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APEC Blues: Who Will Lead The Pacific?

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Volume No. 077 January 2015

SPECIAL REPORT


EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Director: Liu Beixian

China’s climate change deal is a triumph

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

CN11-5826/G2

NEWSCHINA I January 2015

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hile the international community hailed cial for China’s leadership to deal with the massive envithe climate change deal signed by the US ronmental problems that have followed in the wake of and China during the APEC Summit in rapid economic expansion. The legitimacy of China’s November as a milestone in bilateral commitment on government has become tied to its ability to mainenvironmental issues, the domestic response, particu- tain economic growth and improve living standards. larly in the State media, has been Contamination of the country’s muted. Despite China making water, soil and air has shaken China’s leaders are its first-ever commitment to this key source of legitimacy, and aware that climate cap its greenhouse gas emissions grievances over pollution have change is a major by 2030 along with pledges to become a major flashpoint for global threat and that source 20 percent of its future political unrest. energy from renewables, little As the Chinese government China, as the world’s Chinese fanfare accompanied had to ban drivers from highbiggest carbon emitter, the deal. ways and close factories to ensure has an international Part of the problem could be a blue sky for APEC dignitaries, obligation to cut its the context in which the agreenetizens, their tongues firmly in pollution. ment was signed. China’s comtheir cheeks, coined the term mitment to cap carbon emis“APEC blue,” sending the subtle sions could be seen in some message that the power to secure quarters as a major concession clear skies rests entirely with the to international pressure. Previous arguments that a government. cap would hamper economic growth have jarred with China’s leadership cannot ignore this new political China’s newfound status as both the world’s number reality. During the APEC Summit, President Xi Jintwo economy and its number one polluter. The view- ping told his guests he hoped that “every day we will point that the new carbon deal has come at a cost to see a blue sky, green mountains and clear rivers, not China’s own prestige continues to have currency in just in Beijing, but all across China so that our children mainstream political thought within the country, pos- will live in a pleasant environment.” As China simulsibly explaining the visible lack of enthusiasm for a deal taneously promotes the concept of the “China dream” trumpeted as a triumph by the Obama administration. and “APEC dream,” had the administration attempted China’s new economic and political realities have to sidestep the environmental issue entirely, the reacmade this viewpoint obsolete and counterproductive. tion from the public would likely have been even more Far from being a concession made under external pres- frosty. sure, this climate change deal is economically, politiDespite their priority being domestic issues, China’s leaders are aware that climate change is a major global cally and diplomatically beneficial to China. In the past 30 years, China’s economic development threat and that China, as the world’s biggest carbon has been largely driven by investment and exports, emitter, has an international obligation to cut its polluleading to a booming manufacturing sector. However, tion. Being the first major developing country to make this growth has been fueled largely by fossil fuels, par- such a commitment, the new deal will boost China’s ticularly coal, causing the country’s carbon emissions international image, and help allay distrust. But making a commitment is only the beginning. to rocket. China’s recent economic slowdown has sounded the death knell for this growth model, with China must continue to push forward policies and the leadership now advocating a more sustainable, initiatives both at home and abroad to clear skies, mountains and rivers, and, by extension, lead the inenergy-efficient economy. A changing political environment also makes it cru- ternational struggle against climate change.

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Contents

the new normal

P14

Editorial

politics

Cover Story

society

01 China’s climate change deal is a triumph 10 12

Informant Protection: Whistling Into the Wind Capital Punishment: Debating Death

14 Foreign Investment A Silver Lining/Investing in Investment

24 26 28

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Pharmacy License: Bad Medicine Profile Fees: Files Nailed Post-80s Parents: Second-generation Little Emperors

P30

P54 NEWSCHINA I January 2015

Photo by CFP

Those with a foothold in China’s marketplace are suddenly having to adapt to a rapidly changing business environment. Can companies, regulators and investors keep pace?


Contents

P36

P28 feature

culture

30 Shi Chizhong: Prayer and Profit

54 Urban Renewal: An Underground Revolution

military

visual REPORT

OUTSIDE IN

Commentary

34 Aircraft Carrier: Making Waves

58 Top Guns

62 Historic Zhouzhuang: Family Matters

special report

36 APEC: Partisan Partnerships international

42 China and Afghanistan: Common Ground environment

45 Incineration Plants: Trash Talk economy

48 50

Viagra Patent: Pharms Race Rail Diplomacy: Truly Transglobal

NEWSCHINA I January 2015

P62

P58

70 Vision Down Under 72 China needs genuine rule of law 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 53 China by numbers 64 real chinese 66 ESSAY 68 CULTURAL LISTINGS

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NewsChina, Chinese Edition

Caijing

November 10, 2014

November 17, 2014

Taking Off

Sino-Japan Spat

Wang Hai, former commander-in-chief of the People’s Liberation Army (PLA) Air Force, warned in an article published in the magazine Aviation that reform is the only option for China’s air force, calling for its transformation into a modern and strategic branch of the military. The modernized PLA Air Force is now adjusting to profound changes in tactical training practice, combat strategy, equipment and overall operational procedure. NewsChina reporters visited China’s Air Force command authority, Air Force Command College and a training base to interview commanders and pilots about the reform of the PLA Air Force over the past few decades. For the comparatively young wing of China’s vast military apparatus, never before has the sense of both crisis and opportunity been so palpable.

Vista November 12, 2014

Moral Erosion Shortly after China’s Ministry of Education issued ethical guidelines for college teaching staff, including a ban on “improper” relationships between teachers and students, Xiamen University, on October 14, finally published a report on a history professor’s sexual involvement with his students. Wu Chunming had allegedly maintained a longstanding sexual relationship with a female student, as well as sexually harassing another student. He was eventually stripped of his teaching position. Following the scandal, 256 faculty from universities both in China and abroad sent two open letters to Xiamen University and China’s Ministry of Education demanding a preventative mechanism regarding sexual harassment on campus. In June 2014, the Guangzhou Women’s Federation published a research report on female college students in which nearly 90 percent said their female classmates or friends had been sexually molested, most often on public transportation (87 percent), while using restrooms (30 percent) and in offices (23 percent). The issue has become an increasing public concern in recent years.

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In 2013, the 45th anniversary of the establishment of diplomatic relations between China and Japan, nearly all celebrations in China were canceled, bilateral communication virtually ceased, and ties reached an historic low. Starting from 2014, bilateral business exchanges and reciprocal visits by former politicians were resumed, and the chilly atmosphere began to thaw. In November, Chinese President Xi Jinping had a formal meeting with Japanese Prime Minister Shinzo Abe on the sidelines of the APEC conference in Beijing, hailed by media as the first in a new round of ice-breaking talks. The foreign ministers of the two countries also held their first formal talks in more than two years, a hiatus sparked by both emerging and longstanding disputes. The two sides have agreed to set up a control and compliance mechanism to deal with potential crises and to prevent further escalation of tensions. Sanlian Lifeweek November 24, 2014

Breathing Space In the eyes of the middle class in big cities in China, a large apartment, a fancy car and a diploma from a prestigious university used to be primary indicators of success. However, nowadays, the increasing scarcity of clean air has become a yardstick by which to measure happiness, and sales of air purifiers have been on the rise. During the APEC meeting in Beijing in early November, when the authorities launched drastic temporary measures to keep the skies artificially blue, a new phrase was coined – “APEC blue,” meaning something pleasant, yet fleeting. Statistics from the Beijing Municipal Environmental Bureau showed that during APEC, the airborne density of PM2.5, particulate matter harmful to health, dropped by 30 percent. However, to achieve this, 9,298 enterprises halted production, 3,900 scaled back production, and over 40,000 construction sites stopped work in areas surrounding the capital. However, when the bans were lifted, Beijing’s air pollution returned to medium to hazardous levels, with PM2.5 density exceeding 200 micrograms per cubic meter recorded in some parts of the city. Minsheng Weekly November 16, 2014

Organic Mania At a time when food safety has become one of the foremost concerns of the general public, organic food products are gaining popularity, despite higher prices. The market is growing year-on-year, and organic food producers are competing more fiercely than ever before. Since China’s organic food industry first appeared 20 years ago, it has been plagued by regulatory setbacks, and few producers have survived – false advertising has long been a focus of the food authorities. Starting from April, a new organic food certification standard has been enforced by the government to ensure food safety in the organic product industry, leaving many producers in crisis. For the sound development of organic food, there is still a long way to go. NEWSCHINA I January 2015


“Why do I have to go to school? The income from my parents’ real estate holdings will last me three lifetimes.”

“Some people worried that [the tiger] would end up on a dinner table or as a floor covering. Nonsense! We have taken so much care of this‘honored guest’that we are practically worshiping it!” Chen Zhigang, forestry director of Luobei county,

Heilongjiang Province, on a rare Siberian tiger released into the wild by Russia that has recently made its way into his jurisdiction.

“What I regret is that I never had more children. I am especially jealous of the young people who are allowed to have a second baby. I should have been surrounded by my children in retirement.” Real estate mogul Ren Zhiqiang on his personal regrets.

“Even though Sino-US relations aren’t the best, we have to prevent them degrading because of the interests of each individual power. Without a new understanding of bilateral relations, however, this is unavoidable.”

Wang Yiwei, an international relations researcher from Renmin University, encouraging diplomats to “reset” SinoAmerican relations.

“We have to rethink why those paragons lauded in the media bear little relation to their real-life selves. It’s time to stop putting people on pedestals.”

Commentator Wang Chuantao of the China Youth Daily on the fraud charges against hero-turned-conman Lei Chunian who reportedly rescued a number of classmates from the 2008 Wenchuan earthquake. Lei later used his reputation to swindle his acquaintances. NEWSCHINA I January 2015

Illustration by Wu Shangwen

A middle school student whose parents own a total of 14 houses triggering debate over China’s growing legion of “little emperors.”

“In some regions, statutory laws are inferior to official proclamations; official proclamations are inferior to the minutes of government conferences; government conference minutes are inferior to a written memo from a top leader, and all of the above are inferior to the same leader’s casual verbal command. In so many places the rule of man trumps the rule of law.” Yuan Shuhong, vice-director of the Legislative Affairs Office of the State Council, criticizing the excessive power afforded to individual officials. “In addition to abuse, we also oppose negligence. We have to correct the mistaken belief that an official will be fine so long as he does nothing.” Party Secretary of Hebei Province Zhou Benshun speaking at a provincial government conference. “Nobody seeking truth would fabricate stories simply to ‘spread positive energy,’ since no lie, no matter how ‘moving,’ can ever breed trust.” Commentator Liu Xuesong from the Beijing News speaking out against propaganda stories appearing in mainstream media that are later debunked by online whistleblowers. “‘Caged’ at home, many young people have grown up in a test tube, unable to deal with anything other than preparing for and passing examinations. Romantic love seems way beyond their capabilities.” Wu Di, a lecturer from a “love training center,” explaining why so many young Chinese need her dating advice.

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Top Story

China and Japan Attempt Relations Reset

China and Japan have reached a fourpoint agreement aimed at easing tensions, agreeing to enhance bilateral relations through diplomatic talks while acknowledging the ongoing dispute over the Diaoyu Islands, known as the Senkaku in Japan. The agreement was concluded on November 7, when China’s State Councilor Yang Jiechi met with visiting Japanese national security advisor Shotaro Yachi. According to the State-owned Xinhua News Agency, the two sides have affirmed that they will “follow the principles of the four political documents agreed upon between China and Japan, and continue to develop the Sino-Japan strategic relationship of mutual benefit,” and had reached

agreements on “overcoming political obstacles” in bilateral relations, “facing history directly while also looking to the future.” Xinhua added that the two sides had acknowledged “different positions” regarding the tensions that have emerged between them over the Diaoyu Islands and certain waters in the East China Sea, and had agreed to use dialog and consultation to prevent the situation from deteriorating further, establishing crisis management mechanisms to avoid contingencies. Also, both agreed to “gradually resume political, diplomatic and security dialog through various multilateral and bilateral channels,” and to “make efforts to build mutual trust.” Chinese experts believe these measures to be a key step in breaking the ice between the two countries, which could have a positive effect on tensions in the Asia-Pacific region as a whole. Japan’s foreign minister Fumio Kishida, however, presented a different under-

standing of the agreement at a Japanese domestic defense conference on November 13. According to the Kyodo news service, Kishida denied that the new agreement was a legally binding commitment, and emphasized that Japan does not regard the Diaoyu issue as a “territorial dispute” with China. “Conditions are not yet ready to thoroughly settle the territorial disputes between China and Japan. Currently, a more practical way is to control them,” Yang Bojiang, vice-director of research on Japanese affairs from the Chinese Academy of Social Sciences, told Xinhua News Agency. “A mixture of cooperation and struggle will remain the norm in Sino-Japanese relations,” he added.

Trade

GMO Open to Foreign Investors China’s National Development and Reform Commission (NDRC) recently issued its latest draft on guidelines for foreign investment, stirring the waters by lifting the ban on GMO (genetically modified organism) research and development. Analysts believed the decision was pushed by China’s failure to meet growing domestic demand for grain. Despite growth in grain production for 11 consecutive years, grain imports in the first seven months of 2014 have, according to Chinese customs authorities, increased by 80.7 percent on the same period in 2013. Due to concerns that GMO products could be harmful to health, many people, including some experts, have strongly opposed the decision, though the NDRC has argued that China has an “attitude of

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openness” toward bio-agricultural research. Many foreign agricultural enterprises, including Monsanto and Dupont Pioneer, have welcomed the new policy, saying they are willing to cooperate with Chinese domestic enterprises on GMO technology if the new list is finally approved.

NEWSCHINA I January 2015


Finance

Politics

Shanghai and Hong Kong

New Anti-Corruption Bureau Established

Link Stock Markets

also set a 500,000 yuan (US$83,000) baseline for the account balance of mainland investors to access the program, first-day trade volume from the mainland side fell far short of that from Hong Kong. However, given the mainland’s limited channels for investment, analysts believe the slump will not last long.

Law

China Approves Espionage Act China’s highest legislative body, the National People’s Congress, approved a new espionage law on November 11. A replacement of the former National Safety Act, the new law highlights the importance of counterespionage to national security, according to analysts. For the first time, the law clearly defines “espionage” as organizing, getting involved in or instigating any act that harms China’s national interests, or recruiting for individuals or organizations engaging in such activities. China’s fight against espionage is headed up by the Ministry of Public Security, the Ministry of State Security and relevant departments under the People’s Liberation Army (PLA), whose functions overlap in various ways. The new law, according to analysts, will better coordinate these departments by clarifying their respective responsibilities. The law also broadens its range of applications by including Internet and computer safety, areas which had only previously been covered by lower-level regulations.

Society

Sex Survey Issued The China Sexology Association (CSA) issued its first report on the sex lives of the Chinese workforce on October 28, World Men’s Health Day, encouraging the public to confront any sexual problems they may have. The report was based on a nationwide survey launched in early 2014 that covered over 10,000 employees in 22 cities, among whom around 44 percent of males claimed they had sex less than once per week, with over 21 percent of female respondents complaining that they had never had an orgasm. The low satisfaction rate was, according to experts, largely a result of high life pressure and China’s backward sexual education. The report shows that males working in education and medicine, who have better knowledge about sex, usually lead more fulfilled sex lives. NEWSCHINA I January 2015

China’s Supreme People’s Procuratorate (SPP) recently revealed to the media that it will set up a new anti-corruption bureau as a move towards “rule of law.” The new bureau, according to the SPP, is distinguished by its elevation to deputy ministry level, one level higher than the current bureau, in order to minimize interference from other government departments. Official data showed that among the 35,000 people accused of corruption investigated by procuratorates nationwide from January to September, 319 held an administrative rank higher than that of the head of the current anti-corruption bureau. “We aim to unify the guidance of the anti-corruption effort by coordinating different departments and streamlining the work process,” Qiu Xueqiang, head of the SPP, told media. Qiu did not reveal any more details about the bureau. Analysts said that the new agency may be modeled on Hong Kong’s Independent Commission Against Corruption, signaling that anti-corruption investigation will become part of the Chinese government’s everyday work.

What do you think of your sex life?

Good: 37% Fine: 51% Just a “formality“: 8% No sexual desire: 4%

How many times do you have sex per week? (Males)

Photos by Xinhua, CFP

Investors in Shanghai and Hong Kong are now allowed to buy a limited group of stocks listed in the other city via local securities firms or brokers. The program, named the “Shanghai-Hong Kong Stock Connect,“ was reached between the mainland and Hong Kong stock regulators with the purpose of further opening up the Chinese capital market and enhancing competitiveness. Considering the hidden risk, the total trade volume of the pilot program is restricted to 550 billion yuan (US$91.7bn). Since the mainland

≤1: 44% 1-3: 37% 4-5: 11% ≥5: 8%

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Controversial A middle school in Handan, Hebei Province, has come under fire for installing glass walls between classrooms and teachers’ offices, claiming the move would “enhance supervision.” Many parents accused the school of invading the privacy of both faculty and students.

Poll the People The 2010 government policy capping school tuition fees is set to expire. Many high schools are now proposing raising tuition.

What do you think?

Shocking Ma Chaoqun, general manager of a local water supply company in Hebei Province, made headlines after it was revealed he had hoarded 120 million yuan (US$20m) in cash along with 37 kilograms of gold, allegedly acquired through graft, at his home.

I don’t support it. 67.76% 2,665 I don’t support it, but understand. 20.32% 799 I support it. 11.29% 444 Other 0.63% 25

Saddening

Admirable

Source: www.infzm.com

Most Circulated Post Retweeted: 37,178 by November 15

A 33-year-old woman in Beijing was killed after becoming trapped between a safety gate and a closed subway car door after being pushed off a platform by crowds. Blame was leveled at the lack of safety monitors in Beijing’s crowded subway stations, which experienced record numbers of commuters after the recent APEC conferences severely restricted above-ground transportation.

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Chinese media outlets ran a photo collage showing President Xi Jinping and his wife Peng Liyuan “taking care of each other” during the recent APEC meetings in Beijing, with their reportedly visible affection earning public praise.

The captain of China Southern Airlines flight 3739 was praised after landing a plane safely after birdstrike caused one engine to catch fire. Despite widespread panic, the captain calmly told passengers that he was confident that he could land the aircraft, and no injuries were reported.

“There is a kind of love called ‘Uncle Xi and Auntie Peng.’ Our hearts are melted by such warm scenes.” NEWSCHINA I January 2015


WHO’S

Top Five Search Queries On

HOT? WHO’S NOT?

over the week ending November 15 Candid Camera 320,511 An elderly man in Hong Kong was exposed secretly photographing his son and daughter-in-law having sex. Gentleman Putin 218,147 Russian President Vladimir Putin earned praise for placing a shawl around the shoulders of Chinese First Lady Peng Liyuan.

Break Up Girl

APEC 131,830 APEC brought Beijing to a standstill with the government’s efforts to “clean” the sky by closing factories and power plants and restricting traffic. Peking University Dropout 82,502 Zhou Hao, a former student of Peking University, was revealed to have left China’s Harvard equivalent for a vocational school.

Top Blogger Profile Wu Qing Followers: 39,623 Despite a small number of fans, poet Wu Qing is earning recognition since the publication of his latest anthology. Shocked by the direct and unembellished language of his poetry, which some have called “nonsense” due to lines such as “the cloud is white, very white, quite white, really really white,” many people have criticized Wu as a “literary criminal.” The poet himself, meanwhile, argues that poetry should transcend everyday language. “Traditional poems are like riddles demanding that people deduce their significance,” Wu told the media. “Poetry should abandon language in expressing what one wants to say.” Some writers have defended Wu, calling him a “poetry hippie” who can both entertain and inform those willing to give him a chance. NEWSCHINA I January 2015

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

Tmall Earns US$9.3bn 201,493 Tmall, China’s biggest online store which is owned by Alibaba, recorded a sales volume of 57.1 billion yuan (US$9.3bn) on November 11, China’s “Singles’ Day.”

A young woman in Wenzhou, Zhejiang Province, held a “ceremony” in order to break up with her boyfriend after discovering he was already married. The woman was reported to have remarked that, while they still loved one another, they both had to “be realistic.”

Rich Racers A group of elderly Hong Kong men were recently detained for illegally racing luxury cars through the streets of nearby Shenzhen. Local police impounded a total 13 cars, including Ferraris, Lamborghinis and a Nissan Skyline GTR. The suspects were quoted as saying that they had thought the mainland “wouldn’t have been as hard” on street racers.

Love Rail

Changsha, capital of Hunan Province, recently launched “love subways” designed as meeting spaces for young single people, who could match themselves with other passengers by scanning barcodes on train handrails.

Needle Baby An 11-month-old infant from Shandong Province was found to have had 11 steel needles inserted into her abdomen and hips. After her parents denied all knowledge of the abuse, rumors emerged that relatives may have been entertaining superstitions that such actions could ensure that a second child would be born male.

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politics

Informant Protection

Whistling Into the Wind

China’s ongoing anti-corruption drive has resulted in a greater need to protect whistleblowers. Do the Supreme People’s Procuratorate’s newly revised regulations go far enough? By Xie Ying and Han Yong

O

n October 27, China’s Supreme People’s Procuratorate (SPP) issued an updated version of its regulation on the protection of whistleblowers – those who provide authorities with potentially damaging information about officials – a move seen by many to be the department’s effort to comply with “rule of law,” the theme of the Fourth Plenary Session of the 18th Communist Party of China (CPC) Central Committee that ended four days earlier. Over recent decades, the protection of whistleblowers has remained a weak spot in the Chinese legal system, with numerous informants found to have been victimized at the behest of those they reported on. This fear of exposure has forced some informants to stop aiding police investigations, and others to turn to anonymous online tip-offs,

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generally seen as less reliable. The SPP’s latest revision aims to ease informants’ worries by protecting the anonymity of whistleblowers, and endowing them with more rights to seek protection. However, given that informants often report on those in positions of power, including public officials, analysts generally agree that the SPP-level regulation is far from robust.

