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Lucky 13: Five-year Plan Decoded


Friends Like These: China, Japan, South Korea Resume Talks


Body Battle: Trans in the PRC

Healing Debate

Why even a Nobel Prize has failed to reconcile traditional Chinese medicine and Western empiricism


Volume No. 089 January 2016



Published by China Newsweek Corporation Publisher: Zhang Xinxin Executive Director: Zhang Xinxin Editor-in-Chief: Wang Xiaohui Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Ruan Yulin Copy Editors: Jack Smith, Brittney Wong Lead Writers: Yu Xiaodong, Li Jia Editors: Wang Yan, Yuan Ye, Xie Ying, 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: 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 Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: 820 2nd Ave, 3B-C, New York, NY 10017, USA Email: Toronto Office Director: Xu Chang'an Address: 51 Halstead Drive, Markham, ON Canada L3R7Z4 Tel: 1-905-604-6150 Fax: 1-905-604-6170 Email: 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, Deng Min Washington Office: Zhang Weiran, Diao Haiyang Los Angeles Office: Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Zhou Zhaojun Tokyo Office: Wang Jian Paris Office: Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Zhao Shengyu Moscow Office: Huang Xiujun Manila Office: Zhang Ming Berlin Office: Huang Shuanghong Sydney Office: Zhu Daqiang Brussels Office: Shen Chen Astana Office: Wen Longjie Rio de Janeiro Office: Mo Chengxiong Johannesburg Office: Song Fangchan Jakarta Office: Gu Shihong Kathmandu Office: Fu Yongkang Legal Advisor: Allen Wu ISSN 1943-1902


NEWSCHINA I January 2016

China needs to undergo ‘creative destruction’ to inject new energy into its economy


uring the recent Fifth Plenary Session intensive, low-efficiency and often high-polluting of the Communist Party of China Cen- industries are driven out of the market, it appears tral Committee, China’s central leader- that there are not enough “new energy,” innovaship unveiled the blueprint for its 13th Five-year tion-intensive enterprises to fill the gap. Plan. Among the 10 goals outThis problem remains a focal lined, maintaining economic point for the Chinese governgrowth was listed as a top priment. But in order to unleash China must ority. new momentum, China must seriously reform Against the backdrop of a seriously reform its current govits current continuing economic slowernance and create a market-origovernance down, Chinese Premier Li ented economic ecosystem that and create a Keqiang called for seeking rewards innovation. market-oriented “new energy” and “new moTo achieve such a goal, the mentum” to spur economic government needs to reform economic growth. But to create and its current governance system ecosystem promote this much-desired at a fundamental level in order that rewards new energy, China needs to to promote the rule of law and innovation go through what economists prevent excessive intervention. call “creative destruction” to Such reform will need to inaddress various problems that clude changes in many arenas; have resulted from its current liberating the financial market, governance system. addressing the monopoly status With strategies such as “Inenjoyed by State-owned enterternet Plus” and “Made in prises and genuine legal reforms China 2025,” the Chinese leadership has been are all necessary revisions. endeavoring to promote the role of innovation In recent months, the Chinese government has and technological development in the economy in launched various reforms, including freeing up the the past year. In the third quarter, the service sec- interest rate, promoting public-private partnerships tor made up 51.4 percent of GDP, two percentage in infrastructure construction and public utility points higher than in the second quarter. projects, and cutting government power by scrapAlthough this increase is often interpreted as ping or relaxing a third of administrative approvals. progress in terms of moving from an investmentBut to create enough new energy and inject driven model of growth to a consumption-driven enough momentum to sustain China’s economic model, it can also be seen as an indication of the growth, the Chinese government will need to show continuing decline of China’s manufacturing in- a strong political resolve which the Chinese premier dustry. As many businesses in labor- and energy- likened to a courage to “cut ones’ own wrist.”



Scientific succesS What does China's first Nobel Prize in the natural




01 China needs to undergo ‘creative destruction’ to inject new energy into its economy 10 13

Historic Handshake: The Science of Symbolism Family Planning Policy: Boom Over Bust

Cover Story



16 Nobel Prize: A Collective Discovery?/Prize-worthy Proof/Breaking the Ice

30 32


Anti-graft Watchdog: Cleaning House Transgender Activism: Trans Nationals

P42 NEWSCHINA I January 2016

Photo by CFP

sciences mean for traditional Chinese medicine and its top-down approach to scientific research?




P10 special report

visual REPORT

34 13th Five-year Plan: Rule of Fives/New Games, New Rules

60 Reproducing History


64 Divine Donggang: Smoke on the Water

42 Wuzhen: Making History economy

46 Public-Private Partnerships: Pushing a Paradox history

50 1972 Student Exchange: A Taste of London Fog international

54 Trilateral Summit: Rivals and Partners



72 A ‘negative list’ will make market access both fair and open 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 48 China by numbers 66 real chinese 67 Flavor of the Month 68 ESSAY 70 CULTURAL LISTINGS



57 Eileen Chang: Closing the Book NEWSCHINA I January 2016


NewsChina, Chinese Edition

China Economic Weekly

November 9, 2015

November 2, 2015

Taxi Reform

Green Teeth

On October 10, China’s Ministry of Transportation unveiled draft regulations to ban private car owners from offering paid rides through mobile apps. Under the new rules, all cars used for such services need to be officially registered as taxis, and drivers have to obtain a special license if they wish to charge for rides. This regulation, according to officials, is designed to protect the interests and safety of passengers while also preventing “further encroachment” on the rights of taxi drivers. As the government’s virtual monopoly over taxi services has seen ride-hailing apps surge in popularity – ahead of traditional taxis – critics have argued that officials need to reach a wide consensus among all stakeholders. The Internet has transformed China’s traditional taxi industry, and the authority of government regulators has been called into question by consumers, official taxi operators and private drivers.

Minsheng Weekly October 26, 2015

China’s new Environmental Protection Law came into force on January 1, 2015, giving more power to central and local authorities to exact tougher punishments on polluters. The launch also marked the first time China’s environmental protection statute has been amended since it was first passed in 1989. Earlier this year, government leaders in more than 10 cities were publicly invited to a talk on severe pollution in their jurisdictions by the Ministry of Environmental Protection. The transition from talking with enterprise leaders to addressing officials directly marks a shift in the methodology of China’s environmental watchdog, demonstrating, observers say, greater determination to curb pollution. Under pressure, local government leaders seem to be taking more concrete measures to bring China’s rampant pollution problem under control, however, most are painfully aware that improving environmental conditions often goes hand-inhand with hamstringing industry and enterprise.

Oriental Outlook November 9, 2015

Business Jet Slump Business jet sales in China, permitted for 20 years, witnessed steady growth before peaking after the 2008 Beijing Olympic Games. Statistics from the General Aviation Industry Research Center of Beihang University showed that the number of business jets registered on the Chinese mainland rose from 36 in 2009 to 202 in 2013, representing a compound annual growth rate of 54 percent. However, this rate slowed by more than 10 percentage points in the following two years, according to the China Academy of Civil Aviation Science and Technology. Experts say China’s ongoing anti-graft campaign, a paucity of airports equipped to handle private aircraft and a lengthy approval process for obtaining a license have all contributed to this market slump.

Associations Concern Statistics from China’s Ministry of Civil Affairs show that as of April 2014, China was home to nearly 70,000 industrial associations, including 800 with “nationwide influence.” According to the same study, problems with these associations abound. In the results of an audit conducted earlier this year, some associations in the healthcare sector, including the Chinese Medical Association, were shown to have an income of some 1.7 billion yuan (US$266m) obtained through illegal charges, evaluations and unapproved “awards,” as well as through providing medical information for a fee. To make matters worse, a growing number of illegal, unlicensed associations have also appeared. Analysts say that de-registering offending associations and tightening supervision are the best way to address mismanagement and shadowy practices.


Economy & Nation Weekly November 13, 2015

Industrial Upgrading On November 2, China’s first domestically produced large passenger aircraft, the C919, rolled off the production line, a landmark moment in a national program of industrial upgrading. In 2010, China overtook the US to become the largest manufacturing economy worldwide, but both business circles and policy makers have bemoaned the country’s profusion of low added-value, labor-intensive industries. Statistics from have shown that China’s high-end equipment manufacturing industry registered a world-leading output value for five consecutive years, and the government’s 13th Five-year Plan (20162020) proposes that China aims toward becoming a global manufacturing powerhouse. To reach this goal, China has to work hard to address overcapacity and a rather unscientific development pattern, as well as its “skill gap” with developed economies. NEWSCHINA I January 2016

A Chinese domestic seller of imported infant formula in response to a customer complaining about finding a dead insect in her product.

If impatient couples get pregnant right now, it won’t affect whether their children comply with family planning regulations.” Yang Wenzhuang, a director of China’s National Health

and Family Planning Commission, revealing rapid progress on overturning the country’s decades-old One Child Policy.

“I hope that businesspeople in Zhejiang Province won’t involve themselves in bribery. If any of our members do, I’ll expel them. I don’t want to see the next generation continue to vie for money and power by means of bribery.” Jack Ma, billionaire founder of Alibaba, , speaking at the third annual World Zhejiang Entrepreneurs Convention. “The ongoing anti-corruption campaign has cut off the oxygen supply for power-based transactions, which will in turn activate market players, especially at the micro level, and will enhance the allocation of market resources, providing a better environment for long-term, healthy economic development.” Rao Wenjing, deputy director of the internal reference department of Party mouthpiece People’s Daily, publicly refuting suggestions that the central government’s anti-corruption campaign has stymied economic development.

“A businessperson is always shrewd. But to dress in military uniform in an office with armed guards turns shrewdness into naivete.”

Illustration by Wu Shangwen

“First, go identify the bug’s nationality.”

“In 52 years, I’ve never met a better doctor.” A resident surnamed Wang in Xi’an, Shaanxi Province, whose physician prescribed him a cheap, effective medication to lower his blood pressure. This was seen as a contrast to the frequent gouging of patients by other doctors.

“Donate 40 milliliters of sperm, earn 5,000 yuan [US$784]. You could get an iPhone 6S if you pay an additional 288 yuan [US$46].” A controversial advertisement seen outside a Hubei Province sperm bank.

“Female college students are all adults, with the right to choose whether or not to have sex before marriage. I don’t think that any school should have the right to interfere in private matters, never mind forcing women to sign a humiliating chastity pledge.” Teacher Qian Xi criticizing a local university in Xi’an, Shaanxi Province, for compelling its female students to sign a pledge not to engage in premarital sex.

“A big country should contribute to the world by many means, one of which is online education. This shares the fruits of culture with the world while also demonstrating soft power.” World Society for Strategic Communication director Bi Yantao, responding to a piece in the New York Times on Chinese efforts to offer Mao Zedong Thought classes online.

Opinion writer Mu Yifei, in a piece for China Youth Daily, commenting on a Hunan businessman who was conned out of 2.3 million yuan (US$365,079) by a man posing as a military official. NEWSCHINA I January 2016


Top Story

China Presents Homegrown Plane

China’s first domestically made commercial airliner, the C919, came off the assembly line on November 2 in Shanghai, where it has been in development since 2008. According to the Commercial Aircraft Corporation of China Ltd., (COMAC), the plane’s designer and manufacturer, the C919 is 38.9 meters long, 11.9 meters high and seats 158 passengers. With a maximum flight range of 5,555 kilometers, the plane can fly nonstop from Beijing to Singapore. According to Cao Chunxiao, an aeronautics expert working with COMAC as a consultant, the C919 takes advantage of many advanced technologies to enhance its performance, such as updated wings which reduce drag and the use of more compound materials to cut down noise. Compared to some international planes currently in operation, the C919 uses 15 percent less fuel and has 50 percent

lower emissions, according to China Science Daily. Chinese observers are displaying pride at their country’s capability to produce large aircraft, but many still question whether or not this jetliner is purely homegrown, given that many of the C919’s parts, including the engines, are provided by foreign suppliers. Chen Yingchun, the chief engineer on the project, refuted these doubts, claiming that both the C919’s fuselage and onboard system are purely China-designed and that COMAC obtained intellectual patents for them. “The standards for whether or not a product is [made domestically] is not how many parts are from domestic suppliers, but whether or not it has been developed and designed within the country and has obtained intellectual patents,” China Academy of Social Sciences researcher Luo Zhongwei told Beijing-based Science Life Weekly. “But too many foreign parts do indicate a low amount of manufacturing, and it will make our plane too dependent on foreign countries,” he added. Cao Chunxiao told the media that COMAC is continuing to develop key parts for the C919. Chinese media reports revealed that the Aviation Industry Corporation of China is working on an engine for the C919, which is scheduled to enter a trial phase by 2018. By the end of October, 21 domestic and foreign companies had ordered altogether 517 C919s, which will be put into trial operation in 2016 after a series of safety tests. Many people hope that China’s new plane, which will sell for an estimated US$50 million, will break Airbus and Boeing’s duopoly. However, experts say that the C919’s successful entrance into the Western market will largely depend on whether or not it gains certification from the US’s Federal Aviation Administration (FAA).


Chinese Team Wins Fundamental Physics Prize Chinese scientist Wang Yifang and his team won the 2016 Breakthrough Prize in Fundamental Physics on November 9, the first time that the international honor has gone to Chinese nationals. The prize was awarded to Wang and his team for their work in understanding neutrino oscillations observed through the Daya Bay Reactor Neutrino Experiment, which took place in a lab located beside the Daya Bay nuclear power plant in Shenzhen, Guangdong Province. According to the Institute of High Energy Physics under the Chinese Academy of Sciences, Wang also led the design, development and operation of the Beijing Spectrometer III, a new detector installed in the Beijing Electron Positron Collider (BEPC), one of the world’s top eight particle accelerators. His next objective is to develop an updated particle accelerator through which researchers can better understand the Higgs boson, one of the elementary particles of the universe, which is believed by physicians to be the origin of mass.


NEWSCHINA I January 2016


Bill Gates and Chinese Premier Talk New Energy

Beijing’s First ‘Tiger’ Falls

Microsoft co-founder Bill Gates discussed new energy with Chinese Premier Li Keqiang during his visit to Beijing in early November. Gates, who is also the chairman of nuclear energy technology company TerraPower, came to speak at an academic conference on clean energy at the joint invitation of China National Nuclear Corporation (CNNC) and the Chinese Academy of Engineering. Gates said he is planning a new Sino-US energy project, an idea that Li supports. The new energy advocate has also talked with Nur Bekri, director of China’s National Energy Ad-

Former deputy Party secretary of Beijing Lü Xiwen, 60, was detained by the Central Commission for Discipline Inspection of the Communist Party of China on November 11 for “severely violating Party discipline.” She was removed from her post five days later. Lü is Beijing’s first “tiger” – or corrupt senior official – to fall. So far, no official source has revealed the details behind Lü’s detention. The Chinese domestic media alleged that she might have been involved in corruption related to the capital’s refurbishment project for old residential communities, or personnel redistribution following the merging of Beijing’s Xicheng and Xuanwu districts. Lü was promoted to her current post in April 2013. Before that, she served successively as deputy Party secretary, director and Party secretary for Beijing’s Xicheng District. Just one day before Lü was put under investigation, Ai Baojun, the deputy mayor of Shanghai, was detained for similar charges. Now, all of China’s 31 provinces and municipalities have seen at least one “tiger” fall during President Xi Jinping’s sweeping anti-corruption campaign.


China to Promote E-commerce in Rural Areas On November 9, China’s State Council issued a document with guidelines for the promotion of ecommerce in rural areas, proposing to establish a fair and open rural e-market by 2020. To achieve this objective, the document encourages deeper cooperation between online retailers, logistics companies and supportive financial services, while at the same time improving the technology used for agricultural production and broadening sales channels for agricultural products and rural tourism. Online shopping giants have actually moved faster

ministration, about a Sino-US project involving traveling wave reactors (TWR), a new technology which boosts the efficiency of uranium resources by turning depleted uranium into usable fuel. TerraPower and CNNC concluded a cooperative agreement regarding TWR on September 22. Gates revealed that they plan to establish a joint company to engage in further TWR development. than the government in this regard. Alibaba, China’s biggest e-commerce platform, for example, has established hundreds of service stations in rural areas to facilitate e-commerce in those districts., another popular Chinese online shopping website, added more than a thousand service stations in rural counties in 2015. According to media reports, the Chinese government has defined e-commerce as a vital means to change the model of rural economic development and help relieve the poverty felt by many people in rural areas. Analysts have predicted that the size of the rural e-commerce market will expand to 460 billion yuan (US$73bn) by 2016, around three times that of 2014.


Tmall Breaks Own Sales Record on Singles’Day Sales on Tmall, the shopping platform of Internet giant Alibaba, rocketed up to 91.2 billion yuan (US$14.5bn) on November 11, China’s unofficial holiday Singles’ Day, that has turned into China's answer to Black Friday. According to media reports, Tmall’s sales reached last Singles' Day’s total volume in just 12 hours this year, and the whole day’s sales total increased by about 60 percent year on year. Data from Syntun, a global data management company, showed that the total sales volume of all of the online shopping platforms they monitor during Singles’ Day amounted to 122.9 billion yuan (US$19.5bn), 52.7 percent more than last November 11. Analysts have attributed the continuous shopping fervor to the Chinese government’s support for NEWSCHINA I January 2016

Internet-related industries, considering that this year’s shopping day also spread to rural areas where many people took advantage of the deals and bought home appliances online. Many calmer voices, however, warned that excitement at the immense sales volume should be taken with a hefty pinch of salt, as many customers will ultimately return their purchases. The return rate of some brands surpassed 50 percent following last year’s Singles’ Day, according to media reports.


Photos by Xinhua, IC and China Youth Daily


Embarrassing The local tourism bureau in Yangzhou, Jiangsu Province, recently organized a fried rice-making event to try and break the Guinness World Record for the largest serving of fried rice, a Yangzhou specialty. Attendees made more than four tons of the dish. While they successfully broke the record, Guinness World Record officials disqualified Yangzhou because the rice was not ultimately eaten by people, and all Guinness record-breaking food items must be edible. Media reports revealed that some of the rice was dumped in the garbage and some was fed to pigs, triggering fierce criticism from the public.

Controversial A South Korean reality TV show triggered a wave of controversy in the Chinese online community when it asked a group of female celebrities to eat and work alongside monks at China’s famous Shaolin Temple, located in Henan Province. The program organizer claimed that the show was aiming to encourage meditation, but many Chinese netizens viewed it as blasphemous and criticized the temple for getting too involved in commercial activities.

Shocking A couple in Jinhua, Zhejiang Province, recently caused a stir when they posted their wedding photos on their microblog. The photos themselves were fine, but they were superimposed onto a black backdrop and flanked by flickering white candles, making it feel like the ceremony was in fact a funeral. Many netizens said that these were the “most horrible” wedding photos they had ever seen, with some joking that the couple looked like they were “dying for love.” The local photo studio that took the pictures claimed a third-party company did the post-production work and said it would negotiate with the couple for a fairer rate of compensation.



Poll the People The health and family planning commission of Zhejiang Province recently announced that it plans to install condom machines in 128 local universities and colleges in the coming year. What do you think? It is helpful in protecting college students’ health. I think it should be promoted [in other parts of the country]. 67.3% I think it tacitly encourages students to have premarital sex. 26% I don’t care, since I will never use it. 6.7%


Most Circulated Post Retweeted: 47,874 times by November 15

Xie Mingyang, president of a vocational school in Liuzhou, Guangxi Zhuang Autonomous Region, was recently disciplined by the local education department for an on-campus display of drunken behavior. According to media reports, Xie made a speech to new students in which he taught them how to maintain a relationship with their lovers, and even went down on one knee to recite a poem. Many netizens believed his act was an embarrassment to the educator, while others defended him, saying he was more relatable to the average Joe.

On November 7, 2015, Chinese President Xi Jinping met with Taiwan’s current leader, Ma Ying-jeou, in Singapore, the first meeting of its kind since the People’s Republic of China was founded in 1949. State broadcaster CCTV tweeted about this historic moment.

“Chinese people all around the world have waited for 66 years for this historic meeting. Now, let’s give the two leaders a thumbs up and retweet the post so we can bear witness to this moment together!”

NEWSCHINA I January 2016


Top Five Search Queries On


by November 17 Another Mass Lay-off? 866,605

China’s new round of reform of State-owned enterprises (SOEs) has led many SOE employees to worry that they will lose their jobs, like their predecessors did during reform in the late 1990s. The government has denied these allegations.

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On November 13, a group of Islamic State terrorists attacked several locations around Paris with bombs and automatic weapons, killing at least 129 people.

Young Lifesaver

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Xi-Ma Meeting 225,898

Chinese President Xi Jinping met with Taiwan’s leader, Ma Yingjeou, in Singapore on November 7.

G20 and APEC 72,712

Chinese President Xi Jinping attended the G20 summit held in Turkey on November 15 and 16; after that he traveled to the Philippines to attend the 23rd APEC summit in Manila.

Top Blogger Profile Kevin Tsai Followers: 33,174,204 Kevin Tsai, a well-known Taiwanese TV show host, attracted much attention on October 16 when he announced on his Sina Weibo microblog that he is quitting Kangxi Coming, the talk show he co-hosted with fellow Taiwanese celebrity Dee Hsu. Thanks to the wide range of topics it covered and the hosts’ sharp, amusing commentary, Kangxi Coming has accumulated millions of viewers on both sides of the Strait since it launched in 2004. Tsai did not specify the reason for his departure, but posted that he “wants to make some changes” in his life. Hsu immediately made a similar announcement, claiming that Kangxi Coming will be incomplete without Tsai. Though born and raised in Taiwan, Tsai, who is also a writer, actor and director, made a name for himself on the Chinese mainland years ago. He opened his Sina account in 2009 and often shares his thoughts on fashion and individuality with his followers. Tsai did not formerly expand into the mainland market until 2014, when he became a part of Let’sTalk, an online talk show produced by Chinese videostreaming website iQIYI. Media reports alleged that Tsai’s departure from Kangxi Coming suggests he might decide to focus solely on movies. NEWSCHINA I January 2016

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

China issued its new version of the 100-yuan bill on November 12. The central bank claimed that the purpose of the updated cash was to discourage counterfeiters rather than to increase the currency supply.

