began to pierce the natural soundtrack. Dancer Yang Liping stepped onstage, her face looking bewildered and lost. She attempted to open all the cages, releasing their imprisoned peacocks. However, a gigantic cage descended from the flies to imprison her too. Two weeks shy of her 54th birthday, The Peacock is dancer Yang Liping’s swansong – a two-hour dance drama around the themes of love and life. Yang describes the piece as a mingling of illusion and reality, her homage to the changing of the seasons and the power of nature. Regardless of her true intentions, however, Yang seemed to know what would guarantee a full house. Nobody in China knows the appeal of the folkdance-inspired “peacock dance” better than Yang – she has been performing it in one form or another for two and a half decades. Yang Liping enthralled her home country in 1986 during a televised national dancing contest during which she performed her own stylized version of this folk dance, which substitutes the darting head of a peacock with the lithe and elegant arms and fingers of a skilled dancer. Yang’s show-stopping performance earned her the nickname “Peacock Princess,” and she was hailed by State media as “one of the most beautiful women in China.” Even in her mid-fifties, Yang’s tiny waist remains supple, and her arms and hands are as agile as ever. However, she has given her last formal performance. “There’s not only one ‘stage’ for me,” she told reporters. “I can go dancing anywhere, under the trees, in the fields, whenever I like.” “I’m also doing choreography,” she added, less whimsically. She also seems committed to nurturing the next dancing stars on the Chinese stage – casting her 13-year-old niece and protégé Cai Qi in The Peacock in the role of “time.” Yang also seems to have developed an impressive circle of friends. For her final performance, she invited Timmy Yip, an internationally renowned art director and production designer, to help stage her project. Painter Ye Yongqing created The Peacock’s backdrops. Gao Chengming, one of China’s most prominent choreographers, also joined the production. Yang wanted to use live sound effects as much as possible – even the sounds of birds and trees were played live. “Our people say that one who performs the dance of the peacock well is attractive and capable, and deserves happiness,” Yang told our reporter. Yang, raised in a Bai ethnic minority community in Yunnan, credits her upbringing with her love of dance. Born into relative poverty in an underdeveloped area, Yang was denied the chance to enroll in a dance school. Instead, her childhood was spent caring for her younger siblings and tending to her family’s animals. She claims to have taught herself to dance

NEWSCHINA I January 2013

59

Photo by Feng Weizhu/CFP

Fields and Forests


Photo by CFP

culture

Yang Liping speaks during the press conference for The Peacock, October 22, 2010, Beijing

“under the trees and in the fields.” Eventually, Yang was spotted by a talent scout, and recruited at the age of 12 by a local performance troupe. She began touring other villages in Yunnan, in the process learning skills from other dancers, many of whom were members of the region’s dozens of diverse ethnic groups. Nine years later, her repertoire was enough to earn her a place in the China National Ethnic Song and Dance Ensemble (CNESDE). It was with the CNESDE where Yang earned fame as a “peacock dancer.” However, she felt stifled by the institution’s rigorous training in ballet and other classical forms of dance, which led her to abandon her studies and return home, where she refined her own unique, contemporary style of movement. In 1986, she performed her debut The Spirit of the Peacock, becoming an overnight sensation. It remains her most famous performance. Despite having been tied to the animal she so skill-

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fully imitates for her entire professional life, Yang shows little sign that she feels she has become a prisoner of her own successful schtick. “The dance drama is a fable of modern people, of ourselves,” she told NewsChina. “I just chose to deliver this idea through the image of the peacock.” Yang believes her abilities have only improved over time. “When I was young, I was imitating the shape and movement of the peacock,” she told our reporter. “Now, I exude its spirit. When you have experienced all that you need to experience, your dancing will have soul.” Yang now runs a dance school close to her home village in Yunnan Province, and has increasingly focused on choreography rather than performance in the last ten years. In a country where cultural authorities are quick to label performers from ethnic minority backgrounds, Yang has fought to have her ethnicity disassociated from what she sees as her own unique style of contemporary dance – rejecting words such as “ethnic” or “traditional.” “My dance is modern,” she said. “Dances created by modern people are modern dances.” However, labels are tough to shake in China. In 2004, Yang’s first dance drama Dynamic Yunnan was staged. A showcase for the numerous regional ethnic groups in Yunnan Province (70 percent of the performers were from these groups), Dynamic Yunnan was very much a prestige project for the cultural authorities, and its healthy box office cemented Yang’s role as a promoter of ethnic and folk performance art. Despite Yang’s professed desire to be viewed simply as a dancer rather than singled out for her ethnicity, the association has become inescapable, with impresarios and producers keen to capitalize on Yang’s brand to come up with crowd-pleasing shows centering on China’s ethnic minority groups. In 2007, Yang choreographed Tibetan Mystery, another ethnic showcase, and Yunnan Sound, a follow-up to Dynamic Yunnan, toured China in 2009. Small wonder then, that Yang is often evasive when discussing the motivations behind her commercial works. “I don’t really have any aims,” she said. “I just do what I like, and vice versa. There’s no special reason.” Rather like Shakespeare’s The Tempest, Yang has used The Peacock to channel her perspective on retirement from center-stage – a position she has maintained for longer than most professional dancers. The show opens in the springtime, but closes in winter, with Yang explaining that, for her on-stage career, “the winter has come.” However, she expressed excitement to our reporter when asked about her feelings on retirement. “The stage is too small a space,” she said. “There’s lot of places I can go dancing beyond it.” NEWSCHINA I January 2013


history

Beijing Film Studio

Celluloid Cemetery The Beijing Film Studio, once one of China’s most prestigious movie houses, has been slated for demolition after declaring bankruptcy, marking the end of an era

