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Coal and Silver: Unlikely Movie Star


Invisible Victims: Black Lung Epidemic


Revving Up: Fighting Foreign Autos

Is a muted Two Sessions an indication that the Party is cautious about the prospects for its ambitious reform agenda?


Volume No. 069 May 2014



Published by China Newsweek Corporation Publisher: Liu Beixian Executive Director : Liu Beixian Editor-in-Chief: Wang Xiaohui Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Yang Yi Copy Editors: Jack Smith, Alex Taggart Lead Writers: Yu Xiaodong, Li Jia Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Du Guodong First Reader: Sean Silbert Address: 5th Floor, 12 Baiwanzhuang South Street, Xicheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: Art Department Art Director: Wu Shangwen Art Editor/Designer: Zhang Dawei Publishing and Development Office China Newsweek Corporation President: Wang Xiaohui Chief Executive: Fred Teng Publishing Associate: Zhang Tianli Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: Suite 1101, 15 East 40th Street, New York, NY 10016, USA Email: Toronto Office Director: Lai Hailong 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, Li Yang Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Mao Jianjun San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Zhou Zhaojun Tokyo Office: Sun Ran Paris Office: Long Jianwu Bangkok Office: Yu Xianlun Kuala Lumpur Office: Huang Hongbin Moscow Office: Jia Jingfeng Manila Office: Zhang Ming Berlin Office: Huang Shuanghong Sydney Office: Zhu Daqiang Legal Advisor: Allen Wu ISSN 1943-1902



Livelihoods are improved through practices, not promises


n his opening speech at this year’s session of by many to stem from a lack of political franchise, the National People’s Congress (NPC), Pre- as those with a direct stake in the issue – people livmier Li Keqiang stressed that the govern- ing in polluted cities – have no role in the decisionment’s leading policy priority is “the people’s live- making process. lihood.” Such a pledge ties In order to address these probin with recent government lems, the government needs to Pledges are certainly promises on leading areas of enfranchise the citizenry. welcome, but public discontent – namely, China’s new leaders have made air pollution, food safety many reform pledges, promising delivering on them and housing prices. would be even more so to create a fair and just politiIn the government work cal, legal, and economic system, report delivered to the building on pledges made by NPC, officials admitted their predecessors. Pledges are that they face a wide range certainly welcome, but delivering of challenges, singling out general pollution of the on them would be even more so. country’s air, water and soil, as well as highlightDuring the Two Sessions, a few of these promises ing food and drug standards, forced land appro- were fleshed out. Rural residents will reportedly be priation, widespread corruption and inadequate permitted more property rights through reforms to resources allocated to healthcare, social security and land ownership policies. The government has also education. promised to establish a unified social security sysIn the past, “livelihood issues” have been consid- tem. However, the urban-rural divide, enshrined ered purely economic. Consequently, the govern- in the hukou or household registration system, has ment’s solutions have been restricted to offering a remained intact. bigger “share of the pie” to the people by increasThere are signs that China’s decision makers also ing public spending. Unfortunately, as China now realize that a simplistic economic approach can no faces an economic slowdown on almost all fronts, longer resolve social problems. Finance Minister securing a greater allocation for social welfare from Lou Jiwei, for example, admitted that past polithose in charge of the budget has become difficult. cies to raise China’s taxable income threshold have Moreover, what the Chinese people increasingly failed to address the disproportionate tax burden demand are not simple economic handouts or sub- on China’s poor, as income tax only applies to salasidies, but systemic reforms to the system that will ries, and China’s rich typically derive the bulk of allow individuals greater social mobility. their income from other areas. To a large extent, popular welfare allocation in Lou has promised that the government will “take China is not an economic, but a political consid- a systematic approach” in its future taxation polieration. Most public concerns over individual se- cies and will take a “variety of factors” into account curity and wellbeing stem from a lack of political when levying taxes. rights and the general inequality inherent in the But what the Chinese government needs to do social system. next is to translate its words into actions. Only For example, urban and rural residents do not when it visibly strives to conduct more profound have equal property rights, nor does every citi- reforms to create a fair and just system will it win zen have the same entitlement to public services. hearts and minds. The Chinese people have heard Moreover, issues such as air pollution are claimed enough promises. 



The muted tone of this year’s Two Sessions could be an indication that, when it comes to action on its reform agenda, the new administration is keen to manage expectations




01 Livelihoods are improved through practices, not promises 10 12 15

Party Discipline: Who Inspects the Inspectors? Economic Crime: Going Easy on Entrepreneurs Presidential Walkabout: ‘Man of the People’

Cover Story



18 Two Sessions: Growth or Reform/Major Power Play/Personalities

34 Black Lung: Left in the dust


P60 NEWSCHINA I May 2014

Photo by CFP

POMP and circumspection



P15 37 40 42 46

Airpocalypse: Heavy Lifting Child Labor: Learn or Earn? Three Gorges Dam: Hydro Power Corrupts Absolutely Passenger Aircraft: Up in the Air


48 50

Pawn Shops: Credit at All Costs Auto Market : Rallying Cry


56 Liao Fan: A Silver Bear for a Dark Horse

outside in

64 67

Thriving Ordos: The Ghosts Are Gone Flavor of the Month: Culinary Therapy


P56 P37

70 The college entrance exam keeps China’s  universities stuck in the past 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 55 China by numbers 66 real chinese 68 ESSAY 69 CULTURAL LISTINGS

visual report

60 ‘do-volution



NewsChina Chinese Edition

Xinmin Weekly

March 3, 2014

March 3, 2014

Investor Immigrants

In 2013, China became the world’s fourth largest source of immigration. Investing in finance, real estate and business startups has become the primary aim of Chinese immigrants abroad since the 1980s. The US, Canada, Australia and New Zealand remain preferred destinations, though increasing numbers are targeting the UK and South America. In February 2014, Canada declared the permanent cancellation of the Federal Immigration Investor Program, essentially a “golden visa” which saw Chinese immigration to Canada surge. Now, some Chinese investors in Canada are considering legal action against Ottawa. The Canadian government has argued that job-creating immigrants willing to integrate remain welcome. China itself is trying to stem the overseas brain drain of its citizens, many of whom are desperate to escape the poor environmental conditions, spotty educational opportunities and lack of upward mobility which many believe is holding them back at home. Oriental Outlook February 25, 2014

Farewell, Tangjialing Tangjialing and Tujing, two villages in the northwest of Beijing, were known as “ant communities” made up of young graduates who took the cheap rents in the hope of saving enough to procure a home in big cities. They had to move to even more distant suburbs after the village houses they rented were demolished in 2010. The local government has pledged to offer half of the new buildings as subsidized rental housing for middle and low-income groups, mostly young IT professionals working in the nearby technology parks. Villagers will receive rental income and also have maintenance costs covered, but those whose houses are not part of the project have found themselves without a vital source of additional income. Worse still, government pledges to build technology parks, which villagers hope will bring jobs and housing, have yet to be delivered upon.