An 11-year-old girl moved many netizens by donating her corneas, kidneys, liver and heart after dying from myasthenia gravis, a disorder that affects voluntary muscles. Her parents said that they hoped their daughter can find “a new life” through her donations.

China’s Fattest Woman A 31-year-old woman in Changchun, Jilin Province, who weighs 244 kilograms (538 pounds), was recently labeled the fattest woman in China. She told the media that she always gorges on food and can eat 100 lamb skewers and drink two crates of beer in one sitting. Her doctors are helping her lose weight through a surgical procedure.

One-armed Messenger A messenger with a disabled arm won the respect of many netizens by delivering packages onehanded for six years, during which time he never received a customer complaint.

Stupid Counterfeiters A couple in Huizhou, Guangdong Province, was recently arrested by the police for printing cash with a household printer and trying to sell it online. The police said that due to the obvious differences between the couple’s bills and real money, the buyers knew they were fake, but still tried to use them at night or at noisy markets. Netizens were surprised at the couple’s bravado.



Historic Handshake

Beijing is sending a new message to Taiwan’s next leader through Xi Jinping’s historic meeting with outgoing incumbent Ma Ying-jeou By Yu Xiaodong

Photo by Liao Pan

The Science of Symbolism Xi Jinping (right) and Ma Ying-jeou (left)


hen the meeting between Chinese President Xi Jinping and Taiwanese leader Ma Yingjeou, held in Singapore this November, was first announced, the news left observers reeling. The brief summit marked the first-ever meeting between leaders on both sides of the Taiwan Strait since the end of the Chinese


Civil War in 1949, which resulted in the retreat of the Kuomintang (KMT) government of the Republic of China (ROC) to the island, as the victorious Communists declared the founding of the People’s Republic of China (PRC) on the mainland. After decades of animosity, the two sides began to engage in indirect talks in the early 1990s through mediated meetings between

the mainland-based Association for Relations Across the Taiwan Straits (ARATS) and the Taiwan-based Straits Exchange Foundation (SEF). In 2005, China’s then President Hu Jintao met with KMT chairman Lien Chan, marking the beginning of party-to-party talks between the two sides, though the KMT was in opposition at the time. NEWSCHINA I January 2016

Since Ma assumed power in 2008, the cross-Strait relationship has further deepened, but top leaders had never met due to numerous issues of logistics and protocol ranging from terms of address to where such a meeting should be held.


As Beijing does not recognize the ROC government, it also does not acknowledge Ma as either a head of state or a head of government. Therefore, to meet with Ma, Beijing had to choose between acknowledging him either in a personal capacity or as the leader of the KMT, an arrangement unacceptable to Taipei. In addition, due to its insistence that the cross-Strait relationship is a “domestic” issue, Beijing had also opposed holding any meeting in a third-party country. Taiwan’s preference, meanwhile, was for a meeting on the sidelines of a separate international event, or on unequivocally foreign soil, in order to avoid its leader appearing to “kowtow” to Beijing. Prior to the November summit, the closest the two men got to a meeting was in 2014, when Ma openly proposed a meeting with Xi during the APEC summit in Beijing that October in the capacity of “leaders of the two sides of the Taiwan Strait” rather than “two presidents.” When Beijing rejected this offer, the prospects for a summit between Xi and Ma dimmed to the point of being viewed as next to impossible. It surprised observers, therefore, when both sides appeared to brush aside logistical problems and questions of protocol within the space of a year. In November, Xi and Ma indeed met in the capacity of “leaders of the two sides of the Taiwan Strait,” apparently a change of heart on the part of Beijing. Both men addressed one another as “mister.” To avoid the perception that one side was “hosting” the

NEWSCHINA I January 2016

other, and thereby creating the impression of unequal status, it was reported that Ma and Xi split the cost of both their dinner and the rental of the meeting venue. The selection of Singapore as the location for the leaders’ summit was also a shrewd one. Singapore was previously the venue for a similarly historic meeting between ARATS head Wang Daohan and SEF chairman Koo Chen-fu in 1993. While holding the summit in a foreign jurisdiction met Taiwan’s bottom-line demand for “equality and dignity,” Singapore’s large ethnic Chinese population and close relationship with Beijing allowed the PRC to avoid being seen as having made major concessions. State media on the mainland in fact likened the summit to “a meeting between two brothers” held “in the home of a distant cousin.”


While the unprecedented and suddenly announced meeting disoriented observers, the fact that the two sides explicitly announced prior to meeting that they would not sign any agreement or release a joint statement has led many to conclude that the event was more about symbolism than substance. To critics, the timing of the summit – two months ahead of Taiwan’s general election – was designed to influence the island’s politics. Leading candidate Tsai Ing-wen, chairwoman of the opposition pro-independence Democratic Progressive Party (DPP), for example, accused the KMT of trying to “politically manipulate” cross-Strait relations and influence the outcome of the election. However, few analysts believe that the summit will have a major impact on Tsai’s double-digit lead in the polls, even though it may sway some voters one way or the other. According to data released by Taiwan Indicator Survey Research on November 12, while the approval rating of the KMT's Eric Chu increased from 16.4 percent to 20.4 percent

after the summit, Tsai’s approval rating has remained robust at 46.2 percent, with James Soong of the People First Party trailing in third place with 10.4 percent.

Five-Point Plan

However, given the importance of crossStrait issues in Taiwanese politics, the election was no doubt a major consideration in arranging the historic meeting. For Ma in particular, a summit with Xi can serve multiple goals. Not only does it have the potential to enrich his political legacy, but it might also provide a chance to regroup the fractured KMT, which has been left in disarray by partisan internal struggles. Just two weeks prior to the meeting, the KMT decided to replace Hung Hsiu-chu, an openly pro-unification candidate, with the less-controversial Eric Chu, the centrist chairman of the KMT. Hung’s campaign pledge that she would work to sign a peace treaty and achieve “ultimate unification” with the mainland alienated many centrist supporters of the KMT and a broad swath of Taiwan’s electorate that, according to polling data, consistently favors the “status quo.” As Hung remained defiant, stressing that her policy was in line with the ROC constitution and the KMT’s long-held official stance on cross-Strait relations, her eventual replacement has not only enraged the prounification faction within the KMT, but has spread confusion over both the party’s overall mainland policy and its stance on the legacy of the ROC. The summit provided a rare chance for Ma to address these issues and systematically reiterate the KMT’s vision regarding cross-Strait relations. In his speech, Ma stressed the progress made under his administration over the past seven years, including the signing of 23 agreements made between the two sides. Ma also offered a five-point plan for maintaining “peace and prosperity in the Taiwan Strait.”



Xi Jinping and Ma Ying-jeou meet at the ShangriLa Hotel, Singapore, November 7, 2015

Photo by Ren Haixia

Ma stressed the importance of solidifying the so-called 1992 Consensus for the peaceful development of cross-Strait relations. Considered by Beijing as its "bottom-line" position on cross-Strait policy, the 1992 Consensus refers to an agreement reached between the KMT and Beijing in which both sides agreed that there is “One China,” while strategically accepting some ambiguity over the concept’s precise definition. As the DPP’s position has been that such an agreement does not exist, Tsai Ing-wen has avoided discussing the issue in the run-up to Taiwan’s general election. While pledging that she will uphold the outcomes of earlier negotiations between Taipei and Beijing, she has refused to clarify whether she will explicitly acknowledge the 1992 Consensus. Analysts believe that the summit may help Ma to shift the focus of the election back onto the cross-Strait relationship, and make the KMT look like the better choice to handle relations with the mainland. While Tsai’s election victory may now be a foregone conclusion, the KMT might still be able to avert a DPP landslide in the upcoming legislative election that would be held at the same time. In his speech in Singapore, Ma said that the two sides of the Taiwan Strait should reduce hostilities and peacefully handle disputes, a swipe at Beijing’s refusal to renounce force as a means to reunify Taiwan, which the mainland views as a breakaway province. Ma also made reference to missile arrays deployed along China’s southern coast, arrays which Xi declared “did not target Taiwan.” Ma’s third and fourth recommendations were to broaden trade and business exchanges between the two sides, and establish a cross-Strait hotline between senior officials of the Mainland Affairs Council in Taiwan and the Taiwan Affairs Office in Beijing to avoid “misunderstandings.” His final point focused on cultural and ethnic ties, and Ma quoted from various Chinese literary classics seemingly in a nod to Xi’s “one-family” idea. Ma said that both sides should cooperate to “revitalize” the Chinese nation, a concept first raised by ROC founding father Sun Yat-sen a century ago

Photo by Xinhua


A group of mainland and Taiwanese students attend the inaugural cross-Strait coming-of-age ceremony, Jinmen, October 3, 2015

from which Xi has derived his similar concept of the “great rejuvenation of the Chinese nation.” By re-emphasizing Sun’s political legacy, Ma appeared to be trying to reiterate the KMT’s commitment to the ROC constitution and reassert his party’s basic political doctrine, underlining KMT policy on crossStrait relations.

Last Warning

Compared to Ma’s complex goals, Xi’s remarks in Singapore were more straightforward. Beijing appears to be looking beyond the election, towards an administration almost certainly headed by Tsai Ing-wen and the pro-independence DPP. Like Ma, Xi re-emphasized the significance of upholding the 1992 Consensus in his speech, albeit in tougher language. Echoing Ma’s remarks that the Consensus forms the “common political ground” of the peaceful development of the cross-Strait relationship, Xi warned that “the boat of peaceful development may encounter terrifying waves or even

capsize,” phrases that have been repeatedly used by mainland officials in recent months. But, in the meantime, Xi also suggested that Beijing would be willing to engage in talks with the DPP if the latter would accept the 1992 Consensus. “Regardless of which party or organization [leads Taiwan], and regardless of their positions in the past, as long as the 1992 Consensus and its core values are acknowledged, we are ready to have contact,” said Xi. So far, there has been no official contact between Beijing and the DPP. The former refuses to officially engage with any organization that endorses the concept of Taiwanese independence, while the latter has ruled out accepting any “political preconditions” before engaging in direct talks. Xi also said that China would welcome Taiwan to join the Beijing-led Asian Infrastructure Investment Bank (AIIB) under “an appropriate name.” Beijing rejected Taipei’s bid to become a founding member of the AIIB earlier this year, presumably because of the nomenclature Taiwan used on its application. Therefore, these remarks were seen as being directed at the island’s future leader. According to Professor Zheng Yongnian, director of the East Asian Institute at the National University of Singapore, the significance of the summit between Xi and Ma is in its “new possibilities” reflecting “new imagination” in the future of the cross-Strait relationship. “It set up a new platform, that is direct meetings between leaders of the two sides based on the 1992 Consensus,” Zheng told NewsChina. In his view, if such meetings become regular, they could potentially translate into concrete results, bringing enduring peace and stability to the Taiwan Strait. By offering a potential olive branch to the DPP leader, and at the same time reiterating its non-negotiable One China principle, Beijing has raised the stakes for Tsai as a potential future leader, leaving her with less room for ambiguity should she be elected. From this perspective, the significance of the summit between Xi and Ma will only be revealed after Taiwan goes to the polls. NEWSCHINA I January 2016

Family Planning Policy

Boom Over Bust

China now allows all married couples to have two children, but to what extent this adjustment will boost population growth depends on supporting policies

Photo by CNS

By Zhou Qunfeng and Du Guodong

Experts estimate that the policy adjustment will lead to an additional 2.5 million births each year

NEWSCHINA I January 2016




n October 29, during the Fifth Plenary Session of the 18th Communist Party of China Central Committee, China announced the end of its controversial One Child Policy. The perfunctory announcement was, simply, that all married Chinese couples will be permitted to have two children. According to an accompanying communique, the policy change was introduced to reduce the social and economic pressure of an aging population, increase the labor supply (the number of citizens of employment age fell for the first time in decades this year), and boost more balanced population growth. One day later, Wang Pei’an, deputy director of the National Health and Family Planning Commission (NHFPC), told a press conference that the “Two Child Policy” is likely to be implemented in most provinces and cities nationwide in the first quarter of 2016.


On October 30, the deputy director of Hunan Province’s family planning authority revealed that 3.75 million couples in the province are eligible to have a second child, emphasizing that women who became pregnant with their second child after the communique was issued will be exempt from fines. This made Hunan the first province in China to deliver an official response to the policy change. Two days later, the NHFPC made a public statement saying that the new policy has yet to be approved by the National People’s Congress (NPC), China’s top legislative body, meaning a likely start date of March 2016. Officials added that the policy will only go into effect after China’s 2002 Population and Family Planning Law is revised by the same body, marking the first time that particular law will have been amended. “Before approval, current laws and regula-


tions on family planning have to be strictly adhered to by each department and region nationwide,” Wang Pei’an said. As a result of these seemingly mixed messages of enforcement, speculation over whether couples who “jump the gun” and become pregnant with a second child will be considered as having violated these laws and regulations. Yang Wenzhuang, local affairs chief of the NHFPC, explained to NewsChina that the new policy is expected to be implemented “very soon,” hinting that “eager couples” would not be penalized for becoming pregnant. In November 2013, the central government announced that it would ease the One Child Policy to allow couples to have a second child if either the father or mother were an only child. In December, the State Council, China’s cabinet, delivered this proposal to the NPC for ratification. In January 2014, provinces including Zhejiang, Anhui and Jiangxi instituted the amended policy before it was expanded nationwide by the end of September that year. For a Two Child Policy to be fully implemented, the State Council would need to submit a proposal to the NPC for approval, local authorities would need to determine implementation, and local NPC branches would need to modify family planning regulations accordingly.


While officials like Wang Pei’an have gone on record to say that China’s leaders have long been preparing for a family planning policy adjustment like this, factoring in environmental, strategic and economic concerns, some have expressed concern that a baby boom could place unsustainable strain on national resources. Wang rejects such speculation. “After China formally moves away from the One Child Policy to allow all couples to have two

children, demand for public services, medical care, child care and education will increase accordingly, adding some pressure,” he said. “But the problem can be solved through increasing investment, activating existing stock and optimizing allocation.” Chen Youhua, a sociology professor at Nanjing University, told our reporter that China had previously recorded 29 million births in a single year. After the lifting of the One Child Policy, he continued, he does not anticipate a “crunch” in the healthcare or education sectors. “The current shortages of preschools and maternity wards are due to [migrants] flocking to the first-tier cities, resulting in an imbalance in resources,” Chen said. Recent NHFPC research predicted that more than 90 million couples will become eligible to have a second child after the policy change. China registered 16.87 million births last year, and the population is expected to hit 1.45 billion by the end of 2030. Wang added that roughly 60 percent of women who are now eligible to have a second child are aged 35 or older. According to Mu Guangzong, a professor with the Institute of Population Research, Peking University, China has already fallen into the low-fertility trap from which it will take many years to emerge. To allow each couple to have two children, he says, is only an “adjustment” of existing population policy, rather than a fundamental change. “When China began to allow couples to have a second baby if the mother or father was an only child, fewer people than expected took advantage of the opportunity to expand their families,” he said. “China ought to encourage more births to balance population development and address the challenge of an aging population.” According to a recent report released by the China Academy of Social Sciences, China’s biggest think tank, it costs 490,000 yuan (US$76,500) to raise a child from birth to NEWSCHINA I January 2016

Photo by CFP

adulthood (16 years) in the average Chinese city. For many parents, one child is all they can afford.  Mu Guangzong pointed out that the government should alleviate the financial burden on families by providing “relatively comprehensive” social insurance, particularly for pregnant women. “Even if the government will not take more responsibility for the cost of child-rearing, it should make an effort to solve the difficulties [parents face] in preschool and elementary school enrollment,” he said.


Since the One Child Policy was initially relaxed in late 2013, the market for maternity and children's products in China has witnessed a continual boom. According to statistics from the China E-Commerce Research Center, the market for such products hit a total value of 200 billion yuan (US$31bn) in 2014, up from 65 billion yuan (US$10.6bn) in 2013. Statistics published in late October by the e-commerce giant Alibaba Group showed that searches for books about conception and pregnancy experienced a 100-fold surge the day after the announcement that all Chinese couples would be allowed to have two children. Nearly 46.4 percent of these searches were from IP addresses in lower-income, fourth-tier cities in China, though 84 percent were traced to higher-income households in those areas. Analysts from Huatai Securities and Founder Securities have claimed that China’s economy could expect 120 to 160 billion yuan (US$19bn to 25bn) in additional consumption every year in the wake of the policy shift. In addition, Wang Pei’an said, as a result of the change, China’s total working population (able-bodied adults aged 15 to 59) could increase by more than 30 million people,

NEWSCHINA I January 2016

Analysts claim that China’s economy could expect 160 billion yuan (US$25bn) in additional consumption every year after the policy change

and its aging population could fall by two percentage points by 2050. According to Liang Jianzhang, demographer and chairman of online travel agency Ctrip, the policy shift is expected to add, on average, 2.5 million additional births each year on top of the 16 million annual births recorded before the first policy relaxation in late 2013. Liang told our reporter that each additional child in the economy generates annual consumer demand of 30,000 yuan (US$4,700), increasing additional consumption by 75 billion yuan (US$11.8bn) each year. In the initial five to 10 years after the policy is instituted, he went on, China could expect government investment of 225 billion yuan (US$35bn) in social services. “China is expected to receive more permanent strategic investment mainly in the areas of scientific research, education and emerging industries, when the outside world is optimistic towards the market size and talent pool of a future China,” he told NewsChina. According to Yi Fuxian, a researcher at the

University of Wisconsin Department of Obstetrics and Gynecology and author of A Big Country in an Empty Nest, a book describing the damage wreaked on the economy by China’s family planning restrictions, the baby boom after World War II laid the foundation for a decades-long economic boom in developed countries. Taking the US as an example, Yi claimed that the baby boom drove the development of the American toy, entertainment and music industries in the 1950s and 1960s, the real estate and automobile industries in the 1970s and 1980s, and the digital economy and the Internet boom in the 1990s. “The core problem of the recent economic recession in China lies in insufficient domestic demand, and the main problem in the long term is the labor shortage and the aging population,” he said. “The new population policy will help solve these problems, giving the Chinese government, currently struggling to maintain economic growth, a straw to clutch at,” he added.


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Tu Youyou

national prize 16

NEWSCHINA I January 2016

Photo by CNS

The China Academy of Chinese Medical Sciences, Tu's workplace, has seen a frenzy of media interest following her Nobel Prize win

Photo by CNS

Residents of Ningbo, Tu Youyou’s hometown in Zhejiang Province, take photos of Tu’s old home

The significance of Tu Youyou's recent Nobel win goes beyond a medal and a stack of prize money. To some in China's scientific community, it has vindicated belief in both traditional Chinese medicine and China's top-down academic system, though some have questioned singling Tu out for the accolade. Others, meanwhile, say that this lone outsider’s achievement in the face of adversity is the exception proving that China needs to overhaul its approach to scientific research if it is to become an incubator of world-changing minds NEWSCHINA I January 2016


cover story Nobel Prize

A Collective Discovery? The circumstances surrounding medical researcher Tu Youyou’s four-decade-old malaria breakthrough have shrouded her Nobel Prize win in controversy By Xin Zhu, Chang Qing and Xie Ying


n October 5, 2015, a discovery made in the 1970s launched 85-year-old Tu Youyou into the international spotlight when the Chinese medical researcher was awarded the Nobel Prize in Physiology or Medicine for her work extracting artemisinin, an anti-malarial compound, from Artemisia annua, anherb originally used in traditional Chinese medicine (TCM) that is known today as sweet wormwood. The official website of the Nobel Prize said Tu won the honor for her discovery “concerning a novel therapy against Malaria.” According to the World Health Organization (WHO), a combination drug therapy containing artemisinin is now a first-line treatment for malaria in 79 countries. It was distributed to 392 million people in 2013 alone. Overnight, Tu’s name dominated headlines and swept Chinese message boards and blogs, with many Chinese people applauding their nation’s first Nobel laureate in the natural sciences. Controversy, however, accompanied the plaudits – some insiders have questioned the fairness of the decision to honor Tu, claiming that artemisinin was a collective discovery propelled by government support, and many of Tu’s counterparts had actually contributed more to developing the anti-malarial therapy. Although the Nobel committee has defended Tu by saying that she was the first person to actually extract the substance and that the prize is more about achievements made by individuals, Tu has emphasized the role of her team and country during all press interviews. “This honor does not belong to me personally, but to my team and all Chinese scientists… It signals that Chinese medical research is well regarded by


the international community, and it is the pride of our nation and of [all] Chinese scientists,” she said in a prepared statement to the media.