Informants Victimized

Since China launched a sweeping nationwide anti-corruption campaign at the end of 2012, local governments have rushed to set up online and offline channels for whistleblowers, some of which also promised attractive incentives to encourage tip-offs – so far, few informants have claimed these rewards. Most of the cash incentives in Ma’anshan,

Anhui Province, for example, went unclaimed in 2013, with the “winners,” according to the local government, either refusing to answer phone calls or denying they had provided any information. Analysts have attributed this reluctance to the country’s poor protection of informants. A report by the Legal Daily in 2010 revealed that 70 percent of those who had reported wrongdoing to procuratorial organs had suffered some form of retribution, triggering debate about informant protection. Although the SPP later refuted this statistic, reports on the dangers of being an informant have never fully disappeared from the media. As President Xi Jinping’s anti-corruption drive has gathered steam, the necessity to protect those who report on corruption, many of whom are members of the public, has inNEWSCHINA I January 2015


creased. He Zengke, a researcher in Marxism and Party politics from the Central Compilation and Translation Bureau, once told media that nine of China’s top 10 official corruption informants have allegedly suffered “negative consequences.” One particularly well publicized case was that of Zhou Wei, a retired deputy manager from a home appliance manufacturer in Shenyang, Liaoning Province, who was sent to a labor camp for two years after tipping off authorities about local government corruption. More recently, a couple from a village in Jiangsu Province were murdered by someone allegedly hired by the local Party secretary they had reported on. Journalists who, in theory, have both the right and the obligation to report on scandal, are frequently threatened with vengeance. Former journalist Luo Changping from Caijing magazine has written about how he was forced to “go underground” after publishing an incendiary exposé on Liu Tienan, the former vice-director of China’s National Development and Reform Commission. Luo claims he had to abandon his private car, move out of his apartment and cease contact with all his friends and family for an extended period of time. These revelations have severely hurt the public’s confidence in whistleblower protection. A survey by China Youth Daily in 2013 showed that only around 15.8 percent of respondents would be willing to report on corruption under their real names, while nearly 80 percent of respondents would like to see the government set up an informant protection system as soon as possible.

Revision

In fact, informant protection was written into China’s Criminal Law decades ago. Subsequently, the SPP introduced supplementary protection legislation in 1996, and first revised the regulation in 1999. However, those articles, according to lawyers, still remain too vague to be implemented effectively. The 2014 version aims to further specify regulations, making them easier to implement. For example, an article in the 1996 ver-

NEWSCHINA I January 2015

sion mandating that report details be “kept secret at every stage” was replaced in the 1999 version with that information should be “recorded on an encrypted computer, and no unauthorized access granted to anyone not related to the case.” In 2014, the same article has been further revised to ensure that “information and documents related to reporting be kept in a safe place equipped with secrecy systems, with access forbidden to any person not connected to the case unless authorization is granted by the chief procurator in charge,” with a new article forbidding “handwritten analysis of reports.” Another highlight of the recent revision is the provision of four rights to informants, including the right to inquire about the results of their report, and the right to apply for protection, stating that a procuratorate should assess the risk involved in any report it has accepted, and take urgent protective measures with the help of local public security organs if the informant’s safety may be compromised. “The new articles have filled the gap in the prevention of potential reprisal, which was absent from the previous two versions,” an anonymous insider from the SPP told NewsChina. “In the past, the relevant organs would only get involved after an informant has been threatened or harmed, which could not be viewed as real protection,” he added.

Effective?

Despite these breakthroughs, the new version has failed to impress the public. Many have argued that it will have little effect in curbing the common phenomenon of “hidden reprisals” which, according to Luo Shaoliang, a procurator with the Beijing People’s Procuratorate, means those reported on, particularly the powerful, seek revenge by technically “legal” means, such as finding an excuse to demote, dismiss or otherwise punish an informant. According to Chinese media reports, most of China’s top 10 providers of information on corrupt officials have subsequently been dismissed from their posts, and one was found to have been reduced to begging on the streets. Recently, four employees from

the Shenzhen branch of Walmart China were fired for “having caused huge losses to the company” after they reported on the supermarket’s use of expired cooking oil. “Given that China’s Criminal Law only applies to informants who have been physically or psychologically hurt by malicious means, or whose legal rights have been significantly infringed, few reprisal cases can go to trial,” Wu Danhong, a law professor from China University of Political Science and Law, explained in his paper “Evidential Research on the Protection of Informants.” Wu’s paper reveals that in 2001, only 14 of 289 reprisal cases went to court. This is a major reason why many informants prefer to expose scandals on the Internet under a pseudonym, regardless of the government’s ongoing campaign to encourage Internet users to use their real names. Media have reported that informants worry that their reports will fall into the hands of those they are reporting on. The problem is not limited to the procuratorate system. For example, many local petition bureaus reportedly return citizen petitions back to local governments rather than submitting them to procuratorates as they are required to, leaving petitioners open to retribution. “Even if the procuratorates are clean, and strictly obey regulations, what if their higherups interfere in cases?” read a commentary in Guangzhou newspaper the Yangcheng Evening News. The Criminal Law and the SPP do mention cooperation and coordination between the procuratorate and other departments, especially public security organs, but do not go into detail. For the past year, many delegates to the National People’s Congress, China’s highest legislative body, have urged the government to work out a higher-level independent law on the protection of informants, including a third-party organ for tip-offs and a Westernstyle assistance system for informants who find themselves in trouble with current or prospective employers. So far, these calls have received no official response.

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politics

Capital Punishment

Debating Death

A draft amendment to China’s Criminal Law is undergoing its first reading by the top legislature, fueling debate on whether the country should scrap the death penalty for nine currently capital crimes By Wang Quanbao

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draft amendment to China’s Criminal Law, which proposed abolition of the death penalty for nine currently capital crimes, is under discussion by the National People’s Congress (NPC), China’s top legislature, sparking a debate that has spread to involve legislators, legal analysts and the general public. Since China’s Criminal Law was implemented in 1979, a growing number of crimes, many of them nonviolent, were made capital offenses. The total peaked at 68 in 1997, when the country’s criminal statute first underwent a major revision. In 2011, legislators passed another amendment, cutting the number of capital crimes by 13, to the current total of 55. If passed, the latest revision would further reduce this number to 46.

Debate

Compared with the 2011 amendment, which prohibited courts from seeking the death penalty for 13 nonviolent economic crimes, the latest draft also proposes scrapping executions for those convicted of nonlethal violent crimes. The nine offenses that the latest Criminal Law draft recommends removing from the capital list are: smuggling weapons and ammunition, smuggling nuclear material, smuggling counterfeit banknotes, counterfeiting banknotes, fraud, organized prostitution, forced prostitution, “hindering the enforcement of military duties,” and “spreading rumors during wartime.” A member of the NPC Standing Committee speaking on condition of anonymity told NewsChina that the committee remained divided on the draft during a session of panel discussions on October 31. While some advocated retaining the death penalty for these crimes “for the sake of social stability,” others argued that removing these crimes from the capital list would represent progress towards a “more civilized society.” Still more advised caution, proposing instead that the government gradually phase out capital crimes while increasing the number of offenses punishable by life imprisonment. Chi Wanchun, vice chairperson of the NPC Foreign Affairs Committee, said a crime should not be removed from the capital list simply because of its relative rarity. “More research is needed and we should

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be prudent,” he told State media. In the view of Li Andong, a former deputy director of the General Armament Department of the Chinese People’s Liberation Army (PLA), the death penalty for smuggling nuclear material should remain in place. “Smuggling nuclear materials and nuclear proliferation pose a far greater danger than conventional weapons, and therefore all countries impose top-level controls on nuclear materials to make sure they don’t fall into the hands of terrorists,” said Li. “The death penalty serves as a punishment for criminals and a deterrent for potential offenders; it also shows China’s determination in upholding nuclear security.” Li also suggested retaining the death penalty for spreading rumors during wartime. “Spreading rumors and damaging military morale would be disastrous as it could affect the outcome of a war,” he said. Two other members of the NPC Standing Committee, Yang Wei and Zhang Jian, said the death penalty for smuggling weapons and ammunition should remain in place, for such crimes are a severe threat to society with well-documented increases in cross-border weapons smuggling often equated with the rise of domestic terrorism. Committee member Xu Zhenchao, meanwhile, raised concerns over women’s rights should the death penalty be dropped when punishing pimps, brothel owners and human traffickers. Despite there being little evidence that the death penalty statute has done much to inhibit China’s sex trade, Xu remains adamant that forced prostitution, a crime which “brutally tramples on women,” can only be deterred by the death penalty. In contrast, Su Xiaoyun was one of the members who supported the removal of the nine listed crimes from the capital list. To her, such a revision would be a landmark in developing a civil society. “Our concept used to be ‘a life for a life, a wrong for a wrong,’ but that doesn’t say much about our attitude to criminal behavior,” she said. Si Jianmin, deputy director of the Zhejiang provincial NPC Standing Committee, was one legislator arguing for a gradual reduction in the number of capital crimes alongside a strengthening of the terms of life sentences. Si believes that ensuring that murderers in particular NEWSCHINA I January 2015


Photo by CFP

Commenting on the prevailing mood in China’s legislature, Chen Zhonglin, a criminal law professor, told NewsChina, “I think abolishing capital punishment in a step-by-step manner is definitely the right goal, but how to achieve this remains open to debate.” “Depending on the national economy and conditions on the ground, scaling back the death penalty should be made through strict controls on its judicial application rather than outright abolition by the legislature,” he added.

A drug dealer is sentenced to death by a local court in Xuzhou, Jiangsu Province, June 24, 2013

are prevented from re-offending, and that life imprisonment without the possibility of parole is the best deterrent for potential offenders.

Challenges

As crime and punishment has become a preoccupation of those trying to turn China into a modern society, a traditionally hard-line attitude to criminals has gradually lost ground to a sense among both legal experts and the general public that capital punishment is being too liberally applied, while jail sentences are too light. Since 13 crimes were removed from the capital list in 2011, numerous cases have caused public outcry over both what are seen as excessively lenient punishments meted out to both violent and economic criminals, alongside the disproportionately severe treatment of nonviolent offenders. So far, law experts have reached a consensus that China’s current number of capital crimes is unacceptable, but remain divided over how to practically reform the system. Some have called on the national legislature to further scale back or even abolish the death penalty as soon as possible, citing the alarming expansion of the number of capital crimes up until 2011 as an indication of an unbalanced approach to criminal justice. While precise data remain controversial, voices have emerged both inside and outside the government arguing that the country needs to reexamine its approach to criminal justice. However, conservatives have fought back with claims that abolishing the death penalty could have adverse implications for social and economic development, emboldening criminals, and therefore have suggested restricting, rather than eliminating, execution as a penalty for particularly violent criminal acts. Zhou Guangquan, a member of the NPC Law Committee and a professor with Tsinghua University’s School of Law, told NewsChina that adjusting the death penalty is “a complicated matter,” which involves not only modifying the Criminal Law statute, but also initiating reforms of social governance and public education, with current social, cultural and even religious values often conflicting with the aims of legal reformers. In Zhou’s opinion, the social groundwork is in place for a “moderate reduction” of the number of capital crimes. NEWSCHINA I January 2015

Implications

While making a presentation of the amended draft of the Criminal Law to the NPC, Li Shishi, director of the Legislative Affairs Commission of the NPC Standing Committee, said there was no noticeable impact on social stability in the wake of the 2011 amendment to the Criminal Law which removed 13 nonviolent economic crimes from the capital list. On the contrary, positive results were noted by law enforcement and the judicial authorities, with the country even experiencing a slight reduction in the incidence of violent crime. Nevertheless, the draft still irked some conservative legislators, who continue to argue that the death penalty is essential for keeping would-be criminals in line in a developing country like China. He Yehui, a member of the NPC Standing Committee, said the death penalty was applied based on how dangerous the listed crimes were to society, people’s lives and private property, as well as the risk posed to national security. This argument is most commonly used to justify retaining the death penalty for many smuggling offenses. NPC member Chen Xiaochuan, who is also deputy director of the Guangdong provincial NPC Standing Committee, lifted phrases wholesale from current Party rubric on legal reform by saying that retention of the death penalty “to a proper degree” would help “promote the rule of law, raise public awareness of the law and build a society governed by law.” Ma Changsheng, a criminal law expert from Hunan Province, told NewsChina that a variety of factors should be taken into consideration first before the legislature passes the amended law. In addition to adopting an approach of “gradual reduction,” the legislature should also make efforts to minimize the adverse effects the move might have on society and expand judicial application of life and long-term jail sentences. “The Chinese government signed the International Covenant on Civil and Political Rights long ago,” said Ma. “The covenant requires its members to gradually reduce application of the death penalty with a view to ultimate abolition. The number of countries that retain the death penalty is in decline, and surely China will eventually abandon it.” Nonetheless, an online poll conducted in early November by the Social Survey Center at the China Youth Daily indicated overwhelming support for the use of the death penalty to punish corruption, with 73.2 percent of 2,105 respondents backing capital punishment in graft cases. Whether that figure says more about prevailing social attitudes to official abuse of power rather than capital punishment itself remains unclear.

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Foreign Investment

A Silver Lining

Sustainable growth in China is unlikely to arrive on a silver platter By Li Jia, Zhou Yao and Chen Jiying

The ‘Golden Age’ for business in China is drawing to a close,” runs the first sentence of the annual Position Paper released by the European Union Chamber of Commerce in China (EUCCC) in September 2014. According to the EUCCC annual confidence survey issued earlier in the year, the number of member companies reporting disproportionately low profit margins for their China operations in the 2013/2014 fiscal year cited in the report outpaced the number of those reporting the opposite for the first time. Weak financial data have also emerged from US companies operating in China, with the proportion of those claiming a “substantial revenue increase” now in a third year of decline, according to the US Chamber of Commerce in China (AmCham China). The pinch is felt beyond these companies’ account books. At the end of September, 2014, in his first visit to China as CEO of Microsoft, Satya Nadella agreed to cooperate with antitrust investigations launched against his company by Chinese law enforcement agencies. An array of multinationals have been probed, criticized and fined by Chinese

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authorities, and investigations have been given plenty of coverage in major State media. This uncertain atmosphere has bred pessimism regarding the openness of the Chinese market among foreign companies. According to surveys by both AmCham China and the EUCCC, more US companies now classify China as “only one of many foreign direct investment destinations,” (the country was top of the list seven years ago), while European companies are also considering other opportunities in Asia. Besides China’s economic slowdown and the rising costs of labor and raw materials, the ever-shifting competitive landscape and an increasingly complicated regulatory environment have been identified by major foreign business communities. The sustainable, innovation-based “silver age” that foreign companies continue to hope for, then, depends on how both multinationals and Chinese regulators respond to the changing marketplace.

All That Glitters

Until 2011, 10 years after China acceded to the WTO, foreign companies in China

remitted US$262 billion in profits back to their parent companies, recording staggering average annual growth of 30 percent, according to Chong Quan, deputy international trade representative of China’s Ministry of Commerce (MOFCOM) at a press conference in Beijing held in December 2011. In addition to cheap land and labor costs available to all enterprises during that period, foreign companies also enjoyed preferential tax policies. Foreign companies engaging in productive operations for more than a decade in China were exempted from corporate tax for two years and enjoyed a 50 percent tax cut for the first three years after the year they became profitable. Moreover, tax rebates were granted on profits used to reinvest in China. These, along with a number of other preferential arrangements, were included in the law that was created specifically for the tax structure for foreign companies, which took effect in 1991. In 2003, new regulations extended all these preferential policies to any company with a minimum 25 percent foreign stake after its acquisition by foreign investors – showing an unprecedented welcome to overseas investment.

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ments as their Chinese equivalents.

photo by xinhua

Cold Snap

Consumers line up outside a Coach outlet in Tianjin’s Florentia Village, an Italian style shopping plaza designed and funded by foreign companies, February 15, 2013

For ordinary Chinese, working for a foreign company meant a better salary and generally enhanced job security when compared to conditions at either private or Stateowned Chinese enterprises (SOEs). In the early 1990s, a Chinese technical professional could expect to earn more than US$500 a month at a foreign company, while salaries at SOEs hovered around the US$100 mark. These workers at foreign companies also enjoyed business trips in five-star hotels, paid annual, sick and maternity leave and a degree of legal protection that their peers working in Chinese companies could only dream of. This imbalance persisted throughout the labor chain – a young waiter or receptionist with a high school diploma employed by a foreign hotel could earn double the salary of a middle school teacher with a college degree. This era also ignited China’s enduring passion for foreign brand names. At the time, anyone who had the chance to go abroad

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would typically return laden with purchases for friends and relatives, particularly home appliances like refrigerators, TVs and washing machines, which were hard to come by in China. When China’s first McDonald’s opened in April 1992, locals lined up round the block. As Chen Tingli, a staff member at that first restaurant, told the Beijing Daily in 2009, most customers just asked for “a McDonald’s.” Few could have identified the items on the menu. This golden age began to lose its luster in 2006, when foreign companies were required to pay taxes and fees from which they had previously been exempt, including urban land use taxes, urban maintenance fees and education fees. The preferential law on the taxation of foreign companies was annulled by State legislators in favor of a single taxation law for all businesses in 2008. By the end of 2010, nearly all foreign companies were bound by the same financial require-

In early 2013, Samsung and LG became the first foreign-funded companies fined by a Chinese court for price-fixing. The case was followed by several other antitrust investigations into foreign multinationals in various sectors ranging from infant formula and automobiles to Internet data services and microchip manufacture. In August, 12 Japanese auto parts makers were slapped with US$200 million in fines, the highest levy in the history of Chinese antimonopoly cases. It was far from rare for foreign companies to be fined by the US authorities over bribery scandals in other markets, including in China. In 2013, a number of international pharmaceutical giants, including GSK, Sanofi and AstraZeneca, were involved in probes into bribery initiated by the Chinese authorities. Four senior GSK executives were arrested in connection with the case. Layoffs also became a feature of life in foreign companies in China, when, previously, local staff had been immune from the shockwaves resulting from restructuring or acquisition. Many defected to the less well paid but more secure jobs offered by Chinese private companies, with young Chinese graduates in recent years preferring SOEs over foreign companies. This phenomenon was recorded right up the corporate ladder. This September, Yaqin Zhang, former vice president of Microsoft, took the reins at Baidu, China’s Google equivalent. Peers at Google and Oracle had made similar departures since 2011, betting on a relatively protected domestic sector over embattled multinationals losing faith in China’s market potential. In addition, while foreign brands remain preferred by the wealthy, ordinary consumNEWSCHINA I January 2015


ers in China are overwhelmingly choosing domestic products, from home appliances to fast food and clothing, often due to a combination of low price and the convenience of shopping through the Internet. A recent survey released on September 23 by Strategy&, a consultancy under PWC, showed that 65 percent of executives at foreign companies were surprised to find that their Chinese competitors were equal to them, or even stronger, in terms of innovation in production, service provision, supply chains and business models. Few doubt that moderate GDP growth in such a large developing economy as China’s would still mean huge business opportunities. The EUCCC has defined “a long and sustainable silver period of growth” as “modern, creative and market-oriented.” The arrival of a “silver age”, however, is anything but assured. While the claims that Starbucks artificially inflated its prices in China were swiftly exposed as a simple misrepresentation of basic supply and demand economics, complaints about Apple’s aftersales service were generally acknowledged by consumers. China Central Television (CCTV)’s slamming of foreign automakers’ high prices, however, sparked a backlash against the government regulations. In June, MOFCOM launched an investigation into local protectionism in the domestic auto market. For example, autos made by local joint ventures were said to enjoy greater market access than those from elsewhere. Moreover, the CCTV reports triggered much attention to what many see as unfair rules that only outlets authorized by a certain auto maker can sell its products, giving them exclusive power over pricing and terms of services. The ongoing NEWSCHINA I January 2015

Photo by cfp

Adaptation

Western corporations have reached China’s remotest areas, Tibet, February, 2009

investigation by the National Development and Reform Commission on price manipulation by auto giants and their resale agents triggered louder calls to revise these rules. Recently unauthorized sellers in the Shanghai Free Trade Zone have also been allowed to import foreign autos. This indicates a growing sense among consumers that, while they will be quick to criticize opportunism among profit-hungry multinationals, they also expect regulators to

be even-handed, rather than allow Chinese companies to flout regulations while simultaneously launching witch-hunts against foreign brand names. Teng Binsheng, a professor at the Cheung Kong Graduate School of Business in Beijing, believes the future of foreign companies in China will lie in their efforts to provide better products and services catering to local demand, and to expand outside megacities. Unlike investors from South Korea, Japan,

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Microsoft CEO Satya Nadella at a meeting with clients in Beijing, September 25, 2014

third-tier cities even as demand dropped off in megacities like Beijing, Guangzhou and Shanghai. In the auto industry, Chinese automakers remain dominant at the lowest end of the market, though their share is increasingly squeezed by joint ventures which once focused on middle and high-end consumers. The strategy of France’s Scheider Electric is a further example of localization, as the company has explored R&D projects in China for the explicit purpose of selling to the China market, as well as building joint ventures with Chinese partners, according to Zhao Kang, senior deputy president of the company’s China operations.

Silver Bullet

Hong Kong or Taiwan, US and European companies in China have long been focused on tapping the Chinese mainland market, rather than exporting China-made products. This has led to disproportionate focus on high-earning local consumers based in major cities. Now, China’s growing urban and rural middle class have begun to figure into

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their expansion strategy, bringing them into more direct competition with local brands. Proctor & Gamble, for example, has begun to offer very cheap shampoo to compete with domestic options, while a report in 2012 by accountancy firm Deloitte showed strong demand for international luxury brands like Gucci and Louis Vuitton in second or even

This “silver age”, can only be made possible, as the EUCCC has stated, “if broad and decisive reforms are implemented.” Such reforms were already mentioned in the resolution that emerged from the Third Plenum of the Communist Party which was passed in November 2013 and some steps, most notably the removal of certain regulatory barriers, have already been taken. However, achieving the Party’s stated goal of “giving the market a decisive role” in the NEWSCHINA I January 2015


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Beijing United Family Hospital, the first foreign-funded hospital in China established in 1997, mainly provides healthcare services to foreigners

allocation of resources remains a challenge. A free trade zone built in Shanghai to give wider market access to foreign companies is frequently cited as a major step forward. In October, the Party’s Fourth Plenum specified a roadmap for legal reform, addressing some concerns about market access barriers and a general lack of the rule of law, but actions, not words, are needed to reassure companies doubtful about the authorities’ proclaimed openness to foreign investment. In its September statement, AmCham China described the progress of reform as “disappointingly slow” due to “still onerous” rules on investment in many sectors. In its statement on the Party’s Fourth Plenum resolution, the EUCCC expressed its concerns over whether the principles of rule of law specified in the decision would be implemented effectively and swiftly enough to address the issues of “unpredictable” and “discretionary” legal obstacles for business. Some recent actions that Chinese regulators have recently claimed are improving market fairness and consumer protection have fueled further anxiety at foreign firms. Although international companies only accounted for 10 percent of the total number NEWSCHINA I January 2015

of companies investigated in China’s recent antitrust law enforcement drive, many felt that the focus has been unfairly trained on them. The US-China Business Council said in a report in September that US companies noticed that cases involving foreign companies were more extensively reported by Chinese media, and US companies were particularly concerned about the weak application of due process, such as company employees being pressured into plea bargains before even being told of the charges against them. Many suspect that the recent antitrust drive is motivated more by protectionism than by genuine enthusiasm for cleaning up China’s business environment. Some new policies are applied equally to all businesses in a sector, but given the market context, foreign companies are more likely to be adversely affected by regulation. For example, pharmaceutical companies have to wait for at least 10 months for approval of clinical trials for new drugs. According to the R&D-based Pharmaceutical Association Commission under the China Association of Enterprises with Foreign Investment, this is already much longer than the four months required in India, two months in Singapore

McDonald’s arrives in China with a 700-cover restaurant in Beijing, April 23, 1992

and one month in the US. In 2014, this waiting period in China was further extended to between 18 to 20 months. This policy has affected originator drugs more, which need stricter clinical trials. In addition, the prices of some originator drugs in the national drug list covered by health care insurance, normally much more expensive than generics, have been capped by Chinese pricing authorities since 2009. Policy now aims to reduce healthcare costs, with local governments prioritizing low prices – a new policy draft on drug pricing has not even mentioned the concept of originator drugs. All of this is significantly eroding the market access of major foreign pharmaceutical companies which have an unchallenged edge over their Chinese equivalents on the originator drugs market. Many have argued that this policy neither rewards innovation nor respects a patient’s right to choose, and that it runs counter to the government’s stated claims that it favors greater market openness and competition. Whatever color association this “silver age” ultimately assumes in the minds of those with a stake in China’s business environment, it is unlikely many feel that the current outlook is golden, or even rosy.