Photo by Fotoe

By Xie Ying

A scuplture of a peasant, a worker and a soldier still stands on the top of the Beijing Film Studio’s gate

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ehind a vibrant residential area on the northern edge of Beijing’s city center stands a solitary complex with blocks of Soviet-style redbrick buildings, all shuttered and spray-painted with a big Chinese character “chai” (demolish). Only a weathered sculpture featuring a revolutionary tableau of a peasant, worker and soldier gives any indication as to this rundown complex’s former purpose. So ends the story of the Beijing Film Studio, one of ChiNEWSCHINA I January 2013

na’s four biggest State-owned movie houses, established 63 years ago as a bastion of the new communist government’s propaganda machine. According to government sources, the site will be redeveloped into yet another of the capital’s high-end residential and retail complexes. “Several days ago, I returned, alone, to the studio,” sobbed 57-year-old actress Liu Xiaoqing, one of the emergent stars of the 1970s Chinese film scene in the wake of the Cultural

Revolution. “Standing in front of the gate, my eyes were brimming with tears…I was very sad indeed that the studio will soon be gone forever.” “The Beijing Film Studio represents the glory of Chinese movies and its name will be engraved in my heart and the hearts of all Chinese movie producers, directors and actors,” Liu continued. Despite a campaign against demolition by actors, screenwriters and other former protégés

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Photo by CNS

history

Photos by Fotoe

The redbrick buildings of the studio

A poster for Goddess Luo, an opera adaption produced in 1956

Publicity for Taking Mount Hua by Strategy, a propaganda film produced in 1953

of the studio, the project is certain to proceed. This emotional performance from China’s so-called “Movie Queen” at the 31st One Hundred Flowers Awards Ceremony, a major Chinese movie award based on audience voting, would likely have resonated with older audiences, but perhaps left younger film fans cold. After all, the Beijing Film Studio, unlike Liu Xiaoqing herself, hasn’t had a smash-hit in decades.

Made in Moscow

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In the early 1950s a 20-member delegation from the recently-established Beijing Film Studio brought back movie-making experience and techniques from Stalin’s Soviet Union. They immediately set about recreating Soviet-style socialist-realist propaganda epics using Chinese themes. “The studio at that time was purely a copy of the Russian model, under which the authorities dictated everything, from produc-

tion to distribution,” Wang Song, a retired cinematographer who worked at the Beijing Film Studio in the 1980s, told NewsChina. Despite the copycat approach to content creation, the import of Soviet moviemaking technology, particularly color film, stereoscopic sound and wide-screen projection techniques, allowed the Beijing Film Studio to set the curve for China’s domestic movie production houses throughout the 1950s. The intensive, factory-style approach to production also allowed the studio to become China’s most prolific, with official statistics claiming that 255 movies and documentaries were completed on the studio lot between 1949 and 1985. “The studio at that time was like a big plant divided into several workshops,” Wang Song told our reporter. “Each year, the authorities would assign production tasks to all the Stateowned studios which would in turn start producing movies according to the mandate.” “Under the system of planned purchase and sales, no one had to worry about the box office.” This production model endured even into the Cultural Revolution, which effectively closed down production in all China’s movie studios. The Beijing Film Studio, with a greatly reduced workforce, was tasked with filming and editing cinematic versions of Madame Mao’s “Revolutionary Model Operas.” After the end of the Cultural Revolution in 1976, the State relaxed some of its restrictions on filmmakers in order to restore the reputation of China’s domestic film industry. Little Flower, which is even today lauded as a milestone in its representation of the Chinese Civil War and produced by the Beijing Film Studio in 1979, earned Liu Xiaoqing nationwide fame. “[Little Flower] adopted so many innovative techniques, such as flashbacks and strong contrasting colors, to highlight its theme that the movies made in the following decades were unable to surpass it. Meanwhile, its particular style of purity marked itself off from other dull propaganda vehicles,” ran an commentary on arts-focused soical network douban.com after State TV aired Little Flower in 2008. Little Flower kicked off the Beijing Film Studio’s golden age of the 1980s, which saw NEWSCHINA I January 2013


the complex produce more than 30 movies and 200 episodes of various TV shows, some of which, like Strange Friends (1982), garnered international acclaim. “Due to a lack of other entertainment choices, watching movies was a major way for both leaders and ordinary people to pass the time, which helped create a favorable environment for the growth of the studio,” said Wang Song, the retired cinematographer.

Decline

According to Wang Song, the Beijing Film Studio’s slide toward bankruptcy began in 1984 when a new government policy decreed that State-owned movie studios would be responsible for their own profit and losses. At the same time, new forms of entertainment, particularly popular music and, most crucially, television, began to eat into the marketplace where the cinema had reigned supreme. Demand grew for more diverse content than heroic military epics, with ever-popular Hong Kong martial arts movies beginning to trickle into the mainland market. “Starting in the 1980s, VHS, karaoke, more diversified TV shows and Hollywood began posing serious challenges to domesticallymade films,” he told NewsChina. According to the book Chinese Movie Market, Chinese cinemas sold 29.3 billion tickets nationwide in 1979. This figure dropped sharply to 5.2 billion in 1984 and bottomed out at a mere 300 million in 1994. After the government monopoly over movie production was relaxed in the 1990s, State studios were abruptly swept aside by an influx of commercial players, many of them with financing from Hong Kong and Taiwan, backed up with a talent base of international stars. When China began to import Hollywood blockbusters in the same decade, the fate of the Beijing Film Studio, the cultural authorities’ self-described “dream factory,” was sealed. “The government replaced its annual grant with fixed subsidies in 1984, which increasingly fell short of covering our shooting costs,” Zu Shaoxian, former vice-head of the Beijing Film Studio, told NewsChina. “By the end of the 1990s, our funding shortfall had grown to tens of millions of yuan.” An attempt by the studio’s then director