Wartime Demand

The discovery of artemisinin resulted from a government order during the Vietnam War (1954-1975), when malaria had already spread all over the world and killed millions of people. The malaria parasite’s resistance to existing drugs was growing, rendering them ineffective. In order to prevent even more Chinese and Vietnamese soldiers from losing their lives to the disease, Chinese government leaders, at the request of the Communist Party of Vietnam, which they had supported in the war since 1964, decided to have researchers within the People’s Liberation Army develop anti-malarial drugs. They established a team in May 1967 to manage this secret project, named “Project 523.” Altogether 37 different departments and institutes in seven provinces and municipalities had a part in the project, which, according to Chinese media reports, included the examination of over 40,000 types of herbs and compounds in its preliminary phase. China was deep in the midst of the Cultural Revolution (19671976) at the time. Many older, senior experts and researchers were labeled as “rightists” and violently criticized, so the Project 523 team was short of experienced personnel. Against this backdrop, a 39-year-old Tu joined the research team in 1969. At the time, she worked with the China Academy of Traditional Chinese Medicine (renamed the China Academy of Chinese Medical Sciences in 2005), and was told to chair a sub-team due to her previous experience in pharmacology and TCM research. NEWSCHINA I January 2016

Photo by CNS

A field of sweet wormwood in China’s biggest artemisinin processing base, Rong’an County, Guangxi Zhuang Autonomous Region, June 2012

“I studied the Compendium of Materia Medica [a renowned TCM text written in the Ming Dynasty] during my time at Peking University School of Pharmaceutical Sciences, which was the foundation for my systematic study of traditional Chinese medicine. I think I had the right background to develop a new drug based on ancient knowledge,” she said. Keeping in line with Mao Zedong’s statement that “TCM is a vast treasure,” Tu and her team spent three months looking through hundreds of ancient TCM books and materials, collecting records of over 600 potential anti-malarial medicines they supposed might be efficacious. Yet in 1970, none of these substances proved effective against malaria, including compounds containing sweet wormwood. Project 523 was then suspended, and Tu and her colleagues left the team for other undertakings. Project 523 did not resume until June 1971, when its leadership was restructured. Considering that sweet wormwood once showed a 68 percent rate of efficacy against malaria in previous experiments, the project team retested the herb, only to find that the new results were even worse. The impasse was finally broken when Tu found an ancient TCM book that noted the herb should be taken after being crushed rather than boiled, which was how Tu’s team had tried to extract its active properties. “It reminded me that we might have destroyed the effective element in the sweet wormwood by heating it, so I shifted to cold extraction,” Tu said. “We wrapped the herb and dipped it into diethyl ether [which boils at a lower temperature]. It wasn’t until the 191st NEWSCHINA I January 2016

test that we discovered the effective compound.” The results from subsequent tests on animal subjects were inspiring – the extracted compound showed 100 percent effectiveness in both rats and monkeys, symbolizing a breakthrough for Project 523.

Joint Development

Given the political environment during the Cultural Revolution, however, Tu and her team neither published a paper about their discovery nor applied for a patent, but instead merely announced the results of their experiments at an internal academic conference, driving many other scientists to further their research with government support. In December 1972, Tu’s team separated a crystalline form of artemisinin from sweet wormwood and named it “artemisinin II.” At about the same time, Wei Zhenxing, a researcher at the Shandong Academy of Chinese Medicine, extracted artemisinin from sweet wormwood he had collected in Tai’an, Shandong Province, by a more efficient means. In 1974, Luo Zeyuan, a researcher from Yunnan Institute of Materia Medica, successfully separated out an artemisinin monomer. Although the artemisinin II extracted by Tu’s team failed in clinical trials, Luo’s artemisinin monomer showed extraordinarily promising results when combatting malaria in tests conducted by medical expert Li Guoqiao of Guangzhou University of Chinese Medicine. The three artemisinin elements extracted by Tu, Wei and Luo were later confirmed to be the same material, which was then officially named artemisinin. In 1977, China published the chemical constitution of the substance's medicinal form in the name of the artemisinin


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research teams, attracting worldwide attention. In 1981, the Chinese government took the lead in developing a combination therapy joining artemisinin with other anti-malarial drugs, warning against the use of single-drug artemisinin therapy because malaria parasites could easily develop a resistance to it. This, however, did not draw attention from the WHO until 2005.


Given the collective, government-led development of the combination treatment and Tu’s failures in clinical trials, Tu’s exact contribution to today’s anti-malarial therapy has often been questioned in academic circles, especially after she was awarded the US’s LaskerDebakey Clinical Medical Research Award in 2011, an honor known to often precede a Nobel Prize. “[The Lasker award] has reignited a 30-year controversy over whether one person should be recognized for developing a powerful anti-malarial drug that was the product of a massive government project during China’s Cultural Revolution,” Science magazine wrote at the time. One person who cast doubts over the Lasker award decision was Li Ying, a researcher at the Shanghai Institute of Materia Medica who has participated in synthesizing the chemical constitution of artemisinin to make a better drug candidate than its natural form. “Indeed, Tu first proved by diethyl-ether extraction that artemisinin is effective, but I don’t think she played a big role in the other aspects of the discovery,” she told Guangzhou-based paper Time Weekly in 2011. “The discovery and development of artemisinin has won national and international prizes before, but none of them were presented to an individual.” According to the paper, at that time, some relevant researchers privately denied that Tu was even the true discoverer of artemisinin, arguing that only one of the seven crystals extracted from sweet wormwood is in fact artemisinin, the identity of which could not be confirmed without a successful clinical trial. The fact that Tu never received the prestigious title of academician from the Chinese Academy of Sciences added fuel to the fire. Fang Zhouzi, a popular science blogger, attributed this title snub to the disputes around Tu’s contribution to the anti-malarial therapy. He also alleged that Tu had overstated her achievements in the development of artemisinin in subsequent papers. Many others, however, stand on Tu’s side. A prominent member of this faction is Li Guoqiao, the medical expert who first saw promising results from artemisinin monomer tests. He reportedly refused to be nominated for the Lasker award in 2011, claiming that Tu Youyou and Luo Zeyuan, the researcher who first extracted the artemisinin monomer, were more qualified. “I could not have done anything without Tu’s and Luo’s discoveries… My clinical test was based on the sample Luo gave me,” he told the media. In an article about the discovery of artemisinin, former Peking University science professor Rao Yi reaffirmed Tu’s achievements, claiming that, regardless of the size of her role, it was Tu who first extracted artemisinin with diethyl ether, an act which guided the subsequent development of the anti-malarial therapy used so suc-


cessfully today. In the eyes of Li Zhenzhen, a scientific policy researcher at the Chinese Academy of Sciences, the dispute surrounding Tu relates closely to the differences between Chinese and Western culture. “China always emphasizes collectivism, whereas Americans will not give a prize to everyone involved in a discovery, but rather to its inventor or lead developer,” she told China Youth Daily. “Such a concept is more helpful in inspiring individual creativity.”  NEWSCHINA I January 2016

Artemisinin goes global By Huang Yanzhong


To help Chinese and Vietnamese soldiers succumbing to malaria during the Vietnam War, the Chinese government launches the secret Project 523, with team members tasked with finding a cure for the disease. Nobel winner Tu Youyou discovers how to extract the antimalarial substance artemisinin from the herb Artemisia annua. The chaos of war and the Cultural Revolution keeps the findings from being published until 1977.


After several years of clinical studies that suggested the use of a combination therapy would be best for combatting malaria, Chinese scientists combine two substances into a single tablet, creating the first artemisinin-based combination therapy (ACT), a version of which is still used today. Early attempts to market the product internationally fail because of a lack of funds and experience.


China’s Guilin Pharmaceutical forges a partnership with French pharmaceutical firm Sanofi to manufacture and market an artemisinin-based monotherapy. 



The World Health Organization (WHO) orders its 150,000th course of artemisinin-based monotherapy from Sanofi. In March, the WHO mandates all WHO-procured drugs must meet their standards as outlined in the Prequalification Medicines Program, essentially freezing Chinese companies out of the market and making Novartis the only company qualified to produce ACTs for the organization. In April, the WHO recommends the use of ACTs in countries where malaria is resistant to traditional anti-malarial drugs. A Statesponsored Chinese panel sets the goal of expanding China’s share of the anti-malarial drug market from 0.5 percent to 35-40 percent in 10 years.


Unqualified manufacturers spring up in China, flooding the market with substandard drugs that cast a cloud of suspicion over the country’s products. Chinese companies are met with intensifying competition both from multinationals and other firms from emerging economies, like Vietnam and India. Novartis’s Coartem makes up nearly 80 percent of the ACTs procured by the WHO.


The ACT is registered as a new drug in China, with the Institute of Microbiology of the Chinese Academy of Military Medical Science (AMMS) listed as the original patent holder, making artemisinin one of the few drugs entirely created and developed in China.

While Guilin Pharmaceutical, Kunming Pharmaceutical and Beijing Holley-Cotec are all becoming more aggressive about establishing themselves in the African market, Guilin Pharmaceutical becomes the first Chinese company to have its ACT earn prequalified status from the WHO, leading to UN agencies purchasing its product.



The AMMS sells its rights to market ACT outside of China to Swiss company Ciba-Geigy, which would later be renamed Novartis. In return, Novartis agrees to source the active pharmaceutical ingredients of its anti-malarial treatments from China and pay AMMS the equivalent of 4 percent of its annual sales overseas. Chinese firm Beijing Holley-Cotec starts to export the domestically developed artemisininbased drug Cotecxin, which the Chinese government pushes in Africa.


Novartis becomes the first pharmaceutical company to launch a fixed-dose ACT, Coartem.

China starts to lose its grip on its role as the world’s most important raw material supplier for artemisinin-based drugs, as manufacturers in other countries, such as Madagascar, encroach on the artemisinin-extraction market.


Cotecxin reportedly holds one of the second-largest slices of the anti-malarial drug market in East and West Africa, yet Chinese companies in general cannot seem to succeed in other areas. In August, Sanofi announces it has massproduced a new semisynthetic version of artemisinin, further eroding China’s status as a global supplier of the raw material. The author is a senior fellow for global health at the Council on Foreign Relations.

NEWSCHINA I January 2016


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Nobel Prize

Prize-worthy Proof

When Tu Youyou won the Nobel Prize, it opened up a re-examination of China’s scientific research system By Xie Ying

Tu Youyou (right) studies traditional Chinese medicine with her teacher Lou Zhicen in the 1950s


ompared to Chinese writer Mo Yan’s 2012 Nobel Prize in Literature, Tu Youyou’s Nobel Prize in Physiology or Medicine caused a much greater public sensation in China, because a Chinese national had never before received a Nobel in the natural sciences, despite the country’s vast investment in scientific development. Since 1957, altogether 12 people of Chinese ethnicity have won a Nobel Prize, most of whom were born and raised in a foreign country, particularly the US, or long ago abandoned their Chinese nationality. For a long time, the Chinese scientific community’s empty awards cabinet has been an easy mark for critics eager to find fault with China’s government-led scientific research system. Tu’s Nobel win was seen as a victory over such criticism. However, many opponents viewed her achievement as an exception to the rule, due to the special historical circumstances of her discovery, arguing that the controversy surrounding her actually embodies the defects of China’s scientific research system in which political and administrative elements have played too big a role.

Whole-nation System

Zhang Boli, the director of Tu’s organization, the China Academy of Chinese Medical Sciences, is a supporter of the Chinese system. He described Tu’s prize as “a victory for China’s ‘whole-nation’ system,”


referring to a system in which an entire nation’s resources and materials are fully utilized to conduct government-supported research. “Tu’s discovery was based on the joint efforts of scientists and researchers all over the country at that time,” he told the media. “I believe one of the directions China’s future medical research should take is that of the whole-nation system.” Adapted from policies in the former Soviet Union, the wholenation system specializes in centralizing resources and materials, distributing them to government-approved projects and facilitating the coordination of different undertakings under the government’s orders. As a typical socialist country, China has implemented such a system in many fields, including sports and scientific development, and has made some great achievements, including the country’s first atomic bomb, the development of hybrid rice, and, more recently, the Tiangong space lab project. These fruits of whole-nation labor, including Tu’s recent Nobel Prize, are cited by the system’s supporters as proof that it works. In the 2010 annual planning session for economic reform, the Chinese government proposed to further promote the whole-nation system in 16 scientific fields, including aerospace, airplanes, nuclear power stations and pharmaceuticals, claiming that such a system is helpful in rapidly narrowing the gap between China and developed countries. NEWSCHINA I January 2016

Photo by CFP

Photo by Xinhua

Tu Youyou (front) accepts a national science prize

“Given China’s shortage in advanced technology and talent, it is more necessary for us to concentrate on key fields,” said Mei Yonghong, then policy director of China’s Ministry of Science and Technology. “The whole-nation system is not exclusive to China. Many other countries, including the US, also centralize national resources to [concentrate on] strategic projects,” he added. Yet the government’s proposal still caused some experts and observers to protest, cautioning that the political and administrative elements inherent to the system would actually obstruct, rather than further, China’s scientific development. “[In the old days], many promising research [endeavors] were obstructed by political causes. For example, as the [discredited] Russian pseudoscientist T.D. Lysenko’s [counter-Mendelian] genetic theory was forcibly promoted throughout China in the 1950s, other genetic theories were suppressed,” Huang Yanzhong, a senior global health researcher with the Council on Foreign Relations, wrote in a NewsChina article about China’s scientific research system. In Huang’s eyes, Tu’s discovery of the extraction technique of an anti-malarial compound was more a “miracle” of the Cultural Revolution, thanks to the wartime demand for a malaria cure, than a direct result of the whole-nation system. He wrote that many other important research projects at the time were forced to cease activity NEWSCHINA I January 2016

or be abandoned, as the scientists conducting them were labeled as “rightists.” Tang Feifan, a renowned Chinese medical professor in the 1950s, for example, committed suicide in 1958 after being pilloried during the anti-rightist campaign. However, he was the researcher who first independently extracted Chlamydia trachomatis, a breakthrough discovery that led to the treatment of the eye infection trachoma and one which Huang believes is deserving of a Nobel Prize. Similar concerns have not disappeared in the present day, although China has long been free of anti-rightist campaigns. After Chinese President Xi Jinping proposed to promote soccer nationwide in early 2015, media reports worried that children would be forced to play a sport they don’t like. Basketball star Yao Ming also told Xinhua News Agency that he hoped local governments would not sideline other sports, like basketball, when promoting soccer. In an interview with NewsChina in 2012, Du Heng (a pseudonym), a researcher from a Beijing-based scientific research institute, complained that under administrative leadership, China’s input in scientific research was not “scientific” – the government focuses more on fundamental research, while research with practical applications that is more sensitive to market demands is often desperate for funds. “The government has interfered too much in both project selection


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A worker in the artemisinin extraction area of a pharmaceutical plant in Rong’an County, Guangxi Zhuang Autonomous Region, October 9, 2015

and investment. Once the government endorses a project, it will naturally be granted many privileges, which, however, might go against the laws of scientific research and impair creativity,” Bai Zhili, a professor at the Peking University School of Government, told NewsChina.


Given the “joint effort” which characterizes the whole-nation system, collectivism is deeply held in the minds of supporters, especially in Tu’s era, when people were taught to value country and society more than individuality, and personal “heroics” were criticized. At that time, few researchers were allowed to publish their results as individuals. Tu’s discovery, for example, was not published until 1977 and bore a collective name rather than her own, a leading cause for some of the controversy muddying her Nobel Prize win. Tu’s supporters have criticized the collectivism and egalitarianism associated with the whole-nation system for covering up individual contributions, while many others worried that under the current system, in which a project is often entrusted to a known leader rather than the creator of an idea, the wrong people might end up getting credit. “A Chinese researcher with a lower rank would often be marginalized when his/her team publishes the results of their experiment, and worse, his/her credit might be given to some leader [instead],” another


Beijing-based researcher who asked to remain anonymous told NewsChina. In an interview with China Youth Daily, Li Zhenzhen, a scientific policy researcher at the Chinese Academy of Sciences, agreed that China’s current scientific research system actually “did a poor job in fairly appraising the contributions of each of the participants” in a research project. Despite Tu’s global accolades, she has never earned the title of academician, China’s highest academic title, raising eyebrows over the legitimacy of this appraisal system. Although some people, such as the popular blogger Fang Zhouzi, alleged that Tu was never named to the Academy because of her “unpleasant” character and overstatements of her scientific contributions, many others, including Zhang Boli, admitted that China’s appraisal system for scientific researchers has incorporated too many non-scientific elements to be infallible.

Vanity Fair

Many have viewed the strong political and administrative influence in China’s scientific research as a major obstacle for creativity for several years. In 2011, Rao Yi, a renowned Chinese science professor, publicly announced that he will never put himself up for academician status and criticized China’s scientific research institutions for not “caring about scientific research.” NEWSCHINA I January 2016

Photo by IC

China has put a growing amount of money into scientific research since the Reform and Opening-up period began in 1979, becoming the world’s second-biggest investor in scientific endeavors in 2011, only to find that most of Chinese scientists’ achievements are copycats or modified versions of work done by Western peers. For example, Princeton University computer science professor Li Kai said that China’s Project 863, a government-led high-tech project, failed to make a successful prototype despite its 29 years of operation, let alone a patentable technology that could occupy the global market. Rao Yi described China’s scientific research as “picking up breadcrumbs from the West.” “Much of the [scientific research] funds [the government has allocated] are wasted, I believe,” wrote Chinese academic Xiong Bingqi on his blog. He holds a doctorate in education and is well known for questioning China’s scientific research system. “The true road for scientific research is that a researcher devotes himself to a project after getting funding, and then those in scientific circles appraise his work based on his achievements. The practice, however, gets distorted in China, where many researchers see projects as an honor and then use these ‘honors’ to apply for bigger national projects with more financial support,” he said. After that, he added, the cycle continues. “Given that the Chinese [scientific research] system actually cares little about the achievement of a project and how it is conducted, NEWSCHINA I January 2016

but instead weighs an applicant’s administrative title and background more heavily, government funds often flow to those who hold a higher administrative rank or keep a good relationship with others in academic circles rather than those who truly concentrate on research. As a result, many projects ‘end’ when the money is granted,” he added. Tu Youyou was actually deemed very lucky in many people’s eyes, since, if it hadn't been for the Cultural Revolution, a researcher holding only the title of “assistant” at the time might never have a chance to participate in such a big government project. Du Heng, the Beijing-based researcher, also told NewsChina that many enterprises have spent too much time and money keeping good relationships with the government in order to keep the flow of cash coming, while their actual research has been pushed aside. “I am quite surprised that in China, the purely scientific title ‘academician’ is an administrative title even higher than that of ‘professor’ or ‘doctor,’ and [that it directly affects] the holder’s income,” said senior global health researcher Huang Yanzhong. “In an environment that values official titles and hierarchy, the ‘academician’ title has become a tool to fish for fame and benefits.” Given that Chinese institutions usually base scientists’ promotions on the number of papers they have published, many people feel obligated to focus their efforts on projects that may more easily lead to publishing a paper. Some even resort to plagiarism. In August, international publisher Springer revoked a total of 64 papers published by its subsidiaries for alleged plagiarism or cheating, the authors of which were all Chinese. Chinese domestic media reports have also exposed many scientists who had allegedly embezzled research funds or faked their academic background. The whole-nation system’s opponents, including Rao Yi and Xiong Bingqi, have never denied the advantages of government-led projects, especially when it comes to financing and cooperation. Instead, they push for what they deem “de-administration,” namely, the cessation of direct government involvement in the leading and appraisal of any scientific research. “China should explore a new micro level of government management in scientific research, with scientific bodies having the freedom to self-manage specific projects,” said Xiong Bingqi. “Tu Youyou’s Nobel Prize will not be of historical significance until it leads to a deeper reform of the Chinese scientific research system,” commented Huang Yanzhong.  An Zhixuan contributed to this story.


cover story Nobel Prize

Breaking Through

While much of the theory behind traditional Chinese medicine is in conflict with Western science, practitioners keep trying to modernize the industry in order to meet the standards of the global market By Wang Yan


ore than 40 years ago, then research assistant Tu Youyou and her team were frustrated that their attempts to extract the anti-malarial compound artemisinin from the herb Artemisia annua had failed. The stymied scientist, with a background in both Western and traditional Chinese medicine (TCM), turned to a 1,600-year-old Chinese medical text that described using the same herb. The text said the plant’s juices were used after simply crushing it, not boiling it, as Tu’s team had so far done. She followed the text’s instructions, and the extraction method worked. Tu, now 85, gave credit to TCM for her Nobel Prize in Physiology and Medicine, which she won this year for her work with artemisinin, a substance still widely used in anti-malarial therapies today. After her win, she issued a statement underlying the role ancient medicine took in her discovery: “Artemisinin is a gift for the world’s people from traditional Chinese medicine.” As early as 2011, acclaimed Chinese neurobiologist Rao Yi stated that Tu’s achievements in extracting artemisinin were monumental in the context of scientific research involving TCM. Yet in reality, while TCM has been used by the Chinese for thousands of years, it has never really gained recognition in the modern international market.

Ambiguous Identity

TCM currently attends to many people’s health needs in China, and is generally viewed positively by users and practitioners. It is practiced in China alongside modern Western medicine. Nearly every hospital in China has a TCM department. Yet, both domestically and internationally, mainstream physicians and scientists question the


A pharmacist at Hebei-based Yiling Pharmaceutical Group tests a powder made from a traditional Chinese medicinal herb, December 17, 2013

quality and consistency of TCM products, the scientific basis of their usage, and the lack of evidence-based clinical studies evaluating their effects, thus saying TCM lacks a robust scientific foundation. “Due to various reasons, TCM products cannot register as pharmaceuticals for export to many foreign markets, including the European Union and the US,” said Bian Baolin, vice director of the Institute of Chinese Materia Medica (ICMM) under the China Academy of Chinese Medical Sciences. “Despite a year-on-year increase in the export of TCM products, they are exported with the label ‘food additive’ or ‘dietary supplement,’ so they cannot be sold in pharmacies or drugstores, but instead in supermarkets or Chinese clinics.” On its face, the reason for barring TCM from the medical realm is simply that it has not met the scientific standards needed to fulfill the target countries’ relevant criteria. However, the real underlying reasons, Bian said, are very complicated. One of the major differences between TCM and Western medicine is their source material. The former focuses on materials of plant, animal and mineral origin, whereas the latter bases its medicines on active chemical compounds and molecular engineering. Even in comparison with herbal medicine, which has gained popularity in some Western countries, TCM is characterized by its own unique theoretical system. According to Bian, TCM takes a holistic approach to treating illness, while herbal medicine uses different substances to target specific symptoms. “If TCM were to attempt to enter the global market, it would need to first undergo scientific studies to prove its content and effects in the same way herbal medicine has done,” Bian said. Traditionally, TCM physicians prescribe fufang, or complex compound formulas combining some 10 to 20 herbs, minerals or animal NEWSCHINA I January 2016

Photo by CFP

Photo by CNS

A researcher in a modern TCM industrial zone in Tianjin, June 2004

products to patients after observing their symptoms. These formulas may then be adjusted after a period of treatment. Under these conditions, it is challenging or nearly impossible to design randomized, placebo-controlled, dose-escalation studies to test TCM medicines. But in recent decades, when herbal formulas began to be administered in pill form with fixed proportions of each individual element contained in each capsule, it started to make more sense to initiate clinical studies on these kinds of TCM products.