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Foreign Investment

Investing in Investment

China’s reform of its foreign investment policies matters to all investors, and will set the roadmap for China’s ambitions as a new international rule maker By Li Jia

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o inject impetus into its long-stagnant reform agenda, China has once again resorted to boosting the market by further opening it up, a strategy that served the country well after its WTO accession in 2001. Today’s China, unlike its pre-WTO incarnation, carries a lot more economic clout, and its leaders are ambitious to participate in shaping the new rules of the international trade and investment game. Professor Sang Baichuan, dean of the Institute of International Economy at the University of International Business and Economics, a leading expert of major projects undertaken by China’s National Social Sciences Fund, explains to NewsChina how the government’s investment policies have to be retooled to achieve the leadership’s dual goals of greater access alongside broader participation.

Professor Sang Baichuan

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NewsChina: China has opened more of its internal market to foreign investment and imposed more market laws and regulations over the years, yet foreign companies in China are today complaining more than ever that their access and legal protection remain limited. Why is this? Sang Baichuan: Generally, China’s investment environment has improved compared with the early years after the WTO accession, but in some aspects it has deteriorated or progressed too slowly. The comNEWSCHINA I January 2015


plaints of foreign investors mainly center on these areas. Under a new system imposed after China’s WTO accession, the review of foreign investment projects is conducted by a committee and based on rules covering national security, antitrust and industrial policies. This was designed to be a more efficient and rule-based system than the old one in which foreign investors had to deal with more agencies and agree to more detailed checks of their operational affairs at the micro level. However, without a deadline for such reviews, foreign investors given no response even after a long wait for approval are often told that the committee has yet to convene. If they don’t want to wait longer, they have to engage in “public relations” with government agencies responsible for the review process. This has cost foreign investors time and money, and led to corruption. The old system, though more complicated and rigid, set a deadline. As a result, foreign investors feel that progress on paper has been turned into a setback due to opaque implementation. Recently the National Development and Reform Commission has updated its guidelines determining the commercial sectors in which foreign investment is, variously, encouraged, permitted, restricted or prohibited. Despite fewer restrictions, this form of market access management is not in line with increasingly uniform international principles and practices set in place after the global financial crisis. More countries have adopted the condition of pre-access national treatment, which puts foreign investors under the same market access and administrative approval system as their domestic counterparts – the only way in which foreign investors can benefit from the advantages of reduced red tape enjoyed by Chinese investors. Also, a “negative list,” which specifies restrictions on foreign investors, has been used in the Shanghai Free Trade Zone launched in September 2013, since China agreed to adopt the negative list model in bilateral investment agreement talks with the US. Though the adopted list NEWSCHINA I January 2015

was too long, it was regarded as a first step in the right direction and was expected to be shortened in future bilateral negotiations. The updated guidelines, however, are apparently regarded by foreign investors as showing a lack of will to change old thinking as swiftly as they had expected. Committing to pre-access national treatment and negative lists also requires a legal framework applicable to all parties on an equal basis. Foreign investment in China is not governed by the country’s Corporate Law. Instead, foreign companies are subject to three separate laws: one governing Sino-foreign joint ventures, one governing Sino-foreign cooperative enterprises and one governing wholly foreign-funded enterprises. Calls to integrate these three into one and ultimately replace this with the Corporate Law have been growing in recent years. However, a timetable for initiating the legislation process has yet to be set. Foreign companies feel they are still being treated differently by [China’s] legal system. NC: Wariness of foreign investment also seems to be growing, though exhorting people to “buy domestic” hasn’t persuaded Chinese people to avoid foreign goods. When it comes to foreign investment, however, the rhetoric of “protecting our national brands and security” does have currency. How much does investment affect the market? SB: Imported products face individual consumers who care more about maximizing the value of their spending, while investors have direct conflicts of interests with betterorganized companies. When a company is acquired, its investors will lose their market share, and its managers and employees will lose their positions or even their jobs. Meanwhile, other companies in the same industry feel the pressure of new competition which could reshape the market. In spite of globalization, the concept of the nation state still prevails in international politics. For example, when Rolls-Royce Motor Cars was sold to Volkswagen in 1998, there was an outcry in the British media about the loss of a

national icon, and protests from trade unions fearing job cuts. Such sentiment is stronger in economies with weaker domestic industries when compared to multinationals. Chinese brands are highly competitive on the consumer products market, but major sectors in the highend services industry – banking, insurance, securities, accountancy and legal services – not only involve national economic security but are less developed in an emerging economy like China. In this context, China is more cautious about openness in these areas as opposed to, say, the consumer goods market. The solution is to improve China’s own regulatory competence, and not to overestimate the risks of openness. In insurance, which is probably more open [to foreign investment] than any other financial sector [in China], local insurers are doing better than foreign newcomers. In the banking sector, with its State-backed monopoly and full range of services at nationwide networks, further openness would hardly shake the market structure dominated by Chinese players. This is true in many other service sectors. NC: There are also growing calls among Chinese officials and analysts that the country should be more selective than ever towards foreign investment. Only investment that will facilitate China’s economic restructuring, they said, should be welcome. Do you think China’s foreign investment policy should be closely related to the industrial policy? SB: In many economies, some industries are encouraged to improve competitiveness throughout the whole economy. Moreover, the capital shortage which makes any investment welcome is no longer present in China. The key point is that such industrial policies should be applied equally to all enterprises. In many sectors where foreign investment is kept outside on the grounds of environmental protection or overcapacity, domestic enterprises are still expanding, making industrial policies aimless. Indeed, openness towards domestic and foreign investment should go side by side,

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leading to sweeping reform of the whole investment system. For example, pre-access national treatment requires that administrative approval processes be simplified as much as possible and then applied equally to both domestic and foreign investors. China’s recent campaign of streamlining the approval system for domestic businesses is actually a preparatory step towards that. One of the big problems in integrating openness towards both domestic and foreign investment is the poor coordination between policymakers from different government agencies, and even different offices within the same agency. This is why a unified Corporate Law and pre-access national treatment are urgently needed. Actually, international investors attach more importance to a transparent and fair regulatory environment than to preferable treatment. In some places in China, local government agency officials whose careers rely on how much investment they attract have appealed to foreign investors with various favorable policies. Then, other agencies without these political interests have imposed annual reviews and huge fines on foreign companies for failing to comply with various rules. Local governments, closely connected to local companies, are frequently overruled by locally-based SOEs, leaving foreign companies as sitting targets. NC: During its WTO negotiations, China, as a developing economy, could ask for certain exceptions to protect domestic industries and enforce more relaxed standards for social responsibility. Is it still possible for China to do this? SB: This is more difficult to negotiate in bilateral talks than in multinational arenas in

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A Starbucks in Huai’an city, Jiangsu Province, offers Chinese zongzi, a typical Chinese snack eaten during the Dragon Boat Festival, May 25, 2014

which you can find allies to help you resist higher standards. For example, members of the OECD group of industrial economies haven’t yet reached an agreement on investment protection. All global companies want better protection in host countries. The pressure to adopt higher standards is greater in a bilateral setting. The two core issues on foreign investment in China, as elsewhere in the world, are better investor protection and stricter corporate social responsibility standards. The US and the EU have insisted that their level of protection is already higher than China’s, and thus demand improvement on China’s side on the basis of reciprocal agreements. If Chinese companies want better protection in those markets, China also has to offer something in return. This is a global trend that causes countries to keep improving investor protection to compete for foreign investment which brings advanced management and

ideas. China is not short of money, but still needs to import expertise. There is also the question of a regulatory framework on corporate social responsibility. Multinationals always claim they have the same global policies on environmental and labor protection, but implementation is often different in developed and developing countries. All companies pursue maximum profits. Weak law enforcement in China, combined with the poor corporate social responsibility records of Chinese companies, have incentivized some multinationals to water down their own social responsibility policies with impunity. It will be hard for China to go against the global trend of moving towards more liberalized investment and stricter social standards in its bilateral negotiations. NC: China is trying to push forward several regional economic integration projects, NEWSCHINA I January 2015


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The Vigatexco factory in Ho Chi Minh City, Vietnam, employs 3,200 people and exports yarn, fabrics and finished garments to Europe, the US and Japan

notably the Free Trade Area of Asia Pacific (FTAAP), the New Silk Road initiative and the Maritime Silk Road project with Southeast Asia. Does this mean, as many analysts believe, that China has the willingness and competence to become an economic rule maker? SB: The era in which China only accepts whatever international economic rules have been laid down by others has ended. If new rules do not cover the second largest economy in the world, then they will have limited applicability. In the mean time, China has realized the risk of being marginalized by a future US-led international investment framework. Seven out of China’s ten top trading partners in the Asia-Pacific region have already joined the Trans-Pacific Partnership (TPP) negotiations. China was not invited to participate in the beginning, then a request to join was refused by the US. The EU and the US, NEWSCHINA I January 2015

China’s top two trading partners, are working on their bilateral Transatlantic Trade and Investment Partnership (TTIP). It is very likely that both the TPP and TTIP could result in a shift of some business that China might have hoped to secure. For example, will foreign investors choose to enjoy easier access and zero tariffs by building a plant in Vietnam and then exporting from there to other TPP member markets, or will they choose to do this in China – which can’t offer these benefits? China does not want to just sit and wait to either accept the new rules or see the loss of trade and investment. This is why the country is trying to push forward its own regional economic integration initiatives. These mechanisms provide a possible way for China to at least become a participant in the drafting of new international economic rules. However, the FTAAP does not liberalize

trade and investment as much as the TPP. Even less developed economies like Vietnam have joined the TPP negotiations, showing willingness to accept the principles of greater liberalization and stricter social norms. The TPP negotiations are not easy, given resistance from Japanese farmers and difficulty of less developed economies in meeting the high standard. However, it might not be very attractive for a country ready to accept high standards to invest a lot of resources in negotiations on more limited liberalization and a less rule-based regulatory agreement like the FTAAP. The FTAAP initiative may help facilitate regional economic integration, but the prospects may not be as bright as expected. NC: Foreign companies in China have shown strong interest in seeking business opportunities in China’s new initiatives for regional economic integration. Will they have a special role to play? SB: Foreign companies and China share interests when it comes to regional economic integration. They themselves are part of the global supply chain. Given this, their advantage in experience and expertise in global operations will help them secure a head start in these new opportunities. During this process, Chinese companies, especially those acting as partners in joint ventures, can learn from them and go international with their foreign partners. In addition, as the supply chain in the Southeast Asian and Central Asian countries is not as developed, these foreign companies still need their Chinese suppliers for parts and logistics. This will create more export orders and new opportunities to invest abroad for Chinese suppliers. 

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society

Pharmacy License

Bad Medicine

A massive cheating scandal exposed during this year’s national pharmacist exam diet has brought attention to the problems and prejudices keeping the industry from modernizing By Su Xiaoming

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he National Pharmacist’s License Examination (NPLE), held in mid-October this year, would have passed by like any other large-scale national exam, were it not for the thousands of cheats exposed in one fell swoop. According to Chinese media, 2,440 cases of cheating were reported in Xi’an, capital of Shaanxi Province, of which nearly 800 were linked to a single examination center. Sichuan Province caught 1,070 cheaters, and Yunnan caught 1,027. The figure was accompanied by an astonishing increase in the number of exam candidates – more than 800,000 people sat the exam this year, compared to last year’s 400,000, and fewer than 190,000 in 2012. Pharmacy, a profession largely ignored by most Chinese, has suddenly come under the scrutiny of the public and media, thanks to the baffling surge of people seeking to enter the field, and the simultaneous surge in cheating.

Deadline

On October 18 and 19, the Shaanxi Radio Monitoring Station picked up an abnormal radio signal outside the NPLE examination centers in Xi’an. The station confirmed the

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signal was transmitting answers for the exam, and cut it off. In the examination rooms, those wearing concealed radio receivers were quickly identified. Those caught cheating – nearly onetenth of the city’s total 25,000 examinees – had their scores voided, and were banned from applying for any official qualifications for two years. “The deadline is coming. That’s why there were so many examinees, and so many cheaters,” a local pharmacy manager who took the NPLE told NewsChina. This “deadline,” as mandated in the Twelfth Five-year Plan for National Drug Safety issued by the State Council, states that by 2015, all of China’s retail and hospital pharmacies are required to be staffed by at least one licensed pharmacist during opening hours. Meanwhile, another regulation issued by the Ministry of Health (MoH) in 2013 states that those in charge of drug companies, new pharmacies and quality control officers employed by drug wholesalers also need a pharmacist’s license. Pharmacies already in operation are required to comply with regulations by the end of 2015. The deadline has become something of a doomsday prophecy for China’s pharmacy

industry, particularly given the difficulty of the exam – the pass rate has always been low: 13.13 percent in 2011, 17.68 in 2012, and 15.72 percent in 2013. “The NPLE exams takes place over four days and covers four subjects, with each exam lasting for two and a half hours. It requires a deep understanding of various topics. Upon discovering that it wasn’t possible to cram for the test, many turned to cheating,” said the Xi’an pharmacy manager.

An Invisible Role

The NPLE is administered by the Certification Center for Licensed Pharmacists (CCLP), a division of the China Food and Drug Administration (CFDA). Kang Zhen, an expert advisor from the center, told NewsChina that the country is currently suffering from a severe shortage of licensed pharmacists. Statistics indicate that by the end of 2013, there were 270,000 licensed pharmacists nationwide, 186,300 of whom – or 69 percent – work in retail pharmacies. The remainder are employed by drug wholesalers, drug companies and medical institutions. Given that China has a total of 460,000 retail pharmacies nationwide, this adds up to a shortfall of NEWSCHINA I January 2015


non-existent.”

Photo by xinhua

A Chance for Reform?

Staff sort medicine in a pharmacy in Jinjiang, Jiangxi Province, March 2012

at least 270,000 licensed pharmacists when regulations come into effect in 2015. Industry insiders told NewsChina that “real” licensed pharmacists are a rarity in China. Some claimed that the license certificates hanging in most pharmacies are frequently rented from qualified pharmacists with no connection to that pharmacy. Currently, mutual supervision between doctors, nursing staff and pharmacists is relatively weak in China’s medical system. Kang Zhen said that pharmacists in developed countries have at least two basic duties: to verify prescriptions issued by doctors, and to advise patients on safe dosage. Meanwhile, Chinese pharmacists tend to only be responsible for either selling or dispensing drugs. Analysts generally agree that the chronic lack of a robust legal and supervisory framework in China’s pharmacy industry is to blame. In 1994, China issued its first “temporary” administrative regulation on qualification requirements for licensed pharmacists, which became a unified – although still temporary – examination, registration and management system in 1999. “The general idea of the regulation was to supervise and control safety during drug NEWSCHINA I January 2015

manufacturing, distribution and use,” said Kang Zhen. “However, it later turned out that the knowledge and skills required at these three levels of the industry were hugely different. The role of licensed pharmacists in China has still not been clearly determined.” Meanwhile, as Sun Zhongshi, an expert from the Center for Drug Reevaluation of the CFDA, pointed out, a tradition he called “revering doctors but despising pharmacists” in China’s medical system is the reason why China’s licensed pharmacists tend to have poor education levels – 24 percent have only a high-school diploma, while only 2 percent have a Master’s degree, and 0.3 percent a doctorate. “Also, their educational backgrounds are highly varied. Many are chemical engineering, chemistry and biology majors, with little knowledge of drugs [compared to pharmacologists],” Sun Zhongshi told NewsChina. Kang Zhen added that this knowledge deficit and lack of supervision allows doctors to take advantage of patients. “In other countries, the prescription for a common cold would likely be water, but in China, the drugs prescribed can cost a patient up to a thousand yuan (US$160),” he said. “The [supervisory] role of pharmacists here is virtually

One of the largest roadblocks to the system’s improvement, according to Sun Zhongshi, is that hospitals and retail pharmacies are under the administration of different government departments – the former answering to the National Health and Family Planning Commission (NHFPC), and the latter to the CFDA. Therefore, the pharmacist license, issued by the CFDA, has long been seen as unnecessary for those working in hospital dispensaries. Rather than sitting the CFDA exam, hospital workers have traditionally favored the professional qualification tests administered by the NHFPC. “The relationship between qualifications and government organs is still unclear. It has remained confusing for many years,” Sun told NewsChina. Since the NHFPC outranks the CFDA in the medical system, many pharmacists prefer to work in hospitals, worsening the shortage of qualified pharmacists in retail pharmacies. Meanwhile, to keep staffing costs low, retail pharmacies often prefer to hire pharmacists with fewer academic qualifications, meaning that a pharmacist with a PhD would have more trouble finding a job in a retail pharmacy than a high-school graduate might. Furthermore, China’s pharmacists are not strictly required to keep their qualifications up-to-date. “Developments in pharmacy are fast and never-ending,” an industry insider told NewsChina. “However most Chinese pharmacies simply go through the motions when it comes to continued education.” While pharmacy as a profession has long been marginalized in China, Kang Zhen sees the recent media attention – and indeed, the cheating scandal – as an opportunity for long-term reform. “At least the public has started to pay attention to the profession and its current chaotic state,” he said. Kang also told NewsChina that the CFDA is likely to raise the educational background requirement for candidates in next year’s NPLE exam to a Bachelor’s degree, and that many in the industry are beginning to advocate for the drafting of a law specifically governing pharmacists.

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Courtesy of the “Fox Hunt” Office

society

Profile Fees

Files Nailed

Chinese workers are getting fed up with paying a yearly fee for the file the government keeps on them By Du Guodong

T

hese days, Chinese graduates face more decisions than ever before – small town or big city, home ownership or rental, government company or private enterprise. But for those who choose the private sector, one often expensive choice seems increasingly anachronistic: where to file one’s dang’an, a permanent official record of school and work performance. A dang’an usually includes information about the subject’s educational background, employment record, qualifications, physical status and even appraisals from school and workplace supervisors. Under current Chinese archive law, it is illegal to store one’s dang’an privately. The file must be kept in an authorized human resources center, at the citizen’s expense – an increasingly unpopular system.

Controversies

According to a report published by the official Xinhua News Agency in August, the total fees collected for the management of personal files at human resources centers in more than 200 cities across the country hit several billion yuan in 2014. Statistics from the Beijing Municipal Bureau of Human Resources and Social Security show that as of the end of June, 2014, 1.7 million personal files were stored in the human resources centers of municipal and district level authorities in the capital. A total of more than 100

26

million yuan (US$16m) in annual archive fees is collected by the Beijing municipal government alone. Xiao Jun, a professor at Shenzhen University’s College of Management, believes it is unfair that that those with stable jobs in Stateowned enterprises and government agencies have their dang’an stored for free, whereas those with less job security have to pay for themselves. “Personal file management fees are an aberration nowadays in China. It is a public service, but it looks more like a business monopolized by the government,” Xiao told Xinhua. “The ‘customer’ doesn’t even have the right to refuse.” Shi Xingquan, a college graduate who has been working in Beijing for a private enterprise for eight years, told our reporter that he had paid nearly 2,000 yuan (US$326) in total to the local human resources center for keeping his files. “Living in Beijing alone, not only do I need to rent an apartment, but also I have to rent a place for my dang’an – to this day, I have never seen this file, nor do I know whether it will be of any use to me in the future,” he told our reporter. Because of the expensive and lengthy procedure of storing and transferring personal files, a growing number of graduates are refusing to pay management fees, and are simply storing their files themselves, illegally. NEWSCHINA I January 2015


According to incomplete statistics from the China National Center for Human Resources, a division of the Ministry of Human Resources and Social Security of China (MOHRSS), the country has at least 600,000 “dead dang’an” – files whose owners have refused to pay fees for more than five years. Many of these have been “dead” for a decade or more. Official data also show that in Beijing alone, the current number of dormant files is 61,334. A report published by the Social Survey Center of the Beijing Youth Daily in September 2014 indicated that among the 2,069 recent graduates surveyed, 58 percent had met with difficulties when figuring out how to deal with their personal file after graduation. Of these, 26 percent did not even know what the file was for. Jiang Linlin, an employee at the Siping Service Center for Human Resources in Jilin Province, told NewsChina that unless an individual foresees a specific reason to keep their file – an ambition to work at a government agency, for example – most simply do not bother to pay up. “Nowadays, about one third of the personnel files stored in our center are dead,” she said. “We can do nothing but wait for the owners to reclaim them. If fees are not paid, their retirement funds are likely to be affected.” Jiang added that currently in China all the fees collected for the storing personal files were delivered to the State treasury, but the operational costs of archive centers were covered in the national budget, which “falls short of the fees collected.” As of press time, no information on the usage of fees has been released. In August 2014, Jiang Zhaojun, a lawyer from the Juntuo Law Firm in Shanghai, made a freedom of information application to the MOHRSS, the municipal governments of Beijing, Shanghai and Shenzhen, as well as the provincial government of Guangdong, to disclose the balance sheets for personal file fees for the period beginning from January 2011. “The public records agencies are not non-profit organizations, and it is reasonable to charge for services like keeping and transferring files,” said Wang Jing, a professor at the School of Labor Economics attached to the Capital University of Economics and Business, during an interview with the Beijing Times. “The focal point is that the National Development and Reform Commission (NDRC), as the agency in charge of price, should make public the balance of the revenue and expenditure [of public records fees] to allay public doubts. It is an obligation of the government, rather than a State secret.”