Un-cooperative For Chinese urbanites incensed by high housing prices, housing cooperatives sound like an elegant solution. Buyers commission developers to procure land and build housing according to pre-set conditions and prices. Such projects are more affordable than turnkey projects as they allow buyers to engage in collective bargaining with developers. Individual investors who signed up for such plans now hope that housing prices rise faster, boosting their returns. However, so far only three projects have been completed nationwide. Most profitable plots are swiftly appropriated by local governments or commercial developers. Many projects have been abandoned half-built because of investor withdrawals. Institutional investors are also claimed to be disinterested in the schemes, leading many commentators to claim that cooperatives have no future in China’s chaotic real estate market. Caixin February 24, 2014

Canal Plus The world’s largest water diversion project will begin transporting water from the Yangtze River in central China to the vast northern municipalities of Beijing and Tianjin in August or September 2014. Pollution, however, remains a big problem. Contaminated tributaries have been directed into the Danjiangkou Reservoir, the starting point of the 1,400-kilometer new waterway. Excess nitrogen in the water has risked algal blooms which produce toxins and reduce the water’s oxygen content, killing aquatic life. Some parts of the channel have been found to be jammed with garbage or contaminated with raw sewage. Polluted groundwater is believed to be at risk of flowing into some 100 kilometers of the channel. Few of the impoverished communities on the banks of the project have the inclination or the funding to invest in water treatment or drainage projects, and 90 percent of the projects promised by the central government’s upriver pollution control scheme have not been completed. Upriver provinces are now complaining that Beijing and Tianjin whine about pollution without offering any help that could actually make a difference. Southern Metropolis Weekly March 3, 2014

Alien Invasion A South Korean alien has got Chinese hearts thumping. A televised Korean love story between an extraterrestrial and a celebrity earthling had its series finale on February 27, 2014. My Love From the Star, a South Korean SBS TV hit had attracted more than one billion views on the Chinese mainland, an impressive comeback for South Korean TV after a decade of declining ratings in China. Since the late 1990s, the South Korean government has sponsored domestic TV production and restricted foreign access to prime time programming slots. Both public and private producers compete fiercely to secure ratings and ad revenue, investing more in screenwriters and technology than in actors. Meanwhile, in China, relaxed censorship, rampant piracy and Internet channels have allowed foreign programming to gradually gain ground among Chinese viewers. NEWSCHINA I May 2014


“The workers from some food processing plants never eat what they produce. Nor do farmers – because they know what goes into their products. We need a network of food tasters to guarantee quality.”

“Many remote villages have seen none of the benefits of reform – access to education and medical services remain the same as ever. So where have the benefits gone?” Shu Hongbing, an academician with the Chinese Academy of Sciences, on China’s benefit gap.

“[In some provinces], those who have violated family planning regulations are fined much more than those who deliberately contribute to pollution. We need to get our priorities straight.” Wang Xiaokang, president of the China Energy Conservation and Environmental Protection Group, on an appropriate response to China’s growing pollution problem. “Since we can’t predict earthquakes, exactly what function do our seismological bureaus serve?” Lawyer Zhu Lieyu arguing that China’s controversial seismological bureaus are wasting public money. “In some respects, China has only one university, the University of the Ministry of Education. All other universities are franchises.” Vice-president of the Beijing-based China University of Mining and Technology Jiang Yaodong mocking government intervention in academia.


Illustration by Wu Shangwen

Guangdong entrepreneur Zhou Yifeng on China’s poor food standards.

“Many officials hold back unpleasant information in the name of social stability. I believe only truth can create a stable society.” Former chairman of the China Banking Regulatory Commission Liu Mingkang on the Chinese government’s credibility crisis.

“Western democracy is at a low ebb. A higher form will be born [in China], as we stay closer to the people by electing our leaders level-by-level.” Fu Chengyu, president of petrochemical giant SINOPEC, causing public uproar with remarks about Chinese “democracy.”

“Reform is pointless unless it breaks up the old special interest groups. In other words, what we need is more a‘revolution’against these groups.” Peking University professor Li Yining assigning blame for stalled reform progress.

“A‘no-bribes’agreement between doctors and patients is ridiculous. Doctors have to bribe their way into their profession – how can you expect them to refuse bribes once they’re qualified?” Huang Jiefu, vice minister of health, bemoaning the culture of bribery in the healthcare system.


Top Story

Terror Attack in Kunming

Kunming, capital of Yunnan Province, was shaken when a knifewielding gang launched a brutal attack on the local railway station, leaving 29 dead and another 143 injured. At 9:20 PM on March 1, a group of assailants burst into the ticket hall with machetes, hacking at anyone in their way. Armed police shot four dead, and apprehended another female attacker at the scene. The police announced March 4 that they had caught the other three fugitive suspects, who were members of a terrorist group led by a man named Abdurehim Kurban. The Chinese government has called the incident a terrorist attack, citing evidence linking the attack to “religious extremists.” The attack prompted orders from both China’s President Xi

Jinping and Premier Li Keqiang to “crack down on terrorism in all forms,” with many cities, including the capital Beijing, policing crowded locations and transport bottlenecks with armed patrols. On March 19, extremist group the East Turkestan Islamic Movement (ETIM) uploaded a video clip on its website, giving its support for the terror attack in Kunming, and threatening to launch “jihad” in China for “the independence of Xinjiang,” a restive northwestern province. ETIM did not claim responsibility for the Kunming attack. Ethnic relations have been strained in Xinjiang, with frequent attacks occurring since the latter part of 2013. In October 2013, a family from Xinjiang ploughed their SUV into a crowd at Beijing’s Tian’anmen Square, leaving two pedestrians dead and another 40 injured. All three family members burned to death after their car caught fire. The police announced they had found a flag printed with “religious extremist” slogans in the car. The most recent attack saw a 29-year-old ethnically Uygur policeman killed during a fight with an armed assailant on March 17. Kunming’s terror has triggered debate about the Chinese government’s ethnic policies in Xinjiang. Many Chinese domestic experts attributed the growing attacks to the penetration of PanTurkist thought and Islamic fundamentalism into the area, which advocate “overthrowing the rule of China” in Xinjiang. Experts have said that only the local elite benefit from the government’s current policies, and have warned that deepening poverty and unemployment will only exacerbate ethnic tensions in the region.