Inching Forward

Modern chemical and pharmacological methods were first used to investigate TCM materials in China about 50 years ago. With the growth in domestic medical practitioners’ knowledge about chemistry, biochemistry, physiology and pharmaceuticals, along with the availability of scientific instruments, there has been an increasing amount of scientific research examining the chemical components of substances used in TCM. Today, visitors to Tu Youyou’s Beijing workplace, the ICMM, can see walls of posters at the entrance hall of the old building showcasing TCM’s achievements in modernization, such as the most advanced TCM product line that follows Good Manufacturing Practice (GMP), and advanced technical methods adopted to control the quality of orally administered herbal mixtures. To ensure the consistency of the medicine’s effects, the standardization methods include plant authentication through DNA bar coding, and the chemical profiling and quantification of all bioactive components in the final material. With these modernized processes and persistent efforts in getting

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into Western markets over the past two decades, a number of TCM products are finally attaining a certain level of progress in getting international recognition abroad. According to another source at the ICMM, eight new medicines, including cholestin extract xuezhikang and Fufang Danshen Diwan, known as Dantonic in the West, have successfully completed Phase 2 clinical trials in the US and are currently undergoing Phase 3 trials to evaluate consistent efficacy. Cardiovascular drug Di’ao Xin Xue Kang gained authorization in the Netherlands under the EU’s Traditional Herbal Medicinal Product Directive and is approved for sale in pharmacies. Additionally, there are a handful of other Chinese herbal products undergoing clinical trials that meet international standards (the studies are double-blind and placebo-controlled), or are at various stages of clinical development, in EU countries. “It’s been a bumpy road for TCM to get into those foreign markets,” admitted the ICMM source, who preferred to remain anonymous. Indeed, TCM’s compound formulas often use a combination of different effective elements, and it is very difficult to point out exactly which substance is causing which effect. So far, TCM trailblazer Dantonic has been registered by regulatory bodies in 34 countries and exported to 23 countries, with annual exports valued at about 80 million yuan (US$12.6m), according to the pharmaceutical company’s PR director Meng Jie. “However it has taken our company over 17 years to finally reach this current stage, a Phase 3 trial in the FDA approval process,” Meng told our reporter during a recent telephone interview. “If the process goes smoothly, we expect the Phase 3 trials to be finished by the end of 2016.” While the earnings from exporting to new markets certainly don’t


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hurt, the ICMM source doesn’t view profit as the main motivation for TCM manufacturers looking to sell abroad. “Our country’s main purpose in encouraging TCM producers to explore overseas markets is not [to earn more] money, but to compel Chinese pharmaceutical producers to earn GMP approval, thus regulating the development [of TCM products] and keeping [them] in line with international standards,” commented the ICMM source.

Photo by CFP

nologies R&D Program. The results indicated that apart from a limited number of cases of improper operations (i.e. incorrect use of fertilizers or pesticides), some medicinal herbs become saturated with heavy metals as they grow. In the recently published research paper International Standards Development for Heavy Metal Limitation, the ICMM’s Guo Lanping states that “the overemphasis of heavy metal [content] standards in medicinal materials is not reasonable.” In Bian Baolin’s opinion, the “heavy Mission Unaccomplished metal” issue is more or less a difference in TCM has spread to 173 countries or perspective. “Some TCM [practitioners] regions on six continents. World Health use minerals such as realgar and cinnabar Organization (WHO) statistics show that as medicine, and normal dosages of these 29 countries and regions including Austramedicines taken for a few days to treat an lia, Canada, Austria, Singapore, Vietnam, The TCM-based drug Fufang Danshen Diwan has illness will not cause any harm to human successfully completed Phase 3 clinical trials in the FDA Thailand, the UAE and South Africa have approval process health,” Bian said. “But according to the mentioned TCM in government legislastringent food and drug regulations of certion, and 18 have incorporated TCM into tain countries, even this quantity of minertheir national medical insurance systems. als for treatment purposes is prohibited.” As Chinese medicine goes global, its industrial standards have at- Thus, the only way to enter those countries’ markets is to take medicitracted increasing attention from around the world, especially with nal minerals out of the formula. regards to the use of Chinese medications which are somewhat inconThis barrier of different perspectives is a hard one to break. “TCM sistent with experiment- and data-based Western medicine. treatment emphasizes the holistic condition of the body in combinaProfessor Shen Yuandong is secretary of an International Organi- tion with the doctor’s diagnosis, which together indicates [TCM’s] zation for Standardization technical committee that is responsible unique [basis in] Chinese philosophy and its profound cultural confor setting up standards for the quality and safe use of TCM materi- notations,” Bian said. He believes that TCM theory and philosophy als and medical devices. During an interview with China Standard- as a whole must spread before TCM can really expand its influence ization magazine, Shen emphasized the importance of using TCM and find acceptance at a global level. in more scientific, safe and effective ways. According to him, the Bian also admitted that it would be a while before this ambition pharmaceuticals industry is a special sector where the absence of could be realized, so for the time being, TCM should continue to take unified international standards for traditional medicine has become the initiative in adapting itself to meet the Western world’s standards an obstruction for the field’s international trade and quality control. for herbal medicine. “The globalized development of TCM calls for the emergence of inIn recent decades, populations in developed countries have shown ternational standards to meet the needs of the international market,” interest in using herbal medicines to treat illnesses. Yet whether a he said. world dominated by modern science is willing to be more open to or China has invested more than 5 billion yuan (US$782m) in approach TCM theories remains uncertain. quality supervision of the TCM production process, from producFor the time being, it seems TCM and Western science remain at ing the raw materials to establishing production lines to distribut- odds. Lai Lili, now an associate professor at Peking University Ining manufactured products. stitute of Medical Humanities, once delved into this conflict in her For example, to address the controversial issue of heavy metals in master’s thesis. She wrote: “In a sense, ‘science’ has long been treated Chinese medicines, China has invested heavily in investigative research as something alien to Chinese medical professionals who nevertheless projects. Projects included the analysis of standards for limiting heavy have exerted effort to incorporate science’s strengths. Still, hegemonic metals in TCM products and the comprehensive control of pesticide pressures attempt to draw a line around science that would exclude residue and heavy metals in the soil used in TCM production, as out- Chinese medicine, even though the latter has been deeply committed lined in the Ministry of Science and Technology’s National Key Tech- to both modernization and tradition.”


NEWSCHINA I January 2016

NEWSCHINA I January 2016



Anti-graft Watchdog

Cleaning House

In its sweeping anti-corruption campaign, China’s top anti-graft watchdog is having to look in its own backyard

Photo by IC

By Liu Ziqian

From left to right: four disgraced senior officials from the discipline watchdog, Cao Lixin, Wei Jian, Shen Weichen and Jin Daoming


ew Chinese political bodies generate headlines like the country’s top anti-graft commission, the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC). Even adding a new column of content to its website typically elicits a round of commentary and interpretation from the public. On October 12, 2015, the CCDI posted an article on its website in which it criticized malpractice common in its own system, such as bureaucracy and dereliction of duty, claiming that the government watchdog, at all levels, is far from “pure.” During the commission’s regular meeting at the end of September, Wang Qishan, China’s top graft-buster, told staff that cleaning up the CCDI is still a challenge for the national anti-corruption campaign, with some inspectors deliberately breaking regulations and even “seeking personal gains from handling cases.”

Dirty Dealings

According to CCDI statistics, more than 3,400 “discipline inspectors” nationwide received disciplinary penalties, a Party-specific punitive measure, since the anti-graft campaign began after the 18th National Congress of the Communist Party of China in 2012. In January 2015, Huang Shuxian, CCDI deputy chief and head of the


commission’s overseer, the Ministry of Supervision, told a conference that 1,575 inspectors were investigated and punished in 2014. As the government ramped up its anti-corruption campaign, opportunities for discipline inspectors to bloat their salaries with bribes have only increased because of the growing number of officials under investigation. Some inspectors have shed the role of law enforcer and slipped into that of law breaker, violating the very regulations they are charged with upholding. The CCDI itself has seen 14 discipline inspectors investigated and punished since 2002, including Wei Jian, former chief of the commission’s fourth discipline inspection and supervision office. Before taking a position at the CCDI, Wei worked as the deputy chief of the Hebei Provincial Higher People’s Court. His academic papers on the role of keeping confidential information about one's career confidential were widely cited. He was transferred to a post at the CCDI in 2006 and became a chief inspector in 2008, charged with overseeing anti-graft operations in China’s southwestern provinces, including Sichuan. According to media reports, Wang Qishan mentioned at an internal meeting that the CCDI had been investigating Li Chuncheng, former deputy Party secretary of Sichuan Province, for more than a year. Wang added that a senior CCDI official who supervised Sichuan had “divulged a secret” and spent several days by Li’s side during the NEWSCHINA I January 2016

disciplinary investigation. On December 2, 2012, Li and his secretary were detained at Beijing Capital International Airport. An insider handling the case at the scene told NewsChina that when Li and his secretary were already in police custody, his secretary asked to use the restroom. Once inside, the secretary reportedly tried to destroy a bank card, but was stopped by police. Li was the first ministerial-level official to be fired after the Party congress in 2012. Speculations abounded that the CCDI’s Wei Jian was involved in Li’s case, although authorities have yet to make that information public. At the same time the CCDI was investigating Li, Caijing magazine reported, Wei was allegedly sending secret information to Zhou Yongkang, China’s former domestic security chief who was sentenced to life imprisonment in June after being found guilty of corruption, abuse of power and leaking state secrets. During a panel discussion with Sichuan Province deputies at the National People’s Congress in March 2014, Wang Qishan said the CCDI will tighten supervision of its own staff members and show zero tolerance in any instances of malpractice or law violations. Two weeks later, Wei Jian was investigated for serious violations of discipline regulations and laws, becoming the CCDI’s highest official to be removed from office since 2012. Cao Lixin, another senior CCDI official, came under investigation 10 days later. Cao was mainly responsible for supervising China’s northern regions, including coal-rich Shanxi Province. Details of Cao’s disciplinary violations have yet to be released, but local media reported they are related to his work in Shanxi. In 2014, hundreds of that province’s government officials were investigated on suspicion of corruption and serious disciplinary violations. Of those, 170 were involved in a corruption scandal within Shanxi’s transportation department, a scheme in which Cao was also involved, Caijing reported. To date, of the 14 senior CCDI officials who have been investigated, only Wei Jian’s and Cao Lixin’s information has been made public.


Throughout the ongoing anti-corruption campaign, the importance of supervising China’s supervisory agency has been reinforced by the country’s top leaders. During the second plenary session of the 18th CCDI in 2013, Xi Jinping asked: “Who is watching the CCDI?” One year later, Xi once again stated publicly that the country’s top discipline watchdog had a corruption problem. During its fifth plenary session in early 2015, Xi demanded that the whole discipline inspection system “clean house.” In response to political pressure, the CCDI initiated its second round of institutional reform in March 2014. In a bid to root out internal corruption and strengthen supervision, the commission consolidated its six subdivisions and added three more, including a special branch targeting the supervision of inspectors. Chen Wenqing, former deputy head of the CCDI, said that the new office is home to 30 staff members, whose main responsibilities are dealing with reports and tips that cast suspicion of corruption on discipline and supervisory staff.

NEWSCHINA I January 2016

Chen emphasized that the new office was set up to practice selfsupervision, toughen enforcement and beef up punishments for those senior inspection staff members at the CCDI who have violated disciplinary regulations and laws. Shortly thereafter, similar offices started springing up at local inspection watchdogs. A county-level anti-graft official, speaking on condition of anonymity, told NewsChina that staff members of one supervision office concentrating on employees at the county and city level have started work even though there is no official name yet on their office door. So far, staff members have been focusing mainly on monitoring day-to-day conduct, such as arriving to work late or leaving early. In a recent seminar on the supervision of discipline inspectors, Wang Qishan elaborated on the purpose of adding the new office. He said it is meant to play a bigger role as a watchdog for both society and the public, in addition to internal supervision. In April, the General Office of the CPC Central Committee released three guidelines recommending that anyone appointed as a discipline watchdog chief should have worked in several different posts before taking office, in order to avoid the corrupt behaviors that can emerge when officials have been working for too long in one specific place or department, such as nepotism or palm-greasing. Public data has shown that from January to August 2014, the CCDI arranged for the transfer of 240 discipline inspectors, including 40 at the senior level. Some of the staff members who were not suitable for the job were later transferred to other departments. Two moves in the second half of 2015 stood out – Chen Xiaojiang, senior official at the Ministry of Water Resources, was given the position of CCDI publicity head, and Liu Jianchao, former chief spokesman for China’s Ministry of Foreign Affairs, took the position of CCDI international cooperation chief. Another step by the CCDI to purge internal corruption is the ongoing development of a comprehensive information management system that will encompass the entire discipline watchdog apparatus, including its members at the county level. The CCDI will use this system to check the progress of cases at local offices. The local staff member interviewed by our reporter said that his office has already installed the online program necessary to implement the new information management system, and someone will be tasked with inputting data into the program once it is in use. “With this new system, authorities at a higher level can look into the investigation process of each case and hold those discipline inspectors who violated regulations or broke the law accountable,” he told NewsChina. During an inspection in Fujian Province in September, Wang Qishan pledged to speed up the development of the information management system. He was wearing a blue T-shirt and a pair of black cloth shoes at the time, in stark contrast with the other officials present who were dressed in more typical white-collared shirts and trousers. “It is a fundamental rule to take discipline as the basic yardstick in each aspect of this work, including the handling of evidence, discipline supervision and case hearings,” he said.



Transgender Activism

Trans Nationals Poor awareness of transgender issues has left this group struggling for support even as China opens up to other sexual minorities By Liu Danqing


n a snowy day in 2013, Xiaobu told his mother that he was, in fact, her son. That was, he told NewsChina, the second time in his life that he had cried. “Boys don’t cry,” he said. Xiaobu’s mother was driving at the time. He recalled how she was looking straight ahead. After a while, his mother broke the silence. “So, we never had a girl in our home?” “I’m sorry for not treating you in the way you wanted,” she went on. Growing up, whenever Xiaobu’s younger brother called him “sis-

ter,” Xiaobu would get mad. On that day, when they arrived home, Xiaobu’s younger brother greeted him as he usually did. Their mother corrected her younger son. “This is your older brother,” she said.

Photo by dong jiexu




17-year-old Xiaobu looks older than his peers. He is modest and polite. He has a habit of tugging at his newly sprouted beard when he talks. Since commencing hormone therapy, his voice has deepened, and his menstrual cycle has ceased. “It feels great,” he said. Warnings about side effects such as hair loss, osteoporosis or stunted growth don’t concern Xiaobu. He feels he has waited long enough – 17 years – for the body he belongs in. During Xiaobu’s first year at middle school, the changes in his body, particularly menstruation and growing breasts, he said, made him “sick.” Initially, he thought he might be a lesbian – his attraction to pretty classmates with long hair seemed a key indicator. In the end, though, he realized he was trans. “I just didn’t feel like a girl,” he told NewsChina. “My sexual orientation was totally like that of a straight man.” This notion frightened Xiaobu, he recalled. Growing up in a rigidly cisgendered society, his first encounter with the term “transgendered” was online. Stumbling across this word in his second year of middle school, he felt that the definition was “made just for me.” Now, Xiaobu is saving up for sex reassignment surgery. He wants to fully surgically transition before he turns 20, and then get married to his girlfriend. In China, to be transgender is to be a minority within a minority. While gay and lesbian people have slowly begun to emerge into public life, at least in the country’s cities, transgender people have largely remained in the shadows. While gay and lesbian Chinese people have fewer and fewer difficulties explaining their orientation to friends and even family, the country’s trans population struggles for recognition – even when it comes to self-discovery. Xiaotie, manager of the Beijing LGBT Center, an NGO that promotes LGBT rights and providing professional aid to sexual minority groups, told NewsChina that the center has some 40 volunteers, but NEWSCHINA I January 2016

that the team didn’t have a transgender staff member until 2012. Xiaotie and her fellow volunteers have seen firsthand the kind of discrimination that prevents trans Chinese people from living openly. “Even after undergoing sex reassignment surgery and officially changing their gender on their ID card, [trans people] still meet with rejection and discrimination when trying to change their gender on their educational certificates or their permanent employment record,” said Xiaotie.


This discrimination tends to become more flagrant towards trans individuals from lower-income backgrounds, who may lack the educational and financial resources to change their situation. In an interview with NewsChina, Yanyan (a pseudonym) told our reporter that she “died” at age 18. In 2003, she purchased scalpels, forceps, sutures and a slab of raw pork. In a shabby rented room in the port city of Qingdao, Shandong Province, Yanyan practiced surgical techniques. Nobody around her paid any attention. At six feet tall, with broad shoulders and a thick beard, Yanyan looked like the stereotypical image of a butch Shandong male. Her Adam’s apple and genitalia confused and disturbed her. After leaving her rural home and taking a factory job in Qingdao, she began to wear women’s underwear and stockings under her overalls. Her parents were distressed by rumors that began to circulate in their village, fearing their “son’s” reputation would prevent Yanyan's sister from finding a spouse. Once settled in the city, Yanyan learned to use the Internet, where she discovered both the term “transgender” and learned about sexual reassignment surgery. However, without money for the operations and official permission from her parents – neither of which, she felt, she would be able to obtain – she resolved to perform the surgery herself. She bought a surgical manual, and attempted to practice on slabs of meat. Finally, she wrote a short post on her microblog. “I’m going to do the surgery myself. If I die, then that’s it.” Yanyan regained consciousness in an emergency room, bleeding profusely. Her landlord had called an ambulance after discovering his tenant lying in a pool of blood. One of Yanyan’s testes was still attached.

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Worse was to come. The hospital called Yanyan’s parents. Her mother suffered a heart attack, and her father refused permission when the hospital requested that they remove Yanyan’s remaining testis. “I’d rather he died than see him change his gender,” Yanyan’s father allegedly told the surgeon. Yanyan was left scarred and prone to hot flashes. Half her beard was fuller than the other half. She found she hated her body even more. Although she was now living as a woman, she could not secure anything other than low-end jobs, as her appearance didn’t match the gender stated on her ID. Several months later, with the help of one of her “sisters,” Yanyan relocated to Shanghai, where she became a sex worker – a common step for many of China’s transgender community. She has also done occasional work for LGBT NGOs in Shanghai. She has introduced these NGOs to her friends and co-workers, allowing them to conduct research and interviews. Even around other LGBT people, Yanyan still feels what she calls “subtle discrimination” towards transgender people. With a low level of education and limited skillset, she earns much less than other volunteers. Nevertheless, Yanyan finally earned enough to fully surgically transition. As her family was unable to find a husband for her sister due to village gossip, Yanyan has helped them purchase an apartment in the city, and even paid for her mother’s heart surgery. Although hate crimes against LGBT people are rare in Chinese society, and certain transgender individuals – notably transwoman dancer Jin Xing – are even celebrated, they receive no legal protection or social support from the government. As more and more developed countries have either recognized a “third gender” or instituted equal protection for trans individuals in law, transgender groups and sections of the scientific and medical community in China are calling for legal recognition and protection for trans people, who are among the most vulnerable groups in society. “A third gender should be added to the Chinese national ID card, which would reflect our society’s respect for diversity, equal rights and every individual’s freedom and welfare,” said Dr Fang Gang, director of the Institute of Sexuality and Gender Studies at Beijing Forestry University.



13th Five-year Plan

Rule of Fives

China’s growth slowdown and the central government’s ambitious vision could provide a new bittersweet context for economic reform. A bottom-up driving force should not be underestimated By Li Jia

Five years ago, Nokia dominated the market, Steve Jobs was still with us, and we did not yet have WeChat.” Chinese netizens recently circulated this post on social media to express surprise at the difference five years can make in our lives. Now, China’s ruling party has unveiled an ambitious vision for the country's next five years – which, as any Chinese netizen will tell you, is a long time in such a rapidly changing society. On November 3, 2015, the Communist Party of China (CPC) described the coming five years as a “set point” to achieve its goal of building a “moderately prosperous society” by 2020. “Moderately prosperous,” for China’s macroeconomic planners, means doubling official 2010 figures for both GDP and


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ment’s economic goals. The government is hesitant to set a specific compulsory figure that will constitute “medium-high” speed growth. Economists have made projections on a GDP growth spectrum ranging from 5 to 8 percent, and have recommended staying flexible rather than fixating on an exact figure. There is consensus among economists, policymakers and the public that the real pace in the end will depend on the progress of economic reform. In this context, five cornerstones have been highlighted in this so-called “double medium-high” model: innovation, coordination, green growth, opening-up and inclusiveness.