Prospects

China’s personal file system was modeled on that of the Soviet Union shortly after the founding of the People’s Republic of China in 1949, mainly a tool to keep tabs on the work performance and “ideological growth” of individuals. Since files were only kept on people of note – government cadres, government workers and college graduates, for example – having one was something of a status symbol. In 1987, China introduced its Archives Law, which was later

NEWSCHINA I January 2015

amended in 1996. As China strengthened its shift towards a market economy, the significance of personal files reduced significantly, especially after 1997, when the State Council, China’s cabinet, introduced pensions and medical insurance for urban workers, unhooking retirement and social pensions from personal files. However, until 2002, Chinese workers still needed to present their personal file when changing jobs, getting married or applying for a passport. A relic of the planned economy era, China’s personal file system has often come in for criticism in recent years, and calls for reform are nothing new. In 2005, the Chinese Academy of Personnel Science published a China Talent Report, in which it stated that China’s personnel archives management lagged behind reform in other sectors, and that the management of archives should be more “scientific, systematic and standardized.” In 2012, the NDRC and the Ministry of Finance jointly issued a circular to cut administration fees charged by the government, including personal file management fees – from 240 yuan (US$39) to 120 yuan (US$20) per year starting from 2013, until they are totally abolished by the end of 2015, at which time public records fees will be financed by the government. The MOHRSS is also conducting research into setting up differentiated regional standards across the country. In recent years, some local governments have launched programs to reform their management of personal files. In 2009, a locally-designated economic development area in Qingdao, Shandong Province, canceled the charge on personal file fees. Two years later, Shanghai and Jiangsu Province followed suit. Zhao Chenggen, a professor at the School of Government at Peking University, said the canceling of the charge for the management of personal record files was just the beginning of systemic reform. “In the information era, the collecting and management of personnel dossiers cannot be done solely by hand, and the digitization of files is the primary way forward,” he told Xinhua. “The goal of reform is for the system to serve more as a reference for personal credibility, rather than being mainly used in a political and administrative context.” As early as 1995, the State Archives Administration began research into digitization. In 2010, during a national conference, the agency stated that setting up a digital database was “unavoidable,” and further indicated that some archives bureaus and human resources centers will be permitted to conduct pilot digitization projects. So far, digital personal file systems have been initiated in Beijing, Dalian in Liaoning Province and Chengdu in Sichuan Province. Zhang Jizhe, a professor at the School of Information Resource Management at the Renmin University of China, believes that digital personal files will “never replace hard copies” since digital content is “not always reliable, and is more easily tampered with.” “There is still a long way to go when considering the complicated procedures and the legal and security concerns inherent in setting up a digital files system,” he told the Beijing Evening News.

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society

Post-80s Parents

Second-generation Little Emperors With the children of China’s One Child Policy becoming parents themselves, traditional beliefs clash with modern parenting By Wang Yan

M

ore than thirty years after the introduction of the One Child Policy in 1979, the generation of Chinese people born in the policy’s first decade are now fully grown – many of them already married with children. According to official estimates, the coming decade will see another 10 million only children born to the original generation of only children. The “post-80s” generation, a cohort famously known as “little emperors” in their youth, now face the challenge of raising their own children. Variously described as liberal, independent, unruly and selfish in the media, society watches with anticipation to see how these traits will affect their parenting style, and what kind of children they will raise.

Dependent

In October, a middle-aged man in Ningbo sued his daughter for being “kenlao,” literally “biting the elderly,” meaning to be financially dependent on one’s parents. Herself the mother of a two-year-old child, she borrowed over 700,000 yuan (US$114,000) from her parents even though she was still living as their dependent. The Chinese Research Center on Aging estimates that a third of Chinese of adult age, mostly the single child generation, still remain in some way financially dependent

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on their parents. In China, the tradition of living with one’s extended family has endured for thousands of years. But when the policy of Reform and Opening-up in the early 1980s drastically increased mobility, many began to leave their hometowns for big cities in pursuit of jobs or business opportunities. In many cases, their elderly parents offered to accompany them, to help take care of their young children: the post-80s generation. In order to save money and energy, most agreed, often begrudgingly. Zhao Zhongxin, honorary chairman of the Family Education Committee under the Chinese Society of Education, has noted that a large proportion of the post-80s generation are unable to live independently due to them having been over-indulged by their parents in childhood. “I know a mother who still creeps into her married son’s room at night to tuck him in when he’s asleep, and a married daughter who still asks her mother to help her put her socks on,” Zhao told NewsChina: “It is very common to see the elderly do housework for their married children nowadays.”

In 2012, a survey of 534 households by research institute the Shanghai Children Nurturing Base (SCNB) found that more than 40 percent of the post-80s generation live with their parents, over 28 percent said their parents would help raise their children, and over 15 percent said the elderly often help with household chores. The elderly also provide financial support. The survey found that more than 50 percent of the post-80s generation had paid for their apartment entirely with their parents’ money, and almost zero percent had not accepted any financial help from their parents when buying their house. Chen Caiyu, the SCNB’s deputy director, said: “The reality is that it is very hard for the single-child generation to be independent.” Li Yuqin, a Zhengzhou-based pediatrician believes that many Chinese children have been spoiled by their grandparents, causing them to become “selfish, dependent, and inconsiderate of others.” “The first single-child generation are not yet ready to be parents, so it is very common NEWSCHINA I January 2015


for them to let their parents take care of their kids,” said Sun Yunxiao, deputy director at the China Youth & Children Research Center. Sun further explained to the reporter that most parents either ask their elderly parents to look after their child while they’re at work, or simply leave their child entirely in the care of grandparents. While taking one’s children to work was relatively common in the 1980s, this practice is generally seen as unacceptable in modern workplaces.

Compensation

Having grown up in a comparatively liberal sociopolitical environment under Reform and Opening-up, the post-80s generation witnessed China’s transformation from a poor developing country into an economic superpower. During their childhood, however, the spoils of development were yet to materialize – the best most could expect was ample food and clothing. Wang Lin, an only child, was born in 1981 to a working-class family in a third-tier city in Hubei Province. Like many children of her age, she played with homemade toys, and was occasionally given rock candy as a special treat. Her father made a chessboard and taught her how to play. Now mother to a young daughter, Wang often finds herself comparing her own childhood with her daughter’s: “She eats express-delivered organic vegetables, drinks imported baby formula, has piles of toys and books, and her diapers cost us over 1,000 yuan (US$163) a month,” Wang told our reporter. Wang admitted that she tries her best to meet her daughter’s material expectations, to provide herself with what she called “mental compensation” for her own relatively underprivileged childhood. Wang buys her daughter snacks whenever she ask for them, and like many parents, she packs her daughter’s schedule with extracurricular classes like dance and calligraphy. Having had no opportunity to pursue hobbies when she was young, she told NewsChina she did not want her daughter to have a similarly “depressed and uninteresting” childhood. Zhu Yuan, a Shanghai-based mother of two, began sending her elder daughter Coco to an early learning center from the age of one. Now, Coco attends a bilingual kindergarten

NEWSCHINA I January 2015

and takes classes in painting, logical thinking, music, ballet, and swimming. Zhu told NewsChina that she expected her daughter “to act like a lady” when she grows up.

“Me” Generation

“My granddaughter points at me and my wife, and shouts to her brother: ‘These are my grandpa and grandma!’” said Zhao Zhongxin. “Apparently she, as a second-generation only child, wants to claim us as her possessions,” said Zhao. “This indicates an only child’s typical psychology to control, dominate and possess things exclusively.” Zhao warns that this second generation of only children may have a tough time getting along with the rest of society. Chen Caiyu’s training course instructs young parents to help children distinguish between “what is yours, what it is you want, and what you can get.” Chen is trying to teach post-80s moms and dads that unrestricted acquiescence to a child’s demands will result in self-obsession, and, ultimately, another generation of little emperors. Compared to their parents, most of whom grew up during the Cultural Revolution, the post-80s generation are perhaps most famous for the individualism with which they approach their lives and relationships – a trait that has led to them being called the “me-first” generation. Pediatrician Li Yuqin says he often sees impatient post-80s parents at hospitals shouting at nurses in order to have doctors see their children first. “Rude, undisciplined behavior on the part of some parents might be detrimental to their children’s attitudes towards others, and I worry their children will be even less tolerant and even more restless when they grow up,” said Li. Sun Yunxiao noticed that in practice, many young parents – even educated ones – do not know how to raise their children in a way that fosters both freedom and respect. “A successful home education should result in a balance in a child’s self-motivation and self-restriction,” Sun told NewsChina. “A family with both democracy and authority can benefit a child’s healthy development.”

Freestyle

In the 1970s and 80s, most Chinese parents

would inquire very little about their child’s behavior in school, other than to ask whether they were obedient or not. Now, parents ask their children what they learned in school, and how happy they are. Many of the post-80s generation, particularly in cities, have received a college education and, through the Internet and overseas travel, have enjoyed relatively easy access to Western culture, as well as modern scientific parenting methods. They are more likely than the previous generation of parents to educate their children with emotional support rather than criticism. According to a 2005 paper by the Shanghai Academy of Social Sciences, over 45 percent of post-80s parents have looked to the Internet to learn about modern parenting methods, and regularly use online parenting forums. Babytree.com, one of China’s most popular online parenting communities, has more than 16 million registered members, most of them born in the 1980s. Discussion threads on alternative education methods like Montessori education generate lengthy debates. Zhang Wen, a mother in Beijing, told NewsChina that she prefers what she calls “freestyle” or “natural” parenting. Zhang wants to spare her daughter the overwhelming burden of schoolwork – she may even allow her child a “non-traditional” education, whatever form that may take. “I want her to have a memorable and interesting youth,” added Zhang. Yet in reality, adopting a new parenting style might not be as simple as Zhang Wen expects. For most parents of her generation, regardless of their own views on parenting, they still face a perhaps insurmountable obstacle: their own conservative parents. According to Bao Leiping, a researcher from the Shanghai Academy of Social Sciences, it is still too early to gauge grandparents’ influence on the personal development of the new generation of children. “Much previous research on parenting has indicated that while grandparents can help with day-to-day childcare, social and moral guidance [should] remain the responsibility of parents,” Bao told NewsChina. (Chen Wei and Ma Haiyan also contributed reporting)

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feature

Shi Chizhong

Prayer and Profit

Photo by Liu Ranyang

Monk Shi Chizhong is auctioning prayer beads and paintings to pay for renovations to the Huanglong Temple in Yunnan Province. But some accuse him of selling his soul By Wan Jiahuan in Yunnan

S

hi Chizhong, abbot of the Huanglong Temple, Yunnan Province, has mostly remained in seclusion since he had three strings of ancient prayer beads he collected valued by an unnamed auction house at 100 million yuan (US$16.7m). Now, tourists flock to his temple simply to catch a glimpse of this expensive symbol of Shi’s office. If the beads are auctioned successfully, Shi claims, the funds will be used to renovate and expand the Huanglong (Yellow Dragon) Temple. The planned renovations are expected to cost the temple’s administration 400 million yuan (US$66.7m) to complete. According to Chinese media reports, Shi also plans to auction other precious Buddhist artifacts to pay the balance, a move which has led to scepticism that the abbot is simply aiming to make a quick buck by selling off the contents of his temple to the highest bidder. “If I didn’t sell my prayer beads, I would break them up and give a bead to each of my disciples,” he told NewsChina. “However, I’d prefer

30

to exchange the beads for a new temple – something solid and tangible that will be a legacy.” Despite Shi’s posturing, however, there has been considerable public backlash against him and his fellow monks, with many pointing to Buddhism’s strict prohibitions against engaging in commercial activities.

Repairs

Located in ethnically diverse Jianshui county, the Huanglong Temple is the largest occupied temple in its area, with most neighboring halls, however, abandoned due to their inaccessibility and a lack of funding. Huanglong permanently accommodates over 30 monks and nuns in the same complex – an arrangement officially forbidden in all Buddhist orders. This “cohabitation,” despite Shi’s claims that the genders are separated by a minimum of one meter at all times, is just one reason NEWSCHINA I January 2015


NEWSCHINA I January 2015

Photo by Liu Ranyang

why the temple has raised eyebrows among the laity, and also the impetus behind administrators’ desire to expand, in order to accommodate men and women in separate prayer halls. Under Shi’s management, the Huanglong Temple has already undergone extensive refurbishment, with its prayer halls newly painted and fitted with fresh statuary. Some areas even have Wi-fi. “The old temple was run down, worn and in a shambles before Shi arrived,” nun Qing Hui told our reporter. “All the roofs had collapsed and there were no Buddha statues. It was my master [Shi Chizhong] who gradually repaired and renovated it.” Born into an ethnic Yi family in 1942, Shi has studied Traditional Chinese Medicine (TCM) and wushu martial arts, both of which disciplines have strong links to Buddhism, since childhood. He claims to have been rescued from a garbage can by a monk after being abandoned at birth, and that this monk brought him home. After his father’s death, Shi became a businessman, though often approached local monks for help and advice. At the peak of his career, he owned 13 enterprises, though he claims to have “abandoned them all” when he entered monastic life at the age of 52. “I became increasingly interested in Buddhism during my business career. I believe that Buddhism can tell people how to behave and to realize their dreams,” Shi told our reporter. Shi’s self-professed passion for restoring old temples, he claims, stems from his experiences during the Cultural Revolution, when thousands of historic temples were vandalized, looted and burned by activists inspired by Chairman Mao’s exhortation to destroy all links to the past. Before relocating to the Huanglong Temple, Shi had made a name for himself restoring temples in Qujing, a nearby city. The Jianshui County government invited Shi to “revitalize local Buddhism” from a base at the Huanglong Temple. Having been used as office buildings and classrooms in the early days of the People’s Republic of China, the 800-year-old temple was practically a pile of rubble when Shi first laid eyes on it. According to local official Li Jinyuan, who accompanied Shi on his first visit to his future workplace, the monk “wept” when he saw the state the Huanglong Temple was in. Shi determined that expansion could save the temple, and applied to lease the three hills surrounding the complex from the local government. He drew up plans to construct three huge Buddha statues, three pagodas, five halls, an 81-meter-long sculpture of a yellow dragon – the temple’s namesake – and an investiture office where monks and nuns can formally enter monastic life. Currently, the closest such office is over 500 kilometers away. “We are enjoying the Buddhist culture passed down from our ancestors,” Shi told NewsChina while outlining his plans for Huanglong. “Centuries later, we will become ancestors too, so we have to leave

The three strings of beads currently up for auction

something to future generations.”

Fundraising

According to Shi, the local government approved his plans as early as 2004, but he was left to raise the funds. “I ran out of money in Qujing and greatly underestimated the expense of renovating the Huanglong Temple,” he said. “It is indeed much more costly than building a new

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Photo by Liu Ranyang

feature

Shi paints to raise money

one.” Different from the other big temples like the Shaolin Temple in Henan Province, famous for its kung-fu and now more like a Buddhist Disneyland than a quiet place of reflection, the Huanglong Temple has never charged for admission and does not encourage visitors to make donations. “Many temples have been commercialized, with monks living on wages and ‘bonuses’ from pilgrims’ donations, but I hope to support the temple and my disciples in Buddhist ways,” Shi said. The first fundraising idea Shi came up with was selling his own Buddhist calligraphy, a scheme he later expanded to include paintings of tigers, which, in Chinese folk beliefs, can drive away evil spirits. In terms of price tags, Shi would ask customers to pay what they felt was appropriate, and he talked proudly of selling more than 300 works a year. Since Shi’s 312-meter-long painting of 500 Buddhist clerics was recognized by the British-based Carrying The Flag World Records as the world’s longest scroll painting, however, Shi’s artworks have become in-

32

creasingly commercialized, and thus controversial. According to some media reports, an unidentified buyer has made an offer of 60 million yuan (US$10m) for the scroll. Many began to speculate that the value of the scroll had been intentionally overstated in order to make more money for Shi. Shi fell back on claims that his work’s value was “tied to his business network” and people’s “respect” for his attitude towards the Huanglong Temple, rather than the objective quality of his paintings. By selling calligraphy and paintings, a fundraising method that he claims is Buddhist, Shi has reportedly amassed 40 million yuan (US$6.7m) in 10 years, all of which he claims has been spent on the first phase of renovations to the Huanglong Temple. The problem now is the 400 million yuan (US$66.7m) needed to pay the remaining balance, a vast sum which almost led Shi to give up on the project. However, the abbot told our reporter that since the media have publicized both his plans and his budget, he has to see the renovations through. NEWSCHINA I January 2015


Auctioning his antique prayer beads was simply a way to raise funds quickly, though many have challenged Shi on whether he actually has the right to sell the symbol of his office – even questioning whether they are in fact his property. “I bought the beads privately in the 1960s at a very low price,” he told NewsChina. “At the time, they were seen as pretty much worthless. If the auction helps promote the construction, I will make the process more transparent, and publish financial records.”

Charlatan?

an abbot, and he enjoys a certain amount of celebrity, with his disciples spread throughout the country. Shi keeps in touch with these former students and those interested in Buddhism via online instant messaging. “People come to me with various worries, about love, career, family, health and death,” he said. “I often serve as a psychologist or even a judge to help them through tough times. But I will not tell them their fortunes, as many desire – I prefer to tell them how to behave.” “Religion is a science rather than a superstition,” he continued. “Many people easily lose their way in life, filling their own heads with illusions and believing they will be blessed simply by praying to a Buddha statue. But true Buddhism helps people identify their problems and solve them.” To reinforce his ideas about Buddhism, Shi has even written songs, shot music videos for them, and then sent copies to anyone he believes to be interested in Buddhism. He has even self-funded his own biopic, though a lack of commercial interest has prevented it from being screened. Shi claims that government officials called the mini-series “inspiring.” “I may be not a good monk, but I hope I can support good monks,” Shi said. “Buddhists believe that all things in the universe are void, and that we should want nothing from the material world,” he said, stroking the prayer beads on his chest. “But I don’t think I can live like that.”

NEWSCHINA I January 2015

Photo by Liu Ranyang

Many local people still remember the grand ceremony of Shi Chizhong’s investiture, when he was formally made the abbot of the Huanglong Temple in 2009. Visitors and disciples crowded into the temple while local police lined the access road. Shi made his way from hall to hall, flanked by robed disciples bearing lanterns, and chanting. “It was like the coronation of an emperor,” Shi said. “I remember when I walked out of the hall, all the people in the yard outside the temple fell to their knees.” In the People’s Republic, all senior Buddhist clerics have to have impeccable political as well as religious backgrounds. Shi was vetted by the Party school and obtained a Master’s degree in Buddhism from the Renmin University of China. During his time at the Party school, he wrote a paper entitled “Buddhism Should be Subject to the Law.” “In the past, a monk could stay out of politics, but today, no abbot can maintain a temple and support his disciples without contact with the government and officials,” he told NewsChina. “I know a good monk should have no involvement with the economy, politics or the secular world, but this principle simply cannot be applicable to modern abbots [in China].” Shi’s luxurious accommodation has also caused controversy. He maintains private apartments in the temple, which include a long gallery, living quarters, a hall for greeting guests, a goldfish pond and a small swimming pool which Shi claims is for performing ablutions prior to prayers. He also has a personal assistant which he refers to as an “old disciple,” and keeps a private Subaru SUV which he claims he “has to use to attend government meetings.” “If I took a bus, I would be taken for a phony monk,” he told NewsChina. “The government should investigate [Shi],” ran one popular post on bulletin board tianya.cn. “Is he raising money for a temple or for a private villa and luxurious car?” Shi claims that his lifestyle is a standard one for The Huanglong Temple still seems dilapidated despite preliminary renovations

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military

Aircraft Carrier

Making Waves

Recent exposure of China’s new stealth jet fighters has reignited speculation over the progress of its secretive aircraft carrier program

Photo by IC

By Qi Zhigang

China’s second stealth jet fighter, the J-31, at Airshow China in Zhuhai, Guangdong Province, November 20

A

s the only civil and defense aerospace event endorsed by the Chinese government, the biennial Airshow China, held from November 11 to 16 in Zhuhai, Guangdong Province, commonly known as the Zhuhai Airshow, has long been considered a rare chance for military enthusiasts to get a close-up peek at China’s latest weapons technology, as major domestic contractors display their newest product lines. Star of the show this year was the J-31 “falcon hawk,” China’s second stealth jet fighter, making its public debut.

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Revelation

It was in September 2012 when leaked images of the J-31 first appeared on the Internet. Two months later, a model of the aircraft appeared on the Zhuhai Airshow stand of the China Aviation Industry Corporation (AVIC). AVIC officials are tight-lipped about the specifications of the new fighters, claiming that they are an internally funded project developed “for the international defense market,” but as footage emerged of the aircraft both on the ground and in flight, speculation among military analysts over its future role

has been rife. Many analysts suggest that the J-31, similar in size to the Lockheed Martin F-35, is intended to complement the J-20, China’s first experimental stealth fighter, which was first revealed in 2010. During this year’s Zhuhai Airshow, AVIC president Lin Zuoming reiterated that the fighter was aimed at the international market. But his comments that it had “multiple potential applications” were taken as a hint that the aircraft could wind up on the flight deck of China’s new aircraft carrier. NEWSCHINA I January 2015


Currently, China’s only carrier-based aircraft is the J-15, believed to be a variant of the Russian-designed Sukhoi Su-33, the carrier-based version of the Su-27 Flanker. After months of tests, including landing on and taking off from the deck of the Liaoning, China’s first aircraft carrier, the J-15 is now believed to be in full-scale production. Some analysts, however, are already speculating that the J-15 will eventually be mothballed in favor of the newer J-20 and J-31 stealth fighters. In an interview with State broadcaster China Central Television (CCTV), Du Wenlong, a military expert from the PLA Academy of Military Sciences, argued that China may employ a combination of stealth and non-stealth fighters on its carriers. “The J-31 can tear through an enemy’s air defense systems with its stealth capability to provide an offensive window for a massive strike force of J-15s,” said Du.