Missing Flight MH370 A total of 26 countries have joined the search for missing Malaysia Airlines flight MH370, which disappeared March 8 with 227 passengers on board, 153 of whom are Chinese. The likelihood of foul play is now thought to be greater than that of mechanical failure, as Malaysian Premier Najib Razak confirmed that it was highly possible that someone with considerable aviation experience deliberately altered the plane’s route and shut down its transponder. According to Razak, Malaysian radar lost sight of the plane at 8:11 AM, six hours later than the


time originally stated by Malaysia Airlines. The Malaysian government has refocused its investigation on the flight’s crew, particularly Captain Zaharie Shah, who, according to media reports, is a relative and supporter of Malaysia’s opposition leader, Anwar Ibrahim, though no evidence implicating Shah has come to light. On Monday 24 March, Malaysia announced that after analyzing new data, officials were “now certain” that MH370 had crashed into a remote area of the southern Indian Ocean, and that they did not expect to find any survivors. NEWSCHINA I May 2014


Sichuan Mafia Kingpin Falls

China to Approve Five Private Banks

Liu Han, a mining tycoon in Sichuan Province, was charged late February with a series of mafia-style crimes, including murder, gambling, extortion, illegal firearms sales, illegal economic activities and bribery. The 48-year-old ringleader was put under investigation in March 2013 on suspicion of sheltering his brother Liu Yong, who had allegedly shot three of his enemies dead and injured another two in 2009. The police later seized three grenades, over 20 guns and hundreds of bullets from Liu’s underground armory. Ranked 148th in the Forbes 2012 China Rich List, Liu Han reportedly had a personal fortune of around US$869 million. In recent years, Liu invested huge amounts of money in overseas mining projects through his corporation Hanlong Group, which holds a stake in over 30 domestic and five overseas enterprises. Liu’s arrest has led to corruption investigations into an array of local officials, with several media reports further speculating upon a connection to China’s retired senior CPC leader Zhou Yongkang, who governed Sichuan Province for three years. No official source has verified this connection yet.

China plans to grant banking licenses to five private businesses as its first step towards allowing private capital into the financial sector. Shang Fulin, president of the China Banking Regulatory Commission, announced at a press conference in early March that the commission had selected around 10 enterprises to join a pilot program, which will permit private banks to accept deposits and provide loans with an upper or a lower limit, or to accept deposits and provide loans for enterprises in specially designated areas. Social networking giant Tencent and China’s largest e-commerce platform Taobao were both included in the program. The two Internet monoliths are, according to analysts, driving the liberalization of China’s interest rate by launching respective online financial products allowing instant access and prescribing no minimum amount. According to media reports, Taobao’s Yu’ebao has absorbed over 400 billion yuan (US$64.5bn) by February, causing the central bank to warn against the risks of Internet finance. According to China Banking Regulatory Commission, the pilot banks will not be allowed into formal operation until they are confirmed to be ringfenced against excessive risk.


Drug Scandal in Shaanxi Kindergartens Many Chinese parents felt anxious for the safety of their children after two local private kindergartens in Shaanxi Province were found to have administered moroxydine, a prescription cold medicine, to children. The parents had been kept in the dark, until a girl recently told her mother that she would “never catch a cold,” since she had been given medicine at kindergarten. The police have so far detained five suspects, including the head of the two kindergartens and their doctors. They told the police that they used the drug to “improve the kids’ resistance to illness,” and explained that a higher attendance rate is necessary to the school’s continued operation. According to police, the two kindergartens have dispensed the drug since 2008, affecting over 1,500 children. Many children, according to their parents, often felt dizzy, had stomach-aches and rashes, and some found their genitals affected by the medication. Similar scandals were also exposed in several other regions, causing violent public criticism against China’s poor supervision of both private kindergartens and drug sales.


China Issues Six-year Urbanization Program China’s State Council issued its six-year program for new urbanization on March 16, aiming to settle 100 million rural people in cities by 2020. The long-anticipated program, according to experts, is distinguished by its pledge to grant permanent urban residence permits to 45 percent of city dwellers, meaning a great many migrant workers will be endowed with the same rights and interests as those born in cities. Experts said the program shows that China has shifted to people-oriented urbanization, urging local governments to invest more in public services like housing, education and medical care, rather than purely economic goals. The program also emphasizes optimized and intensive use of urban land and space, pledging to issue preferential policies to lead more people into small- and medium-sized cities. NEWSCHINA I May 2014

China’s urbanization rate (number of urban inhabitants/total population) 2002-2013 60 50 40 30 20 10 0













Source: National Bureau of Statistics


Photo Credit: Top Story,: Xinhua; Society,; IC


Shocking A man who had never previously driven managed to steal a car and drive it 1,800 kilometers from Jiaxing in East China’s Zhejiang Province to his home in Southwest China’s Guizhou Province. Late last year, the car thief allegedly broke into an apartment in Jiaxing but found nothing valuable apart from the key to the SUV. He then spent 20 minutes learning to drive and to operate the vehicle’s GPS. The man was arrested at his home and sentenced to four years’ imprisonment with a fine of 80,000 yuan (U$13,000).

Poll the People The Baby Safety Island, a pilot facility provided in Guangzhou that offers an anonymous space for parents to leave unwanted infants, was suspended due to excessive demand. The tiny office had taken 262 babies, all of them reportedly disabled, in 48 days of operation until March 16 when the Guangzhou government announced they could no longer manage the volume of arrivals. 91 percent of the infants have allegedly survived since being left at the facility.

Do you agree with the suspension of the Baby Safety Island? Yes 236 (50.4%) No 232 (49.6%)




Most Circulated Post Retweeted: 577,975 times

On March 10, a black Buick sedan owned by the local tobacco bureau of Huangshan, Anhui Province blocked the only access road to a local hospital for more than 10 minutes, preventing two ambulances from entering the grounds. The bureau’s chief was dismissed, along with the absent driver, a day later.

According to Liu Liangyi, an official with the State Postal Bureau, many college students are so dependent on their parents that they couriered their laundry home, with their parents returning the clean clothes by post. Liu added that the State Postal Bureau made the bulk of its campus profits from this “service.”

Amusing A man surnamed Sun from Xi’an of Shaanxi Province planned to conduct an armed robbery at a local ATM, but picked the wrong target and was floored by a former professional wrestler surnamed Guo. At the police station, Sun asked Guo for financial compensation for his injuries.


The microblog of State broadcaster CCTV called upon people to pray for those aboard Malaysia Airlines Flight MH370, and to take the feelings of affected families into consideration when tweeting about the incident.

We know the outcome could be tragic. Please do not retweet posts that depart from solid facts. The family and friends of the missing passengers are looking for information on these portals, thus please do not add to their pressure and depression with rumors. Please kindly pray for the 239 passengers aboard, and retweet this.



Top Five Search Queries On


over the week ending February 15 Terrorist Attack at Kunming Railway Station 2,136,863 The attack on March 1 resulted in 29 deaths. Zhou Yongkang Rumors 275,251 Rumors of the arrest of this former member of the Standing Committee of the Politburo went viral despite an officially enforced news blackout. Missing Malaysia Flight 233,794 With more than 150 Chinese nationals on aboard, the missing flight quickly eclipsed other news stories.

Dog Cleaner A seven-year-old golden retriever named Soybean has been retrieving trash left in a river by feckless tourists visiting the Danxia Mountain Scenic Area, a UNESCO World Heritage Site in Shaoguan, Guangdong Province.

Crimea 122,084 The controversial referendum in Russian-occupied Crimea is being closely watched by the Chinese.

Top Blogger Profile Fan Jianping Followers: 84,464 The 57-year-old chief economist with the State Information Center is a tenacious advocate of breaking up State monopolies in industries like finance and energy. He has also vigorously opposed the government-led urbanization of China, citing that equal benefits and rights for rural residents are key to closing the wealth gap. NEWSCHINA I May 2014

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

My Love from the Star 197,866 The Korean soap opera is the hottest TV series screening on the Chinese mainland.