Old Story

individual personal income. The document in which this pledge was made, “Proposal on Formulating the Thirteenth Five-year Plan (2016-2020) on National Economic and Social Development,” is a guideline for the drafting of the 13th Five-year Plan which will be approved by the National People’s Congress, China’s top legislative body, in March 2016. The proposal was officially adopted at the Fifth Plenary Session of the 18th CPC Central Committee, held in Beijing in October 2015. China’s growth story can no longer be taken for granted. It is not realistic for the naNEWSCHINA I January 2016

tional economy to rely on fragile and volatile overseas markets. Further exploiting domestic demand will take time. The environmental cost of development and the rapid depletion of resources are both beginning to bite. Government and corporate debt is piling up. Chinese President Xi Jinping has acknowledged that all these factors will contribute to uncertainty in the next five years. According to Chinese Premier Li Keqiang, in an article published in Party mouthpiece People’s Daily on November 6, “mediumhigh speed” growth, rooted in “medium-high quality” will be key in achieving the govern-

At the top level, there seems to be no division or ambiguity on what reforms should be made and how they should be implemented. The momentum of reform, however, remains a point of contention. The idea of upgrading the quality of China’s growth was first proposed by policymakers some 20 years ago, and was later enshrined in the Party’s Ninth Five-year Plan (1996-2000), which called for the more efficient use of resources, more technical innovation and fairer competition, rather than a continued dependence on huge investment and cheap labor. Progress, however, was too slow, and overreliance on massive investment became even more consolidated in the years after this agenda was set, according to Wu Jinglian, an economist with the Development Research Center of the State Council, speaking at a seminar held on October 25 by the Center for Industrial Development and Environmental Governance at Tsinghua University. Wu added that academic researchers and policymakers later agreed that this failure to enact sufficient reform was rooted in systemic barriers, and that the problem could only be addressed by the program of marketoriented reforms pledged in a CPC decision issued in 2003. As a result, upgrading China’s economy remained a priority in the Party’s 11th and 12th Five-year Plans (2006-2015). Nevertheless, that same decade witnessed the



stagnation of the national economic reform agenda. It is widely believed that the extraordinary growth seen in the wake of China’s WTO accession, which paved the way for China to claim the title of the world’s secondlargest economy in 2010, largely resulted in complacency. A sweeping reform package under the banner of giving the market a decisive role in China’s economy for the first time was unveiled at the Third Plenary Session of the 18th CPC Central Committee at the end of 2013. This pledge immediately ignited very high expectations for renewed, dynamic reform. New steps and concepts designed to empower the market have been announced one after another ever since, including trial projects involving opening-up, financial liberalization, reduction of administrative red tape for entrepreneurs, restructuring Stateowned enterprises (SOEs) and overhauling rural land transfer systems. There are now roadmaps for building a “smart” manufacturing sector, and encouraging development in China’s emerging service sector. The market has acknowledged this progress. The registration of new companies is surging, and the service sector has overtaken both manufacturing and mining in terms of its prominence in the national economy. Caps on interest rates have been removed. Government accounts have been placed under stricter legal scrutiny. The Chinese yuan is gradually becoming more international. Hundreds of billions of dollars’ worth of utilities projects have been opened to private investment. However, progress has not been strong enough to disperse concerns over the apparent lack of effective implementation of major reforms. Investors are complaining that the stock market chaos in June and July was partly caused by a discrepancy between the progress of reform on the ground and high expectations. At a forum sponsored by media group Caixin on November 7, Zhang Junkuo, vice director of the Development Research Center of the State Council, recog-


nized that the process of forcing moribund enterprises out of the market had not moved fast enough. These so-called “zombie enterprises” are mostly SOEs or companies with close ties to the government which enjoy privileged access to market resources. Analysts have repeatedly warned that monetary and fiscal reform policies will fail to boost growth so long as these zombie enterprises are permitted to drain the national coffers.


China’s evident slowdown and the central leadership’s commitments regarding national prosperity were expected to exert further pressure on economic planners to speed up reform. Both Xi Jinping and Li Keqiang have stressed in their speeches and articles on the 13th Five-year Plan that China has to avoid the “middle-income trap.” In the past few years, speculation over China’s level of exposure to this trap has sparked intense controversy among analysts. Acknowledgement of such a risk in the official discourse of paramount leaders has been interpreted as proof of the urgency of the Party’s reform agenda. The average Chinese citizen is some US$5,000 a year shy of membership to the international high-income club, members of which must hold at least US$12,736 Gross National Income (GNI) per capita. In 2012, the World Bank estimated that 101 economies had entered the middle-income group by 1960, but only 13 of these managed to upgrade to the high-income club by 2008. In his People’s Daily article, Li Keqiang explicitly stated that the failure to transition to a more efficient, more inclusive growth model is the lesson that China had to learn from countries already languishing in the middle-income trap. Li’s statements are in line with the original definition of this trap, and, even if many economic observers reject the middle-income trap as an invention of the World Bank, China’s premier’s analysis of the best escape route aligns with the general consensus on the state of China’s economy.

At the press conference in Beijing on November 9, Yang Weimin, vice director of the CPC Central Committee’s Central Leading Group on Financial and Economic Affairs, noted that the country’s economic performance in the past two years had already proved that the “old path” was no longer viable, adding that the central leadership’s 2020 prosperity target was “irrevocable.” The phrase “window of opportunity” has become popular among senior Chinese officials and analysts when stressing the urgency of restructuring the economy over the next five years. While continued adherence to an obsolete growth model continues to erode decades of gain, the benefits of reform look increasingly attractive. According to the calculations of Cai Fang, vice president of the Chinese Academy of Social Sciences, effective implementation of reform measures could add 1 or 2 percentage points to the national growth rate. In an exclusive interview with NewsChina’s Chinese edition, Cai described reform of the household registration system, or hukou system, for example, as “one stone, three birds,” – by relaxing access restrictions on migrant workers seeking urban public services, he argues, a more stable labor supply will be secured, leading to greater transfers of labor to more productive sectors, boosting consumption. Breaking SOE monopolies and encouraging private entrepreneurship are, many believe, complementary concepts. Liu Kefeng, general manager of the Zhongguangcun Software Park in Beijing, China’s national base for the domestic software industry, told NewsChina that the huge potential for innovation and entrepreneurship in China has yet to be exploited, adding that SOE reform would make a big difference. There is hope that these lingering problems would be resolved through the CPC’s 13th Five-year Plan. Right before and after convening its Fifth Plenary Session, the central government decided to build a “residence registration” system around the country to NEWSCHINA I January 2016

allow migrant workers in steady employment to access urban public services such as healthcare and education. The plan also advocates allowing the market to set prices for competitive elements of the supply chain in the transportation, telecommunications and energy sectors. A market access “negative list,” which would bring China’s economic planners in line with their international peers, will be launched in December and implemented nationwide in 2018. As the title of the latest Five-year Plan indicates, it does not focus solely on developing the “national economy,” but also prioritizes “social development.” Indeed, both the Party’s vision for 2020 and the measures undertaken, like household registration reform, are not only economic, but social as well. This is also true for the plan’s five core underlying principles of innovation, coordination, green growth, opening up and inclusiveness. Innovation in particular, while identified as the core of China’s new growth path, has been highlighted by analysts as a term applied more forcefully to “systems” as opposed to just science and technology. This is why calls are growing for the central leadership to seek reform dynamics from the lower levels of the economy and from society as a whole, rather than purely from political resolutions made at the top. In an interview published on October 30 in the 21st Century Business Herald, Liu Shangxi, director of China’s Research Institute for Fiscal Science, a think tank under the Ministry of Finance, stressed that “social organizations” should be encouraged to provide more healthcare and education services, and that “industrial guilds” should play a bigger role in disciplining the market. In recent years, China’s public has consistently called for more government intervention when problems have arisen in the fields of environmental protection, food safety or product certification. Some analysts have begun to realize that society itself could and should be a part of the solution to these

NEWSCHINA I January 2016

Photo by AFP


problems. Zhang Junkuo believes that a major reason for laggardly reform in the past two years has been a lack of incentives to innovate at the local level. He argues that it is important to show more tolerance for trial projects initiated by local governments. A major contributor to reform in the past decades has been these local-level experiments, rather than reform by central diktat. Concerns are growing among Chinese analysts that further delay in undertaking legal reform rather than continuing to prioritize Xi’s anti-corruption drive could deter local officials from attempting such experiments. Inaction among officials has already become a headache of the central government recently. Apparently the solution is not only Party discipline, but clear legal definition of responsibilities and misconduct. Even in terms of encouraging an innovation-driven, efficient economy, economists have stressed that the main obstacle lies not in research and development, but in social policies. Wu Jinglian noted that the highly

bureaucratic education system is hindering the supply of good human resources. Reform in this area, along with legal reform, has been slow, he acknowledged. In a joint report published in the October issue of the journal China Finance 40 Forum, Huang Yiping and Wang Daili, researchers with the Peking University National School of Development, advocated greater government investment in education, training, basic research and intellectual property protection to encourage innovation, rather than simply underwriting growth in select sectors. In the big data industry, for example, the gap between leading Chinese and international service providers lies in basic mathematical methodology, said Liu Kefeng. Like any transitional economy, the road to a better future cannot be summed up in an algorithm. It is a complex social process with innumerable factors. Social consensus on reform is not always present. China is lucky enough to have this key source of impetus right now, and the country cannot afford to waste it. 



13th Five-year Plan

New Games, New Rules By shaking up major platforms for global and regional economic governance, China is displaying both ambition and caution on its journey towards becoming a global rule maker By Li Jia


he instruction for drafting China’s 13th Five-year Plan (2016-2020) included the first open declaration that “increasing China’s say in the world economic governance” was now a national strategy. China will chair the next G20 summit in September 2016, and at this year’s meeting, held in Turkey on November 16, Chinese President Xi Jinping pledged to transform the G20 “from a mechanism of crisis response to one of long-term governance” and shift its agenda from “short-term issues to deep-seated and longer-term ones.” Two days later, at an APEC summit in the Philippines, he urged an acceleration of the process of building the Free Trade Area of the Asia-Pacific (FTAAP). Given the realities underpinning the G20 and the Asia-Pacific economic situation, these two projects seem to address core issues of global economic governance, and thus


provide an opportunity for China to realize its ambition of having more say in managing and addressing these issues. The words and actions of China’s leaders in the past year have been regarded as signposts that the country is already well on its way to playing a bigger role in reshaping global economic governance. It is also important, however, to listen to voices warning of challenges ahead. A small mistake made in this early stage of realizing an ambitious vision could mean major trouble down the road. China has a lot of homework to do.


In 2008, the G20, representing all major developed and emerging economies, was upgraded from a gathering of central bankers and fiscal ministers to a full-blown leaders’ summit in response to the global financial crisis. The G20 was initially expected to assume a bigger role in coordinating global economic

and trade policies than the G7 club of industrialized nations had been able to. However, the G20 faced criticism that it has become nothing more than a talk show in the past two years; as emerging economies suffered growth slowdowns, a lack of implementation of commitments against protectionism by G20 members has remained, and no progress has been made on enforcing the G20 decision to give emerging economies more power in the IMF. The G20 needs refreshed momentum to become an institutionalized platform for world economic governance. On October 5, 12 of the 21 APEC members concluded negotiations on the Trans-Pacific Partnership, a US-led regional free trade protocol. “We can’t let countries like China write the rules of the global economy,” said US President Barack Obama in his statement that same day. By pushing through negotiations on the TPP, the US was seemingly trying to block the revival of the FTAAP as NEWSCHINA I January 2016

China’s GDP 2010-2014 (trillions of yuan) discussed at the APEC summit in Beijing in 2014. APEC reached consensus on the FTAAP in 2006, but shelved the scheme after the US lost interest. In this context, what China’s leaders have said and done in the past year reflects Beijing’s intention to project its newly acquired economic power in participating in a new round of rule-making in the world economy. China’s One Belt, One Road initiative to link Asia and Europe was launched early this year. The Asian Infrastructure Investment Bank (AIIB), in which China is the biggest shareholder, is scheduled to go into operation by the end of the year. China’s Silk Road Fund, established a year ago, has already invested in infrastructure, manufacturing and energy projects in South Asia, Italy and Russia. A roadmap for building the FTAAP was passed at the APEC summit in November 2014 as a result of a Chinese proposal. Progress on strategic study of the FTAAP would also be reviewed at the same summit, according to a China Ministry of Foreign Affairs briefing on November 10. On November 13, 2015, an IMF staff paper was submitted to the IMF Executive Board suggesting that the Chinese yuan be included in the basket of Special Drawing Right (SDR) currencies, an international reserve fund. Xi Jinping remarked in his speech at the G20 summit on November 15 that approval, once granted by the IMF at the end of that same month, would “help to lift the representativeness and attraction of the SDR, improve the international monetary system and safeguard global financial stability.”

2010 40.89 (US$6.04tn)

2011 2012

48.41 (US$7.5tn)

53.41 (US$8.5tn)

2014 2013 58.80 (US$9.5tn)

63.65 (US$ 10.36tn)

Source: National Bureau of Statistics, World Bank

China’s GDP growth rate, year-on-year (%)

Source: National Bureau of Statistics


In China, these initiatives, especially One Belt, One Road and the AIIB, as well as the breakthrough on the internationalization of the yuan, are regarded as moves towards providing common good in the world economy, a key foundation for becoming a global

NEWSCHINA I January 2016

China’s GDP growth rate, quarter-on-quarter (%)



economic rule maker. This point has been highlighted in several People’s Daily editorials regarding the G20 summit. In response to US and Japanese calls for the AIIB to adopt higher international standards, China’s Ministry of Finance repeatedly made it clear that its view was that there was no such thing as best international practice, simply stating that China would “seek better practices.” Many analysts within and outside China believe China is taking steps to counter US resistance to greater Chinese participation in the new economic order and a US “pivot to Asia.” Chinese analysts believe that the participation of European economies in the AIIB in particular will facilitate new arrangements in the sphere of global financial governance.


Professor Yan Xuetong, dean of Tsinghua University’s Institute of Modern International Relations, thinks a bipolar, ChinaUS power structure is the most likely future scenario in the world economic order. As he explained at the “World Order and China’s Role” forum in Beijing on October 30, the power gap between China and the US has been narrowing, and both economies have widened their respective gaps with other forces in global governance. Yan added that a “bipolar pattern” could emerge in the economic sphere before it became apparent in politics or any other area. The instruction for the drafting of China’s 13th Five-year Plan dictates an array of opening up policies, including boosting imports, inbound and outbound investment, and

foreign aid. These measures are expected to build a bigger and stronger Chinese presence in the trade and investment world. China has also been stepping up efforts to expand free trade agreements with more economies, including investment agreements with the US and the EU. China used to be a leading recipient of foreign direct investment, but since 2014, China’s investment abroad has matched its FDI inflow. As Professor Marcos Troyjo, co-founder and director of the BRICLab at Columbia University, told NewsChina, current and future globalization trends will be more about investment than trade, and China’s increasing overseas activity in this regard could help give Beijing a more prominent voice in global economic governance.

No Rush

At the same time, China apparently does not want to give the rest of the world the sense that it wants to establish an entirely new status quo. China has insisted that it remains a “participant, facilitator and contributor in the global and regional order,” not a “free-rider” or “challenger.” “The idea of [the] AIIB is not to reinvent the wheel,” said Chinese Premier Li Keqiang in an interview with the Financial Times in April 2015, but “is intended to be a supplement to the current international financial system.” Some Chinese analysts have opined that China is already in the lead in terms of global NEWSCHINA I January 2016

China’s Economy US$17 trillion

China’s projected GDP by 2020


China’s ranking (out of 141 economies) in the 2015 Global Innovation Index by the World Intellectual Property Organization


China’s per capita GDP in 2014, 70 percent of the global average, oneseventh of that in the US, one-fifth of that in the EU

US$7,380 economic rule-making. Yan Xuetong said this is an overstatement. China’s influence, he noted, remains limited to trade in goods, and has yet to expand into services. China still reports a huge deficit in this field, where, despite considerable growth, it continues to lag behind developed economies. The overall quality of China’s investment abroad has also yet to improve. China’s Gross National Product, which includes both the GDP and the net value of goods and services from overseas assets of Chinese residents, remains smaller than the recorded GDP, indicating the poor performance of China’s investments abroad relative to FDI in China. In an exclusive interview with the Chinese edition of NewsChina, Ba Shusong, a member of the panel drafting the country’s 13th Fiveyear Plan and chief economist of the China Banking Association and HKEx, noted this reflects a big difference between China and developed economies. He stressed that China needs to make more effort to invest abroad with a more global perspective. Besides economic returns, China’s investment abroad should also pay more attention to its social impact. According to the 2015 Report on the Sustainable Development of Chinese Enterprises Overseas co-published in October by the UN Development Program China, the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce and the Research Center of the State-owned Assets NEWSCHINA I January 2016

Supervision and Administration Commission, Chinese companies are “troubled by insufficient knowledge, experience, human resources and capital,” influencing their ability to raise their capacity for sustainable development in overseas operations. Many Chinese analysts are cautious about how much the inclusion of the Chinese yuan in the SDR can help the currency become international. The SDR itself, they argued, is effectively a marginalized tool of the IMF because it cannot be used directly as a currency and is thus rarely turned to. There is consensus that a developed, open domestic financial market with an effective financial regulatory framework is the key to making a currency truly international – something China patently lacks. Ba Shusong said that China’s leading private equity manager runs a fund of only about US$3 billion, compared with the US$90 billion or more handled by its US counterpart. Financial reform in China still has a long way to go. The regulatory structure has yet to be reshuffled after the country’s recent stock market chaos, and divisions remain between analysts and officials on how best to tackle the issue. China’s mechanism to establish market-based interest and foreign exchange rates also has yet to be improved. For China to both get its own financial house in order and blossom into a global economic rule maker, it appears, some growing pains are inevitable.

China’s per capita GNI in 2014, according to the World Bank

US$3,004 and US$931

Respective average annual disposable income of urban and rural Chinese residents in 2010

US$4,560 vs US$1,730

Respective average annual disposable income of urban and rural Chinese residents in 2014

70.17 million

Predicted number of people currently living on an annual income below US$360 that will be out of poverty by 2020

17 million

Estimated number of additional live births in China between 2016 and 2020 as a result of the introduction of a two-child-per-family policy


Predicted share of non-fossil fuel energy as a percentage of China’s total energy consumption by 2020, up from 11.4 percent recorded by the end of 2015 Sources: Memoranda of the 5th Plenary Session of the 18th CPC Central Committee, Information Office of the State Council of China, World Bank, World Intellectual Property Organization




Making History

Over the past decade and a half, Chen Xianghong used a mammoth restoration project to transform his run-down hometown of Wuzhen into a tourist hotspot. Now, he is working to turn it into a national cultural mecca By Zhou Fengting


ithin a 4.92-square-kilometer area, along both banks of a river, 12 countries brought together 73 stage plays, 1,200 carnival acts, 12 young directors’ entries for a drama competition, nine forums and five drama workshops, all of which took place within 10 days. This was the third annual Wuzhen Theater Festival, which launched in mid-October 2015 and turned the Xizha area of Wuzhen, Zhejiang Province, into a wonderland entangling reality and fantasy, and where audience members mingled with actors dressed in costumes that crossed time and space. With a focus on drama and the theatrical arts, the festival drew nearly half of those involved in China’s professional drama and acting circles, making the crowds so cluttered with household names that even superstars were breathing easy. Xu Zheng, an actor and director whose movies have grossed billions of yuan at the box office over the past several years, originally came to the event wearing a cap and black mask to avoid being recognized, yet over the course of the festival he gradually loosened up his protective gear, dressing more casually, sitting among audience members and even playing with his cell phone. Three years ago, when Chen Xianghong, president of Wuzhen Tourism Co. Ltd. and now also chairman of Culture Wuzhen Co., Ltd., decided to found the Wuzhen Theater Festival, he found himself surrounded by doubts not only from industry insiders, but also from sections of the media who questioned his private company’s motivation for operating a long-term arts festival. But given the transformation Chen had already managed to pull


off, his critics should have known their doubts were unfounded. Just 16 years ago, even though vestiges of Wuzhen’s 1,300-year history still remained, few locals would have believed that their ramshackle town would soon top the list for most annual visitors received of any single tourist attraction in China. They also knew little about Chen’s plan to transform Wuzhen, his hometown, into a cultural mecca.

Ancient Town

Born in Wuzhen, Chen left the town with his grandfather when he was seven years old. Many years later, he returned to the area as director of the municipal government office in the city of Tongxiang; Wuzhen falls under Tongxiang’s jurisdiction. The first task that brought him back to his childhood home was a small fire, as one of his duties was to handle resettlement affairs. It was Chinese New Year, 1999. To Chen’s surprise, he found few people were out on the streets during what it is typically a festive time, and the river roads streaming through this historic “water town” were as black as ink and emitted a bad smell. “The town once had a population of 100,000 at its peak,” Chen said. “But the year I came there were only 9,000 left, and 80 to 90 percent of them were elderly.” In the past, Wuzhen flourished. Located between the cities of Suzhou, Hangzhou and Shanghai, the town is quartered by UNESCO World Heritage Site the Grand Canal, whose waterways separate Wuzhen into four cardinal quadrants: east, west, north and south. The river brought Wuzhen prosperity for centuries, until newly built highways became the main mode of transportation and drew young NEWSCHINA I January 2016

Photo by IC

Chen Xianghong, president of Wuzhen Tourism Co. Ltd.

people out of town. One month after the fire, the Tongxiang government released its plan for Wuzhen’s development – it established the Wuzhen Protection and Tourism Development Management Committee, and appointed Chen as the committee’s director. Chen became the de facto administrator of Wuzhen, as well as its head of tourism development and management. Chen resolved to enhance and restore the town’s historical look. NEWSCHINA I January 2016

His first move was to tear down the five-story department store that had been erected atop ancient streets. Few in the town understood his actions at the time. They thought he was crazy to rip down modern buildings. Several older men often openly berated him, and once someone even left feces outside his office door. Yet Chen persisted. In the first two years, Chen focused on Dongzha, the east section. Apart from demolishing new buildings and repairing old ones, Chen’s committee also moved seven factories out of town, cleaned the river and set up large parking lots and a tourist service center. The Tongxiang government provided 22 million yuan (then about US$2.7m) in funds for the project, but that was quickly exhausted. Chen then went to banks to ask for loans. In total, Dongzha’s restoration cost 100 million yuan (US$12.5m). Chen’s efforts to restore the ancient town soon paid off. The loans were paid back within two years of the restoration, and Dongzha’s annual tourism income reached 30 million yuan (US$3.6m). Chen soon set his eyes on developing Xizha, in Wuzhen’s west.