Homegrown

The discussion surrounding the J-31 fighter is just one more regarding China’s ambitious but carefully guarded aircraft carrier program. Ever since the Liaoning, a retrofitted Soviet-era carrier purchased from Ukraine, was launched in 2012, military observers have relentlessly combed through sporadic media releases and leaked specifications to determine the future direction of China’s naval strategy. While the Liaoning is considered outdated, the real attention has been on China’s determination to build its own carrier. However, unofficial reports are heavily dependent on unverifiable information released online, and occasional, vague reports from the official media. Some believe that the bulk of leaks, including purported photographs of the hull of a “homegrown” carrier which appeared online in 2013, are released intentionally by the military. According to an earlier report appearing in the web-based IHS Jane’s Defence Weekly, an independent research organization based in the US, not only has China laid the keel of its first homegrown carrier, scheduled for completion in 2017, but it has also finalized NEWSCHINA I January 2015

blueprints for a second vessel. Speculation over a second homegrown carrier was touched off after a scale model of an as-yet unknown variety of aircraft carrier appeared at a shipping exhibition held in Guangdong Province this June. As many Chinese military projects, such as the J-31 stealth fighter, Lijian drone and various antiship missiles have a history of sudden, unexpected debuts in miniature form at industrial and military exhibitions, many saw the appearance of the model as a subtle nod to the future direction of China’s carrier program. With a hull number of 18 (the Liaoning’s is CV-16, and its rumored successor CV-17), the model seemed to display four catapultlaunch systems (the “outdated” Liaoning uses the Soviet-era “ski-jump” takeoff system) and three aircraft elevators. If constructed as per this design, therefore, China’s homegrown carrier would boast the kind of strike capabilities currently only seen on US carriers, vastly broadening China’s naval reach and the sophistication of its radar monitoring and early warning systems. According to Li Jie, a military expert within the PLA, it is very likely that China will adopt a prudent approach to the design of its first homegrown carrier, which will most likely adopt technology closer to that already operational on the Liaoning, with more cutting-edge designs reserved for a more ambitious second homegrown carrier project. In late October, new images of the J-15 fighter showed that the aircraft’s landing gear had been modified in a way military analysts believe could accommodate a catapult takeoff, which further fueled speculation about China’s unconfirmed “second carrier.” Although few believe anyone but the PLA would have the gall to leak such images online, officials have remained typically silent about the scope and ambitions of the country’s carrier program. The most overt reference came from Ministry of Defense spokesperson Yang Yijun, who told media in late 2013 that “the Liaoning is China’s first aircraft carrier, but it will not be the last.” Estimates of how many carriers China ultimately aims to have in its fleet ranges widely

from two to six. According to Du Wenlong, China should aim to maintain three carriers, including the Liaoning, in the future. “With one carrier on active duty, one for training and the other one in dry dock, three carriers would mean China always had one on active duty,” he said.

Combat Groups

Military analysts are also in agreement that China will ultimately seek to develop its own carrier groups, to turn the PLA Navy into a comprehensive blue water force. On October 27, CCTV aired three minutes of footage of the Liaoning under escort by at least eight naval vessels, including destroyers, frigates and submarines. Observers took the footage as a “model” for the composition of China’s future carrier groups. The PLA Navy has been rapidly updating its fleet of warships and submarines in recent years. It is estimated that, in 2013 alone, 17 new destroyers and frigates were put into service. Among these is the Kunming, China’s first Type 052D guided-missile destroyer. Widely seen as the Chinese AEGIS cruiser and believed to be comparable to the Arleigh Burke-class destroyers of the US Navy, Type 052D destroyers are the most advanced warships currently operated by the PLA Navy, equipped with 64-cell vertical launch systems capable of firing a variety of missiles including long-range air defense and cruise missiles. It is reported that China currently has at least five such destroyers under construction. Besides the Type 052Ds, two Type 052C destroyers, the Haikou and the Lanzhou, upgrades of the Type 051C destroyers photographed escorting the Liaoning in 2012, have also entered service. This type of destroyer is widely touted as the future vanguard of the PLA Navy’s carrier groups. Should the predictions of China’s legion of military observers and commentators come to pass, China could boast the world’s second most powerful naval strike capability within a decade – indeed, few voices seem to predict any other outcome. For now, therefore, the country’s military leadership seems happy to allow the speculators to do their PR work for them.

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SPECIAL REPORT

APEC

Partisan Partnerships Despite landmark deals reached between the US and China during the recent APEC summit in Beijing, the world’s two largest economies remain in competition for leadership in East Asia By Yu Xiaodong

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NEWSCHINA I January 2015


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hen Barack Obama left Beijing on November 11 in the wake of the Asia Pacific Economic Cooperation (APEC) summit, he had every reason to claim an unexpectedly productive diplomatic victory.

Unexpected

Among some 20 agreements signed with China was a landmark deal on climate change. While the US promised to accelerate its plan to cut carbon dioxide emissions to 26-28 percent of its 2005 levels by 2025, China, now the world’s number one polluter, made its first-ever commitment to cap its own emissions by 2030, an abrupt departure from its previous stance. Moreover, the US and China also agreed to expand the scope of the global Information Technology Agreement (ITA) pact to reduce tariffs on 200 categories of products to zero.

NEWSCHINA I January 2015

According to the US authorities, the agreement, if implemented, could support up to 60,000 new American jobs and eliminate tariffs on nearly US$100 billion of made-inAmerica products. The two sides also agreed to extend the length of tourist and business visas granted to each other’s citizens to ten years from the current limit of one year. Analysts believe the development could not only remove some long-standing impediments to exchanges between the two countries, but could also pave the way to a bilateral investment treaty, which both countries have made a priority. Furthermore, to avert potential military clashes in the waters off the Chinese coast, the two sides also signed a military accord to “regulate behavior” for encounters in the air and at sea, and to notify each other of major military activities, such as military exercises.

Photo by Xinhua

President Xi Jinping and his wife Peng Liyuan host the leaders of the APEC nations in Beijing, November 10, 2014

But for all the talks of collaboration between Washington and Beijing, the two countries clearly continued to compete for the supreme leadership role in the Asia-Pacific region.

Competition

As the host country of this year APEC Summit, China’s agenda was to push forward the Free Trade Area of the Asia Pacific (FTAAP), a trade liberalization framework first proposed in 2006, which includes all 21 APEC member countries. Despite its initial support for the FTAAP, the US later shifted focus to the smaller Trans-Pacific Partnership (TPP), which aims to adopt “higher standards” in establishing a trading bloc of 12 countries including Japan, Australia, Canada and Mexico, but notably excluding China. According to a report in the Wall Street

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Photo By IC

SPECIAL REPORT

Banquet tables are made ready for delegates at the APEC CEO Summit at the China National Convention Center in Beijing

Journal, during negotiations prior to the summit, the US successfully pressured China to drop two provisions regarding the FTAAP from its draft APEC communiqué. One provision called on the APEC bloc to launch a feasibility study on the FTAAP, which would be the first formal step towards kicking off negotiations on the framework. The other provision was a target date of 2025 for cementing the deal. Despite these concessions, however, it seems that China won enough support by the end of the conference to claw back some of the ground lost to Washington. During his closing remarks at APEC to an audience that included President Obama, President Xi Jinping announced that member states had reached an agreement to launch a two-year feasibility study on the FTAAP. Calling the agreement “an historic step,” though making no mention of the previous 2025 target China had pushed for, Xi urged members to speed up talks and to “turn the vision into reality as soon as possible.” China has long considered the TPP an attempt to check China’s growing economic power, as many in the US have claimed that the existing multilateral trade order favors China over the US. For example, according to estimates from the Peterson Institute of International Economics cited by the WSJ, the US would gain about US$191 billion in export volume un-

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der the TPP, much less than it would gain under the FTAAP (US$626bn). In comparison, China would stand to lose about US$100 billion in exports if the TPP were agreed, but would gain US$1.6 trillion under the FTAAP. From China’s perspective, the US preference for the TPP over the FTAAP indicates that Washington has increasingly adopted a “zero-sum” mentality as it becomes more sensitive about its economic gains relative to China, and is willing to forego profits so long as Beijing ultimately loses more. From a US perspective, China’s firm advocacy for its own agreement over the TPP at a time when TPP negotiations have stalled, is tantamount to directly challenging US free trade supremacy in the Asia-Pacific region.

New Approach

However, in contrast to its increasing confidence in pushing forward trade and financial initiatives in recent months, China appears to have taken measures to reduce tensions regarding its territorial disputes with surrounding countries during these various international summits, which many analysts see as an obvious and unexpected departure from its earlier assertiveness. Besides a military accord with the US designed to avert conflicts, Xi met with Japanese Prime Minister Shinzo Abe in Beijing during the APEC summit, their first meet-

Yanqi Lake resort, the venue for the APEC summit in Beijing

ing in two years. The two countries earlier reached a four-point consensus within which Japan acknowledged the dispute between China and Japan over the sovereignty of the Diaoyu/Senkaku island chain for the first time since 2009. During the ASEAN summit in Myanmar, directly after APEC, in which President Obama also took part, Chinese Premier Li Keqiang said China and ASEAN are working towards the “earliest possible” consensus on a code of conduct in the South China Sea, something Beijing has been trying to avoid in recent months. Li also raised a seven-point proposal on a framework for China-ASEAN cooperation in the next ten years, which includes the signing of a treaty of “good-neighborliness and friendly cooperation” with ASEAN countries, establishing mechanisms for meetings between China-ASEAN defense ministers and improved maritime cooperation. Then, in a speech to the Australian parliament in Canberra on November 17 following the G20 Summit, Xi reasserted that China is “committed to peace and peaceful development.” “China will not develop at the expense of others,” Xi said. Stressing that China has settled land boundary issues with “12 of its 14 neighbors” through “peaceful consultation,” Xi said China will continue to work in this direction in its territorial disputes with other NEWSCHINA I January 2015


Photo by CFP

Photo by IC

Beijing Olympic Park, November 2, 2014

nations. The new approach may indicate a policy adjustment in response to a more serious and assertive stance taken by the US to counter an ascendant China. Besides the FTAAP, the US effort also extends to a variety of China-led initiatives. Earlier in October, for example, three of Asia’s biggest economies – South Korea, Indonesia, and Australia – were absent when China announced the establishment of the Asian Infrastructure Investment Bank (AIIB) along with 20 countries, although all three countries had initially expressed interest in the scheme. It is reported that South Korea and Australia at least had withdrawn support under pressure from the US, which sees the AIIB as a direct challenge to both the World Bank and the Asian Development Bank (ADB), which are largely under the control of the US and Japan. In the meantime, US and Chinese strategists have raised the possibility of potential military clashes between the two rivals. In his speech made at the University of Queensland on November 15, President Obama reasserted that Washington is determined to maintain its military pre-eminence in the Asia-Pacific region. “The US... will deploy more of our most advanced military capabilities to keep the peace and deter aggression [in the region],” he said. Although Obama did not mention China NEWSCHINA I January 2015

in his speech, these remarks were taken as being directed at China. “By the end of this decade, a majority of our Navy and Air Force fleets will be based out of the Pacific, because the United States is, and will always be, a Pacific power,” he added. China has been concerned that the US “Pivot to Asia” is aimed at causing China’s territorial disputes with surrounding countries to flare up in order to strengthen US regional alliances and legitimize enhancing Washington’s military presence in the region. It is believed that China’s new approach aims to limit competition with the US to trade and economics, areas in which it currently has an advantage, and to avoid direct confrontation with the far superior US military machine. With its recent high-profile diplomatic blitz to launch various trade and financial initiatives in the spirit of regional cooperation, China appears to be confident that its initiatives, which advocate “win-win” situations and a “common destiny” will be able to counter the Pivot to Asia. Although the TPP negotiations are so far still ahead of those on the FTAAP, China can afford to be more flexible than the US in its negotiating position. If the US were to be successful in blocking the FTAAP, China could switch to the Regional Comprehensive Economic Partnership (RCEP), a trade bloc which would include the ASEAN member

states plus Australia, China, India, Japan, South Korea, and New Zealand, and is based on the bilateral FTA already signed between these countries. On November 10, Beijing secured an FTA with South Korea, followed on November 17 by a similar agreement with Australia – both close US military allies. In the meantime, Indonesia, which chose not to become a founding member of the AIIB, has expressed a subsequent interest in joining. Moreover, to reduce US pressure in the Asian-Pacific region, China has begun overtures to the less integrated states of Central Asia with its New Silk Road Initiative which has gained momentum in recent months. In an interview with the People’s Daily Online, Zhang Zhaozhong, a military theorist at the PLA National Defense University, said the APEC Summit has a symbolic meaning – China’s status as a major power has been acknowledged by regional powers including, crucially, the US. Zhang and many other analysts share the same view that economy, definitely not military, will be the major theme of the competition between the world’s two major powers for the next decade. Experts on both sides of the debate are likely to hope that a zero-sum result isn’t the only possible outcome of enhanced interaction between the world’s two largest economies. 

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SPECIAL REPORT

2

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3 1. President Xi and President Obama take a relaxed stroll in Zhongnanhai, Beijing’s central government compound, November 11 2. Beijing Capital International Airport was cleared to make way for APEC leaders 3. Chinese-made Hongqi L5 limousines wait outside the Kempinski Hotel at Yanqi Lake Resort 4. A fireworks display illuminates Beijing’s National Stadium, known as the Bird’s Nest 5. Russian President Vladimir Putin drapes a shawl around the shoulders of China’s First Lady Peng Liyuan 6. Over 4,000 journalists attended the summit 7. The banquet hall at Beijing National Aquatics Center is readied for world leaders, November 15

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NEWSCHINA I January 2015


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7 NEWSCHINA I January 2015

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international

Common Ground Contrary to media speculation following the US drawdown in October, 2014, China’s enhanced role in Afghanistan is likely to be specialized according to Beijing’s foreign policy priorities which, when it comes to Afghanistan at least, broadly coincide with those of the West

photo by xinhua

China and Afghanistan

Chinese Premier Li Keqiang (front row, second from right) speaks with Afghan President Ashraf Ghani at the opening ceremony of the 4th Ministerial Conference of the Istanbul Process on Afghanistan, Beijing, October 31, 2014

By Li Jia

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hinese translations of Khaled Hosseini’s bestseller The Kite Runner are probably the closest contact that ordinary Chinese have with Afghanistan. Despite the country sharing a border with China, exchanges with its huge eastern neighbor have been limited by the Soviet invasion, the Taliban regime and most recently, the US occupation of this central Asian state. Recent developments have somewhat underlined the importance of China-Afghan relations for both countries and the rest of the world, not least the withdrawal of US-led combat troops from Afghanistan on October 26. Two days after the withdrawal, Afghan President Ashraf Ghani left Kabul on his first official trip as head of state. On October 31, senior representatives from 46 countries and organizations gathered for the Fourth Ministerial Conference of the Istanbul Process on Afghanistan.

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Beijing played host to both events. At the ministerial conference, China pledged about US$325 million in aid to Afghanistan between 2014 and 2017, more than total Chinese aid sent to Afghanistan in the 13 years since the US-led invasion of 2001. Bilateral talks between Ghani and Chinese leaders highlighted China’s commitments on technical personnel training, investment and bilateral security cooperation. This significant deepening of ties immediately aroused speculation that China was advancing its commercial and diplomatic agenda in Afghanistan to fill the void left by a war-weary US administration. However, Chinese analysts are advocating a less direct and more specialized role in Afghanistan, a country described in the joint declaration of the Beijing conference as “at a crucial stage” of transition. NEWSCHINA I January 2015


Danger

“There is no place that, once the Taliban or any other insurgents take over, the Afghan military can’t take back,” said General John Campbell, the commander of the International Security Assistance Force (ISAF) and US forces in Afghanistan, at a press briefing on October 2. Despite the withdrawal of US combat troops, Washington retains a significant presence in Afghanistan. From 2015, 12,500 US-led ISAF troops will remain in Afghanistan on a two-year mission focusing on “targeting the remnants of Al Qaida, and… training, advising, and assisting Afghan national security forces,” according to Rear Admiral John Kirby, the US Defense Department press secretary, speaking on September 30. These arrangements have done little, however, to assuage fears of a resurgent Taliban. A prominent Chinese expert on Middle Eastern affairs who asked not to be named told NewsChina that Afghan forces were “not sufficiently well-prepared,” adding that the security situation in Afghanistan was so severe that there was a very real possibility of it becoming the “next Iraq” once US forces departed, citing US officials who confidently declared after the withdrawal of combat troops in 2011 that Iraq was ready to govern itself. The country then descended into years of sectarian violence before the fundamentalist Islamic State emerged as an offshoot of the Syria crisis. Others are more optimistic. Professor Wang Lian of Peking University told NewsChina that the continuous US military presence in Afghanistan showed that the US had learned the lessons of Iraq, and was carefully winding down its military presence without leaving a power vacuum. The standoff between Taliban forces in the rural south and government troops surrounding Kabul in the urban northern area, Wang believes, will continue, but there is currently little threat of a full-scale civil war. However, the future of the current Afghan administration and its ability to gain complete control of the country is far from certain.

Agreement

Most analysts are in agreement that China cannot afford to ignore the potential risks posed by an unstable Afghanistan, with most advocating a cautious but sincere commercial and diplomatic outreach to Kabul. Growing ethnic unrest in China’s majority Muslim Xinjiang Uygur Autonomous Region, which borders Afghanistan’s eastern frontier, has been partly attributed to the rise of militant fundamentalist Islam across the world. This globalized emergence of radical conservative Islam, which has affected sociopolitical discourse from Egypt to Indonesia, has been blamed for a rising conservatism among Xinjiang’s Muslims. China has accused Taliban training camps in Afghanistan and Pakistan of producing the separatist militias who have launched attacks on police and civilians in China.

NEWSCHINA I January 2015

Security cooperation has thus been placed at the heart of bilateral relations. President Ghani remarked to his Chinese counterpart Xi Jinping in their October meeting that Afghanistan would “not allow any force to use its territory for anti-China activities.” In addition, instability in Afghanistan also affects the security situation in Pakistan, one of China’s largest neighbors, further destabilizing sensitive western border regions that China wishes to develop as part of Xi Jinping’s New Silk Road Economic Belt initiative. Afghanistan signed onto this trade agreement during President Ghani’s visit. Designed to better link Central Asian economies with China’s, Afghanistan’s position at the intersection of central, southern and western Asia, is crucial for the New Silk Road Initiative. China’s two biggest development projects in Afghanistan, a copper mine and an oilfield, have both been halted due to repeated attacks from insurgents. With China hoping to expand its infrastructure and resources exploitation activities in Afghanistan, security guarantees, particularly protection for Chinese workers, are a major priority in commercial relations. There is no doubt that economic recovery in Afghanistan is a more reliable guarantee for foreign investment there than any promise on paper. The US Geological Survey has identified 24 world-class mineral deposits in the country including iron, cobalt, gold, copper, and rare earths according to an editorial published in Science on August 15, 2014. In 2010, the US Defense Department valued mineral resources in Afghanistan at US$908 billion. The Science editorial highlighted security challenges and a lack of infrastructure as the two major obstacles to turning Afghanistan’s resources into jobs and economic development which might, in turn, erode support for the Taliban’s ongoing insurgency. Resource-hungry China thus has a direct commercial as well as political interest in a secure and prosperous Afghanistan. Unless the Taliban are defeated or, at least, contained, the prospects for sustainable and mutually beneficial bilateral relations are gloomy.

Multilateral

Few analysts think China will risk committing militarily in Afghanistan, with most doubting Beijing would even place security personnel within the country beyond its current handful of UN-led police peacekeepers. According to Reuters, Sun Yuxi, China’s special envoy to Afghanistan, made it clear in July 2014 that China’s presence in Afghanistan would be “mainly commercial.” Recently, however, an enhanced Chinese diplomatic presence in Afghanistan that appeared to coincide with the US drawdown attracted attention. In his 2013 article on relations between India, Pakistan and Afghanistan, entitled “A Deadly Triangle,” historian and journalist William Dalrymple commented that China could expect her ally Pakistan to act as guarantor of Chinese interests in Afghanistan, protecting them from Taliban attacks, an arrangement which “could be a boon for future peace.”

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photo by xinhua/afp

international

British and US troops in Helmand Province hand over two bases to Afghan forces, October 26, 2014

Chinese analysts dismiss the notion that Beijing would resort to relying on anyone else to protect China’s interests. Taliban fighters have regularly kidnapped Chinese engineers and tourists in Pakistan over the years, most recently in May 2014, which is seen as proof that Islamabad is unable to protect Chinese nationals in dangerous areas. Professor Wang also pointed to Pakistan’s troubled relations with

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Afghanistan as another sticking point in establishing some kind of tripartite agreement on security. Chinese analysts are more interested in Beijing’s role in regional multilateral platforms, particularly the Istanbul Process on Afghanistan and the Shanghai Cooperative Organization. Regional major stakeholders with long-term direct, deep involvement in Afghanistan – specifically India, Pakistan and Iran – have all been participants in the former and observers in the latter. Indeed, China’s relations with these three powers are likely to be as important to Sino-Afghan ties as direct contact between Beijing and Kabul. Chinese analysts believe that China’s good relations with Pakistan and Iran, both of whom continue to have uneasy relationships with the US, put China in a uniquely advantageous position to facilitate communication between major regional direct stakeholders in Afghanistan. Sino-Indian relations, meanwhile, remain overshadowed by longrunning border disputes. Some experts therefore see Afghanistan as an area for the two sides to establish some much-needed common ground. In August 2012, the Indian Ministry of External Affairs announced US$2 billion of development assistance to Afghanistan, a figure which made India the fifth largest bilateral donor after the US, UK, Japan and Germany. A consortium led by Steel Authority of India won a bid in 2011 for more than US$1 billion’s worth of iron ore projects in Afghanistan. India’s huge investment in Afghanistan is seen by some, including the anonymous expert approached by NewsChina, as an attempt to shore up political support in the country against Pakistan, which Indian intelligence services suspect of covertly backing the Taliban. Some even speculate that after centuries of being used as the battleground for proxy wars between the great powers, Afghanistan could now emerge as a rare zone of cooperation between traditional rivals – with the US, China, India and Iran all invested in a stable and prosperous Afghanistan. In an interview with the Chinese newspaper the Global Times, Sun Yuxi said Afghan affairs had been a “bright spot” in Sino-US relations, and that the two sides “shared similar views” and were “cooperating closely” despite their divisions over many other bilateral and international matters. China’s indirect but unique diplomatic involvement through multilateral regional platforms might also reassure other world powers that China’s biggest interest in Afghanistan is not strategic, but commercial and pragmatic. That these interests coincide with the majority of global stakeholders, as Jin Canrong, a professor at Renmin University of China and prominent expert on Sino-US relations, observed, can prevent China from becoming entangled in clashes between its global partners that center on Afghanistan. If China can play this role well, it might bring peace in Afghanistan closer, and reinforce Beijing’s global standing as a mediator, rather than an instigator, of international disputes. NEWSCHINA I January 2015


environment

Incineration Plants

Trash Talk The Beijing government is relaunching a garbage incinerator project which was suspended five years ago due to neighborhood protests. Why are the authorities determined to see this unpopular project realized?

Photo By CFP

By Fu Yao

China is the world’s largest producer of solid waste

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ate July this year, Huang Xiaoshan received a notice informing him that the Asuwei incineration plant construction project that he and fellow residents of Beijing’s Changping district fought to have suspended five years ago would undergo a new “environmental impact assessment.” Huang could see the writing on the wall. The location of the 1,200-ton capacity plant, near an existing landfill 35 kilometers from downtown Beijing, remained unchanged. In 2009, residents of the upscale gated communities in the area united to oppose the project, fearing environmental degradation in the surrounding wetlands and a negative impact on the value of their properties. On September 4, 2009, over a hundred protesters assembled in front of the Beijing NEWSCHINA I January 2015

Agricultural Exhibition Hall during an annual environment and sanitation expo. Protest leader Huang Xiaoshan was detained for five days for “disturbing public order.” The experience only served to strengthen this former lawyer’s resolve to pursue a career as an environmental activist. However, in the interim, Huang has come around to the Asuwei incinerator, just one of ten planned as part of the government’s 2013 action plan on the capital’s garbage problem, which has pledged to complete a total of 44 waste treatment projects by 2015. He, like many others, can’t see an alternative.