Private Official Li Qingsuo, a water supply bureau chief in Mizhi, Shaanxi Province was dismissed from his post after being reported for spending 100,000 yuan (US$16,130) in public funds on construction of a road leading directly to his own family’s ancestral tombs.

Gallant Principal Wang Zheng, the principal of the Affiliated High School of Peking University, canceled classes for one day due to heavy smog in late February, despite an order from the local education bureau demanding the school stay open.

Tiger Baiter A young man from Hefei, Anhui Province hit an endangered Siberian tiger with a piece of brick because he was “unhappy” to find the animal dozing during his visit to the zoo.



Party Discipline

Who Inspects the Inspectors? While most commentators agree that transparency is the more effective check on official misbehavior, closeddoor self-policing remains the norm in China. Indeed, to many Chinese officials, “openness” in government is a one-way ticket to the Party’s collapse By Li Jia and Zhao Jiapeng


t was recently reported that Wang Qishan, one of the seven members of the Standing Committee of the CPC Politburo, is a fan of the Netflix series House of Cards. Western media speculated that Wang’s fondness for the shows stems from its depiction of how Washington’s politics are routinely manipulated by abusive politicians. However, observers point to what they see as Wang’s identification with lead character Frank Underwood, played by Kevin Spacey, a ruthless pragmatist adept at “whipping” his own party into submission. At the end of 2012, the CPC Central Committee issued what it called its “Eight Rules” – a new campaign to build clean government. Since then, a number of white papers and official actions have claimed to boost scrutiny of officials’ private assets – from their cars to the contents of their shopping carts – as well as how China’s leaders make use of their office hours and their downtime. At a press conference in January 2014, the CPC’s Central Commission for Discipline Inspection (CCDI), the body headed by Wang Qishan, declared that by 2013, 30,420 officials had been found “in violation” of the Eight Rules, including some officials within the CCDI itself. In 2013, 32 “typical examples” of these violations were published by the Commission, mainly involving officials from the village to the provincial level using public funds for entertainment and tourism. In December, a list of names, including some ministerial-level figures, was published. A number of ministries and local governments responded with their own name-and-shame lists. As a result, total expenditure on official receptions held by departments and offices directly under the central government in 2013 was less than half the figure recorded in 2012 according to the Commission’s website, though verifiable data are impossible to obtain. Nevertheless, the CCDI has announced more inspections in more government agencies and State-owned enterprises this year than in previous years. In other words, the Party is still placing its faith in self-policing as an effective method to foster good behavior in its ranks.


Party Detectives

Many of the allegations resulting from these disciplinary actions look almost deliberately salacious, and State media reports are typically backed up with simple statements of guilt and blurry video footage. For example, an official who was allegedly caught surfing pornographic websites during office hours found himself the subject of a prime time exposé on State-run China Central Television (CCTV) on April 11, 2013. He lost his job – head of a township discipline inspection bureau in Hunan Province – shortly afterward. On February 17, 2014, videos of several government officials and their staff members in Hubei Province shopping or playing online games in their offices were also broadcast on CCTV. One of them, Zhou Ziyi, the county’s deputy statistics director, had previously appeared on TV claiming that he was so busy that he “didn’t have time to worry about inspections.” Unannounced inspections by Party agents are increasingly used as part of the Eight Rules campaign. According to the paper under the CCDI, discipline officials in Changshu city, Jiangsu Province, scanned parking spaces around the town’s most extravagant karaoke parlor in search of government vehicles in June 2013. Mouthpiece of the Chongqing municipal government the Chongqing Daily has detailed a number of cases where wayward officials have been netted “by chance.” In February, for example, discipline investigators stopped government cars at freeway on- and off-ramps to check if they were carrying contraband luxury liquor to banquets. Others demanded that five-star hotels in minor cities disclose details of all banqueting reservations. In August 2013, Yueyang became the first city in Hunan Province to install its own GPS system designed to monitor the movements of more than 4,000 government autos round-the-clock. Illegally parked vehicles trigger a warning in a government monitoring center which can then relay a signal to the car’s onboard computer, cutting off the fuel line. Other frequently used techniques are sting operations which enNEWSCHINA I May 2014

Photo by Xinhua

The movements of government vehicles are monitored through a GPS system in Yueyang, Hunan Province, October 30, 2013

list the help of members of the public. In Tianjin municipality, for example, about 1,000 doctors, teachers, lawyers and even college students volunteered in 2013 to “test” government hotlines and public service bureaus, specially those charged with taxation and business registration. A sweeping crackdown on agencies that were allowing telephones to ring unanswered or providing poor service followed soon after.

Watch the Watchdog

At the conference on March 15, Wang Qishan asked CCDI inspectors to “keep their eyes wide open.” During its Third Plenum in November 2013, the CPC Central Committee decided to reduce the intervention of local Party agencies in investigations into discipline violations, with central officials increasingly in the driving seat. This has moved responsibility for prosecuting corrupt or abusive officials everhigher up the political food chain. While effective in terms of forcing local authorities to surrender control of their own investigations, this tactic also makes it virtually impossible to scrutinize top-level officials, meaning that generally, the higher an official’s rank, the safer they are likely to be. Consequently, violations become more severe the higher they go up the food chain. The secretive operations of the Party’s internal discipline wing may be more visible than ever, yet they remain far from transparent, particularly at higher levels. The CCDI’s official web site, launched in September 2013, publicized selective information on the organizational structure and procedures followed by the agency. Some senior officials gave interviews to the website, which also published the names of officials under investigation, what they were charged with, and their punishments, if any. NEWSCHINA I May 2014

However, some observers claim that such nods to transparency simply further cloud the public’s vision, and serve to replace one smokescreen with simply a more sophisticated one. The specific powers wielded by the CCDI itself, for example, have never been fully clarified to the public. Huang Shuxian, deputy secretary of the Commission disclosed at a press conference in January that provincial offices only assigned 22 percent of their human resources to dealing with specific cases. Therefore, as stated in an article written in February by Hou Chang’an, Hubei’s provincial head of discipline inspection, officials should “focus on their own responsibilities,” rather than be assigned to “irrelevant tasks.” The backgrounds of the inspectors themselves are also regularly called into question. In 2013, several local discipline inspection officials were arrested for taking massive bribes. The CCDI website reported that it would establish a separate wing to investigate investigators, leading many to speculate just how deep this rabbit hole would go. In addition, the deaths of several local officials while in CCDI custody in 2013 have raised concerns about the use of torture and even extralegal executions during closed-door interrogations. Progress on establishing genuine transparency in CCDI operations has been slow. For example, while many argue that the full declaration of officials’ private assets is crucial to establishing clean government, these calls have been roundly rejected by almost all Party agencies. Genuinely public surveillance or the use of NGO watchdogs as alternatives to self-policing have similarly been viewed with contempt by Party officials and the State media. For now, the Party is asking the public to continue to have faith in its ability to regulate its own behavior. How much of this faith still remains, however, is anyone’s guess.