China’s Wuzhen

To avoid becoming too commercialized, Chen’s committee limited the number of shops on Dongzha’s streets and required stores to set up according to the area’s development plan. However, when choosing between honoring regulations and chasing profits, some shop owners opted for the latter. So Chen made a bold decision when devising Xizha’s development plan. He decided to evacuate the original residents out of the


Photo by CNS


area and close it off for restoration. He borrowed 300 million yuan (US$36.3m) from the bank using Dongzha as collateral. He used the money to buy new homes for the 600 Xizha families, then moved them out over the course of nine months, compelling some with forced evictions. Needless to say, the plan was incredibly controversial. Chen was attacked by locals and colleagues alike. People accused him of “bullying the residents” and “being overbearing.” Nonetheless, Chen continued to pursue his plan over the next three years, working around the clock. In the evenings, he drew up architectural sketches and by day he supervised the construction. Using meters and meters of blueprint paper, Chen outlined every bridge, streetlight, wharf and traditional-style rooftop in his own hand. To preserve the area’s timeworn feel, he bought up every old bridge, home or piece of furniture that had been discarded by nearby towns as they disposed of the old to make room for the new. He transported everything back to Wuzhen, then oversaw the workers as they installed each antique, piece by piece. As the restoration brought Wuzhen increasing fame, there was a need to find the town a proper post-development tagline. Many suggested “Wuzhen, Hometown of Mao Dun,” as the town was the birthplace of one of China’s most important modern writers. However, Chen decided the town deserved an even grander address. Over many objections from various parties, he bypassed Tongxiang, Jiaxing City and Zhejiang Province, all divisions to which Wuzhen belonged, and labeled the town “China’s Wuzhen” in all of its promotional materials.


Residences along the Grand Canal

By the time Xizha’s restoration was completed in 2007, it had racked up about 1 billion yuan (US$137m) in costs. Chen had no choice but to look for outside investors to invest in Wuzhen’s tourism industry. Before CYTS Tours, one of China’s biggest tour operators, decided to invest, Chen divided Wuzhen’s assets into two categories: operational and protected assets. The former included businesses such as hotels, which the town and CYTS operated together, splitting the profits. The latter comprised the historical buildings and facilities, such as the bridges and old homes. These remain 100 percent Stateowned. “They are the treasures I spent my whole life fighting for,” Chen said. Over the next seven years, underdog Wuzhen surprised everyone in China’s tourism industry. According to CYTS’s 2014 annual report, 6.93 million tourists visited Wuzhen that year, 230 times the figure from 15 years prior. Profits from that year reached 311 million yuan (US$49m), nearly nine times that earned in 2007.

Something Unique

Actually, besides Wuzhen, there are six other ancient water towns south of the Yangtze River in Jiangsu and Zhejiang provinces. These towns share similar landscapes and cultural characteristics with Wuzhen. Yet in the 16 years that Chen Xianghong has presided over Wuzhen’s development, he has borne in mind the need to build a unique brand for the town, something reflected in the slogan he wrote for it: “The same ancient town, but a different Wuzhen.” Chen wanted to NEWSCHINA I January 2016

uncover the town’s unique aspects, something only found in Wuzhen that no one could imitate or plunder. As an age-old hub for water transportation, Wuzhen’s former openness and prosperity had actually made the town a site of some cultural renown, but it was the association with Mao Dun that helped attract many of Wuzhen’s early tourists. Another famous Wuzhen native is Mu Xin, a highly respected Chinese writer and painter. While he was born and raised in Wuzhen, he moved to the US in the early 1980s. Chen remembered reading an article Mu wrote, in which he described traveling back to Wuzhen in 1995 and feeling despair upon seeing his childhood home replaced by a factory and the entire town’s decrepit state. Through some mutual acquaintances, Chen sent Mu a message: “Your hometown is looking for you.” At Chen’s invitation, the two of them started to discuss plans to restore Mu’s family home so the famous writer could return to Wuzhen. Restoration work began in 2002 and, four years later, at age 79, another of Wuzhen’s native sons came home. Chen cared for Mu personally until the writer’s death in 2011. Actually, after Xizha’s restoration in 2007, Chen resigned from government office and took up the position of president of Wuzhen Tourism Co. Ltd., making him a private entrepreneur within Wuzhen’s tourism industry. Yet, as a Wuzhen local himself, the businessman had always been deeply involved in the cultural scene as well. Chen became acquainted with famous actor and director Huang Lei when Huang chose to shoot a romantic TV series in Wuzhen in 2001. The two became good friends. In 2008, Huang invited Chen to Nanjing NEWSCHINA I January 2016

Photo by CNS

A restored canal area

to watch the play Secret Love in Peach Blossom Land, an acclaimed drama by Taiwanese playwright Stan Lai. Chen realized that plays drew large audiences in the city, with many young people buying tickets to see the show. The theater’s target audience mirrored Wuzhen’s target tourists. Both Chen and Huang started toying with the idea of hosting a theater festival in the ancient water town. After discussing and planning the event over the course of a year, Huang Lei invited Stan Lai, avant-garde playwright Meng Jinghui and National Theater of China director Tian Qinxin to participate in the festival. With the support of three of the most prominent figures in Chinese theater, the first Wuzhen Theater Festival launched in 2013, attracting significant media coverage. Although Chen and his team lacked event management experience, they have become better and better at executing a successful festival. Over the past few years, it has turned into a widely influential event and is receiving increasing recognition from both the Chinese and international arts community. Now, the theater festival is just one facet of Wuzhen’s artistic identity. Last November, after years of preparation and construction, Wuzhen’s Mu Xin Art Museum finally opened its doors. Hundreds of Mu’s paintings, calligraphic works and manuscripts are now on display. Chen Danqing, Mu’s disciple and a renowned artist in his own right, took up the post of museum curator. Also, in the spring of 2016, Wuzhen will host the first Wuzhen Modern Art Biennale, for which more than 100 international artists will fill the ancient water town, flanking the Grand Canal with their artistic creations.



Public-Private Partnerships

Pushing a Paradox

With conflicting goals at the central level, and conflicting interests at the local level, China’s muchhyped public-private partnerships (PPP) have met with a lukewarm response By He Bin


ollowing the leadership’s pledge during the Third Plenum of the 18th Central Committee of the Communist Party of China in late 2013 to allow market forces to play a “dominant” role in the economy, China’s central government has been advocating its so-called PPP, or publicprivate partnership, model for infrastructure and public utilities construction. In November 2014, the Ministry of Finance (MOF) rolled out 30 “model” PPP projects for public tender with investments totaling 180 billion yuan (US$28.3bn). Then, in May, the National Development and Reform Commission (NDRC) released a list of an additional 1,043 PPP projects worth some 1.97 trillion yuan (US$317.75bn). More recently, on September 29, the MOF released details of another 206 PPP projects worth a further 658.9 billion yuan (US$105.3bn). As the government has advocated the PPP model at the national level, local governments have also been mobilized as early adopters. It is estimated that 1,860 PPP projects worth some 3.5 trillion yuan (US$551.7bn) have been advertised by central and local governments in the past year, ranging from expressway and hospital construction to water conservation projects. Proponents of the PPP model argue that if the initiative can be successfully implemented, it will serve multiple goals by boosting growth, reducing China’s high levels of local government debt and promoting a more


modern system of governance, all of which are key aims of the central government.

Lack of Enthusiasm

However, compared to an outpouring of enthusiasm at the official level, the reaction from China’s private sector has been lukewarm. According to a survey conducted by Minsheng Securities, of the 1.6 trillion yuan (US$251bn) worth of PPP projects covered by the survey, only 210 billion yuan (US$33bn) worth have contracts in place. Of these contracted companies, most are Stateowned enterprises (SOEs), under the direct administration of central government agencies. According to the definition set by the MOF, PPP “private investors” can be SOEs as long as they are not controlled by local governments. Liu Lifeng, a senior researcher with the NDRC’s Academy of Macroeconomic Research, told NewsChina that a major reason for the lack of enthusiasm among private businesses is the skewed balance of power between local governments and private enterprises. “As local governments have the power to unilaterally change the rules of the game, it is too risky for private investors to join the PPP initiative,” he said. Compared to private investors, SOEs, backed by relevant government agencies, have much more bargaining power when dealing with local governments. As most PPP projects are mega-projects involving huge in-

vestments, SOEs, with lower financing costs and far better access to the State-controlled financial sector, are far better placed to participate than private enterprises.

Conflicting Goals

According to Wei Jianing, an economist with the Development Research Center of the State Council who recently completed a survey of ongoing PPP projects, told our reporter that the lack of enthusiasm among private investors is just a symptom of various institutional and systemic problems embedded within the scheme. Wei remarked that the PPP initiative, which stems from a reform agenda that nominally focuses on restoring the role of the market in China’s economy, has increasingly become a tool for the government to achieve its more short-term goals of boosting economic growth and reducing local government debt levels. For much of the past year, the Chinese government has been struggling to maintain economic growth as the GDP growth rate dropped below the official target of 7 percent in the first three quarters of the year, its slowest pace in six years, and the growth rate of fixed asset investments slumped to its lowest level since 2000. The Chinese government is also striving to rein in the expansion of local government debt, currently estimated to total up to US$3 trillion. Although the central government has offered to exchange the high-interest debts of NEWSCHINA I January 2016

Photo by CNS

The PPP initiative offers some private businesses access to sectors currently closed to them, such as infrastructure

local governments for low-cost bonds, the country’s local debt burden still poses a major threat to China’s financial stability. To deal with the local debt issue, China has passed a new budget law which prohibits local governments from borrowing money by any means other than provincial government bonds approved by the State Council. This tightening measure is considered a major contributing factor in the drop in fixed asset investment, which has in turn affected economic growth as a whole. By attracting private investors, it is hoped that PPP projects will reduce the local government debt burden and boost growth at the same time. But, Wei Jianing told NewsChina, these two goals, in the context of the government’s preferred PPP model, are not always in alignment. The fact that administration of the PPP initiative appears to fall under the jurisdiction of two central agencies, the MOF and the NDRC, is particularly worrying for observers like Wei. “The reality is that there is a lack of a unified institutional framework regarding the administration of PPP projects, with NEWSCHINA I January 2016

both the NDRC and MOF trying to exert authority over the initiative,” he said. Overlapping jurisdiction has already sowed confusion among local governments. Subject to the different priorities of the NDRC and the MOF, experts are concerned that some PPP projects will create more problems than they solve. For example, PPP projects contracted in the interests of boosting short-term growth may result in prolonged and exacerbated debt problems for local governments invested in these projects, who might find themselves on the hook for years-long expressway or utilities construction initiatives. Even when infrastructure construction is finished, the operation and management of these projects typically requires ongoing government subsidies.


Moreover, with current practices focused on these short-term goals, experts are concerned that the prospects are dimming for the PPP initiative to serve as a catalyst for further reform and promote what Chinese

government calls a “modern governance system” based on rule of law and respect for the market. The MOF’s inclusion of SOEs as valid investors may be a product of an assumption that SOEs, with their ample financial resources, can essentially bail out local governments by investing in PPP projects. But many are concerned that giving SOEs disproportionate influence could render such projects essentially meaningless in terms of expanding the role of the market in China’s economy. “The government should not overestimate the effect of PPPs in boosting economic growth and reducing debt,” said Wei Jianing. “After all, the ultimate goal of the initiative is to promote reform of China’s system of governance.” “We must remember that the ultimate goal of the PPP initiative is not to turn it into a financing platform, but to promote the overall quality of governance,” Professor Qiao Baoyun, dean of the China Academy of Public Finance and Public Policy under the Central University of Finance and Economics, told NewsChina. According to Qiao, under current policies, there is little incentive for local governments to advance the PPP initiative and change their behavior unless they are already in financial difficulties. The result is that many PPP projects advertised by local governments are either existing projects which the governments have struggled to finance, or projects offering relatively low returns. When the PPP initiative was first launched, it was expected that it would be better implemented in the more prosperous Eastern China, where the rights of private investors are better protected. But, in reality, local governments in wealthy coastal regions have shown minimal interest in the PPP initiative, largely due to their relatively sound fiscal situations. In the round of 30 PPP projects announced by the MOF in 2014, only a few projects are on China’s coast, with the majority clustered in the western hinterlands, where debt problems are more acute but corporate interests are less well-protected. With the stagnation of its grand PPP


economy china



Year-on-year increase in China’s budget in the first 10 months of 2015. The increase in fiscal revenue was 7.7 percent

50 40 30

Change in fiscal revenue


Change in fiscal spending

10 Source: Ministry of Finance of China














Value of China’s music market in 2014, 4.7 percent higher than the 2013 figure

Ratio of nonperforming loans (NPL) held by commercial banks in China by the end of September 2015, up by 0.09 percent since the end of the second quarter

12 6

Rise in PC-based market value


Rise in mobile-based market value


Rise in number of mobile music users


Rise in telecom value-added music services

Digital music market in China in 2014

Rise in number of users

“In theory, the partnership between public and private players is supposed to be ‘spontaneous,’” said Qiao Baoyun. “But, in China, the financial authorities have now stepped in to ‘forge’ this partnership.” He warned that by launching drastic measures to push forward the PPP initiative, the central government has increased its stake in its success, something potentially dangerous to China’s financial stability. For Qiao and many other experts, the problems underlying the stagnation in the implementation of the PPP initiative are precisely the problems the scheme was designed to address – government interference in the market, and inadequate protection of the rights of private investors. A paradox has therefore emerged. While the central leadership hoped that the PPP projects would “force” the establishment of rule of law in the business sector, a prerequisite of the successful implementation of the initiative is having systemic legal support for private interests already in place. Unless the government can resolve this catch-22, the PPP initiative may remain a short-term financial tool to prop up growth and defray some of China’s massive local government debt burden. Given the uncertainty over this initiative’s prospects, however, using it even to address these issues can be called into question.


Rise in market value



Share of total music market

projects, the MOF and 10 financial institutions, including some of China’s biggest banks, jointly launched a 180-billion-yuan (US$28bn) fund on September 30. Industrial & Commercial Bank of China, Bank of China, China Life Insurance Company, CITIC Group and the National Council for Social Security Fund all put their names down as investors in PPP projects. The move was apparently a U-turn by banks reluctant in the past year to support PPP projects involving private investors whose capital is not underwritten by the government. With this new PPP fund, the central government was announcing central financial support for the PPP initiative in a bid to attract greater private participation.

2 NPL ratio Average profitability on bank assets


0 Source: State Administration of Press, Publication, Radio, Film and Television of China


US$349.8bn Deficit in China’s non-foreignexchange reserves, mainly foreign direct investment, securities investment and foreign savings and loans, in the international balance of payments for the first three quarters of 2015 Balance of China’s non-foreign-exchange reserves, US$bn 350 300 250 200 150 100 50 0 -50











Source: State Administration of Foreign Exchange of China


Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Source: China Banking Regulatory Commission

US$333.8bn The one-year trading value of the two-way investment channel Shanghai-Hong Kong Stock Connect by November 13, 2015; it launched on November 17, 2014


Source: China Securities Regulatory Commission NEWSCHINA I January 2016

NEWSCHINA I January 2016


1972 Student Exchange

Lei Yunxia (front row, center) with her classmates

A Taste of London Fog

At the height of the Cultural Revolution, a small band of rural Chinese students were hand-picked to study abroad in the UK, making them young ambassadors at a time when China’s doors were still closed to the West By Xu Tian


tudying abroad is nothing novel to the Chinese youth of today. In fact, the topic is unavoidable. Posters advertising study abroad agencies plaster subway station walls, shopping malls and high school bulletin boards. Young salespeople giving out pamphlets for foreign language schools dot urban sidewalks; bookstores’ bestseller sections overflow with vocabulary textbooks and SAT study guides. It’s fair to say that Chinese students today have study abroad mania. About 459,800 studied abroad in 2014 alone, an 11 percent increase over the previous year, according to China’s Ministry of Education. With those kinds of numbers, it might be hard for today’s self-funded, foreign-educated students to imagine what it was like for


their predecessors in the 1970s. In 1972, six years into the Cultural Revolution (1966-1976) and while China’s schools and education system were in complete disarray, the government sent small groups of young people to Western countries to study. The UK was one of their destinations. Generally smart, industrious, patriotic and devout in their belief in communism, these young students, born and bred at a unique time in Chinese history, went through a variety of cultural and ideological shocks when they temporarily left the East to live in the West. Coming from a country whose doors were closed tightly to outsiders, these young students would kindle the beginnings of modern China’s relationship with the NEWSCHINA I January 2016

Courtesy of the interviewees


rest of the world.

England Bound

After the People’s Republic of China (PRC) regained its seat at the United Nations in 1971 and then US President Richard Nixon paid his famous visit to China the following year, the country established diplomatic relations with a large number of countries in a short period of time. Yet China’s relationship with the UK had begun much earlier. The UK was one of the first Western countries to recognize the PRC, making the announcement on January 6, 1950. The two countries first exchanged diplomatic representatives in June 1954. On March 13, 1972, half a month after Nixon’s China visit, the PRC and the UK upgraded their diplomatic relations to the ambassadorial level, launching the China-UK student exchange program shortly after. Both China and the UK expressed a strong willingness to have students study abroad to better understand the other’s language and culture. Selecting the right students was a major concern for China’s Ministry of Foreign Affairs (MFA) at the time. During the Cultural Revolution, Chinese students stopped receiving an education, as all schools and colleges had closed to make way for “revolution.” In 1968, millions of “educated urban youths” began to answer Mao Zedong’s call for young students to “go up to the mountains and down to the villages,” a movement that entailed relocating to the countryside to labor beside, and be “re-educated” by, poorer rural villagers. Under these circumstances, choosing a group of students with a grounding in foreign languages was a difficult task. One cohort of young people stood out as potential candidates. These were students who had previously studied a second language at one of the country’s eight foreign language secondary schools, all of which had been founded by 1963. Their studies came to a halt as the Cultural Revolution revved up, and these students, like their peers, had been sent to rural areas for labor. The MFA’s first step was to find the students, who had been scattered across the country. They then took a language test to further whittle down the candidates, and eventually about 40 students were selected. Lei Yunxia was one of them. Lei had graduated from Beijing Foreign Languages Secondary School in 1966 after studying English for three years. In 1968, she left Beijing to go “down to the countryside” in Hulin Town in the northeastern province of Heilongjiang, working as a medical assistant in the No. 33 Regiment of the Heilongjiang Production and Construction Corps. Day after day, the 21-year-old Lei nursed patients and bound wounds, until the early spring of 1972, when she received notice of the MFA’s call for foreign language students. Lei Yunxia was sent to Beijing to receive a preparatory training course conducted by the MFA. Political studies and language classes were the two main parts of the training. The significance of patriotism had been stressed repeatedly to these students. Since they were the face of all Chinese students who had experienced the Cultural Revolution, they needed to know how to communicate with foreign

NEWSCHINA I January 2016

students “correctly.” For instance, they were taught how to answer questions on touchy subjects, such as Lin Biao. Lin was Mao’s secondin-command during the early years of the Cultural Revolution; after an alleged coup attempt, he defected in 1971 and died in a plane crash on his way to the Soviet Union. The students were instructed that the proper response to questions about Lin’s demise was: “It was no more than an inner-Party power struggle.” If asked if they were Red Guards, they were to reply: “Yes, we are, but we only use verbal criticism, never violence.” But it wasn’t until the end of the training sessions that the students learned they were to be sent abroad. Lei Yunxia was floored. “England! Never in my life had I imagined that I could go abroad one day,” she told NewsChina. “I had never dared to think of it.” Lei’s family was extremely excited about this unbelievable news. They helped Lei prepare for her journey and bought her several Dacron shirts, the most fashionable clothing available at the time. Qi E’hong was another chosen student; at 26, he was a bit older than the rest of them. He loved reading literature, especially foreign works. The news of the UK exchange thrilled him. As he told NewsChina, he remembers being interviewed by a journalist from Reuters before departing from the Beijing airport. When asked if anyone had read books written by English authors, Qi was so excited that he exclaimed loudly in English: “Of course! I’ve read Charles Dickens’ Great Expectations and Oliver Twist.”

‘Like Alice in Wonderland’

On December 4, 1972, the first group of trained students, 11 men and four women, finally set foot on British soil. The 15 were the first Chinese students sent abroad since the start of the Cultural Revolution. Lei Yunxia and Qi E’hong were among them, as was a 22-yearold Wang Guangya, current director of the Hong Kong and Macau Affairs Office of the State Council. Their arrival attracted considerable attention from the London press. After landing, the students were astonished to find that they were greeted by a long line of flashing cameras. Lei Yunxia remembers hearing a phrase muttered frequently by reporters — “Red China.” The students first had a short tour of the city, as arranged by the local Chinese Embassy. Qi E’hong said he felt “like Alice in Wonderland” during the early days of their sightseeing trip. The students were impressed by the modern metropolis: its shiny glass skyscrapers, lofty cathedrals, crowded movie theaters, restaurants and pubs. Everything was new. They had never seen kids feeding pigeons as in Trafalgar Square; street performers singing, playing guitar or performing tricks in the London Underground; young hipsters in studded leather jackets showing off tattoos on their arms or chests; or a couple kissing across the street. Apart from visiting the typical tourist spots such as Big Ben, the British Museum and the Royal Observatory, Greenwich, the Chinese students, a group of firm believers in communism, also visited Karl Marx’s tomb in Highgate Cemetery, guided by staff from London’s Chinese Embassy. Harboring a great interest in these young guests from what they called “Red China,” journalists reported on the


students’ London trip. One publication posted several photos of these students sightseeing with the caption, “A Taste for London Fog.” After several months of language training, the students were admitted to the United College of the Atlantic in Wales on Easter Day in 1973. The local newspaper published an article detailing their first day at the college. Qi E’hong still has that clipping, the headline of which was “Chinese Students Check In.” While their British peers tended to be rebellious, bohemian and keen on The Beatles, the Chinese students stood at the opposite end of the spectrum. When their British classmates were having fun, the Chinese students spent all their time in the library, staying up late doing assignments and wading through books on their recommended reading lists, recalled Lei Yunxia. Each of them treasured this rare chance for an education. “It was like a refreshing rain after a long drought,” she said. Their diligence touched the college staff. Although the Chinese students often broke the dormitory’s “lights out” rule, their supervisors chose to leave them alone. “They never squandered money or idled time away, never smoked or took drugs, and always got to class on time,” said David Sutcliffe, president of the college at the time. As devout communists, ideological conflicts were an unavoidable issue that they had to cope with during this period. Could they, as atheist communists, enter a Christian church? If they visited, should they pray as the Christians did? Such questions were often discussed during their weekly meetings. Besides industriousness and self-discipline, cautiousness was another prominent characteristic among them, especially in dealing with issues concerning faith and politics. They wanted to avoid any social faux pas, even though they were in a foreign land. If they were uncertain of how to proceed in a given situation, they would ask the Chinese Embassy for “instruction.” On the church issue, for instance, the Embassy told them they could visit the church, but there was no need to pray. Not until they actually set foot in the religious institution, however, did they find out that in church, people not only pray, they also sing hymns. Qi E’hong, an unshakable atheist, refused to join in, for he believed that singing the hymns would violate his beliefs. Along with the cultural differences were things that brought the students and their British peers closer together. For example, their college offered Chinese language courses. The Chinese students recorded several tapes with standard pronunciation so that the language students could listen to a typical Chinese accent. Qi E’hong also conducted a Chinese course once a week, mainly teaching British students simple daily expressions. 