Overflowing

Until the 1980s, Beijing had a primitive approach to its limited volumes of household

garbage, most of which was simply transported to the rural suburbs to be processed as “fertilizer.” Limited household incomes encouraged people to “make do and mend” rather than throw things away. Plastics, glass and other non-biodegradable waste products were generally recycled in the home or by small-scale scavenging operations. However, as living standards have risen while the prices of cheap consumer goods have remained standard, Beijing has gradually begun to struggle to stay ahead of its inhabitants’ waste. Lacking a concerted effort from the authorities to deal with the problem, mounds of untreated garbage piled up, particularly in poorer areas of the city, until, in the late 1980s, aerial photographs revealed over 4,700 ad hoc garbage dumps within the

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environment

city proper, constituting a looming public health crisis. In 1994, with aid from the German government, Beijing set up a few experimental waste disposal facilities. Landfills were preferred as a low-tech, labor-intensive option, but there were hopes that incineration and biological reprocessing methods would later become the norm. Despite the concerns of some public health officials, however, the city continued to expand, with waste disposal (garbage output was, by the late 1990s, increasing by 7 to 10 percent annually) low down on the list of of-

Photo By CFP

the possibility of constructing a number of plants to ease the pressure on the city’s landfills. However, the high emissions of airborne pollutants and carcinogens from incinerators soon led to a backlash from environmentalists and the general public. Of three incinerators slated for completion in 2003, only one, in Chaoyang District, is currently operational. “We never expected such strong public opposition,” Feng Qi from the Beijing Environment Sanitation Engineering Group, the contractor in charge of the Asuwei incinerator, told NewsChina. The protests against the plant proved so embarrassing to the government that construction was halted indefinitely. Building on the success of the Asuwei protests, movements against situating polluting industries in residential areas mushroomed across the country. Lü Jiangtao, an employee from the Solid Waste Management Center under Beijing’s Municipal Commission of City Administration and Environment, told NewsBeijing citizens visit the Gao’antun incineration plant at the China that Beijing’s 20 million invitation of officials residents produce 18,400 tons of garbage per day, and that landfills can no longer handle these ficial priorities. Moreover, hastily constructed volumes. Experiments with biological reproand poorly planned landfills were causing a cessing – favored as an expensive but “green” citywide pollution problem of their own. form of waste disposal that can also be used In 2001, Zhao Zhangyuan, a professor to generate power – have so far failed to bear from the China Research Academy of En- fruit. One plant in Beijing’s Tongzhou Disvironmental Sciences, led an inquiry into trict slated for completion in 2008 remains suspected groundwater pollution caused by offline because, insiders claim, of a lack of the Asuwei landfill site. Laboratory testing supporting infrastructure in terms of conrevealed that groundwater 4 kilometers from vincing urban residents to sort garbage prior the site had been polluted, and that this was to collection. A similar project in Shanghai causing widespread health problems in the was declared a “total loss” in 2013. surrounding communities. “Due to this pheFor Lü and others, incinerators remain the nomenon, we proposed that the government city’s only option. abandon landfills as a waste management soNo Alternative lution,” Zhao told NewsChina. The internationally recommended “Three At the time, over 90 percent of Beijing’s ‘R’s” principle for waste treatment - reduce, garbage ended up in landfill sites. The suggested alternative was incinera- reuse, recycle - emphasizes reducing waste tion, and the government began exploring at its source or encouraging individuals to

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sort their waste in the home. Few Chinese households bother to do this, instead throwing away mixed organic and inorganic waste. Biological reprocessing - viewed internationally as the most environmentally friendly technique for waste disposal - is only viable when organic waste is completely separated from other garbage. Unless Chinese households begin sorting garbage on a large scale, mixed-waste incinerators are likely to remain the government’s favored disposal method. However, these incinerators, which burn mixed organic and inorganic, wet and dry garbage, produce large-scale toxic emissions that are virtually impossible to mitigate. Chen Liwen from Beijing-based environmental NGO Nature University told our reporter that 50 to 60 percent of Chinese household waste is organic kitchen garbage meaning a high water content and a low heat value. “This variety of garbage is not suitable for incineration, and burning it releases emissions that are hard to control and monitor,” he said. Composting may be an increasingly common practice in the West, but in China, almost all household waste ends up in community garbage cans. The Beijing government, under pressure from environmental groups, has called on the population to sort their waste in their communities. However, the public has apparently largely ignored the government’s multi-million-yuan awareness campaigns. Four years ago, Huang Xiaoshan was invited by the Beijing government to accompany municipal officials on a fact-finding mission to inspect waste management projects in Japan. Huang was impressed by the strict Japanese approach to sorting household waste, even claiming publicly that, if properly promoted by the government, Chinese people could become equally conscientious. He has since abandoned this position, telling NewsChina: “Nobody [in China] is willing to sort their trash. How can we still blame everything on the government?” “People keep invoking their rights, but overlook their social responsibilities,” he continued. “The garbage is produced by the public rather than the government and we NEWSCHINA I January 2015


Photo By CFP

The Lujiashan incineration plant in Beijing’s Mentougou District

should be responsible for our own behavior.” Most Chinese waste management officials agree that incinerators are far from an ideal solution to Beijing’s garbage problem, but claim that without social impetus, any attempt to handle the city’s waste through more environmentally friendly methods is doomed to fail. Some have even called for a “trash tax,” charging residents directly for waste disposal services, but so far no such measures have been adopted.

Credibility

The Lujiashan incineration plant, located in a suburb of Beijing, is a 3,000-ton capacity household waste treatment plant that has been running on a trial basis for over a year. The Lujiashan plant is seen by many as a compromise – constructed to supplant four other plants that were blocked by popular protests. Back in 2010, State-owned steel conglomerate Shougang Group was under pressure from the central government to diversify its operations. Perceiving a business opportunity in the city’s inadequate waste management sector, Shougang halted construction on a planned limestone mine in Mentougou district, and sunk a 2.16 billion yuan NEWSCHINA I January 2015

(US$353m) investment into the State-funded Lujiashan incinerator, with the government matching this sum. While proposed sites in residential areas of Beijing had faced large scale opposition, the remoteness of the location meant the project encountered less resistance from local residents. The Lujiashan plant also became something of a prestige project for the government, adhering to strict emissions standards and working closely with environmental authorities. At the end of 2013, environmental NGO Nature University petitioned the Beijing Environmental Protection Bureau to publicize its environmental impact assessment data for the Lujiashan project. The petition was refused out of hand. Since 2010, Nature University has applied to government agencies for the release of environmental impact data for incinerators a total of 28 times, and has consistently been rebuffed. This lack of transparency when it comes to the potential risks of building incinerators in residential areas is one major factor behind the popular protest movement. Reports have emerged of corner-cutting at waste disposal plants, with incinerators being run at lower temperatures to save money –

and consequently releasing greater concentrations of toxic emissions into the atmosphere. Despite broader financial support from the government for waste treatment projects in Beijing, many argue that the will to build efficient and relatively clean incinerators is sapped by a desire to maximize profitability – something the uniform lack of transparency embraced by both operators and government overseers has virtually guaranteed. “This is more than a technology issue people know it is a management issue,” said Chen Liwen of Nature University.

Choosing Location

Now, the battle lines are drawn, with the government and waste disposal companies on one side, and NGOs and local communities on the other. Neither side is willing to give ground. According to the new construction plan, the building of the Asuwei incineration plant will require the relocation of over 1,000 people residing in the four villages that ring the proposed site of the incinerator. An insider source told NewsChina that relocating these communities will cost the government 7 billion yuan (US$115m), making it the most expensive waste management project ever undertaken in Chinese history. One person who will not be protesting, however, is Huang Xiaoshan. He claims to have accepted the “inevitability” of the project, and, as most of his fellow protestors have either sold their homes or emigrated abroad, there are few remaining who are willing to join him in opposing the new plant. Indeed, the proposed Asuwei plant has more than doubled in size since work was halted, and is now expected to handle 3,000 tons of household waste a day. Initially, the incinerator will be used to destroy the thousands of tons of waste currently polluting the soil surrounding the Asuwei landfill site. New mega-incinerators are scheduled to go online in the coming years in five of Beijing’s 14 districts. It seems that, while protests are a concern, even more pressing is the capital’s need to deal with its garbage problem.

47


economy

Viagra Patent

Pharms Race Following the expiry of Pfizer’s Chinese patent on Viagra, the little blue pill is set to face increasing competition in China’s lucrative market place By Chen Jiying

D

r Ma Rong, a urologist at a Beijing hospital, is no longer surprised when elderly patients ask him for Viagra. When Pfizer’s erectile dysfunction (ED) drug Viagra first hit the Chinese market about a decade ago, Chinese patients seeking ED treatment tended to be in their 30s or 40s, well-educated, comparatively wealthy and, according to Ma, relatively shy about discussing their condition. “Now, my ED patients range in age from their 20s to their 70s,” Ma said. Viagra, the “little blue pill” that quickly became a global sensation following its release in 1998, was no less of a revolution in China, where mainstream media coverage of the drug challenged taboos around the discussion of sex, and struck gold with China’s estimated 127 million ED sufferers. However, since this May, when Pfizer’s Chinese patent on the drug’s active ingredient sildenafil expired, Viagra has been bracing itself for increasingly fierce competition in the Chinese market. “If there are cheaper products on the market, sales of Viagra-like drugs will at least double,” Ma said.

IP War

Now a billion-yuan (US$163m) industry in China, according to data from research agency IMS, it is unsurprising that Viagra has had to fight to protect its intellectual property in the country. But while Pfizer’s well-publicized battle with counterfeiters has been going on almost since the product’s launch, the expiry of its patent has opened the door to legitimate competitors. In February 2001, regulators granted approval to a batch of Chinese pharmaceutical companies to begin clinical trials of their own Viagra-like drugs. Boosted by the rejection of Viagra’s patent application

48

in Europe, the future looked bright for China’s would-be ED drug manufacturers. However, in September 2001, China’s State Intellectual Property Office (SIPO) granted Viagra a Chinese patent, and while this was temporarily revoked in 2004 thanks to a joint appeal from 12 domestic pharmaceutical companies, its reinstatement in 2006 effectively stymied hopes of a domestic manufacture market. Given the obvious market potential for ED drugs, however, Chinese firms never fully abandoned their research into sildenafil. Eventually, in 2012, as the May 2014 expiry date of Pfizer’s patent approached, Guangzhou Baiyunshan Pharmaceutical (GBP) rebooted its sildenafil program, and began preparing to file another application with the China Food and Drug Administration (CFDA). In 2012, Dr Ferid Murad, co-winner of the 1998 Nobel Prize for Physiology or Medicine and dubbed “the Father of Viagra” in the media, accepted GBP’s invitation to take the helm at its research institute. In August 2013, the company filed a new registration application with the CFDA, and just three months after the expiration of Pfizer’s patent, GBP became the first Chinese enterprise to receive the go-ahead for its ED drug program. By November 2014, little more than 2 months later, GBP’s pink, diamond-shaped “Golden Spear” ED pills, the first NEWSCHINA I January 2015


C h i nese ED drug made with compounds previously patented by Viagra, appeared on pharmacy shelves in first-tier Chinese cities. At least 10 other Chinese pharmaceutical companies have followed GBP’s lead, filing applications for licenses to manufacture and sell sildenafil-based products.

ED-conomics

Viagra’s global profitability is no secret. According to Murad, while Viagra sold at just a few US dollars per tablet when it debuted on the US market in 1998, the price has now risen to 15 dollars per tablet. In China, a 100-milligram Viagra tablet costs around 128 yuan (US$21). Ma Rong, the urologist, told NewsChina that ED patients currently spend roughly 500 yuan (US$82) per month on medication. Since NEWSCHINA I January 2015

Viagra is not covered by China’s national medical care program, longterm treatment can be a heavy economic burden for many patients, Ma said. Retail prices for GBP’s Golden Spear present a clear challenge to Pfizer’s reported 70 percent market dominance – its single-tablet pack carries a price tag of 48 yuan (US$7.80), while a 10-tablet pack sells for 345 yuan (US$56), more than 60 percent less than Pfizer’s Viagra. With the arrival of Chinese ED medicines on the market, “sildenafil drugs will no longer be so expensive, and more people will be able to afford them,” Murad said. To compete with the increased competition, Pfizer will likely be forced to drop its prices. When the Viagra patent in South Korea came to an end on May 17, 2012, more than 30 Viagra-like drugs appeared on the local market, some of them costing just one-fourth of the price of Viagra. One month later, Pfizer’s Viagra sales in South Korea had fallen by about 42 percent, prompting the company to slash its prices by 35 to 40 percent. In Germany, Pfizer launched cut-price versions of Viagra, costing between 2.08 and 6.25 euros (US$2.58-7.75), about 21 to 42 percent of the regular Viagra, after the patent expired. This May, Australian pharmacy chain Chemist Warehouse began selling a four-tablet pack of Pfizer Viagra for 13.99 Australian dollars (US$12.02), a record low price. There has so far been no news about Viagra price cuts in China, and Pfizer insiders confirmed to NewsChina that the company had no plans to roll out a discount, although this may be due to the fact that few Chinese hospitals and pharmacies have yet begun offering patients domestic ED drugs.

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economy

Rail Diplomacy

Truly Transglobal

With its ongoing high-speed rail diplomacy and various international financial initiatives, has China adopted its own version of the Marshall Plan? By Yu Xiaodong

W

hen, on November 7, Mexican President Enrique Peña Nieto canceled a high-speed rail (HSR) deal with a Chinese-led consortium including the China Railway Construction Corp and several Mexican firms, many saw the first major blow to China’s effort to export its domestically revolutionary HSR technology. The US$3.75 billion contract to build a 210-kilometer (130-mile) line con-

50

necting Mexico City with the central city of Querétaro was China’s first such deal in Latin America, and prompted an outcry from Mexican lawmakers when it was announced less than a week earlier. Few, however, believe that this setback will halt what many have termed China’s “highspeed rail diplomacy” drive, as the country endeavors to shift its national growth strategy away from labor-intensive, low-end manu-

facturing to the higher end of the global market.

Expansion

With its first HSR line completed in 2008, China’s domestic network surpassed 11,000 kilometers of track within just six years, utterly transforming travel in a country heavily dependent on rail to move both its goods and its people. With 49 new projects totaling NEWSCHINA I January 2015


Photo by Xinhua

The first high-speed rail line built overseas by China is opened in Istanbul, Turkey in July 2014

7,000 kilometers of track currently underway, it is estimated that China will have an 18,000-kilometer HSR network by the end of 2015. Besides domestic expansion, China has also endeavored to export HSR technology as part of its diplomatic outreach to other nations. Dubbed China’s leading high-speed rail “salesman,” Premier Li Keqiang has been actively promoting Chinese HSR technology NEWSCHINA I January 2015

on his overseas visits. On an official visit to Thailand in October 2013, Li inaugurated an HSR exhibition in Bangkok alongside then Prime Minister Yingluck Shinawatra, signing a memorandum of cooperation on a US$23 billion project that will link a fledgling Thai HSR network to China’s by 2021. Although the project was suspended after Shinawatra was deposed in a bloodless military coup, Thailand’s current ruling junta reactivated the project this August. During a trade forum held in November 2013 in Bucharest, China announced a HSR project in Romania and also inked a partnership agreement with Hungary and Serbia to build a line connecting Budapest to Belgrade. During an African tour in May 2014, the Chinese Premier attended the World Economic Forum on Africa, joint research projects were announced on HSR technology, with delegates mooting a vast network connecting several African capitals. China has long been a major player in the market of railway and infrastructure construction in Southeast Asia and Africa. Now, the country has broadened its scope to include Europe and the Americas, hoping that growing demand for HSR networks in developed economies may disperse previous anxieties about welcoming Chinese investment. In his visit to London in June, Premier Li signed an agreement with British Prime Minister David Cameron to promote bilateral cooperation on the design and expansion of an extended rail network, including HSR, which analysts believe will pave the way for Chinese enterprises to add impetus to HS2 (High Speed 2), a major infrastructure project aimed at establishing an HSR link between London and the north of England. During his visit to India earlier in September, President Xi Jinping signed an agreement with Prime Minister Narendra Modi, which will see China investing US$20 billion in India’s infrastructure over the next five years, including the addition of HSR lines to the country’s rail network. On October 23, the United States approved cooperation between the Massachusetts Department of Transportation and

China North Vehicle Group (CNR), China’s other rolling stock giant, to purchase 284 subway trains for the Boston area. Although these trains are not technically high-speed, it is the first time that a Chinese rail company has won a bid for a contract in the US. Both China South Locomotive and Rolling Stock Corporation Limited (CSR) and CNR have indicated their interest in supplying rolling stock for California’s proposed US$68 billion HSR network, with its first line between Fresno and Bakersfield scheduled to open in 2021.

Global Ambitions

Besides cooperation with individual countries, China has also proposed several international and even intercontinental high-speed railways. The first to open may be a 3,000-kilometer railway line linking Kunming, capital of Yunnan Province in southwestern China, to destinations in Laos, Thailand, Malaysia and Singapore. The high-speed rail project recently restarted by leaders in Bangkok is believed to be phase one of this grand project. According to Zhao Xiaogang, an adviser to the China Institute for Innovation and Development Strategy and the former chairman of CSR, China aims to finish this transnational project, which will have an estimated cost of US$75 billion, by 2025. An even more ambitious is a 6,000 kilometer line linking China’s Xinjiang Uygur autonomous region with Eastern Europe, passing through Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Iran, Turkey and Bulgaria. Few proposed projects follow China’s global economic strategy as closely as this rail line, which traces almost exactly the investment path of the government’s muchvaunted “New Silk Road” initiative launched by the central leadership under President Xi Jinping in 2013. During Premier Li Keqiang’s visit to Moscow in October, China proposed yet another grand project to build a 7,000-kilometer HSR line from Moscow to Beijing, which would cost about US$230 billion and cut the journey time of today’s Trans-Siberian Railroad from six days to two. The two sides signed a memorandum of understanding re-

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Photo by Xinhua

economy

A press conference attended by Gerardo Ruiz Esparza (fourth from left), Mexico’s minister for transport and communications, announces the first high-speed railway in Mexico to be designed and built by a Chinese-led consortium, November 3, 2014

garding building Phase One of this proposed project – an HSR link between Moscow and Kazan, the first leg of the Trans-Siberian Railroad.

National Strategy

Many analysts believe that China’s “highspeed rail diplomacy” is part of a national strategy inspired by the US Marshall Plan of the 1940s. Officially called the “European Recovery Plan,” the Marshall Plan was an unprecedented package of financial, logistical and military aid provided to the devastated nations of Europe in the wake of World War II. A byproduct of the plan, which some claim was its main intention, was establishing strong overseas markets for American goods, securing US influence in most major world markets and placing the dollar at the heart of global trade. In 2009, Xu Shanda, former director of the State Taxation Administration, proposed that China should learn from this example to engineer a “Chinese version of the Marshall Plan.” According to Xu, China is comparable to the postwar US, suffering an excess of production capacity and vast foreign exchange reserves with limited investment channels. By offering financial assistance to infrastructure projects in both developed and developing

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countries as well as emerging markets, China can achieve multiple strategic objectives. Not only would building a global HSR network help China absorb its excess capacity and sustain its flagging domestic economic growth, it could also accelerate the pace of the internationalization of China’s currency, increasing the yields on its foreign exchange reserves, reducing its holdings of US treasury bonds and guard against long-term depreciation in value of the US dollar. Moreover, with an increased presence in an in-demand hightech market, China can boost its soft power and enhance political and security cooperation with partner countries. Although Chinese officials have denied that the government has adopted this strategy, many commentators, both domestic and foreign, have made comparisons to the Marshall Plan, pointing to the fact that Chinese financial initiatives are increasingly tied to infrastructure projects. Besides low cost and rapid construction, a key advantage of Chinese HSR manufacturers is the virtual guarantee of State-backed funding. In the Mexican deal, for instance, the Export-Import Bank of China (EximBank) offered to finance 85 percent of the project. On October 24, 2014, China, along with other 20 countries, established the Asian

Infrastructure Investment Bank, with China providing the bulk of an initial fund of US$50 billion, which Chinese officials say will soon reach US$100 billion. On November 9, that same year, during the APEC summit held in Beijing, President Xi Jinping announced that China will invest US$40 billion in establishing a “Silk Road Fund” to finance its Central Asian initiatives.. Then, when ASEAN leaders met in Myanmar the weekend after the APEC summit, Premier Li Keqiang announced that China would provide US$10 billion in loans to ASEAN countries, also allocating another US$10 billion fund to EximBank to finance infrastructure projects in the region. Roads, ports and, crucially, HSR projects will be financed by these initiatives.

Mergers

Under its national strategy, the Chinese government is reported to be encouraging a merger between CNR and CSR in order to boost competitiveness with major international HSR firms such as Bombardier (Canada), Alstom (France) and Siemens (Germany). It is argued that the two Chinese companies have engaged in a fierce price war on overseas markets which has undermined China’s overall strategy. In 2011, for example, the two companies undercut one another in bidding for a Turkish contract, which eventually went to a South Korean firm. Then in 2013, after CSR bid for a rolling stock contract in Argentina, CNR offered a vastly lower price, leading the Argentine government to cast doubt on the credibility of both companies. On October 27, the two State-owned companies suspended the trading of shares. With total annual revenue of 131 billion yuan (US$21.4bn) and 98 billion yuan (US$16bn) respectively and combined profits of US$1.4 billion in 2013, the merger, if successful, would give birth to the world’s largest rolling stock manufacturer, fundamentally changing the international market. NEWSCHINA I January 2015


china

bynumbers

NEWSCHINA I January 2015

60 50 40

Others

Stocks

Corporate bonds

70

Trust

80

Entrusted loans

Regardless of the aims of its policies, however, China also faces serious political and economic challenges in achieving its stated objective of a global HSR network centered on the People’s Republic. Industrial analysts are warning that China’s high-speed rail diplomacy, along with the proposed merging of CNR and CSR, will inevitably lead to an intensified diplomatic fightback. Others warn that it would be very difficult for China to replicate the success of the Marshall Plan, given that it is not the sole player in a global market that, while somewhat stagnant, is far from the devastated wasteland left in the wake of WWII. In an article published on political analysis website The Diplomat, Dingding Chen, assistant professor of Government and Public Administration at the University of Macau outlined four major differences. Unlike the US, which was already a global dominant power in the 1940s, China is a rising and developing power, already perceived as a direct challenge to US supremacy, a status which will inevitably be combated by American maneuvering. Moreover, while the Marshall Plan was conducted between the US and its European allies, China’s initiatives are open to almost all countries, meaning a “free ride” for those seeking to profit from infrastructure deals while remaining strategically and economically aligned with US interests. In addition, China still faces trust issues in many markets, as evidenced by the collapse of its Mexican rail initiative. Chen argues however that China’s advantage lies in that it understands “the key desire of many developing countries: They want development first, and they want development without the political strings imposed by the West.” “China needs to work harder to convince others that its initiative is indeed aimed at achieving a ‘win-win’ outcome for everyone,” he concluded.