NEWSCHINA I January 2013

Han Sanping to introduce the Hollywood model failed spectacularly. Zu believed this was due to the Beijing Film Studio’s backward management ethic and outdated technology. However, even turning their backlots into tourist attractions couldn’t halt the decline of the Beijing Film Studio’s fortunes. Selling the studio’s trademark was the only way the production team could hope to turn a profit. As private studios were only permitted to make movies on the Chinese mainland if they partnered with a State studio, the Beijing Film Studio quickly stepped up to co-produce and fund a variety of joint productions. This briefly turned the studio’s fortunes around, with one of the studio’s co-productions, the New Year blockbuster The Dream Factory, made 33 million yuan (US$4.85m) at the box office. However, yet another change in policy, this time allowing private moviemakers to operate independently, soon led to the demise of even this briefly successful business model.

Historic Locations

The now-vacant Beijing Film Studio’s backlots are located at No. 77, the North Third Ring Road. One area is dominated by a Ming Dynasty-style mansion modeled on the settings for Cao Xueqin’s classic epic romance The Dream of the Red Chamber, a mainstay of Chinese drama serials. The Beijing Film Studio’s abridged adaptation of this novel, shot in the 1980s, remains one of the studio’s most enduringly popular productions. “They should not have closed this tourism spot so early,” complained film fan Ju Jian, who had arrived to photograph the historic backlots only to find his way blocked by a locked gate. “Both these backlots are more cultural and historical.” “The Dream of the Red Chamber was an unprecedented blockbuster,” the art director Chen Yiyun told Chinese Arts paper. “We spent one-third of our total budget [US$440,000] in reproducing the architecture described in the novel. The building was so accurately and exquisitely designed that it later became a tourist attraction.” “The studio’s leadership wished to make the backlot a permanent structure, and that was why it was built to be a work of art,” he added. Equally well-known was the Ming and

Qing dynasty-style shopping street, built in 1979 for the movie Camel Xiangzi. The set was later expanded to cover 14,000 square meters, reproducing the old-style stores, traditional courtyards and crisscrossing lanes of old Beijing. Chen Kaige’s 1993 masterpiece Farewell My Concubine was shot on the Beijing Film Studio’s backlot. The film remains the only Chinese-language film to receive the Palme D’Or at Cannes, and for years held the record for the most commercially successful mainland Chinese film at the US box office until the release of Zhang Yimou’s 2002 martial arts epic Hero in 2004. As more and more buildings, including these historic backlots and what was once the largest stand-alone film studio in Asia, are reduced to rubble, the fight to conserve what little remains of the Beijing Film Studio is becoming increasingly hopeless. Supporters of demolition believe that only the construction of a commercially viable replacement could make up for the studio’s huge debts, while opponents argue that the studio’s cultural legacy should trump financial considerations. Predictably, neither side is willing to compromise. In late September, several dozen retired former employees staged a protest against the demolition in front of the Beijing Film Studio’ waving posters and shouting slogans. “We have to depend on the location of the studio to continue its cultural heritage, which involves not only its buildings, but also its movies, moviemakers and actors,” said Huang Suying, a 93-year-old actress who attributes her career to the patronage of the studio. One early October morning, our NewsChina reporter met with a group of would-be-extras waiting outside the studio in the hope of securing a bit-part in one of its productions. Most of them were unaware that the complex was on the verge of being demolished. “So there will be no more Beijing Film Studio?” Wang Peng, one of these would-be stars, asked NewsChina, his face creased with worry. Invoking the name of a former Chinese superstar who began his career as an extra, he told our reporter that he had dreamed of becoming the “second Wang Baoqiang.” “Now where should I go?” he asked. (Ma Duosi also contributed reporting.)

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OUTSIDEIN perspectives from within China

Remote Langmusi

At World’s End

Adventurers with romantic notions of the Tibetan horse trail will find their appetite for authenticity sated over a mug of butter tea with the nomads of the Amdo plains By Sean Silbert

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n invisible line divides the village of Langmusi. This small rural community sits directly upon the provincial border separating Sichuan and Gansu provinces. On a cloudy day, it is impossible to tell which road goes to Chengdu and which heads for Lanzhou, the respective provincial capitals. As I walked towards this unassuming border town, two monks in crimson robes loitered serenely beside the road, waiting for a bus headed in the other direction. Two sheep heads dangled from a bridge over the road.

Border Town

Langmusi is small enough that local residents define its size by the number of families. There’s only one significant landmark, the eponymous lamasery split between the prayer halls on the Gansu side of the village and the court on the Sichuan side. A group of nuns chant for alms in front of a cafe selling “McYak” burgers to tourists. I dodged a sputtering dirtbike run aground on the sidewalk, also avoiding fording a miniature lake that had formed in the middle of the road.