Great Expectations

Self-discipline and perseverance assured the students academic success. In late 1974, many were admitted to various universities to


Courtesy of the interviewees


Qi E’hong, one of the first 15 Chinese students to study in the UK after the onset of the Cultural Revolution

further their studies. Eight of them, including Qi E’hong and Lei Yunxia, attended the University of Bath. Wang Guangya and Cong Jun went to the London School of Economics. Five of the younger students stayed at the United College of the Atlantic to continue studying. In the following years, the MFA continued to send groups of students to study in the UK as well as other Western countries. Great expectations awaited these young adults on their return. Many of them have made significant contributions to Chinese diplomacy or cross-cultural communication. Along with Hong Kong and Macau Affairs Office director Wang Guangya, other major players in Chinese foreign affairs also had the experience of studying abroad during the Cultural Revolution, such as State Councilor Yang Jiechi, former foreign affairs minister; Sha Zukang, former head of the UN Department of Economic and Social Affairs; Long Yongtu, China’s former vice minister of trade who took a leading role in negotiating China’s entry into the WTO; and Zhou Wenzhong, the secretary general of the Boao Forum for Asia and the former Chinese ambassador to the US. Dickens reader Qi E’hong, now a retired English professor of PLA Nanjing Political College, still loves literature. In the decades since his time in the UK, he has become a noted literary translator, keen on introducing Chinese readers to famous international works of fiction, such as those by Agatha Christie and Sebastian Faulks. Every now and then, the 69-year-old indulges in nostalgia, recollecting those golden days in a foreign land which still resound in his memory. And, of course, he still remembers that first taste of London fog on a misty, quiet December morning. NEWSCHINA I January 2016

NEWSCHINA I January 2016



Trilateral Summit

Rivals and Partners

After a three-year hiatus, China, Japan and South Korea have resumed trilateral summits, pledging to deepen economic ties without untangling deep-rooted historical and territorial disputes By Yu Xiaodong


NEWSCHINA I January 2016

and co-prosperity in the region.” However, despite the optimism, various historical and security issues that led to the suspension of the trilateral summit three years ago appear to remain unresolved, a shadow that continues to loom large over ties between the three regional powers.

Photo by Liu Zhen


(Left-right) Shinzo Abe, Park Geun-hye and Li Keqiang meet in Seoul on November 1, 2015

Initiated in 2008, the trilateral summit was held annually until 2012 when Japan, under the administration of Prime Minister Yoshihiko Noda, determined to “nationalize” the disputed Diaoyu/ Senkaku islands located in the East China Sea, prompting Beijing to suspend high-level talks with Tokyo. In the same year, escalating tensions over the disputed Dokdo/ Takeshima islets and hardening Japanese attitudes toward its wartime history, particularly regarding “comfort women,” sex slaves drafted from the Korean Peninsula and other occupied regions by the Imperial Japanese Army throughout World War II, also alienated South Korea. In 2013, as perceived historical revisionism regarding Japan’s imperial past expanded under the Abe administration, urging Japan to stop whitewashing its wartime atrocities became common cause for China and South Korea. In November 2014, China and Japan resumed high-level contact as Chinese President Xi Jinping met with Abe on the sidelines of the APEC summit held in Beijing. During this meeting, Abe remarked that he acknowledged China’s “different view” on the sovereignty of the Diaoyu/Senkaku islands, which Beijing interpreted as a subtle acknowledgement that the territory is in dispute, one of China’s declared bottom-line prerequisites for the resumption of high-level talks with Tokyo. Even so, the bilateral relationship has remained frosty, given the enduring animosity between the two countries. Park Geun-hye had refused to meet with Abe since assuming power in 2013, insisting that Japan should first accept responsibility for its wartime use of “comfort women,” something which Abe’s administration has persistently refused to do, arguing that the issue was resolved “once and for all” in the 1965 treaty that restored diplomatic relations between the two nations.

United Front


ith much anticipation, China, Japan and South Korea resumed their trilateral summit on November 1, 2015. Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe traveled to Seoul to meet with South Korean President Park Geun-hye in the highest-level meeting between the three countries in three years. In the Joint Declaration for Peace and Cooperation in Northeast Asia issued after their summit, the three parties declared that “trilateral cooperation has been completely restored on the occasion of this Summit,” adding that “the common recognition that the situation in which economic interdependence and political/security tensions coexist must be overcome in order to build permanent peace, stability NEWSCHINA I January 2016

As the trilateral summit resumed, there was no sign that major progress had been made on enduring historical disagreements between the three countries. In their joint statement, the only mention of these issues was a pledge to carry out cooperation “in the spirit of facing history squarely and advancing towards the future.” After the trilateral meeting, Park and Abe held their bilateral meeting, also the first between Japanese and South Korean leaders in three years, which also appeared to fail to initiate a thaw in relations, as Park’s office declined to host a luncheon for Abe after two hours of talks. By contrast, Li Keqiang, who paid an official visit to South Korea ahead of the trilateral summit, was received with full diplomatic ceremony and a welcome dinner. It was reported that Japan had urged a trilateral meeting prior to


Photo by CFP


A gigantic bowl of Korean bibimbap made by Chinese and Korean chefs at the 14th Korean Week festival in Shenyang, Liaoning province, September 12, 2015

any bilateral talks between any two of the three sides, a notion apparently rejected by Seoul. The rather chilly reception received by Abe in contrast to the red-carpet welcome enjoyed by Li led many in Japan to complain that in Seoul, Abe was meeting with a “united front.” Although South Korean officials pointed out that Li’s visit was an official one while Abe’s was personal, necessitating different diplomatic protocols, there seems little doubt that South Korea has become much closer to China than it has to Japan, its erstwhile ally, in the past couple of years. Not only do the two countries have a shared experience of wartime occupation, but their economic ties have grown ever-closer. With an economy about one-third the size of Japan’s, South Korea’s trade volume with China has seen a 60-fold increase in 20 years, to reach US$290.8 billion in 2014, only slightly lower than that recorded between China and Japan (US$311.4bn). As the two sides have signed a free trade agreement which is expected to take effect by the end of this year, bilateral trade is expected to continue to expand even further. During Li’s visit, Beijing and Seoul signed another 17 agreements covering a variety of fields, and agreed to incorporate their respective national policies in four fields: the upgrading of infrastructure, innovation and industry, as well as the joint exploration of third-party markets.

Common Interests

Despite unresolved historical and territorial issues, it appears that the three parties have agreed to set these aside in a bid to restore an important trilateral platform to address various shared political and economic challenges. For Japan, by resuming talks with China and South Korea without making major compromises on historical and territorial issues, Abe can secure a stronger political position on both the domestic and international stages.


In past years, both Tokyo and Seoul, both treaty allies of the US, have been under pressure from Washington to repair their bilateral ties. Compared to Abe, this US pressure on Park is particularly acute, as she has held several summit-level meetings with Xi Jinping while consistently refusing to meet with Abe. As many in Washington are now wary of Park tilting yet further towards China, it has become important for Seoul to ease these concerns by resuming talks with Japan at the highest level. For Beijing, as tensions with the US over the South China Sea issue continue to foment, de-escalating tensions with Tokyo, particularly after the latter declined to join US naval patrols in the disputed region, seems to have become a strategic goal. Economically, too, against a backdrop of global economic turbulence, all three nations have encountered economic difficulties. China’s economic growth rate has slipped below 7 percent, its lowest ebb since 2000, and Japan fell back into recession in the third quarter of this year, a further blow to so-called “Abenomics.” In the meantime, as foreign demand has declined, South Korea has also been struggling to boost its crucial export sector. Given these economic difficulties, both China and South Korea have resorted to cutting interest rates to boost their economies, while Japan has adopted a zero-percent interest rate alongside quantitative easing to stimulate its economy. Improved cooperation in the economic and financial fields would enable these three heavily interlinked economies to better coordinate and manage economic and financial policies. This has apparently already begun – in February, South Korea and Japan agreed to extend a 14-year currency swap agreement. Indeed, according to the joint statement, the bulk of trilateral cooperation will remain in the fields of economic and social issues such as disaster management, environmental protection, and deepening economic ties – areas where the interests of all three countries have significant overlap. The only exception to this appears to be a consensus on North Korea, where the three leaders “reaffirmed our firm opposition to the development of nuclear weapons on the Korean Peninsula.” Most importantly, the three leaders also agreed to make further efforts “towards the acceleration of the trilateral FTZ negotiations.” When initiated in 2008, the primary goal of the trilateral summit was to deepen economic integration among the three countries and eventually set up a free trade zone (FTZ) in a region that accounts for more than 70 percent of total Asian economic output. As all three leaders are expected to remain in power in the next three years, analysts are predicting a relatively sustained period of political stability allowing for genuine progress in the FTZ initiative. But whether this restarted mechanism will eventually lead to the realization of a much-desired trilateral FTZ in the absence of political and strategic consensus remains open to question.  NEWSCHINA I January 2016


Eileen Chang

Closing the Book

Two decades after her death, Eileen Chang remains one of China’s legendary modern writers. The recent release of new versions of two of her manuscripts makes the author’s oeuvre complete at last on the Chinese mainland

Illustration by Leng Bingchuan

By Wen Tianyi

A portrait of Eileen Chang used as cover art for The Young Marshal

NEWSCHINA I January 2016



Handwritten manuscript of Small Reunions


ew modern Chinese writers have received as much attention as Eileen Chang. This public scrutiny is not limited to her work — everything about her, including her marriages, family drama and even her fashion choices, has been the topic of much discussion and research. Even when previously unpublished works hit bookstores after Chang’s death, they each shot to the top of bestseller lists. Recently, two of her novels found a second life in newly published forms; the manuscript version of Small Reunions and the simplified Chinese version of The Young Marshal were both released on the Chinese mainland this past October in honor of the 20th anniversary of the writer’s death. At last, all of Chang’s works have been published in her homeland. And her legacy lives on.

This ‘Gift’

Before she died in Los Angeles in September 1995, Eileen Chang willed all her possessions to Stephen and Mae Fong Soong, a married couple who, in her later years, had been her closest friends in the US. Chang’s estate included all of her unpublished works, and eventually the couple’s son, Roland, became the executor of Chang’s literary legacy. However, “If I could choose again, I definitely wouldn’t accept this ‘gift,’” Roland Soong told NewsChina.


Born in 1949 in Shanghai, the younger Soong moved to Hong Kong with his parents when he was four months old. At 18, he left for the US and lived there for 30 years. The apple fell far from the tree — unlike his parents, who spent most of their professional lives immersed in the literary world, Soong has a doctorate in statistics and his career has had little to do with the written word. Though Soong still recalls meeting Eileen Chang when he was little, his memories have faded over the years. He told NewsChina that he remembers her as tall and slim. She wore glasses and talked with his parents in the Shanghai dialect. He actually felt little interest in Chang as a child and complained “whenever she came, she would take my bedroom and I would have to sleep in the sitting room.” However, when Soong’s mother died in 2007, Soong was left with no choice but to take up her mantle by managing Chang’s literary estate. Since publishing Chang’s first posthumous work, the essay “A Return to the Frontier,” in 2008, Soong continued combing through Chang’s old manuscripts and published Small Reunions, Strange Country, Quotations of Eileen Chang, The Book of Change, The Fall of the Pagoda and The Young Marshal. Soong also co-wrote a memoir of his father, which includes stories about his family’s interactions

with important Chinese literary figures like Chang and Qian Zhongshu. Soong admits he’s no expert on Chang. “What I’ve done in the past years could hardly count as research,” he said. “I just like solving problems.” “Solving problems” is the mindset Soong has had towards managing this part of his inheritance. In deciding which unpublished works of Chang’s to send to the printers, Soong’s approach reflected his analytical background. Each time he investigated an asyet undiscovered piece, he’d first read through the correspondence between his parents and Chang, a massive mound of text filled with some 900,000 characters, to pick out parts that mentioned that particular composition. Through these letters, Soong would deduce Chang’s attitude towards the material and its importance to her. He would extend his sleuthing to all sorts of external sources on the Internet and in other media, finally creating a statistical analysis based on his findings. “I won’t judge whether a work of Chang’s is good or not, because I really don’t know much,” Soong told NewsChina. “To me, it’s all a matter of numbers.”

Not So ‘Small’

Although he works with numbers instead of letters, Soong’s contribution to Chang’s literary estate cannot be denied. Chen ZisNEWSCHINA I January 2016

Photo by IC

A Different View

han, a known researcher of the author’s texts, said that Soong has a “very clear” mind and a special perspective when it comes to managing her works. The first Chang novel that Soong published was Small Reunions, a semi-autobiographical work that caused a great deal of controversy, not over its literary merits, but over whether or not the book should have been published in the first place. The dispute stemmed from Chang’s will, in which she writes: “… Small Reunions should be destroyed. I haven’t thought over these things thoroughly; we will discuss it later.” When Soong found the draft in his hands, he was surprised by the careful, neat handwriting that tidily filled 619 pages with some 160,000 characters. “I had never seen a manuscript as thick as Small Reunions. I went through it page by page, and it was all written so neatly,” Soong told NewsChina. “Just the thought of destroying it made me feel so guilty.” Soong decided to publish the work in 2009. “I had three choices: publish it, destroy it, or put it aside for others to decide in the future,” he said. “However the last choice was actually not a possibility. I was already in my 60s, with no kids. My sister’s children are all Chinese American and can’t speak or read Chinese. So I had to make the decision by myself.” NEWSCHINA I January 2016

Mu Xin, a famous Chinese artist, writer and literary critic, commented in an article that Eileen Chang was a “beautiful woman in troubled times,” but when “the times are no longer troubled, the woman isn’t beautiful anymore.” The “troubled times” Mu was referring to were the days Chang spent in Shanghai in the 1940s during the Japanese occupation, and the subsequent civil war between the Kuomintang and the Communist Party. Many of Chang’s most important and famous works, including Love in a Fallen City, The Golden Cangue and The Red Rose and White Rose, were published during this time. However, when Chang left Shanghai for Hong Kong and later moved to the US in the 1950s, Mu wrote that her literary flair “faded away.” Zhi An, a writer and the chief editor of The Complete Works of Eileen Chang, which was published on the Chinese mainland in 2009, disagreed with Mu, saying Mu only thinks that because he is “unfamiliar with Chang’s literary works from her later years.” According to Zhi, Small Reunions actually provided a precious vehicle through which readers and researchers could get a deeper, contrasting perspective towards Chang and her other works. “It’s not just supplementary to [earlier] research on Chang, it actually overturns many previous conclusions,” he commented. “After reading Small Reunions, we realized that the biographies written about Chang in the past had all gotten it wrong in many ways,” Zhi said. “We have to adjust how we view her relationships with many people, including Fu Lei, Su Qing, Hu Lancheng and Sang Hu,” Zhi said. “Small Reunions doesn’t provide biographical information [on Chang], but instead destroys present biographical information.” The Young Marshal, which saw fresh life this October with its first publication in simplified Chinese, is actually an unfinished work based on the story of Kuomintang mar-

shal Zhang Xueliang (Chang Hsüeh-liang) and his wife, Edith Chao. Zhang, nicknamed “Young Marshal,” was an instigator of the 1936 Xi’an Incident and had Kuomintang leader Chiang Kai-shek arrested, for which he was put under house arrest for 50 years. His wife stayed by his side for nearly the entire period. Eileen Chang wrote the story in the 1960s in the US. She spent three years collecting materials and doing research about the Young Marshal. However, Chang stopped writing after just seven chapters, leaving the story several years short of the Xi’an Incident. Few knew of the existence of the Young Marshal manuscript before Chang’s death, and no one really knows why she suddenly gave it up. “I don’t think The Young Marshal is a successful work. If you are not familiar with Chang, you might be confused by what she was writing,” commented Soong. In Zhi An’s opinion, it was the love between the Young Marshal and his wife that overcame political conflict and the turmoil of war that drove Chang to write the story. Chang’s first marriage was to Hu Lancheng, a writer who collaborated with the Japanese and worked in their puppet government in China in the 1940s. Many Chinese people regard him as a traitor. The four-year marriage was a painful failure to Chang that haunted her for a lifetime. “The Young Marshal is actually a love story,” said Zhi. Yet when Chang started writing the story in the ’60s, the events she was describing had happened about 40 years prior. “If another person were to write down their story some 40 years ago, it would definitely be just a pure romance novel,” he said. “But after 40 years, all the dust had settled down. An elderly couple was all that was left, alive but forgotten by the world.” In his opinion, it might be the vicissitudes of the couple’s life at the time that attracted Chang’s interest in the first place.


visual REPORT

Reproducing History

A purportedly 95-percent accurate reproduction of Beijing’s Old Summer Palace, known in Chinese as the Yuanmingyuan, opened to the public on May 10, 2015, in Hengdian, Zhejiang Province. The structure was completed 155 years after the original palace was burned down by Anglo-French forces during the Second Opium War. A complex of palaces and gardens, the original Yuanmingyuan was built in the 18th and early 19th centuries for the exclusive use of the emperors of the Qing Dynasty, who used it both as a private residence and official office. With its extensive landscaped gardens and buildings filled with precious works of art, the Old Summer Palace was also known as the “Garden of Gardens.”The reproduction, which took nine years to construct and cost an estimated 30 billion yuan (US$4.7bn), has been the target of controversy since the first foundation was laid. As little information about the original Old Summer Palace has been preserved, with the only sources being inaccurate, fanciful paintings and inexact written accounts, the “authenticity”of this newly built complex is dubious. Moreover, after being open for nearly half a year, the number of visitors has remained more conservative than expected.


NEWSCHINA I January 2016

1. Bird’s-eye view of the complex, May 2015 2. Several visitors tour the site before its official unveiling, May 9, 2015 3. A reception hall replicating where the emperor held court 4. Reproduction of an original Old Summer Palace fountain featuring the 12 animals of the Chinese zodiac

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NEWSCHINA I January 2016


visual REPORT


4 5

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1. Visitor numbers continue to lag behind expectations 2. Supposedly authentic ritual processions are recreated by performers 3. Dancers in Qing-era costume 4. One of the complex’s many pagodas 5. A large-scale multimedia performance conducted on the complex’s main lake, May 9, 2015


NEWSCHINA I January 2016


NEWSCHINA I January 2016


OUTSIDEIN perspectives from within China

Divine Donggang

Smoke on the Water

One of Taiwan’s most breathtaking folk events is held in one of its least-known towns By David Green

A boat is ritually burned at the Donglong Temple, Donggang, Taiwan, October 24, 2012


eldom have I traipsed home at dawn so energized. Skipping through Donggang’s thoroughfares as the early light overpowered the golden orbs suspended above the street, my thoughts turned to the cleansing nature of a prolonged conflagration. Nevada’s Burning Man festival may be world-renowned, but why light up “The Man” when you can incinerate bad luck itself – embodied in demonic effigies chaperoned by gods – sealed aboard an elaborately engraved and painstakingly painted wooden barge more than 20 feet long? Such is the nature of a triennial ritual held here known as Wang Ye, referring to five local deities led by Marshal Wen, a folk hero posthumously elevated to godhood. Academics believe this custom originated in the Song Dynasty as a means to celebrate the gods’ battle against plague-carrying demons. Now, with the specter of plague banished, this still fiercely respected rite is seen more as a prayer for peace and prosperity, though more modern viruses like dengue fever and H1N1 are also thought to be exorcised through the ritual. Silver Fox Cave



Donggang, a port that prides itself on its bluefin tuna catch, is for most of the year a laid-back town much like any other sleepy fishing enclave dotted up and down Taiwan’s southwestern coast. But during the week-long festival, which occurs around the ninth lunar month on a date determined by lengthy scrying of wooden divination blocks, Donggang comes alive with firecrackers and color, music and mayhem. The joy of Wang Ye lies in giving yourself up to the experience; to the magic in the incense, incantations and aromas that infuse the lanes; and the soothing red and gold light that beckons softly from flickering household shrines. During the day, the roads are seeded with explosive welcomes primed to herald the boat’s arrival, as well as stalls vending everything from fruit juices to wild boar sausage and deep fried squid. For those seeking liquid refreshment, craft beverages can be obtained for exceedingly reasonable prices at The Beer Shop. NEWSCHINA I January 2016

Getting There & Away

By far the most convenient way of getting to Donggang from Taipei is to take the frequent High Speed Rail trains from Taipei Main Station all the way to the end of the line at Zuoying. From Zuoying, which is situated on the outskirts of Kaohsiung, take the city’s red metro line to Xiaogang station, and switch to the 9117 bus to Donggang. The journey takes about an hour and the buses are operated by a variety of companies, including Pingtung Bus, Kuo Kuang Bus and Kaohsiung (KS) Bus. Alternatively, hail a cab outside the HSR station and negotiate an offmeter fare. Be aware there are no taxis in Donggang itself.

Where to Stay

Photo by CFP

Photo by CNA

Taiwan has an amazing array of comfortable, welcoming and homely B&B options, and Donggang is no exception. There are essentially two options when staying in Donggang: right on the water slightly away from the town itself, or right in amongst the hustle and bustle. For the former, I would recommend Discovery B&B, which boasts views over the ocean and quick access to the nearby Dapeng Bay National Scenic Area. In the town itself, Wish-Dream B&B features a garden and terrace, and is very close to the port and market.