Shortfall in social financing by Chinese enterprises in the first ten months of 2014, compared to a rise of US$2.4 trillion in the same period of 2013.

Yuan bank loans

Challenges

Breakdown of China’s social financing Foreign-denominated bank loans

US$201.9bn

30 20 10

Source: People’s Bank of China

0

US$54.9bn

30%

China’s general trade surplus in the first ten months of 2014, compared with a US$25.7 billion deficit in the same period of 2013. Surpluses in processing trade, imports of parts and secondary exports of finished goods shrank by 3.6% y-o-y. 100 80 60 40 20

Average annual growth in international e-retail sales in China since 2011, with volume in 2016 predicted to be US$1 trillion

0 -20 -40 -60 -80 -100

2008

2009

2010

2011

2012

2013

Source: Ministry of Commerce of China

Source: General Administration of Customs of China

-5.7%

Monthly change in fiscal spending, year-on-year 30

Decline in fiscal spending in October, 2014, the first decline for 15 months

25 20 15 10

Source: Ministry of Finance of China

5 0 -5 -10

July’13

Aug’13

Sep’13

Oct’13

Nov’13

Dec’13 Jan, Feb’14 Mar’14

Apr’14

May’14 June’14 July’14

Aug’14

Sep’14

Oct’14

22.4m Unprecedented jobs growth in the self-employed sector in the first ten months of 2014 Source: State Administration of Industry and Commerce of China

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culture

Urban Renewal

An Underground Revolution

Through his experiment to turn a “space” into a “place,” designer Zhou Zishu tries to find a way to bring life and dignity to Beijing’s basement dwellers By Wu Ziru

U

nderneath about 17,000 buildings more than ten stories high in Beijing, over a million people live in basement rooms originally designed as bomb shelters. Most who live above-ground imagine these subterranean dwellings as gloomy, shabby corridors – poky cells, full of damp and foul smells. Those who live in them, often lowincome migrant laborers, street traders, the unemployed and even recent university graduates, have been dubbed “rat clans” – a vagrant, scuttling population. That explains why photos of Zhou Zishu’s makeover of one basement dwelling in Wangjing, in Beijing’s Chaoyang District, struck a chord with the public when they appeared on Sina Weibo, China’s Twitter, becoming a viral sensation. The project site, part of a corridor and a few 10-squaremeter rooms in the basement of a building in a compound built in 1994, was a typical underground dwelling – old, worn-out, dirty and smelly. However in Zhou’s photos, these same spaces were clean, warm, bright, colorful, and above all, subversively creative.

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The walls and floor of one room were painted white, but Zhou left the ceiling and part of the walls untouched. With several white stools in the shape of twisted triangles, the décor looks modern and artistic, while the untouched concrete preserves a taste of its unglamorous past. Another room was walled and floored with wood, and furnished with a wooden bed and tables that could be folded into the walls to save space. In both rooms, the patterns on the upper walls above and opposite the doors mimicked roofing beams to give the residents a feel of a traditional house. Another highlight of Zhou’s makeover is a room called “Skill Exchange Room,” where the building’s residents (underground or otherwise) are invited to write their name, a skill they have and a skill they want to learn onto a card, attach it to the end of one of the colorful ropes draped from the ceiling and nail it to their home province on one of the two maps painted on the walls. The project has attracted wide attention, thanks in part to the various activities that have been held there. A private movie NEWSCHINA I January 2015


Photo by CFP

Zhou Zishu in the “Skill Exchange Room”

screening was held in the white room which – although perhaps not entirely legal – earned the landlord 300 yuan (US$49) in two hours, nearly half of the previous month’s rent. Small lectures and salons have also been held in the rooms. The project, originally intended to last for one year, was Zhou’s postgraduate thesis project for Central Saint Martins College of Art and Design (CSM) in London. However, Zhou has decided to extend the experiment to the whole of the building’s 600-square-meter basement in half a year, incorporating bedrooms, a café, a library and other areas. He is building an underground community, balancing the interests of basement tenants, landlords, above-ground residents and even the government, with a core mission of effecting “social and spatial justice.”

The Sensitive Issue

Zhou Zishu, 35 years old, is tall, has wavy hair and wears thick glasses, rendering him almost a caricature of a designerintellectual, although he prefers “idealistic critical activist.”

NEWSCHINA I January 2015

He takes this self-applied name as a starting-point for “seeing clearly the reality that society is facing, while still being greatly idealistic, and trying to act to improve it with a critical mind,” he told NewsChina. Before leaving for London, Zhou obtained his first Master’s degree from Beijing’s Central Academy of Fine Arts (CAFA), and worked as a designer at the National Art Museum of China (NAMOC) for four years, before leaving when he became “bored by its bureaucratic atmosphere.” He then founded his own architecture design studio, before applying to CSM. Zhou’s major at CSM was about how to turn a “space” into a “place” through design and strategic planning. “A ‘space’ is an abstract concept, where nothing happens. A ‘place’ is where stories happen,” he said. In London, Zhou learned that during the Industrial Revolution, many of the city’s cellars were turned into basement dwellings for the urban poor, a fact that reminded him of the air-raid-shelter-turned-basement dwellings in Beijing. For his thesis project, Zhou chose to “make sense of” the basement

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Photo by CFP

culture

A sign at the entrance to Zhou Zishu’s renovation project reads “Basement Rooms for Rent”

dwellings through design. In 1986, Beijing municipal government issued a regulation that underground air-raid shelters must be built underneath buildings more than ten stories high. However, due to a funding shortfall, in 1992, the government decided to turn some of these shelters into rentable space, homes which gradually developed into today’s basement dwellings. Back in Beijing, Zhou discovered that these dwellings were something of a sensitive topic, subject to various vested interests. Many of them were managed by government departments who rent them to different companies on 20-year lease. These companies then rent the basements to middlemen, who often act as property managers, renting separate rooms to tenants. As the demand for rental space rose with increasing migration to Beijing, basement rentals peaked in 2004. But the overcrowding, fast turnover and poor management also

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brought safety and security worries to many communities. Calls to regulate basement tenants grew. In 2008, the government closed all of the city’s basement dwellings for five months in preparation for the Olympic Games. In 2009, ahead of the 60-year anniversary of the founding of the People’s Republic of China, these basements were closed again for three months. These short-term “clear-out” activities resulted in little more than controversy and dispute. In 2010, the Beijing Municipal Office of Civil Air Defense issued a three-year plan to clear up the basement dwellings, but met with fierce resistance from landlords and tenants. In 2011, the government scaled back the plan to only include some of the basements, with the others getting an improvement in management or converted into public utilities. However, given the complex interests involved, the plan had very few results. Before meeting landlord Liu Qing, who let Zhou Zishu experiment in his properties, Zhou had visited a large number of basements in the Wangjing area, but Zhou’s offer to rent a room for an experimental renovation was met with suspicion and rejection from cautious middlemen. Liu Qing has lived in Beijing for seven years – the majority of which he has spent in his basement. Besides signing contracts with tenants and collecting rent, he also cleans and takes care of maintenance. The rest of the time, he plays computer games. The first time they met, Liu Qing also refused to participate in Zhou’s project, even after a two-hour conversation. “He was talking all the time about renovation and plans,” Liu told NewsChina. Though a little confused, Liu was touched by Zhou’s candor and passion. Before long, Zhou made a second visit to Liu, and this time Liu rented him his game room.

Social Capital

Despite having worked for years as the chief graphic designer at NAMOC, Zhou Zishu refuses to be labeled as a designer or a curator, and neither does he accept the recent tag of “migrant worker rights activist.” In fact, Zhou does not even agree with calling basement dwellers a disadvantaged group. In his opinion, they simply own relatively limited resources – strictly speaking, most people in China are in a “disadvantaged position” compared to the privileged. Yet those living underground also have certain NEWSCHINA I January 2015


NEWSCHINA I January 2015

Courtesy of the interviewee

Zhou Zishu and a member of his team work in the “Wooden Room”

Courtesy of the interviewee

skills, and the same willingness to exceed their limitations as most of those living above the ground. When Zhou was studying at CAFA, he was assigned to make a billboard for the school with the words: “Art for the People,” a slogan that confused him. Though he had taken a course teaching “social responsibility of designers,” he had little idea of how “art” could be “for the people.” But now, his basement project seems to have helped him develop a better understanding of the relationship between “art and the people.” He defines the project as a “reconstruction of social capital,” ultimately aiming to build an energetic and dynamic system through design, to “benefit parties both underground and aboveground and finally realize spatial justice.” As such, he cautiously distances his project from such words as “philanthropy” or “non-profit.” To him, the project is neither philanthropic nor solely commercial. In his perspective, a building is a living organism, in which there should be a comprehensive and multi-directional interaction between those under and above the ground. Trust should be built up “through interaction and mutual assistance,” he said. Xu Ping, professor and vice dean of the School of Design of CAFA, praised Zhou’s basement project as a “milestone issue in China’s design scene.” He told NewsChina that currently in China, design is usually seen as an art form disconnected from society. Teachers are busy transplating an esthetic system of design from the West directly into their students’ minds, and most students merely concentrate on the skills and techniques. However, Xu said the pressing task for designers is to build a connection with society and to have a certain degree of influence. “Zhou Zishu’s experiment has a certain significance,” he said. Zhou’s effort to “reconstruct social capital” has received overall positive feedback – his thesis design made him the first Chinese student to earn an “A” at CSM, and in late September the project received the 2014 Design Trend Award at Beijing Design Week. His team has expanded – it now includes a US professor who asked to join Zhou, as well as the landlord Liu Qing. Liu said he trusted Zhou: “He is good and kind,” Liu told our reporter. “It’s so exciting to see the feedback. It means that social energy has started to flow,” Zhou told NewsChina. “Let’s see what happens in half a year.”

A salon attended by basement dwellers is held in the “White Room”

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visual REPORT

Top Guns D

uring Airshow China 2014, held in Zhuhai from November 11 to 16, China’s new stealth jet fighter the“Falcon Eagle” J-31 made its debut, attracting attention from the global media. The plane’s first public appearance comes at a time of tensions between China and its neighbors, particularly Japan, over territorial disputes. Besides demonstrating the strength of the country’s military, the J-31 display was also an advertisement to potential buyers. Nearly 700 companies from China and abroad presented more than 120 aircraft at the airshow, as well as other defense products including missiles and armored vehicles.

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NEWSCHINA I January 2015


China’s Yun-20 cargo plane, a military transport aircraft, makes its debut

More than 130,000 people attended the first day of Airshow China held in Zhuhai, Guangdong, November 14 NEWSCHINA I January 2015

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Photo by IC

The Sukhoi SU-35, a Russian fighter aircraft, on display at the airshow


visual REPORT

1

4

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NEWSCHINA I January 2015

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2

3

1. The airshow’s closing day drew large crowds 2, 3 and 4. The Russian Knights aerobatics squadron performs with SU-27 fighters 5. Attendees wear eye protection while observing an aerobatics performance 6. The United Arab Emirates’ National Aerobatic Team 7. China’s first group of female fighter pilots 8. A model poses beside a fighter jet

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NEWSCHINA I January 2015

7

8

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OUTSIDEIN perspectives from within China

Historic Zhouzhuang

Family Matters

You can barely move in Zhouzhuang without bumping into an ancient something-or-other. While the relics are well preserved, the town’s real pull is its honor roll of prominent residents By Lisa Gay

Z

houzhuang is dubbed the “Venice of the East,” but this comparison is seriously misleading. Venice is larger-than-life, full of towering churches, palaces and bridges – Zhouzhuang is tiny, with narrow canals, claustrophobic alleyways and stunted bridges that only measure a few meters in length. Venice made history, Zhouzhuang passed through with barely a whisper. And that’s why, when Zhouzhuang was “discovered” due to a series of paintings by Chen Yifei, a Chinese painter popular in the early 1980s, it drew masses of tourists to the village’s slate-covered streets and marble bridges – or at least, as many as a boat could accommodate. There were no roads into the village until 1989, so until very recently, travelers had to rent a boat from a local fisherman to even access the area. A steel bridge now connects Zhouzhuang to the outside world, but it is still one of

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the most complete water villages still surviving in China. While the Jiangnan region (or, more simply, the area just south of the Yangtze river) used to be filled with tiny villages all connected by water, the twentieth century has seen canals filled in, whitewashed homes supplanted by concrete blocks, and stone bridges toppled in favor of steel. Zhouzhuang was saved from all this destruction due to an accident of geography. While a steel bridge actually does connect Zhouzhuang to the outside world, cars are still unable to penetrate the ancient quarter. It must be explored on foot, navigating alleys tracing the lines of the old canals, twisting through jumbled merchant stalls and climbing finely carved stone and marble bridges. But the best way to see this water village is by using its (until recently) primary mode of transport – boat.

There are two main routes that the old wooden boats of Zhouzhuang follow. One stays within the confines of the old village, and the other goes further afield, where you can spot fishermen on the South Lake looking for their next big haul. The tourist boats are usually piloted by women (another difference from Venice) who warble traditional fishing songs that echo throughout the town. Unusually, nearly every local over the age of thirty, man or woman, can steer these boats. Strength is not a requirement, but it does take skill to navigate the more narrow arteries that flow through the town – occasionally, one of the younger women (and it is always the young ones) will bump into the canal sides. It is said that in the old days, boats were more useful than feet. Steps descend down into the canals, where women still wash clothing and vegetables, and delicate NEWSCHINA I January 2015


WHAT TO SEE: Zhouzhuang prides itself on being a leisure city. Catch Kun opera performances, sit in for a Pingtan session or nosh on freshwater fish. Whatever you choose, be sure to overnight in this village, as this water village becomes much more atmospheric once the daytrippers leave and the red Chinese lanterns light up. WHERE TO STAY: The best rooms in town are at the Blossom Hill Hotel, which is operated out of a renovated merchant’s residence. It will cost roughly 500 yuan (US$81) per night, so those on a tighter budget should opt to stay in a serviceable guesthouse run by local families. Expect to pay 250 yuan (US$41) for a basic en suite room.

Photo by Liu Guoxing/IC

GETTING THERE: Zhouzhuang is easily accessible by bus or taxi from Shanghai, Suzhou or Kunshan. From Shanghai, catch a tourist bus from the Shanghai Tour Bus Center on Zhongshan Road.

Parts of Zhouzhuang’s historic quarter are 900 years old

moorings, worn down by time, can still be spotted on the canal walls. The rivers and canals should be more properly considered thoroughfares, with the stone alleyways becoming sidewalks. Conceive of the village in this way, and suddenly, its nature becomes quite clear. Elderly residents will still remember a time when fruit and vegetable vendors rowed their way through the village – residents would drop buckets from their windows and buy their daily necessities from farmers and passing merchants. Whether seen from boat or by foot, the most noticeable characteristic of Zhouzhuang is the number of small bridges, carved from stone. They are not uniform in style, but reflect the tastes and conventions of the day. Many were built by local patrons, who retained bragging rights through their descendants – you occasionally hear locals talk about their great-great-great-greatNEWSCHINA I January 2015

someone-or-other who commissioned this or that bridge. The Twin Bridges are a local icon, and are the main attraction in Zhouzhuang. By themselves, neither bridge is particularly special (far more beautiful bridges can be found elsewhere in town), but it is their side-by-side positioning, one arched, one squared, that makes them worth seeing. This scene, with each bridge reflecting its unique shape onto the water, was captured by Chen Yifei. The painting was later bought by a rich American oilman who subsequently gifted it to Deng Xiaoping. The symbolism of the Twin Bridges is almost too obvious – but it is also just the sort needed to win a few lucrative business contracts for a country on the brink of development. Fu’an Bridge is probably the finest example of an arched bridge in the village.

It dates all the way back to the Yuan Dynasty, although it has been rebuilt several times since. That said, several stones are of Yuan vintage, including the balustrade at the eastern end of the bridge. Bridge towers dot the four corners of the bridge – in the past, these would have been filled with teahouses for merchants to conduct business deals, but nowadays, they are touristy coffee shops. Not far from Fu’an Bridge is the Shen Residence. The wealthy merchant who lived in this home was actually the descendant of a far wealthier man. His name was Shen Wansan, and he was said to be the richest man in China. Shen lived in turbulent times: He saw the collapse of the Yuan Dynasty, and the beginning of the Ming. He came from a humble background, but built up a trading empire throughout the Jiangnan region.

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A presence in all the key trading ports, however, would not amass the kind of wealth that would make one richer than the emperor. Shen had, in fact, realized that domestic Chinese products, like silks, teas and Chinese medicine, would never make a huge profit at home. He decided to set sail for southern Asia, making it as far as Singapore, where he could sell these items for a higher profit margin. Shen also purportedly filled up his fleet of boats with rarities like ivory, pearls and mahogany, which were unique on the Chinese market – and could sell for enormously high prices. But the first Ming emperor (who started his adult life as a wandering beggar) was said to be jealous of Shen’s success, and eventually had him banished to Yunnan Province. His home, once a magnificent mansion on the banks of the Yingzibang river, fell into complete disrepair. Shen’s seventh generation descendant seemed to have inherited his forbear’s business acumen – and luckily, his home still stands. The Shen mansion is opulent, with row after row of high ceilings, thick beams and

Photo by Lisa Gay

travel

A traditional Chinese opera singer performs on a boat

finely carved doorways. Don’t miss the elegant bed upstairs, which is a piece of furniture original to the home. The Zhang Residence belonged to a family of officials, and it is the most complete

example of a Ming-era home left in the village. The Ming-style furniture utilizes clean, simple lines – quite a departure from the complicated, almost fussy fixtures at the Shen Residence. There is a couplet in the front hall which reads, “Sedans come through the front gate, boats go through the back.” While the first is pretty much self-explanatory, the second needs a glance out a rear window, where a dock can be spotted in the back garden. In the main section of town is a district where traditional crafts are sold. While most stalls in Zhouzhuang purport to sell handcrafts, it is only in Zhengfeng Street that this is actually true. Called the “twelve shops,” these all represent an old traditional craft of the village. There are demonstrations inside each shop for those curious to see how these products are made. There are a clutch of old women embroidering baby shoes, a weathered man selling ironwork (over a furnace, no less) and bamboo artisans weaving baskets. Support local industries by buying here, although bargain hard, as quoted prices are sky-high.

real chinese

bài

jiā

baijia wastrel

On November 11, China’s unofficial Singles’ Day, Tmall, the country’s biggest online shopping website under Alibaba, shocked the world once again by achieving a sales volume of 57.1 billion yuan (US$9.3bn), leading media to joke that the success of the company’s founder Jack Ma was built by millions of baijia women: wastrels. With “bai” meaning “decay” and “jia” meaning “family,” baijia was once used to describe idle playboys who wasted their families’ money – Chinese folklore is full of

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cautionary tales of baijia offspring gambling their families into bankruptcy. The term was later used to deride State-owned enterprises for squandering public funds. As China has become increasingly commercialized, however, the word has come to describe the consequences of wanton online shopping. Ever since spending money first became a pastime in China, Chinese men, particularly in the north, have been known to accuse their wives or girlfriends of being baijia. With the advent of e-commerce, Taobao has become

the nation’s leading cause of baijia – and never is this more evident than on Singles’ Day. Nevertheless, with materialism still prevalent in China, the label “baijia” is not necessarily pejorative – in some cases, it can even be a badge of honor to be a “kept woman.” Recently, Chinese media published a list of rich people who had spent huge amounts of money on things like art collections, with many readers exclaiming that they wished that they could have the financial resources to be so baijia. NEWSCHINA I January 2015


flavor of the month

Bubble bubble By Sean Silbert

T

here’s little comfort to be found in the depths of the Beijing winter. For three or four months, the city’s teeming millions retreat from a windswept, bone-chilling freeze, the scenery arid, gray and dry – and only fleetingly blanketed with snow. There are few triedand-true methods to combat this cold, but my favorite is gathering friends together for a sweatinducing hotpot. Hotpot is a style of cooking where anything from thinly sliced meats to crisp veggies and starches are thrown into a bubbling pot of broth at the center of the table, fondue style. The hotpot meal is as much of a social event as a culinary one. On the surface, it is not the most complicated or sophisticated method of cooking – come on, boiled meat? – so it should be no surprise that it was a favorite of the hardscrabble northern Manchus, nomadic hunters with fairly plain gastronomic traditions. While these eating habits became distinctly more rarefied when this gaggle of barbarians assumed power in Peking, becoming the Manchu Qing dynasty, the hotpot remained a regular fixture on their court menus, keeping a total of 12 emperors (and at least one doughty Empress Dowager) warm through the winter. But just as the bounty of meats and vegetables tossed in affects the ultimate taste of the stew, the diverse range of available broths are infused with the influences of where they were first invented. I’ve loved all the variants I have tried, and so this winter I attempted to boil, sweat and munch my way across China’s hotpot spectrum. I started with the Sichuanese variety – by far the easiest to find, as the notoriously fiery southwestern cuisine seems to have won out in the nation’s capital. My old standard, local chain Haidilao, has the hotpot game down to an art. They’re known for their convivial service, offering free manicures while you wait for a table and NEWSCHINA I January 2015

hip-hop noodle-spinning dances once you’re seated, but I keep going back for their signature broth, which is good enough to be available in Beijing supermarkets. Dark crimson, swimming with chili peppers and entire stalks of Sichuan peppercorns, it carries a powerful piquant kick that shocks the sinuses and numbs the tongue – lashings of sesame-based dipping sauce can temper this fiery assault. For many, Sichuanese hot pot is the default. Many hot pot places offer “heaven and hell” broths, the pot itself divided into a yin-yang with one spicy and one savory option catering to stomachs of both iron and paper. That second broth I tried on my journey had more in common with shuanyangrou, the Northern Chinese hotpot which has the closest ties to the Mongolian/Manchurian original. It’s the hometown variety that’s tailored to Beijing taste buds, meaning more focus on the dipped ingredients and less on the soup. The dish is translated as “rinsed mutton,” which is essentially what you’re doing to the meat. Instead of a hollowed pot in the center of the table, diners are presented with a copper funnel ringed by a moat of gently simmering consommé. This saw me venture out to a no-name hideaway in Beijing’s old city, packed with surly old men and tarnished pots. Unsurprisingly, the food was delicious. The light stock supports the thinly sliced lamb, with each bite a mouthful of succulent, rich meat. Swishing in some

aromatic greens adds subtle hints of flavor, which can be ramped up fully to the customary Manchurian level with the addition of plenty of puckeringly sour pickled cabbage. At Zhenziwei by Beijing’s Worker’s Stadium, I found that the Cantonese have thrown the humble hotpot a curveball. It appears that some contemporary chefs have ditched the broth entirely, instead using the ever-popular Southern staple – congee, or rice porridge – that acts as a sponge for the various flavors tossed in. It works particularly well with seafood, another specialty from down south. That being said, the more traditional Cantonese hotpot is more akin to the northern style – focusing on fresh, crisp ingredients and chopped meats. Ever health conscious, some Cantonese will even dip their cooked ingredients in raw egg to temper the heat in line with traditional Chinese medical practice. One of my personal hotpot favorites is the Guizhou variety, which simmers an entire fish into a vat of fragrant, sour soup. Spicy broths are popular, but here you’re meant to slurp it up instead of merely using it to cook your food – waste is a great sin in one of China’s poorest provinces. The closely related Yunnanese version also adds mushrooms and wild herbs to cater to the taste for simple, fresh flavors that typifies Chinese frontier cuisine. I also found a number of other, weirder, variations, such as the rather irreverent “tomato hotpot” that necessitates stewing staples like shredded lamb in a blood-red tomato soup. What unites all variants of this symbol of winter eating is the importance of gathering friends to share in the fun. The warmth of good company, as with all great culinary experiences, should taste as sweet as the spread. The unbridled joy of enjoying a hotpot with friends is enough – well, maybe almost enough – to make the frigid and lingering Northern winters bearable.