Economic Crime

Going Easy on Entrepreneurs

China seems to be quietly abolishing its infamously severe punishments for white-collar crime By Han Yong


specialist in crimes committed by private entrepreneurs, lawyer Wang Rongli has noticed a drastic change over the past few years – businesspeople convicted of economic crimes are becoming far less likely to pay with their lives. The proportion of death sentences for white-collar crimes which may result in an immediate execution handed down in Chinese courts has seen a constant and steep decline, from 35 percent in 2009 to 2 percent in 2013. Data indicate that in 2013, a total of five entrepreneurs nationwide were actually executed after receiving death sentences. In the meantime, lighter punishments – jail sentences of less than five years – have been on the rise, from zero to 40 percent in the same period. In 2013, 80 convicted entrepreneurs were sentenced to less than five years in jail. These two sets of data come from a report on white-collar crime published by China Youth Daily’s Public Opinion Monitoring Center, and economics and law magazine the Legal Daily, with reference to reports by Wang Rongli and the Institute of Criminal Science at Beijing Normal University.

Getting Heavier

Over the past five years, two amendments have been made to China’s Criminal Law, one in 2009 and another in 2011. Insiders believe the trend of increasingly lenient sen-


tences for economic crimes began with the 2009 amendment. Previously, treatment of economic crimes in the courts had been growing increasingly severe, in terms of both charges and penalties. Before the promulgation of China’s first Criminal Law in 1979, no economic crimes legislation existed in China. Rooted in a heavily politicized societal backdrop of class struggle, the majority of crimes in the first Criminal Law were classed as “counterrevolutionary activities” and punished accordingly. Indeed, given the dominance of planned economics at the time, there was little space for public participation, let alone criminality, in the economy. In the Criminal Law of 1979, 15 articles related to economic crime. Meanwhile, despite there being 27 crimes punishable by death, none were white-collar. However, the advent of Reform and Opening-up in 1979 opened the floodgates for entrepreneurial spirit and the pursuit of financial gain among the populace. With private economic activity flourishing, the extant criminal law quickly became outdated – new laws were added, and with the eventual promulgation of China’s new Criminal Law in 1997, there were over 10 separate laws relating to economic crimes. The laws during the chaotic transition from a centrally planned to a comparatively market-based economic strategy reflected

the government’s will to suppress economic crime, and were characterized by heavy penalties. For example, the 1979 criminal law did not prescribe the death penalty for theft, but a “zero-tolerance” campaign in 1983 saw a separate criminal law that theft of money or goods at or above a certain value was punishable by death. Meanwhile, in areas with loose legislation, a large number of administrative regulations, local regulations and even official documents were used as temporary laws. The “crime of speculation,” an accusation infamously leveled at many early business activities in China, was not defined in the 1979 Criminal Law. Governments in different regions gave wildly varying definitions of the charge. In 1982, 30,000 people were accused. In 1987, the Provisional Regulations on Administrative Punishment upon the Crime of Speculation finally defined 11 different kinds of criminal speculation. The result was that the accusation became a “pocket crime” – a subset of several crimes that could be lumped together due to non-specific regulations. The crux of the problem of heavy penalties in Chinese law has long been that the government instills its own demands into legislation and judicial interpretation. The underlying interests of the government in the law have proven to have hidden perils. When the new Criminal Law was released NEWSCHINA I May 2014

Photo by Zhu Guangzhi/Xinhua

in 1997, in Chapter Three of the “Special Provisions” section, articles regarding the crime of “sabotaging the socialist market economy” had increased to 92, from 15 in the 1979 version. Among these, 16 were punishable by death and accounted for 23.5 percent of all 68 capital crimes on China’s statute book. However, the Criminal Law of 1997, enacted during the early stages of a market economy, became insufficient for the drastic economic changes that ensued, and thus needed constant amendment. Most of these amendments raised the severity of penalties. In this process, the Criminal Law incorporated more economic crimes, while adjusting its penalties to a level seen as appropriate to the legislation. Now, there are more than 140 economic crimes defined by separate articles, criminal amendments and judicial interpretations. The sixth amendment to the law in 2006 made the biggest change, amending 20 articles, including seven related to economic crime. It added the crime of illegal use of funds, increased the classifications of upstream money laundering crimes from four to seven, and expanded the definition of commercial bribery to include people outside the economic sectors. The Criminal Law’s expansion of the scope of economic crime peaked in 2006. Among the 92 economic crimes in the Special Provisions, only 11 were punishable with penalties with a maximum sentence of three years, accounting for 10 percent of all crimes in Chapter Three of the Special Provisions. 16 had a maximum sentence of capital punishment, accounting for 23.5 percent of all capital statutes in the Criminal Law.

10 people are accused of the “crime of speculation” in the early 1980s for selling automobiles, Anyang, Henan

The trend of reducing penalties for economic crimes began with the seventh amendment in 2009. One of these changed the “crime of tax theft” to the “crime of tax evasion,” a more neutral and appropriate wording in the context of economic crime. Also, first-time violators could avoid judicial penalties by paying the requisite back taxes NEWSCHINA I May 2014

Photo by CNS

Light or Heavy?

Gu Chunfang (front), accused of “illegal fundraising,” is sentenced to death with two years’ reprieve, October 23, 2013



Sentences for Entrepreneurs Convicted of Economic Crimes (2009-2013) Death

Death with Reprieve

Life Imprisonment

>15 Years

10-15 Years

5-10 Years

<5 years


Source: Legal Daily/China Youth Daily 2013 Report on Entrepreneurs Convicted of Economic Crimes in China

Ratio of Death Penalties to All Sentences

and fines. Academics in the legal field tend to agree that the amendment was a “win-win” law – entrepreneurs lost no freedoms, resulting in less interference with the operations of companies, while the government avoided tax losses and received more income in the form of fines. Those who support heavy punishments believe a stronger hand would do a better job of preventing such crimes. Opponents, on the other hand, believe balance is needed between heavy and light penalties – they argue that while fear can be a deterrent, heavy penalties breed public sympathy with criminals as well as earning contempt for the law. Criminal law academic Su Huiyu believes that, based on the retaliation principle of criminal law, economic, rather than criminal penalties, are more effective in dealing with white-collar criminals. The eighth amendment, enacted in 2011, further reduced penalties for economic crimes. This amendment abolished the death


penalty for 13 non-violent crimes, accounting for nearly one-fifth of all 68 capital statutes in China’s Criminal Law. Of these 13 crimes, nine are economic, accounting for 56 percent of white-collar death sentences. Professor Gao Mingxuan of China University of Political Science and Law has been promoting the abolition of capital punishment for economic crimes. Gao participated in the early research and preparation work of the eighth amendment. One of his arguments against the death penalty is that it deprives the offender of the opportunity to atone for his or her crimes. Another widely accepted viewpoint states that there are often many motivations behind economic crimes, not all of which are addressed by executing offenders. Although the eighth amendment abolished nine capital statutes, industrial insiders are expecting more to follow. In 1988, the Chinese government signed the International Covenant on Civil and Political Rights, in

which Clause Two of Article Six rules that “In countries which have not abolished the death penalty, a sentence of death may be imposed only for the most serious crimes…” Professor Gao believes that according to the Safeguards Guaranteeing Protection of the Rights of Those Facing the Death Penalty adopted by the Economic and Social Council of the United Nations, only intentional crimes that result in death or other severe consequences are viable under this definition. Gao understands that this includes serious violent crimes and crimes where the object of the act has the same value as a human life – a definition that would exclude economic crimes. Regarding how to abolish legally the death penalty for economic crimes, experts suggest using the eighth amendment of the Criminal Law. The nine capital statutes abolished in this amendment have long been put aside in legal practice, becoming de facto “dead” penalties. Their abolition, many in the legal field agree, would be welcomed. NEWSCHINA I May 2014