A festival performer in the raiments of a deity

You can find all of the above at Taiwan’s infamous night markets, but it is fantang, a Donggang specialty, which really must be sampled. Its literal translation, “rice soup,” is a misnomer. This is congee gone native, sucking up and absorbing anything it can get its hands on — in my experience, this thick potage encompasses fish balls and shrimp, beef shank, cabbage and ginger. Listing the ingredients is a futile exercise because every household’s fantang is different; it is the process, not the recipe, that is key. Cooked continuously for the duration of the festivities, this hearty soup is repeatedly restocked with water and ingredients, and shared amongst neighborhoods and households. Anyone who knows anything about Taiwanese cooking culture need not be told there is intense competition at work here. Reputations are at stake, and the concoctions taste all the better for it. On the festival’s final day, crowds milled about on the beach from the early evening onwards, but it was only deep morning, when the boat emerged from the nearby Donglong Temple, that the shore came to life. Borne by an army of yellow-uniformed and rattan-hatNEWSCHINA I January 2016

ted palanquin bearers, the vessel was heralded by a resounding gong, which tolled with a haunting rhythm reminiscent of the final scene of The Wicker Man.


As the night wore on, a crowd several thousand strong gathered in expectation of the burning, cramming onto the beach and perching atop every conceivable vantage point; chewing betel nut, drinking home-brewed power drinks, or laying down on blankets to get some shut-eye before the main event. The sand was strewn with paper treasures: replica mansions, livestock, modern appliances and, of course, cash — accumulated in piles so precipitous they eclipsed the view of the waves beyond. Like much in Taiwan, what appeared to be merry chaos in reality had a strict order and a razor-sharp religious and political edge. Every paper packet and package earmarked to be stacked inside the offertory boat bore the names of persons of prestige, and touching them was



forbidden. All that occurred in the run-up to the burning, from the distribution of paper money to the precise route of the boat – which was paraded past the townhouses of important temple officials during the day of the ceremony in a bid to symbolically absorb evil spirit – was a carefully choreographed display of local power. The burning itself was an epic affair, preceded by literally hours of preparations and an at times exasperated commentary from a master of ceremonies who might have enjoyed a few too many pre-game tipples. But, as the night wore on and the moment of ignition approached, the sense of excitement became palpable. The experience of watching the flames lap at the ship’s hull before catching and belching smoke into the sunrise will linger long in my memory: there was a genuine sense of mystique.


While the Wang Ye festival can be traced back 300 years, it has a very modern significance. Beds in Donggang were entirely booked out on the big night, which surpasses even Chinese New Year in its importance to the townsfolk, and celebrations such as these are of vital importance to a port that desperately needs a new lease of life. Persistent overfishing in the deep Pacific, where boats run lines hundreds of kilometers long and often do not return to port for more than a year, has resulted in dim prospects for the town’s younger residents, who have little incentive to sail the seas of their fathers. The

dwindling catches have also resulted in the boat captains transgressing the boundaries of legality by relying on shark finning, which was banned in Taiwan in 2011, to turn a profit. Some have compared the slow decline of the fishing industry here with that of the art of building the wooden boats used in the festival itself. But as my guesthouse host Pei-Lun Huang tells me, several master boat builders remain in the town, and all are now actively striving to pass their knowhow down to the second and third generation. All is not lost for the fishing industry, either, if it can adapt and wean itself off unsustainable and illegal practices, according to Greenpeace. Fishing is Donggang’s lifeblood — evidenced by the haphazard patchwork of fishing boats jammed prow-to-keel beneath the Yanping Road bridge. But in the absence of an industrial revival, the town must seek other sources of income, with tourism an obvious potential avenue. Pei-Lun’s home was full of guests, and the ebullient father of two was quick to tell me that the number of foreigners in town was noticeably larger this year than he had ever seen. The triennial timing of the festival makes it impossible to rely on as a draw for tourists, but Donggang has the charm indigenous to sleepy fishing towns the world over, and the seafood is world class. Those interested in exploring Taiwan’s religious, commercial and craft traditions would do well to make the trip, whatever the time of year.

real chinese


saohuo shopping spree

Millions of Chinese people went on a shopping spree on November 11, the country’s unofficial Singles’ Day holiday. Social media carefully followed reports of rampant, nationwide saohuo. With sao meaning “sweep” and huo meaning “products,” saohuo is descriptive of someone making a “clean sweep” of a store. The term predates the invention of Singles’ Day, China’s answer to Black Friday – in close proximity to any national holiday, individual brands and retailers typically launch major sales, luring


hordes of customers into saohuo fever. This term has even spread beyond the Chinese diaspora. During China’s National Day vacation (October 1-7), an estimated 400,000 Chinese mainland tourists “swept” stores in Japan, racking up sales revenue of an estimated US$1.1 billion. Media coverage showed Chinese lined up at cash registers across Japan, with teetering mounds of merchandise piled around their feet. As November 11 approached, Australian mothers began to complain that throngs of


Chinese mainland shoppers had cleared their local supermarkets out of infant formula, a complaint repeated in Hong Kong and Taiwan. Closer to home, China’s stock market frequently dances to the tune of the saohuo orchestra. In the world of finance, the term describes investors who bulk-buy stocks in a bid to inflate their prices, even to the point of influencing entire indexes. Whether you’re a Sydney grocer or a Shanghai stock trader, China’s saohuo legion is a force to be reckoned with. NEWSCHINA I January 2016

flavor of the month

The Joy of Soy By Sean Silbert

NEWSCHINA I January 2016

Light soy sauce can be aged, which thickens the consistency and darkens the color enough to be called, fittingly, “dark” soy sauce. The more robust, rich taste of this mixture makes it better for more intense cooking, as the flavors hold up and even improve at high temperatures. Some regions fiddle with the recipe, including additives such as mushrooms or starch to give the brew its distinctive heavy texture. At least in China, both of these varieties are used to alter food in the kitchen and on the plate. Saltiness is one of the cornerstones of Chinese cuisine and probably its most common flavor (though spicy is a strong contender). Since the Chinese mindset holds that the saltiness of the food is the responsibility of the chef – you won’t find a salt shaker on a Chinese dining table – getting the balance right is crucial. Why is soy sauce still so popular when salt is now so cheap? For one, soy sauce is a potent source of umami. A dash of soy sauce can easily lend an extra boost of that meaty, mushroomy, savory quality that is so appealing to the palate. There’s a lot of chemistry involved here, but the gist of it is that soy and other fermented sauces are an easy way to get that extra push that ramps up Chinese cooking. That taste, combined with the industrial-scale production of soy sauce, available in every supermarket and corner store in a bewildering smorgasbord of variety, make soy sauce a given for any chef. The side effect of this is that Chinese now have one of the highest intakes of salt per person in the world. Modern soy sauces are saltier than traditionally brewed and homemade alternatives, and table salt is now a standard weapon in the cook’s arsenal, meaning many restaurant dishes get a double dose. Rural Chinese, especially in the north, add so much salt to their food during cooking that it has become a public health problem, turning many regions into stroke and hypertension hotspots. What was once a problem of scarcity is now a problem of abundance. Beware, gentle reader. And if you think you’re getting real soy sauce when you’re eating Chinese takeout, think again. Those little transparent packets aren’t necessarily the real thing – in fact, they’re typically filled, according to The Atlantic, with a cheap, saccharine mixture of “water, salt, food coloring, corn syrup, MSG, and preservatives.” Head to your nearest Asian market to try the real thing for yourself, and even an amateur can taste the difference. The wise soy saucer shops carefully. Photo by IC


f you need to stock a Chinese kitchen, you might start with a good bottle of soy sauce. But in order to understand why this ingredient is so critical, you’ll have to first look at the role of another essential commodity: salt. Salt’s ability to preserve food to last far out of season must have made it seem almost mystical – if very taxable – to the ancients. From the dawn of the first Chinese empire, the state held a monopoly over salt sales as a way of raising state revenue. Remarkably, it still does. State control made salt a rare, expensive commodity, and regular Chinese needed a way to make the little they could get their hands on last a long time. One of the most common ways to stretch salt was through brewing fermented sauces. Enter soy sauce. Over two thousand years ago, Chinese would make a particularly pungent condiment, known as jiang, by layering fish with salt and soybeans until they fermented into a thick ooze – very much like the garum of ancient Rome, or the fermented fish sauces found in modern-day Southeast Asian cuisine. Earthen jars packed tightly with this pungent mixture were household treasures, carefully managed for months or sometimes years. The soybeans both sped up fermentation and were noticeably cheaper than the fish, making them useful enough that the fish component was eventually ditched altogether. It’s said that this sauce is the ancestor of today’s soy sauce, while its fishier cousins endure from Korea to Indonesia. To get sauced these days, soybeans are soaked, boiled and let to sit with a particular strain of fungus, Aspergillius oryzae, in brine. The fungus consumes and breaks down the starches in the soybeans, a process which leaves a dark brown liquid behind. The mixture is then pressed to extract every last morsel of flavor before bottling. Each batch of this brew has varying levels of quality, and variance in water content and length of fermentation affect the taste. Like olive oil, the first pressing of the soybeans is considered to have more flavor, and is reserved for dipping. This, and everything after, is called “light” or “fresh” soy sauce. Light soy sauce is the standard cooking variety, available under dozens of brands and primarily used for flavoring, finishing and seasoning due to its delicate nature. It’s thinner, saltier and has a less bombastic influence than its heavier alternatives, making it better for vegetables and table-side dipping.



Cloud Breakers By Madara Rudzite


I have a suspicion that officials are quite pleased at being seen as having dominion over the weather

Illustration by Liu Xiaochao

“It will be horrible.” “Why would you even consider it?” “You only have a week off this semester, why spoil it with crowds of millions of people?” “Just the thought of the smog makes me suffocate!” Such were the encouraging words of my friends when I told them of my plans to go to Beijing for the National Holiday in October. I knew what I was signing up for – a week in the city that infamously went “off the charts” in 2013 when the air quality index (AQI) rose above 500, the maximum measurable level on a scale developed by the US Environmental Protection Agency, surely only made more interesting by the chaos that millions of visitors to Beijing create during what is also known as Golden Week. I thought I was ready and had mentally prepared myself, but what I saw in Tiananmen Square on the morning of October 1 took me by surprise: the city that had experienced pouring rain just the day before was shining beneath a bright blue sky. I simply could not believe it. I had expected at least moderate smog – the factories had been closed for the vacation and thus, ever the optimist, I’d not bought a face mask. But this was just too much. Surprising weather changes had happened before. It was equally sunny in the capital over the recent Mid-Autumn Festival, but weather changes, right? There was nothing surprising about a sunny weekend in between two rainy weeks, if anything, it was simply a coincidence I could only be thankful for. But now, looking at a sky blue enough to hurt my eyes, I began to ponder if this “good fortune” wasn’t merely an artificial atmospheric cloud shielding Beijing from the real weather. A friend made a joke that the government must have control over the weather. Wait. Was that even a joke? Turns out it wasn’t. Apart from closing factories and limiting vehicle movement in cities, the Chinese government has also practiced a high-tech version of the rain dance for many years. The grand opening of the Beijing 2008 Olympic

Games? Boom! A photogenic blue sky. Severe drought in the wheat-producing north?

Boom! Rainy days. The 66th anniversary of the People’s Republic of China? Boom! Three days of perfectly blue sky. This is achieved by using jets to disperse clouds, and then firing silver iodide rockets into them to “seed” them. There’s an official department in charge of this – the Beijing Weather Modification Office – that, among other things, employs farmers from nearby areas to fire the rockets at the clouds. It’s in their interest, too, after all. What surprised me the most was that the Chinese friends I incredulously asked about this would just look at me and laugh. “What do you mean it is strange? It is nice to have nice weather during holidays, and our government tries hard to ensure that.” I have a suspicion that officials are quite pleased at being seen as having dominion over the weather. Just as emperors used the Altar of Prayer for Good Harvests to ask politely for a grain surplus, so the modern State has managed to effect a far more tangible influence over forces once entirely left to the auspices of nature. To a Westerner, it’s almost overwhelming. And yet, there we all were, enjoying our vacation in the sunshine. Contrary to the warnings I had been given by friends, Beijing was pleasant, bright and warm, and the people weren’t shy about expressing thanks to their leaders. Maybe that is what National Day is all about – uniting China’s present with her past, fusing the mythical and the real, conjuring a dreamlike, perfect holiday to take everyone’s minds off the workaday smog. But holidays end. That Sunday, when the holiday was officially over, I once again detected a smoky tang in the air, and my throat did not approve. By Monday it was business as usual, and the sun was nothing but a boiling orange ball sinking into gray-brown dust. I could not see anything beyond 50 meters, and the smog seemed more like a fog, a dynamic cloud that you could clearly see rolling back into the city. Goodbye, Beijing. Until your next vacation! NEWSCHINA I January 2016

Wedding Crashers By Jozette Allan

NEWSCHINA I January 2016

Despite my swollen feet being several sizes too large, I managed to squeeze them into her dainty slippers

Illustration by Liu Xiaochao

“Your hot dog is so cute!” I vacantly stared at the originator of this comment, confused. Having just arrived in China the night before, my body was still going through the jet lag adjustment process. After a few moments, I looked down at my phone case and at once, it all made sense. I’d clad my cell in a hot dog-shaped novelty cover. I soon learned that the girl who made this comment was a Chinese postgraduate student named Cynthia. As is the usual custom in China, we exchanged numbers, and I bid her farewell, assuming it was the last I’d see of her. A week later, however, I received a curious message. “Teacher Yi’s brother will hold a wedding on Saturday. We need a bridesmaid. I want to invite you to come with us.” Despite the fact that I didn’t know who Teacher Yi was, my mind took very little making up. YES. I will take the job! I went on to Skype and told my boyfriend about my new job. He was somewhat concerned that I was about to be abducted. I laughed this off, but then, that night I had a horrific nightmare and woke up terrified for my life, and wishing I’d never seen Taken. I was suddenly extremely apprehensive about this mysterious trip to the countryside where my tickets and hotel were being bought for me by people I didn’t know. The wedding group chat on my phone was my only source of reassurance. On the day before the big one, I discovered that I had a serious problem. Apart from a pair of Doc Martens, I realized I had no shoes to wear to this wedding. My bridesmaid dress was being provided for me, but I had overlooked the matter of footwear. To solve the problem, I found myself frantically running in 28-degree heat all the way across campus to try on Cynthia’s shoes. Despite my swollen feet being several sizes too large, I managed to squeeze them into her dainty slippers. On arriving at the venue, I discovered, to my relief, that a total of eight “international

student bridesmaids” (including Cynthia), and eight “international groomsmen” had been procured for the occasion. The organizers were pretending that Cynthia was Korean just to keep up appearances. The 16

of us were whisked off to a bizarre wedding rehearsal. The decorations were fantastic, with a grand runway and stage in the middle of the room. The rehearsal featured the groomsmen entering to some hilarious ’90s rock while us ladies daintily glided down the runway to the soothing tones of Enya. After a bit of scripted commotion between the bride, groom and the father of the bride, us international students had to introduce ourselves in Chinese, and then deliver a blessing to the happy couple in our native languages. At ridiculous o’clock on the big day, the bridesmaids assembled outside of the bride’s room. The bride herself was sitting serenely in the middle of the bed, her dress flowing around her in tumbling white waves. The task given to the bridesmaids was to stand outside the room to bar the groom from entering. Once he arrived, he presented red envelopes to “bribe” us, and then answered a set list of questions. Once the groom was admitted, the couple fed each other noodles and dumplings, representing longevity and fortune, respectively. Despite the endearing gestures, I tensely watched as the chopsticksuspended noodles swung menacingly. I was rather anxious as to what condition the bride’s dress might be in at the end of the ritual. I needn’t have worried – she had two other dresses to wear; a more flamboyant, jewel-encrusted gown for the ceremony and then a red, traditional-style wedding dress for the meal afterwards. On the way to the ceremony that morning, there was a brass band, cannons, streamers: the works. It was all so fabulously extravagant. What wasn’t fabulous was the goat that was getting skinned at the side of the road – not part of the ceremony, just rural life going on as usual. The whole spectacle was over by about 11 AM, and I was on the train back to the city by the early afternoon. Despite the early hour, however, we’d all managed to get as spectacularly wasted on local liquor as we might have done at any Western wedding banquet.


Cultural listings Cinema

Documentary on the Silver Screen After four years of shooting and production, Himalaya: Ladder to Paradise, a documentary about summitting Mount Everest from the north side, was released in theaters in China in mid-October 2015. Directed by experienced documentary filmmakers Han Xiao and Liang Junjian, the movie focuses on the growth of a young guide whose father was the only monk at the remote Rongbuk Monastery, located some 20 kilometers from Everest’s peak and reportedly the highest-altitude monastery in the world. As the story unfolds, grand scenes of the Himalayas expand before the viewer. The movie was the first among Himalayan documentaries to shoot fully in 4K ultra-high definition. Other documentary firsts included aerial shots of the mountain’s Advanced Base Camp at 6,500 meters (21,300 feet), shooting at above 7,000 meters (23,000 feet) and hauling a tripod up the mountain. As China lacks a large documentary audience and has very few arthouse theaters, the movie’s theatrical release is seen by many as a pioneering step.



Darkness, Colorless Blending traces of Kazakh sound into their dark and heavy industrial arrangements, IZ, since the band’s 2013 album Echo Jango, has gotten away from its earlier roots of modernized Kazakh folk music that was flavored with a taste of the grasslands. The band’s latest album, Colorless, which came out in November 2015, continued the experiment with a better manipulation of both avant-garde and traditional elements. The album’s 12 tracks are very diverse. Led by Xinjiang-born Kazakh musician Mamer, an excellent dombra and guitar player, the band, though currently down to two members, has created a unique sound in China’s rock scene. While Mamer sings only in Kazakh, the new album, unlike the previous three, provides both Chinese and English translations of the lyrics so listeners can better understand IZ’s music.


Out of Monarchy By Qin Hui


Yoko in Beijing Yoko Ono’s first solo exhibition in Beijing opened on November 15, 2015, at the gallery Faurschou Foundation Beijing in the capital’s 798 Art District. Although Ono’s last solo exhibition in China was in Shanghai seven years ago, the 82-year-old multimedia artist and widow of John Lennon still garnered much attention from China’s media and arts community. Running through July 2016, the exhibition, titled “Golden Ladder,” features a mix of old and new works, from the titular goldpainted ladders to “Ex It,” a collection of coffins with trees protruding from them, originally made in 1997. As Ono’s works are often conceptual, the core of her art is the idea portrayed, rather than the material used. Visitors are invited to interact with Ono’s works in various ways, such as bringing their own gold-colored ladders of any size, shape and material to join the artist’s own display.

In historian and sociologist Qin Hui’s opinion, Chinese society is still going through the period of constitutional and historical change initiated at the end of the Qing dynasty (1644–1911). The last time such change transpired was some two thousand years ago, when China transformed from a feudalistic society to an imperial monarchy. Released in early October 2015, Qin’s new book, Out of Monarchy, discusses the changes China has experienced in the past one and half centuries, contextualizing them with penetrating analysis. Qin believes the key to an insightful perspective on China’s future political development lies in understanding the two gigantic upheavals Chinese civilization has undergone over the past 3,000 years. NEWSCHINA I January 2016

NEWSCHINA I January 2016



A ‘negative list’ will make market access both fair and open Recent progress made on China’s negative-list market entry approach marks a major step forward in economic governance By Wan Zhe


ollowing a September meeting of the Central Leading money and time currently borne by both investors and the authoriGroup for Comprehensively Deepening Reform, presided ties, while improving the effectiveness and efficiency of government over by Chinese President Xi Jinping and during which regulation. a guideline for adopting a negative-list apIt is expected that the negative list will proach for regulating market access was apincorporate restrictions on investment If successfully proved, China’s State Council published its found in various laws and regulations implemented, the “Opinion on the Implementation of the into a single document, allowing invesNegative-list Market Entry System” on Octors in sectors and activities not included policy will greatly tober 19, 2015. in the negative list to establish a company improve openness, According to this document, the negathrough a straightforward registration profairness and tive list, which will loosen market entry recedure, with no administrative approval retransparency in the quirements for both domestic and foreign quired. Moreover, once the negative list is Chinese market, investors, will go into effect in the Shanghai established nationwide, local governments and, therefore, its Free Trade Zone on December 1, 2015. It will have no power to change it. is expected that the policy will be rolled out Backed by this list, both investors and attractiveness nationwide by 2018. government agencies will, for the first The introduction of a negative-list aptime, have a clear idea of what the governproach to market access reflects new thinkment can and cannot do regarding maring at the top level of China’s governance ket access. Without excessive bureaucratic system against the backdrop of a “new meddling as a factor, a negative list has the economic normal” and a sustained growth potential to restore the dominant role of slowdown. If successfully implemented, the policy will greatly im- the market in China’s national economy. Not only will private and prove openness, fairness and transparency in the Chinese market, foreign investors currently excluded or deterred from participating and, therefore, its attractiveness. in the market be empowered to compete in it, but State-owned enIn the past, a major problem has been arbitrary and excessive terprises and other existing players will also be compelled to increase government intervention in China’s economy. With a governance their competitiveness rather than focus all their efforts on lobbying. system based on gaining advance administrative approval, the ChiBy delineating the government’s jurisdiction in commerce, this nese government essentially controls who can and who cannot en- reform has the potential to inject new vitality into the troubled ter the market. Such a system not only breeds inefficient and unfair Chinese economy, securing China’s long-term economic sustaininvestment, but creates ample room for rent-seeking, an underlying ability.  factor in widespread corruption within the government. By transforming micro-management into macro-management, The author is a chief economist with China National Gold Group China’s economic planners can greatly reduce the costs in both Corporation.


NEWSCHINA I January 2016

NEWSCHINA I January 2016



NEWSCHINA I January 2016

January 2016