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essay

Love, Or Best Offer By Alec Ash

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Supply and demand for love in China can feel as cruel as the housing market, and you’d be forgiven for confusing the two

Illustration by Liu Xiaochao

A hot Sunday in Beijing’s marriage market in Zhongshan park. Mr Sun looks me up and down as if he’s searching for my price tag, and asks how tall I am. 1.89 meters. It’s one centimeter shorter than his ordinary requirements, he says, but he could make an exception. Next he asks how old I am. 28. “Bu xing,” no good, he waves me off. Too young. Mr Sun is 67, with a helmet-shaped mop of silver hair, half his teeth missing, and a ragged look to him. He’s an old Beijinger, and lives near the east gate of Temple of Heaven park, where he goes to the marriage market every Sunday to look for a match for his daughter. This time, after striking out, he got on bus number 60 to try his luck in Zhongshan park, twenty minutes away. Inside the park, the boulevard next to the moat that hugs the Forbidden City is split into two long columns, where parents have come to advertise their children as marriage material. “Buyers” mill around, while “sellers” sit on fold out canvas stools, fanning themselves in the summer heat. An A4 piece of paper is on display in front of each of them, listing the product specifications. With dark wrinkled skin taut on his lean frame, Mr Sun looks like a lone wolf who has fallen on hard times. He prowls up and down the strip with the other parents, peering down at the adverts. A hemp bag dangles from one hand. Inside is a thermos of tea, a pouch of rolling tobacco and papers, seeds and fruit to snack on, and a black notebook in which he writes down information and phone numbers in a shaky hand. “Beijing male, born 1987, undergraduate degree, height, 1.73 meters, airline company, has own car and flat.” Some of the A4 pieces of paper are handwritten, most are printed. Those that go the extra mile are laminated, or kept in transparent slips. “Seeks: Beijing female, taller than 1.60, training college degree or higher, has job.” Too young again. Mr Sun walks on. “Beijing male, born December 1968, 1.78 meters, vocational degree, works in a danwei [government work unit], has two-bedroom flat, car, pleasant appearance, agreeable disposition, decent, honest and sincere, respects his parents.

Seeks: Female, height 1.62 to 1.70 meters, born 1973-1978 in Beijing, or outsider who has Beijing hukou [residence permit], family has flat in Beijing, regular looking appearance, agreeable disposition, unmarried or divorced without children, stable job, fixed income.” If it weren’t for the height requirements, it might have worked. Mr Sun’s daughter was born in March 1979 and is 1.83 meters tall. She’s a graduate from a sports college in Beijing, and works as a school PE teacher. She’s never had a proper boyfriend before, in part because Mr Sun disapproves of her dating casually. Now it’s hard for her to find a match,

because of her age and also her height and strong build, which puts men off. There are other ways for his daughter to find a man on her own, he knows – he just doesn’t like them. “In the eyes of us old Beijingers, bars aren’t respectable,” he says. “And the Internet isn’t reliable.” His daughter, meanwhile, doesn’t want him coming to the marriage market, because she thinks it’s old fashioned. Sometimes he passes her a phone number, but she’s never once followed up with an actual date. Mr Sun is undeterred. He has been coming to the markets every weekend for a year. He likes it because he can talk with the parents and get a good impression of their children, although some of them are prone to exaggeration. For his daughter, he’s looking for a guy from Beijing, over 35 years old and over 1.90 meters tall, with a stable job and a flat. It’s important the couple should be fond of each other too, but those feelings can come later. “Do you know about Chinese history?” he asks me. “There was a period of confusion.” I guess he is talking about the Cultural Revolution, and Mr Sun nods. “I was very wretched in those days, because I came from a bad family background.” It suddenly makes sense – his ragtag, almost beggarlike look, the heavy tan, those missing teeth. “Because of that,” he goes on, “I know that feelings are also important.” The market bustles on. Phone numbers are bought and sold for promises of compatibility. Information is traded like stocks. Mr Sun walks languidly through it all, looking at this or that notice – turning up his nose at most, or jotting down the occasional prospect. After less than an hour, he leaves the park and takes the number 60 bus back home, to pass what contacts he has gathered on to his daughter. Supply and demand for love in China can feel as cruel as the housing market, and you’d be forgiven for confusing the two. But there are still traders who believe that marriage is more than the sum of its parts. The right man is out there for Mr Sun’s daughter, towering over the crowd. He’s sure of it. NEWSCHINA I January 2015


Finding My Voice By Alison Sullivan

NEWSCHINA I January 2015

I caught flashes of patrons lounging on couches, microphone or cigarette in hand. Their eyes were fixed on the lyrics crawling across their dedicated screens as they belted out indecipherable local hits

Illustration by Liu Xiaochao

My heartbeat quickened as I watched the timer slowly count down. I remembered being excited about my first Chinese karaoke experience that morning. But suddenly, standing before a large television screen flanked by two friends, I began to question myself. Too late. The music pulled me back into the room. “Yo, I’ll tell you what I want, what I really, really want,” emerged from my lips, my hips involuntarily bumping along to the Spice Girls classic I’d known since kindergarten. Spending a summer in China meant I’d do anything in the name of “cultural immersion.” Eat duck tongue? Sure. Brains? Pass the chopsticks. Karaoke? Gulp. Before that summer night in Beijing, I’d have equated participating in karaoke with enduring a public flogging. But China changed everything. It was there that I broke fear’s chokehold on my vocal chords. Now I preach the karaoke gospel. I’m the KTV ambassador. Karaoke’s roots are Japanese but its branches reach all corners of Asia. It has been a social mainstay of China, Taiwan, Korea and the Philippines since the 1970s and 80s. In China it’s called “karaoke television” – KTV. “We sing a lot to express our emotions and with friends we can have beer and sing and have fun together,” said Siwen Wang, a fellow China Daily intern and University of Iowa student from China. It’s serious business. The lobbies of major chains rival a posh hotel in terms of luxurious decor. Private rooms are stacked into multi-story complexes that illuminate Beijing’s hazy nights. The staff treat patrons like royalty. Although the Chinese don’t need an occasion for KTV, having an excuse to celebrate is all the more reason to go. Wang’s 21st birthday was the perfect excuse. The birthday girl picked a two-hour slot at a branch of Melody, the “hottest karaoke joint in the imperial capital,” as described by Xun Zhou in her book Karaoke: The Global Phenomenon. We were

led down a sweeping staircase into the pulsating bowels of the building. I had begun to feel nervous, then curious, as we filed past an in-house convenience store with snacks, alcohol and tea for those who would sing well into the wee hours. As the four of us strolled down a long corridor to our designated room, my reflection flickered back at me from the mirrored walls that nearly camouflaged doors to private suites. I caught flashes of patrons lounging on couches, microphone or cigarette in hand. Their eyes were fixed on the lyrics crawling across their dedicated screens as they belted out indecipherable local hits. Karaoke’s literal translation from the Japanese is “empty orchestra.” I quickly realized the Chinese are not shy about filling that emptiness. This wasn’t a dive-bar in the US, with bored drinkers heckling the courageous warblers who dared take to the

sticky stage in public. My musical talents, such as they are, were, I felt, best confined to an audience of the steering wheel and dusty dashboard of my own car. But as the lights dimmed and the music swelled as I stood beneath the miniature disco ball on exactly the other side of the world from where I learned to keep my singing voice to myself, I found my courage. The friends lounging behind me halflistened while perched on the couch, browsing the Internet on their smartphones. So I sang. The words flowed cautiously but by the end of the song I felt inexplicably at ease. The pace of the night varied as my pop hit selections of Destiny’s Child, the Backstreet Boys and Britney Spears juxtaposed with the slow, emotional Chinese ballads chosen by Wang and co-worker Lu Chen. Unsurprisingly, we found common ground with Coldplay’s “Yellow.” The two hours disappeared and before long my friends and I found ourselves back on the street, scooters zipping past as elderly citizens gabbed with their neighbors and fanned themselves on their nightly stroll. As I stood with my hand in the air to snag a cab I felt rejuvenated, revived. What had changed? It certainly wasn’t my vocal talents. “It’s therapeutic,” Wang said. I realized she was right. I suddenly found myself an eager fan of KTV. In America, if someone doesn’t have stunning vocal range then it is simply easier to play it safe and perform as if the whole thing is a farce. Nestled in a small KTV room with close friends, there’s no need for dramatics. Karaoke in China is more about the singer than the audience. It didn’t take me long to embrace that perspective. The night before I left China, friends treated me to an evening of karaoke as a sendoff to remember. Walking home along the dark and vacant streets I realized the KTV mentality didn’t have to stop once I put down the microphone. Indeed, whoever’s holding the mic, in life as in Melody, should be allowed to have their moment.

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Cultural listings Cinema

Difficult to Catch Up After a year’s wait, Blue Sky Bones, the debut cinematic work by Cui Jian, the so-called “godfather of Chinese rock music,” was finally released in theaters in October 2014. Combining the stories of two generations, a young computer hacker and underground rocker, and his father who grew up in the Cultural Revolution, Cui claims the movie presents his artistic transformation from a sharp, angry “red” rocker to a deep, calm “blue” thinker. Having not released a new album for nine years, high expectations were placed on Cui’s first cinematic effort, and media attention was rife for the first few days of screening. However, the movie soon came in for harsh criticism, the primary target of which was Cui’s “superficial” depiction of the youth of today – some went so far as to say that this failure to move with the times has had been evident in his music for a decade. Perhaps most disappointingly, after a month in theaters, the movie had only made a total of 4.1 million yuan (US$670,000) at the mainland box office.

Music

Book

1701 Released in mid-November, 1701, the seventh album of independent singersongwriter Li Zhi, was played online over 400,000 times in seven hours and over 2.5 million times in a week. In 2004, Li spent 5,000 yuan (US$600) on the recording and production of his debut album titled The Forbidden Game. With folk-style songwriting and poetic lyrics rich in depiction of personal, social and political pressures, the album quickly gained Li a following of underground music fans. In the following years, the prolific Li steadily expanded his influence, releasing a large volume of highstandard music. His new album has all the quality and style of his previous works, but production values have received a significant boost thanks to the participation of a number of famous underground musicians and producers. However, some critics have said the album’s heavily refined sound blunts Li’s famously primitive temperament.

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Clouds Come and Go By Brigitte Lin

Exhibition

Old Town Survival Old Beijing was composed of the inner and outer cities, the outer known as Nan Cheng, or “South City.” Established during the Ming dynasty (1368– 1644), the area has a very traditional atmosphere, with complex networks of hutong alleyways and buildings that have stood for over a century. From October to late November, Cheng Nan Project, an exhibition and forum including discussions, scale models, videos, interviews, installation projects and even dance performances, presented a multifaceted exploration of ways to preserve the old area, maintaining a balance between development of its economy, architectural refurbishment and the improvement of the livelihoods of locals. Led by renowned contemporary art curator Weng Ling, the exhibition also invited a number of famous architects and urban development researchers to discuss the survival of traditional culture in an age of rapid change and globalization.

Now in her 60s, Taiwanese actress Brigitte Lin released her second book, Clouds Come and Go, in early November. One of Taiwan’s best known stars, Lin has a large following in the Chinese mainland and overseas, having shot to fame overnight after her debut in the film Outside the Window in 1973. By the time she bid farewell to the film industry in 1994, Lin had acted in more than 100 films. She began writing essays for a local Hong Kong newspaper in 2004, to broadly positive feedback from readers. In 2011, her first essay collection was published, and became an instant hit. Three years later, 23 short stories written by Lin have been collected into a new book, this time accompanied by a CD with recordings of her reading five of them. A photo album chronicling her life from the age of 6 months until her 60th birthday is also on the CD. NEWSCHINA I January 2015


NEWSCHINA I January 2015

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Commentary

Vision Down Under Xi Jinping’s visit to Australia and New Zealand has set a new tone for regional dynamics By Kerry Brown

P

resident Xi had been to Australia four times before his first state visit in November. His brief visit this time round to Hobart, Tasmania, also meant Xi has now visited every major Australian population center, and every state. Xi addressed the Australian parliament in Canberra on November 17 with an unusually warm speech according the bilateral relationship the status of a “comprehensive strategic partnership,” rather than the “strategic partnership” he has spoken of before. Later, Xi stood beside Prime Minister Tony Abbott for the signing of a much-anticipated Free Trade Agreement (FTA), speaking of a need for a Sino-Australian relationship which was “more visionary and imaginative.” So why the gushing remarks? Since 2009, China has been Australia’s largest trading partner, overtaking Japan. Australia supplies over half of China’s iron ore and a significant amount of coal. But it is also the destination for increasing amounts of Chinese State and non-state investment. Reports issued by KPMG and the University of Sydney China Studies Centre’s “Demystifying China” series over the last four years show that Chinese direct investment across Australia has been both rising and diversifying. Chinese enterprises are now investing in Australian property, agribusiness and finance, and leaning away from mining and resources. In many ways, Australia stands literally at the coal face of trade engagement with the world’s second biggest economy. This intensifying trade and investment linkage means that, in many ways, the bilateral relationship has had to be put in a wholly new context, one which is more complex and more dynamic. Analysts and commentators in the past were fond of referring to the Australian dilemma of relying on China for their economic interests, and America for security. But the Xi visit made clear that there is now no easy division. The preservation and strengthening of economic interests is vital to security, and security is central to a good economy. If we see them as part of the same spectrum, rather than occupying different realms, then the challenge that Australia now faces, together with many others, is having a clear idea of where its interests lie and what sort of diverse international partnerships it needs to preserve these.

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It is to this issue that President Xi’s words of needing “more imagination” were most likely a reference. Australia can sometimes be perceived as slavish in its observance of US leadership in foreign policy. This has been an issue since the Rudd premiership in 2009 agreed, for the first time ever, to have US marines stationed on a rotating basis in Darwin. Questions resurfaced last month when Australia initially expressed interest in being part of the Asia Infrastructure Investment Bank Beijing was setting up, and then reportedly withdrew due to US pressure. Xi’s visit was a good reminder that Australia needs to think beyond a region and a world where straightforward following of the US is sufficient. China’s economic fortunes are now so tightly tied to Australia’s that a fall in growth north travels south almost instantaneously. This quest for a more subtle, sophisticated framework within which Australia can engage with China is best seen through the prism of the Free Trade Agreement which was finalized on 17th November. The FTA is, in fact, a broad outline of common areas where more specific discussions and deals will now be able to take place. In essence, it maps out a broad area of consensus between the two countries where they feel it is in their mutual interests to work more closely with each other, and allow better access to their respective domestic markets. It sets the stage for future economic engagement better, but still means that real practical business has to be undertaken. Companies from both sides, with government help, now have to go out and do the real work. Australia has grown complacent on easy returns – simply sending huge amounts of resources into the Pacific, and receiving huge payments from China in return. In 2013, raw materials exports alone accounted for almost 90 per cent of the Australian exports to China, with services making up less than 6 per cent. As the need for resources in China changes, and the more service orientated, urban economy there develops in the coming years, Australia has to rethink the very basis of its relationship, and the FTA at least allows that process to start. Sydney is a major finance centre, and 80 per cent of the Australian economy is made up of the service sector. It is a creative, innovaNEWSCHINA I January 2015


tive, globalized economy, one with New Zealand is more than a remote a highly educated work force, and Australia has grown complacent provider of dairy produce and the some of the best universities in the place where the Hobbit films are beon easy returns – simply world. It is not surprising therefore ing made. sending huge amounts of that realigning the bilateral relationThis visit has been one of Xi Jinresources into the Pacific, and ship to be service sector orientated ping’s most successful. In the space receiving huge payments from rather than simply resource based of seven days, President Xi signed China in return is far more sustainable and needs to a major environment deal with the start happening now. US at APEC in Beijing, attended the This means enhancing the ability G20 in Brisbane to discuss mainof Australian finance and service sectaining sustainable global growth, tor companies to operate in China, and then reframed the Australia and and finding partnerships there. The opportunities on offer for direct New Zealand relationship with his country. The real issue now is Chinese currency trading, for instance, which was also agreed in the whether local politicians in these two countries have the imaginaNovember 17 agreement, and the chance for Australian banks to tion and energy to lift their heads from their domestic concerns and open branches more easily in China and to engage in yuan-denom- really take up the challenges of driving towards a new relationship. inated trading are all crucial. So too are the provisions in the FTA Because of parochial interests and ideological differences, Mr Abframework for insurance, tourism and other companies to do more bott, widely painted as a climate change , did not wish to discuss the in China. Australia currently has an edge, but both sides need to be environment at the G20, despite the summit giving prominence to willing to see it wielded. They cannot continue to be complacent. the issue. Xi Jinping, fresh from a groundbreaking commitment to The initial yuan trading settlement agreement signed in 2013 with a carbon cap, found little enthusiasm for the subject even though Sydney as a hub has garnered less enthusiasm from Australian com- Abbot appeared keen to engage on almost every other topic. panies than it might have. This was a dark cloud over an otherwise glowing few days. In the If the Australia leg of President Xi’s visit was dramatic and eye- sustainability field, China and Australia have huge common interopening for many Australians, allowing them to see the leader of ests and a lot more they could potentially share. Abbot’s visible lack their largest trading partner first hand for the first time, then his visit of imagination and vision at precisely the time when even pragmatic to New Zealand was lower key. New Zealand has one of the most President Xi was asking for dialog may prove his undoing. For now, straightforward relations with China. It signed its own FTA over six it may well go down as a major missed opportunity. years ago, and is a major agricultural supplier. It suffers few issues But for the rest, this was a hugely successful visit, and one that over security or economic partnership that its larger neighbor does. has set a new tone for regional dynamics which will have impact for In many ways, New Zealand’s challenge in China is simply raising years to come. its profile. In this respect it too needs to diversify its dealings with the People’s Republic beyond the agribusiness sector. There has not Kerry Brown is the director of the China Studies Centre, University of been a high level visit from China to the country for many years, so Sydney, team leader of the Europe China Research and Advice Network, this was a major opportunity to show Asia’s leading economy that and an Associate Fellow of Chatham House, London NEWSCHINA I January 2015

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Commentary

China needs genuine rule of law Establishing rule of law means that society as a whole, including political parties, governments and individuals, should be subject to the law By Jing Kaixuan

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uring the Fourth Plenum of the Communist Party of Besides citing ancient legalist philosophers, many mainstream China’s Central Committee held in October, the au- scholars have attributed the widespread corruption to the collapse thorities announced that China will launch reforms to of value systems. In search for solutions, they argue for reviving establish rule of law and improve the quality of governance in the ancient moral systems such as Confucianism. Such arguments are future. The move is no doubt a step forequally misleading, in that they take the ward, as there has long been a consensus collapse of value systems themselves as a that many of the country’s social probroot cause, rather than a consequence of, While a focus on lems stem from abuses of power. the widespread abuse of power, which regulating the behavior However, we should also be wary of a of officials with the use of has shattered people’s faith in the moral number of misleading theories regarding values the government purports to adstricter law enforcement the rule of law. As the legal reform was vocate. Instead of reviving ancient mocould be effective in the launched in the throes of a high-profile rality, the government should devote its short term, it will prove anti-corruption campaign, many have resources to nurturing respect for the taken it as an internal tool to regulate law, the constitution and political rights, futile if certain powers the behavior of government officials and all of which are integral components of a remain above the law to curb corruption. Others portray it as modern society. a way to govern the country more effecMoreover, during the Fourth Plenum, tively. Both ideas can be found in the lePresident Xi warned against the prospect galist theories first put forward two thousand years ago by ancient of “people only having power in theory, but having no power in reChinese thinkers such as Han Fei, who argued that the people and ality.” To avoid such a prospect, China’s legal reform should not just government officials should be strictly subject to the letter of the focus on institutional arrangements within the existing judicial syslaw – the emperor, however, was placed above legal reprimand, a tem, but should aim to share its power with the people and subject principle that formed the basis for China’s feudal society. itself to public supervision. Economically, the government should To establish a governance system for a modern society, legal re- step back from various industrial sectors in which it currently has form should go beyond these ancient theories to make all people, a dominant role. Politically, the government should force officials organizations and political parties subject to the law. Only this way to declare their assets, increase the transparency of their decisioncan power be put “into the cage of regulation,” as President Xi Jin- making processes and promote the watchdog role of the press. ping has repeatedly vowed to do over the past couple of years. Instead of focusing on the picking apart the term “rule of law” To a large extent, China’s new round of legal reform is a response itself, China’s legal reform should aim to recognize, respect and to the existence of massive corruption within the government. In protect people’s civil rights and freedoms. Good governance can be less than two years, more than 180,000 government officials have achieved only when both people and the government are subject to been investigated under the ongoing anti-graft drive. While a focus the law. Only this way can the people have power, both in theory on regulating the behavior of officials with the use of stricter law and in reality.  enforcement could be effective in the short term, it will prove futile if certain powers remain above the law – the fundamental cause of The author is a senior commentator for NewsChina’s sister publication the corruption problem. China Newsweek

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