Presidential Walkabout

‘Man of the People’ Xi Jinping’s series of unannounced photo-ops in Beijing marks an unprecedented shift in the PR efforts of China’s usually secretive leaders By Yu Xiaodong


Photo by Xinhua

eijing, February 25 – Zheng Yuanjie, a bestselling one of the smoggiest author, recommended that the days of the year – and president sample durian – a President Xi Jinping surprised specialty snack currently poputhe nation when he made an lar along Nanluoguxiang. unannounced visit to NanWhile “everyman” visits to luoguxiang, an historic former famous sites are a common residential street-turned-tourist feature of populist politics in trap lined with kitschy souvethe West, they are very rare for nir shops, bars and cafes. top Chinese leaders. “Public” Wearing a navy jacket and appearances by Chinese leadpants and, most conspicuously, ers have previously been stageno anti-pollution facemask, Xi managed to a fault, with entire was accompanied by several historic sites cleared of all tourequally dressed-down municiists and most staff before being pal officials including Mayor placed on full security lockWang Anshun and the city’s down. Party chief Guo Jinlong. The trip to Nanluoguxiang, While local businesses were by contrast, marks the second allegedly tipped off about the time in two months that Xi visit days in advance, the unJinping has shown up “unanannounced appearance of the nounced” in a public place. president immediately sent In December 2013, the presitourists into a frenzy, and Xi dent appeared at a branch of was pursued by a swarm of Xi Jinping visits old residential compounds in Yu’er Lane, Beijing, February 26 Beijing’s popular Qingfeng smartphone-wielding onlooksteamed bun restaurant where ers for the duration of his visit. he got in line, ordered and paid Unperturbed, he continued on for a simple lunch costing 21 his way, stopping to talk to local residents, ensuring a good show. yuan (US$3.45). The actual branch Xi visited has since become a As the images spread rapidly through China’s social media, they tourist attraction, where visitors queue up to order the 21 yuan “Presitriggered lighthearted discussion among both netizens and celebrity dential Combo.” bloggers. Pan Shiyi, a real-estate tycoon, for example, asked whether Despite it later emerging that both these “unplanned” visits were he would be in time for a picture with Xi if he “rushed to the scene.” actually carefully planned beforehand, the Chinese public as a whole, NEWSCHINA I May 2014



Xi Jinping tucks into his “Presidential Combo”

unaccustomed to even token attempts at outreach by their leadership, seem to have found Xi’s recent walkabouts refreshing.

New Strategy

Analysts point to such photo-ops as symptomatic of a sophisticated public relations strategy adopted by China’s new leadership, most of whom are keen to shed the image of the aloof, privileged bureaucrat. Since assuming power as China’s paramount leader, Xi Jinping has broken with the past in terms of both his media presence and his interactions with the public. “I’ve kept you waiting for too long,” Xi apologized to reporters in the Great Hall of the People prior to announcing his nomination as Party chief in November 2012. While such a remark might seem innocuous coming from Barack Obama, in China’s protocol-obsessed political realm, such seeming humility from the country’s most powerful man took reporters by surprise. Almost immediately, commentators began to praise Xi’s “plainspeaking” style, and even his unaccented Mandarin was hailed as a boon when it came to communicating with his public – the new president’s predecessors having uniformly failed to shed strong regional accents even when speaking in public. A month after his inauguration, in December 2012, China’s official Xinhua News Agency published a profile of Xi which not only detailed his experience working in the countryside, but also included family photos including his celebrity wife, former singer Peng Liyuan, and even the president’s daughter. Few Chinese citizens have historically


been as shielded from media attention as the country’s First Family, and the appearance of these photographs in the State media caused a stir. Many have drawn parallels between the careful honing of Xi’s public image and his recent anti-corruption campaign. Warning of the perils of official ostentation in a country with such a pronounced richpoor divide, Xi has personally issued decrees requesting officials to reduce the length of official documents and speeches. He has also put his seal of approval on campaigns to crack down on the pomp and expense that has typically accompanied official events, including red carpets, welcome banners, motorcades and extravagant banquets. Apparently leading by example, Xi eschewed the presidential limousine in favor of a minibus, and dispensed with the highwayclearing motorcades beloved of his predecessors on a trip to Guangdong Province in December 2012. Even the simple act of holding his own umbrella on an inspection tour in Wuhan in July 2013 made headlines, and while rumors that Xi had casually hopped into a Beijing cab and chatted with the driver in April 2013 were refuted by the official media, there seems to have been no effort by State censors to suppress the story. Analysts agree that China’s top leadership hopes to change public perception of officials as corrupt, detached and rapacious, instead cultivating an image of frugal self-sacrifice to win back an increasingly sceptical populace. As his anti-corruption crackdown has led to the fall of some 30 ministerial-level officials and undermined China’s vast luxury goods industry, Xi’s star has continued to rise, even earning the politician the nickname “Xi Dada,” or “Uncle Xi.” Few have seen coincidence in the fact that Xi’s recent public outings came immediately prior to the Two Sessions of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) in Beijing. Issues raised by Xi’s public appearances became hallmark themes of the two conferences. Xi’s decision to eat the same food as regular Beijingers, rather than carefully-prepared dishes sourced from the government’s private organic farms, was seen as a nod to the importance of food safety in a country still dogged by appalling public health violations. Similarly, his refusal to don a protective mask even as air pollution soared 40 times above internationally acceptable levels, all were seen as evidence that China’s new president cares about its people. “Breathing together, sharing the same fate,” ran official headlines reporting Xi’s Nanluoguxiang visit. NEWSCHINA I May 2014

Photo by Xinhua

“With public appearances like this, Xi is trying to bridge the gulf between Party cadres and the public by showing that they care,” Lam Wing Yin, a Sinologist from the University of Melbourne told NewsChina. It was no coincidence that only days after Xi’s stroll through the choking Beijing smog, Premier Li Keqiang, speaking during the NPC session, pledged that the government would “declare war” on air pollution, announcing various measures including phasing out 50,000 coal-burning furnaces, taking six million vehicles off the roads in 2014 and increasing the use of renewable energy.