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Getting there No buses stop in Langmusi directly, but you can jump out of one on the route north to Lanzhou or south to Songpan – make sure your driver knows where you’re disembarking. Central bus stations in both cities sell tickets to Langmusi – have your destination written out clearly and explicitly in Chinese characters if you’re not a Mandarin speaker. Langmusi is also a great place to stop off on the pilgrim trail to the monasteries in Xiahe. Lodging A tourist trail is slowly developing through Langmusi and there is no shortage of hostels despite the remote location. While you might be hard pressed for luxury, shared rooms can be found for around 25 yuan(US$4)/night, or singles for as low as 40 yuan (US$6.40). Try the Nomad Youth Hostel, a YHA-approved guesthouse, where local guides can also be secured if you too want to spent a night on the plains. Dress warmly.

To Tibetans, Qinghai Province and the southern part of southwestern Gansu are both known as Amdo, one of the ancient Tibetan kingdoms that splintered from the Tibetan Empire around the 9th century. While cultural influences from the roof of the world have lingered throughout this region, it has been under Chinese rule since the European Enlightenment, give or take a few flirtations with various warlords. Intimidating distances stretching between myriad oneyak towns remain a barrier to practical micromanagement to this day, and so life in Langmusi continues, as Gandalf might say, much as it has this past age. Monasteries like the one in Langmusi historically fulfilled a political as well as a spiritual purpose. Lamas ruled from golden thrones in the halls of learning, raising armies and fighting wars as if they were kings. Such powers have long been relinquished, but monks remain at the heart of life in these rural backwaters. And there is no shortage of monks to keep people on the straight and narrow. Indeed, the blanket of silence bestowed on this area by a lack of motor vehicles NEWSCHINA I January 2013


Photos by Sean Silbert

and people, would drive anyone into deep meditation. That way of living can be seen first hand, with the help of a local guide. I was assigned mine a day after signing up, bundled in a jacket, sweater and long underwear to battle the bitter wind. Jiu Shijia only gave his Chinese name – he seemed to know instinctively I’d struggle to pronounce its Tibetan equivalent. Clean-shaven and casually dressed under his thick purple robe, one sleeve flapping in the wind, he often paused to sweep his luxuriant mane of shaggy black hair to one side. Guessing his age was a gamble, though his manner was unquestionably youthful. “Do you like the NBA?” I inquired, noting his Boston Celtics sweater. He looked confused. I pointed to the smiling leprechaun on his breast. “Oh, that. A friend gave this to me.” He had never heard of the team. He didn’t have a TV. He didn’t even have an address. We set off, traveling in local style – on horseback. Indeed, Shijia NEWSCHINA I January 2013

seemed more devoted to the horse’s welfare than mine as I bobbed around shakily in the saddle. Trails faded off into open fields, with our unshod horses more comfortable trotting on the soft earth. Our path began to climb, and the thinning air sapped my strength, though my horse and Shijia remained in fine fettle. We pushed on to top an ocher cliff which ringed the rock-strewn countryside, the undulating hills breaking like frozen waves below us. Shijia had never been further away from home than Hezuo, maybe a two-hour bus ride north, and thus knew every ridge and path as an old friend. He grew up, as do most locals, in the saddle, dropping out of school after the second grade to take his family’s herds out to pasture. In the winter, he minded the stables in the village, picking up his tour guide job as a favor from the town’s travel agent a few years back. His younger sister married in her teens, as did Shijia – he told me he had married his wife at 15. My horse yanked the reins forward to crop the long grass. I struggled to yank its head back to allow us to push on, the first of many

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travel

times this farce would be re-enacted along the trail. Despite these frustrating interludes, the time passed unnoticed until a lone rider, his face masked by a scarf to protect against dust, appeared trotting toward us along the trail ahead. Shijia, smilingly, dismounted and extended his right arm out into the distance, indicating a dot on the horizon. That’s where we were staying. A full day had passed, and I hadn’t even noticed.

Sleeping Rough

The two of us proceeded up to a small yak-hide yurt anchored not far from a field of sheep speckling the hillside with white blobs. The inside was an ode to Trappist simplicity: the main feature a wroughtiron stove in the center of the room, with a dirt platform instead of beds. No mattresses or soft linen here. I kept my coat and shoes on. Shijia was already busy lashing the horses together to prevent them running off, then he darted back inside to toss a dustpan of dried yak droppings onto the stove. Seeing the stars was out of the question, he told me – the guard dogs employed to protect the sheep, and us, against wolves didn’t know my scent. I had to give advance notice before searching for a spot to use the bathroom. My guide reminded me to not to point my feet at the stove. He spoke haltingly, with plenty of hesitation between words. I made a self-deprecatory remark. Shijia smiled. “It’s hard to translate,” he said. His Chinese was not good enough – there was little cause to use it in these parts. Our host, a heavyset woman with scraped-back hair also smiled nervously, asking me to excuse her lack of Mandarin. She babbled happily in Amdo Tibetan with the neighbor woman who delivered a shipment of yogurt, before proceeding to tether yaks, set up the stove and begin preparing a meal of noodle soup for dinner with military precision. All the while, her two-year old son ran around the interior of the yurt in circles, pushing around the frame of a toy car. “HALLO!” he crowed,