A notable feature of the leadership’s PR drive is the attempt to harness the power of China’s vast and dynamic social media – historically the platform for criticism, not praise, of the country’s rulers. Both the steamed bun story and images of Xi’s Nanluoguxiang jaunt first appeared on Sina Weibo, the country’s leading microblog platform, before being “picked up” by the official media. An even bigger break with tradition came in February, when, a media site backed by the Beijing government, published a cartoon entitled “Where has Xi Jinping’s time gone?” featuring a cartoon of the leader and gently making light of his many official engagements since assuming office. One week later, a similar cartoon of Premier Li Keqiang was published by the Xinhua News Agency. In China, visual depictions of top leaders are typically restricted to a degree comparable with the world’s strictest lèse-majesté laws. All photographs of officials appearing in official media have to be approved by State censors to ensure they are sufficiently dignified and free of subtext, while almost all non-photographic visual representations are effectively banned, with stiff penalties imposed upon artists daring to caricature unpopular cadres. Although publishers claimed the cartoons were “independently designed,” few doubt that they were drawn up at the behest of the authorities. Such attempts to harness social media to promote the government, rather than devoting all official energies to censoring criticism, are a new strategy that so far appears to be meeting with limited success. “[The new PR strategy] is a political necessity, rather than an option,” commented journalist Liang Shichuan on his blog. “Chinese leaders have been transforming their images from ‘political saints’ sixty years ago, to political authoritarians, to ‘retail politicians.’” However, perceptions of top national leaders are not the only PR offensive needed to shift public opinion. The hope is that local politicians, typically the principal targets of popular dissent and criticism, will follow Xi’s example and moderate their behavior. There are indications this may already be happening. According to the Beijing News, officials in various localities have conducted 29 “shows,” during which they have interacted with the public, since Xi NEWSCHINA I May 2014

Xi Jinping visits Inner Mongolia before Chinese New Year

assumed office. On February 7, Party Chief Qiang Wei of Jiangxi Province ate lunch in the canteen of a local copper mining operation, even chatting with the miners. Then, on February 8 in Nanjing, capital of Jiangsu Province, Mayor Miao Ruilin and several city officials took a bus to their office on a particularly rainy day. On both occasions, officials ensured plenty of local press were in attendance to cover the story. While these attempts at populism have not gone unnoticed, the public reaction has been distinctly different to that sparked by Xi’s recent public outings. A raft of scathing and sarcastic responses typically follows any publicity stunt arranged by a local official, no matter how well-intentioned. Indeed, top politicians have historically never been the principal targets of public ire, which tends to be overwhelmingly directed towards grassroots cadres, who are almost uniformly perceived as self-interested plutocrats. Despite this unfavorable bias against local cadres, however, most analysts agree that a PR drive remains essential for the survival of China’s grassroots politicians. “There is now no way to stop officials from getting closer to the people,” read the headline atop the Beijing News’ report in local attempts to replicate Xi Jinping’s charm offensive. According to Shang Huping, a researcher in public administration at Lanzhou University, public cynicism around local politicians’ recent attempts at outreach is the result of these politicians being “shamed” into action by their superiors. Unless their sincerity can be proven, the public are unlikely to soften their views. “It is some kind of progress when Party cadres care about putting on a show, but what people really care about is substance,” Shang told NewsChina. Indeed, most analysts agree that even “Uncle Xi” will eventually have to reward a receptive populace by delivering on his many promises to the Chinese people. And delivering results will require every cog in China’s vast political machine.


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In contrast to previous years, China’s leadership weren’t giving much away during this year’s Two Sessions. What does this mean for the future of the Party’s ambitious and sweeping reform agenda?



cover story

Two Sessions

Growth or Reform

China’s leadership are trying to give themselves some wiggle room in balancing frequently conflicting objectives By Yu Xiaodong



he “Two Sessions,” as the annual meetings of China’s National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) in Beijing are known, are perhaps the clearest public window into discourse on Chinese government policy and its implementation, typically drawing comprehensive media coverage in both State and nonState media. This year, however, the two sessions appear to have had a relatively low profile – the volume and depth of media coverage has been substantially scaled back on previous years. This is partly due to considerable media attention being devoted to the terrorist attack on a train station in Kunming that left 29 dead, and the disappearance of Malaysian Airlines flight MH370. But to a certain extent, the muted coverage of this year’s two sessions, at a time when an ambitious reform blueprint laid out by China’s new leadership has raised public hopes for genuine change, may also reflect leaders’ caution about pushing forward highly anticipated reform in an uncertain economic climate. NEWSCHINA I May 2014

Photo By CNS

Chinese Premier Li Keqiang at a press conference March 17,2014

A Trade-Off?

Almost every year, a focal point of the Two Sessions has been China’s GDP growth target, a figure that tends to underline the direction of the country’s overall economic policy. As China’s investment-driven growth model has become increasingly unsustainable, pressure has been mounting to lower the target, if not drop it entirely. China officially achieved 7.7 percent growth in 2013, slightly above its 7.5 percent target. Earlier this year, there was speculation that the Chinese government would stop announcing growth targets in 2014, while others expected the target to be set lower than last year’s, at 7.0 percent. This is why, when Premier Li Keqiang announced that the government would maintain its 7.5 percent growth target, it immediately led to concerns that such an ambitious goal might jeopardize the leadership’s reform agenda, which was expected to tackle some of the serious imbalances in China’s economy. One of the most alarming problems is the high level of local government debt throughout the country. According to a report by SpanNEWSCHINA I May 2014

ish bank BBVA, China’s total non-financial borrowing has risen from 138 percent of GDP in 2008 to 205 percent in 2013 – a hangover from the credit binge that came with the massive government stimulus package issued in 2009-2010. A prevalent argument is that China will need to keep debt under control, or the Chinese economy will face a hard landing. But to deal with the problem aggressively could cause a drop in GDP growth, at least in the short term. Adopting a 7.5 percent growth target, the same level as in 2013, has left many concerned that no space is being left for the government to tackle the issue. The perceived contradictions between economic growth and reform also exist in Li’s other commitments. For example, during the NPC, Li promised that the government would cut iron and steel production by 27 million tons, and cement production by 42 million tons, which will inevitably lead to a decline in GDP. Similar goals have failed to materialize, as growth targets remain the priority of local governments. In 2013, for example, construction began on new iron and steel plants with a total 30 million tons of output capacity.


cover story Key Figures in 2013/14 (target)


Government Budget 2014:


GDP Growth



M2 Growth


CPI Growth

New Affordable Houses

Financial Deficit




Employment Increase


10 5


2013 Unemployment Rate

Growth in Entry of Poor Rural Students to Top-level Universities

In response to concerns and doubts, Chinese leaders quickly redefined their target as a “range” around 7.5 percent. “If by the end of the year, the growth rate is 7.3, 7.2 or 7.1 percent, I would say we have met our target,” said Finance Minister Lou Jiwei at a press conference held on March 6. Premier Li also defended the growth target at a later press conference on March 13, saying that the real goal behind the 7.5 growth rate was to secure employment, hinting that the government could “tolerate” slower growth if other key objectives could be achieved. “What we care about is employment and livelihoods,” said Li. But when pressed to offer a “bottom line” growth target, Li refused to do so, saying that the government would seek a “balance between multiple goals” regarding growth, employment, inflation, financial stability, and environmental protection. Setting multiple challenges with contradicting implications, the leadership appears determined to have flexibility in its policy objectives, leaving itself the space to loosen policy if growth slows too sharply. According to Yuan Zhigang, dean of the School of Economics at Fudan University, who is close to the decision-making process, there has been a disagreement within the leadership regarding the 7.5 percent target. “Some believe that the government should stop announcing GDP growth targets altogether, to show it will tolerate slower growth in boosting economic reconstruction,” Yuan told China Business News. “Meanwhile, others insist that a growth target is necessary to secure employment.” Liu Shucheng, vice-director of the Institute of Economics at the Chinese Academy of Social Sciences, argues that it is a prudent decision to set up a growth target as it will stabilize market expectations, which is essential for any serious reform to be successful.