proud of his ability to communicate better than his elders. Most of the nomads on the Amdo plains live communally in a cycle of gossip and mutual assistance. Nobody worries about sheep rustlers – everybody is on first-name terms, making a crime hard to get away with, and outsiders are a rarity. The elderly women and the very young keep to their villages, away from the biting chill of the grasslands. Shijia sees his wife and two sons once or twice a week – he spends more time with the proprietors of this yurt than with his own family, though he spoke proudly of his sons in particular, both of whom, he said, were doing well in elementary school. Staying with the family was an exercise in people-watching: I found myself captivated by our host as she fried butter and chopped noodles. Her son seemed more than content in his own little world, as Shijia blended bowl of yak butter, hot water and barley together to make the local staple - tsampa. I hardly said a word – there was little to say, and less that would be fully understood on either side. Before long, I found myself buried under a heap of rough blankets. I was startled awake by the most cacophonous snoring I’d ever heard. I looked around the yurt, angrily searching for the culprit. Then I spotted him. A hulking yak, its massive shadow thrown by the moonlight against the wall of the yurt, was happily nuzzling the earth outside. After returning to town, passing over the same breathtaking verdant mountain plateau, I posited whether I could live like the folk of the grasslands – without things – after a youth spent freelancing my way from café to café, my loyalty cleaving only to whoever offered the fastest Internet connection. This gave way to speculation as to how I could thank my gracious, silent hosts. In the end, I decided against upgrading the little two-year-old’s toy car by way of a thank you. Somehow it would have been an unworthy gesture. My experience in that lonely yurt was something that could never be repaid. 

real chinese

Huyou Lure into a trap These days, the word huyou is so widely used to describe an attempt to lure someone into a trap, that people seem to have forgotten its original meaning: to flicker or flash. Originally, huyou would be used to describe a state of swinging or flittering – a candle flame might huyou, or a playground swing. Its meaning did not evolve nationwide until a skit by China’s most popular comedy actor Zhao Benshan, performed at the 2001 Chinese New Year gala on State TV network CCTV. In the program, Zhao amused audiences with his portrayal of a crafty businessman talk-

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ing an able-bodied chef into buying a pair of crutches. “I can huyou something straight into leaning, someone good to be bad.I can even huyou a loving couple into breaking up. Today, I have huyou’d a pair of healthy legs into becoming lame,” went one of the most memorable lines of the performance. Since the broadcast, the word’s use as a slang term, formerly restricted to speakers of the northern Chinese dialect, has gone nationwide, especially as the term found its way into posts and news reports, most frequently to describe

you

false advertising, or simply to call out a liar. Coming from a skit, huyou is not as harsh as the verb “to cheat” or “to swindle,” and retains a certain lightheartedness. Telling someone to stop huyou’ing you is more “Quit kidding around!” than “You filthy cheat!” However, the word continues to evolve today, and is increasingly used to criticize someone powerful, such as a notoriously underhanded company or institution. The word is becoming more critical – many complain that some local government reports or policies are the biggest official huyou’ers. NEWSCHINA I January 2013


flavor of the month

High and Dry By Stephy Chung

NEWSCHINA I January 2013

Photo by CFP

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eijing’s blistering winters are no match for the heat generated by Sichuan peppercorns. I found this out the hard way. These citrusy, crimson pods flavor most dishes in their native Sichuan province, and are applied liberally by Beijingers looking to fend off Siberian winds. They’re the key component in mala sauces, aggressively simmered with chili peppers and other unforgiving spices. This almost indescribably moreish flavor is obsessed over throughout China. Mala-flavored potato chips outsell barbecue-flavored Lays two-to-one, and a powdered form of this searing, oily sauce is habitually shaken onto popular street foods. However, it is in the stocks employed in the capital’s myriad hotpot restaurants where this evocative flavor really shines. To accommodate the less-than-ironclad constitution, a true Sichuan hotpot includes a “yin-yang” divider, splitting a lightly-flavored, non-spicy broth from its savage mala cousin. The stock is brought to a vigorous boil, and then shredded raw meats and veggies are ceremoniously dunked, later to be fished out, swirled in a cilantro and tahini dip, and savored. While this highly communal dining experience is initially delightful, as the stomach fills beyond comfort and the oily broth congeals with animal fat, the appetite is easily lost. Items which looked tantalizing on the menu, like cubes of gelatinous pig’s blood and crisp lettuce leaves, become grossly indiscernible when allowed to simmer too long. This is why, in my opinion, the mala xiang guo, a “dry” medley of favorite hotpot ingredients, is far superior to its brothy predecessor. Diners select their ingredients, and they are dry fried by the chef in a combination of sauces and spices. My personal favorite includes delicate chunks of cod and tender sweet potato. Be warned, however, the lack of broth means the spiciness is magnified tenfold. These impressive dishes pack a lethal punch. While dry hotpot is a mainstay of the dining scene in every one of Beijing’s districts, its true home is gui jie, the capital’s famous “Ghost Street” – a noisy, near 24-hour strip of restaurants catering to spice addicts. Shivering staff members waver outside their places of employment a la Brick Lane or Little Italy, attempting to drag customers inside to sample some searing specialty or other. Locals joke that bunches of wild Yunnanese marijuana are muddled into Ghost Street’s signature dishes, hence their addictive quality. I’d put my money on a generous spoonful of MSG. Ducking into one of the trustier, better-lit joints, we sat ourselves in large wooden seats, all with their own scarlet sleeve to protect our winter coats from splashing chili oil. I wondered why they weren’t also providing gorging diners with bibs. Aromatic steam rose from the hotpots at each table. Our waitress handed us giant picture menus with sixty-odd ingredients to choose from. It’s genuinely hard to go wrong with dry hotpot, and so we whimsically selected a range of likely candidates. The minimum, five, was an easy reach, considering the choice available – bullfrog, rabbit head and calf tripe were some of the most unusual additions. We were then asked if we could handle spice. I confidently responded that I could, and ventured that our chef attempt to “bring it.” Apparently, I

had suppressed earlier memories of just how stomach-strippingly spicy this dish could be. After a fifteen-minute wait, helped along by a freebie of sunflower seeds and sweetened soymilk, our dish arrived in a dauntingly enormous tin bowl. I was alarmed by what seemed to be an overgenerous amount of coarsely chopped red peppers and whole Sichuan peppercorns piled so high upon the meats and vegetables beneath that they all but obscured them. Even before I managed a bite, my eyes had already begun stinging and a sharp intake of breath burned deep. I delicately nibbled into a piece of lotus root, and while I appreciated the oily, crunchy texture, the spice was truly unbearable. In the next round of punishment, I tried shoveling down sticky vermicelli. Again, I was simultaneously impressed, this time with the chewy consistency, but horrified by the blazing aftermath. My tongue and, more alarmingly, gums, were pulsating. I was in genuine pain. “Eat some rice,” was the obvious advice lent by a nonchalant friend. A more useful “Wait until it’s less hot” came from a sympathetic one. Both were munching away quite blissfully. When the dish finally did cool down, I was able to actually enjoy mouthfuls of delectables, in between bouts of chili-induced agony. The snowywhite fish balls were particularly savory, as they absorbed the perfect volume of sauce without overpowering their salty-sweet flavors. The glutinous nian gao, oval slices of sticky rice cake, were prized finds, each bite immediately satisfying and filling. The potato slices were sinfully greasy but incredibly delicious. Golden needle mushrooms, on the other hand, seemed to cling together in slimy clumps in order to trap clusters of Sichuan peppercorns, like microscopic prey caught in the tentacles of a jellyfish. I learned to avoid these. While those who revel in deep, rich flavors will be in seventh heaven at a dry hotpot joint, I wouldn’t recommend it as a venue for a first date. Those given to copious sweats will immediately stand out from the crowd – flushing scarlet and soaking through endless napkins in an attempt to stay dry. Dry hotpot is best on a cold night - the masochistic heat is the gift that keeps on giving. Venturing into the midnight chill, the spices continued to keep us so toasty that hats and gloves remained pocketed. Next time, though, when a waitress asks me how much spice I can handle, I’ll go for wei la – “mild.” My guts will thank me for it.

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essay

Love, marriage, and property Before I got married, my colleagues in the US and UK would send me the latest economic and demographic reports they read on China and marvel, “Looks like the population imbalance is in your favor over there!” True, we do have a surplus of marriageable men here, but in modern China, relationships aren’t a simple game of numbers. Sometimes it feels like the whole country is toiling away just to pair up its young and produce the next generation of workers. In extreme (but not uncommon) cases, parents sell family homes in order to provide their sons with brand new apartments – a deal breaker in terms of finding an attractive, well-educated mate. China is not unlike other developing societies around the world in terms of its older generation’s preoccupation with marriage. But unlike other traditional cultures, the situation in China is aggravated by a severe, and widening, gender imbalance. About 105 men are born to every 100 women in China, and while this evens out in the long run (women generally live longer), this is small comfort to the legion of Chinese men who will most likely never be able to marry. The One Child Policy further aggravates this problem, with most parents still preferring sons over daughters, and while it is technically illegal for doctors to reveal the sex of unborn babies due to China’s history of female infanticide, the introduction of ultrasound scans in the 1980s drove the birth ratio to over 130 baby boys for every 100 baby girls in some areas. This gap has narrowed somewhat of late, but nevertheless, China continues to have a surfeit of some 40 million bachelors. This has completely reversed China’s millennia-old tradition of dowries. A popular Ming dynasty saying held that “Thieves don’t bother to enter a household with five daughters” – indeed, dowries frequently bankrupted families with few male heirs. A new phrase has displaced this piece of ancient wisdom. Nowadays, you are more likely to hear that “Daughters are China Merchant Banks, sons are China Construction Banks.” Put

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Illustration by Xiang Zhaohui

By Qi Zhai

“You have to clear the double hurdles —the girl’s mom’s material expectations, and the girl’s personal dream of her Prince Charming”

simply, a girl can be a goldmine, if paired with a well-to-do young man. Few educated urbanwomen will agree to marry a man who offers anything less than an apartment and at least one foreign-branded automobile. People who find Chinese real estate prices unbelievable (last time I checked, the cash needed for a nice apartment in Beijing buys two in Queens) should remember that home ownership isn’t a pipe dream for most Chinese – it’s an absolute necessity. As a college student from Chongqing told me last week, “Not owning an apartment before getting married seems irresponsible. Do I ask my wife to move from rental to rental?” Matchmakers and mothers-in-law, still the principal powerbrokers where marriage is concerned, will likely scupper any attempt by a love-struck girl to devote her life to a man without property. Everyone seems to be a matchmaker in China. There are parks where the elderly gather bearing signs listing the accomplishments of their offspring, hoping to connect with the grandparents of other unattached youngsters. Parents habitually divulge details of their family assets to people in their extended social networks just in the hope

that a matchmaker might overhear and send a spouse their way. Once, I was even drawn into this game against my will. A retired lady in my mother’s “dancing in the park” club grilled me about my age, educational background and occupation while I was out jogging one morning, before going on to harass my mother for weeks in an attempt to coerce me into finding a boyfriend for her daughter. With ten to twenty extra men for every woman, why was this lady worried about her daughter? Because, at least in the minds of the ever-pragmatic fretful Chinese mother, excessive quantity is no guarantee of abundant quality. Many of my professionally successful but, by their own admission, privately unfulfilled girlfriends bemoan the limited number of educated, independent and interesting men with whom they feel they could share their lives. “The men who aren’t intimidated by my wealth are either too busy pursuing their own careers, or they’re coalminers who can’t carry on a conversation,” one disaffected Beijing alphafemale complained to me. “In any case, I can’t compete with the hordes of young, pretty girls from the countryside who just want to become trophy wives.” The men don’t have it easy either. The problem with matchmaking, a 30-year-old eligible bachelor (who has a house, a car, and a civil service job) from Jinan explained to me, “is that you have to clear the double hurdles – the girl’s mom’s material expectations, and the girl’s personal dream of her Prince Charming.” Sometimes, the mounting pressure to marry and the shrinking pool of marriageable candidates becomes simply too overwhelming, especially for women. When this happens, they pull out the trump card – independence. A friend of mine told a story about an art student who returned to China after years of studying abroad. “She missed the window of dating in China in her 20s and early 30s. So she bought her own apartment and car.” Nothing says “I don’t need a dowry from my parents or from a man” like providing your own dowry.  NEWSCHINA I January 2013


Back to Normal Thank god that’s over. It’s been a struggle living at the geographical center of a once-ina-decade leadership transition in the world’s most populous nation. Trying to keep pace with the reams of news coverage devoted to speculation over who would make it into the Politburo Standing Committee, and what it might mean should such predictions prove correct, has been a constant struggle, and all just to keep one’s end up in conversations over beer or coffee. Journalists and analysts everywhere will be breathing a huge sigh of relief now they have some tangible facts to deal with, and know who the magnificent seven actually are, while the rest of us can resume the business of our daily lives as usual. The small business owners of Beijing who were told to keep a low profile during the Congress, will quietly begin turning the lights back on, or taking delivery of the truckloads of produce kept outside the city limits for a full week. Visiting businessmen who have as yet failed to attain the social status of “car owner” will once again be able to wind down the rear windows of their cabs and drink in the crisp autumnal air, now there is no danger of in-car shenanigans disrupting important meetings. Soccer players can stop smuggling balls under their sweaters when traveling to a kickabout in the park, now that hot air balloons and the like can once again be legally carried in public. Mothers in Shunyi district are now able to complete their Christmas shopping by visiting the toy store and purchasing the remote controlled helicopter their children have been clamoring for without giving their address, name, rank and ID number. More importantly for the city’s Chinese residents, the 1.4 million volunteers mobilized to keep order and make sure nothing untoward spoiled the atmosphere of the conferences can take off their eiderdown jackets and bid a less-than-fond farewell to the cold street corners they have called home NEWSCHINA I January 2013

Illustration by Xiang Zhaohui

By David Green

My protective instinct towards my adoptive city always kicks in when I’m gearing up to showcase Beijing to the uninitiated.

for a fortnight. Traffic, the bane of every Beijinger’s life, will also hopefully improve now that drivers are not required to either register or provide identification when entering areas close to government headquarters. I’m glad things are getting back to normal. I haven’t lived in Beijing for five years without forming an attachment to the city, its people and lifestyle, and I have little time for events which cause massive disruption to this vibrant city’s daily life. However, it was amidst all the palaver of the Party Congress that I prepared to host two good university friends who were making a flying visit to Beijing on their way back home to the UK after a stint in Taiwan. My protective instinct towards my adoptive city always kicks in when I’m gearing up to showcase Beijing to the uninitiated – many of whom make no secret of their bafflement at why I should choose to live here. Naturally, my friends wanted to visit the Great Wall and, as they didn’t speak a word

of Mandarin between them, it fell to me to be their guide. But what obstructions would we find on our way there? Checkpoints? Border patrolmen armed to the teeth? The choking, snaking tourist crowds of the National Day vacation? As it turned out, none of the above. Our trip turned out to be a delight, hassle-free and well worth it from my point of view when my friends greeted the sight of the wall itself with gasps of awed wonder which were enough to force me to reappraise a spectacle I’d long since come to take for granted. The driver who ferried us to and from the bus stop to the Great Wall village of Mutianyu also displayed a touching sense of responsibility by waiting for us at the bus stop to make sure we caught the express back home, rather than fall victim to the achingly slow local route that carried the same number. Later in their stay, my friends once more confounded my expectations by thoroughly enjoying a trip to Tiananmen Square in the pouring rain. Even when security around the site was at its peak, a journey I’d cried off attending for fear it would be next to impossible proved a breeze – indeed, there was no indication that the police were inclined to ruin anyone’s holiday, regardless of what was happening behind closed doors in the Great Hall of the People. My friends’ final assessment was that they found Beijing to be a much friendlier place than they’d dared hope, and a lot less oppressive than they’d been conditioned to expect by reading about it. That they could form this opinion while visiting at the height of the thick atmosphere of paranoia surrounding the 18th Party Congress does much to put things in perspective. Now, with my Internet once again chugging along at a snail’s pace (rather than simply not working altogether), I can, swaddled in my winter wear, get back to business as usual in the city which, for all its faults, I have grown to think of as home.

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Cultural listings Cinema

The Forgotten Famine In 1942, a famine hit Henan Province in central China. Three million of the province’s total population of 10 million starved to death. That year, China was fighting fiercely against the Japanese invasion, and the country’s wartime capital Chongqing suffered continuous bombing. The famine, caused by both natural and human factors, was shockingly intense, yet few in the province remember it, and it was nearly forgotten by history. Based on the novel Back to 1942 by Liu Zhenyun, a famous writer born in Henan, top Chinese director Feng Xiaogang spent a year shooting the movie. One of China’s most famous and commercially successful directors, Feng has shifted from the urban focus of his early films to encompass a much wider range of material. Particularly, he has indicated a growing interest in disaster movies, such as his critically acclaimed 2010 work Aftershock, which depicted the horrors of the 1976 earthquake in Tangshan, Hebei Province.

Music

Book

From Red to Blue

Lu Xun’s Thoughts and Worries

Will Cui Jian’s comeback gigs be nostalgic gatherings for middle-aged fans? 52-year-old Cui, China’s original rocker, thinks not. On December 15, 2012, Cui began his 2012 national tour, entitled The Blue Bone. Wearing his iconic white baseball cap with a red star on the front, Cui said he’s transforming himself and his music from “red to blue,” which he defined as a transition towards wisdom and free spiritedness. Meanwhile, the tour shares its title with a new movie, directed by Cui and scheduled for release in 2013, that tells the moving story of an underground rocker who happens to be an Internet hacker. Over the past few decades, Cui has never stopped changing and challenging himself. He claims that his passion will never fade: the red is the blood, and the blue is the bone.

Exhibition

Making Use of History History is the past. Yet it can also be the present, or even the future, when it comes to art. In early November 2012, twelve of the most renowned Chinese artists including Wang Guangyi, Fang Lijun and Yue Minjun gathered their works at the Hubei Museum of Art in Wuhan, Hubei Province, to showcase their use of historic elements and the meaning of re-invention. These artists have been borrowing from rich historic resources for a long time – in their works, traditional, classical, popular, Western and Chinese elements have connected the past to the present to give an alternative interpretation of the world around them.

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By Sun Yu

The genius of writer Lu Xun (1881 – 1936) has hardly been challenged in China’s modern literary history. In textbooks used by nearly every Chinese elementary and middle school, he is lauded as a great writer, thinker, critic and revolutionary. However, the stereotyped image of Lu has caused increasing rancor among academics in recent years. Sun Yu, former dean of the Beijing Lu Xun Museum and veteran researcher of Lu Xun, tries to restore a lively and personable image of the writer. “We had all been researching Lu Xun in a way that he would have hated,” Sun said in an interview. In the book, Lu is removed from politics, and placed squarely in the real world. NEWSCHINA I January 2013


NEWSCHINA I January 2013

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Commentary

Enlarging the Middle Class To avoid radicalization in a time of transition, China needs a larger middle class By Dang Guoying

C

hina is a country still very much in the process of transitioning from a traditional polity to a democratic one. To ensure this transition is a smooth one, the country needs to deal with three important relationships: the relationship between labor and business, between central and local governments, and between the State and society. The three relationships are intertwined with each other – a problem in any one area can lead to serious issues in the others. Unfortunately, most advocates of political reform in China focus their attention primarily on the relationship between the State and society. However, neglecting to balance the three may lead to political chaos, jeopardizing the very democratization process itself. For example, if the majority of a population has not reached consensus over its future path, a hazy decentralization of power from central to local government may lead to division of the country. Also, the experiences of other countries show that without realizing a certain level of prosperity for the majority of the population, the rapid rise of populism can lead to radical movements which bring political chaos. Moreover, rapid democratization in a country with a wide income gap may not only perpetuate existing social stratification, but also result in a pseudo-democracy, oligarchical in structure. Given China’s vast size, cultural diversity, widening income gap and polarization of political opinion in recent years, we must be aware of the prospect of such dangers when pushing forward political reforms. These are not “necessary price of democracy” or “worthwhile sacrifices,” as some radical democracy advocates may argue. To achieve a successful transition toward democracy, China must find the right formula. An effective way of overcoming these problems is to enlarge China’s middle class. There has long been a consensus that the existence

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of a large middle class is essential to a country’s democratization, with both aspiration for meaningful change and desire for stability preventing the rapid rise of populist movements. Unfortunately, despite decades of economic growth, China’s middle class has not yet fully developed. Although there are a large number of people with medium-level incomes, they have yet to form a shared middle class identity and values, which has forestalled them from fully cementing their influence. For China to continue its transition toward democracy, it must endeavor to enlarge its middle class. In addition to many widely acknowledged measures, such as reducing taxes, rebalancing income distribution, creating a fairer society, and encouraging greater civil participation in social and cultural affairs, China should also include the often neglected rural areas when promoting the middle class. Currently, the majority of China’s vast rural population have low living standards compared to urban residents, and are categorically excluded from the middle class. The Chinese government should center its rural policy around increasing agricultural productivity – by pushing forward urbanization, China can turn peasants into farmers. With farmers engaging in more efficient agricultural production, a large proportion of the rural population will join the middle class, and in the meantime, increased agricultural productivity will help to both stabilize food prices and address food security issues. Only when the middle class becomes the dominant social group in both rural and urban society, can China achieve a smooth transition into a modern, democratic country.  (The author is a researcher on rural studies from the Chinese Academy of Social Sciences.) NEWSCHINA I January 2013


NEWSCHINA I January 2013

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January 2013