10 million

13.1 million




7 million








Decisive Market?

Despite concerns, many Chinese economists remain optimistic about the government’s prospects of achieving both its growth targets and reform objectives. Many point to the reform of State-owned enterprises (SOEs), which was a major theme in the reform roadmap outlined at the high-profile Third Party Plenum held last November, in which the leadership pledged to allow the market to take a “decisive” role in resource allocation, and encourage the development of the non-State sector. It has been argued that the focus on the market will tackle the root cause of existing economic problems, including mounting debt at the local level resulting from an investment-driven business model controlled by unaccountable local authorities and SOEs. During the two sessions, Li announced that private capital will be allowed to enter seven major “strategic” industries, including finance, oil, power, railways, telecommunication, energy exploration and public utilities, all of which were previously monopolized by SOEs. At the local level, the Guangdong provincial government announced that it aims to move 80 percent of provincial SOEs to a “mixed-ownership structure,” with no predetermined minimum State shareholding. China’s petrochemical giant Sinopec also announced that it would allow private investment in its downstream gasoline and diesel distribution operations. While the anti-corruption campaign and frugality drive launched in the last year have aimed to prevent local authorities from meddling in the economy, allowing private capital to have a bigger role serves to increase overall economic efficiency. At the March 13 press conference, Premier Li stressed that a major focus of the year’s economic policy would be to further loosen government control over the economy. According to Li, the number of newly registered private companies grew 30 percent, the biggest increase in more than ten years. NEWSCHINA I May 2014

Agriculture, Forestry and Water: US$104.6bn Social Insurance and Employment: US$115.4bn Education: US$66.7bn Science and Technology: US$43.1bn Culture, Sports and Media: US$8.3bn Healthcare and Family Planning: US$49bn Affordable Housing: US$40.8bn

Social Security




National Defense: US$130.4bn

Food and Drug Safety


Public Security: US$33.1bn

Income Distribution


Energy Conservation and Environmental Protection: US$34.0bn

Discipline Supervision


Family Planning


Pollution Control


Education Reform




New Urbanization


Transport and Logistics: US$70.1bn Grain and Oil Reserves: US$22.5bn

Public Services: US$20.1bn

In the meantime, China has announced that it will free up interest rates on bank deposits within two years. A major reason behind high leverage in China’s economy is the low cost of borrowing, resulting from the Central Bank’s tight restrictions on interest rates. By lifting these restrictions, the government hopes that it will force banks to evaluate risk more carefully, thus reducing lending to the inefficient State sector, and providing more cash to private firms, which have been largely ignored in the past. The People’s Bank of China (PBOC), China’s central bank, also announced on March 15 that it would loosen control on the Chinese yuan by doubling the daily trading range for the currency’s exchange rate, as a measure to “improve efficiency and increase the decisive role of the market in allocating resources.” A timetable to address the risk of defaults in the US$7.6 trillion in assets allegedly controlled by China’s shadow banking system, which some overseas economists warn could precipitate a new global financial crisis, has also been made, according to Premier Li. While the rationale behind the market-oriented approach is well reasoned, its impact will likely be long-term. In the short-term, amid so much uncertainty, China still has to tread carefully. Economic data released on March 14 show that an economic slowdown that started in late 2013 has accelerated in the first two months of 2014 – as investment growth dropped to an 11-year low of 17.9 percent, industrial value-added output growth fell to a five-year low of 8.6 percent. Retail sales growth reported a nine-year low of 11.8 percent, while exports in February dropped by 18.1 percent. In the meantime, deceleration in real estate construction and housing prices has led to concerns that the housing bubble may soon burst. So far, Chinese leaders have appeared confident in their ability to control the direction of the economy. “We achieved our growth target without resorting to stimulus in 2013, why wouldn’t we achieve it this year?” said Li. NEWSCHINA I May 2014

Top 10 Most Popular Topics (3,358,566 online respondents)

Source: (official website of People’s Daily)

Top 10 Most Popular Topics (3,071 offline respondents) Housing




Income Distribution


Food and Drug Safety


Medical Reform




Social Security


Education Equality






Source: (official website of People’s Daily)


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Two Sessions

New Hints

After a year of assertiveness in its defense and foreign policies, China’s new leadership reaffirms its “proactive” approach at the National People’s Congress By Yu Xiaodong


The Chinese People’s Liberation Army [PLA] is not a troop of Boy Scouts with spears,” Foreign Ministry spokesman Qin Gang told reporters on March 5, defending Beijing’s decision to increase its defense budget by 12.2 percent to 808.2 billion yuan (US$131.6bn) in 2014. The budget increase was announced by Xinhua News Agency on March 5. Premier Li Keqiang said during the annual session of the National People’s Congress (NPC), China’s highest legislative body, that the government would “strengthen research on national defense and the development of new and high-technology weapons and equipment,” and “enhance border, coastal and air defenses.” China’s military budget has been steadily growing for the past two decades, and this is the fourth consecutive year in which it has witnessed a double-digit hike, though as a percentage of China’s GDP, it is expected to remain unchanged at 1.3 to 1.4 percent. Meanwhile, China’s military budget is equal to about 21 percent of the US’ annual military spending, and China’s per capita military spending is roughly one-fifth of Japan’s. In the past, China has defended the growth of its military spending rather passively. But this year, under the new leadership fronted by President Xi Jinping, Beijing has become more confident and forthright in declaring its “proactive” approach in both its defense and foreign policies, while in the meantime stressing China’s continued adherence to its long-established concept of a “peaceful rise.” In the 2014 government work report, Premier Li reiterated the country’s pledge to work with neighboring countries in creating an environment of peace and stability in the region.

Strategy Shift

“Under no circumstances will we sacrifice core national interests,” President Xi Jinping said at a meeting with NPC delegates from the PLA on March 11, days after the announcement of the defense budget increase. Xi urged the military to become “combat-ready” and swiftly build the capability to “fight and win wars.” Xi has made similar remarks on various occasions throughout his first year in power, distinguishing himself from previous Chinese leaders. Since Deng Xiaoping, the late Chinese leader and architect of China’s economic reform, made an overall assessment of China’s international environment in 1985 that concluded that a major war was “unlikely,” China has adopted a rather passive defense policy. Although military spending started to increase in the late 1990s, the focus has been on China’s capacity to defend her borders. But as China has become the world’s second-largest economy with the second-largest military spending, the decade-long principle of taoguang yanghui – “concealing capacities and binding one’s time,” has become increasingly unpopular among the Chinese public. After assuming power, Xi quickly launched various new concepts, including “building maritime power” and “the Chinese dream,” all of which suggest that China will be taking a more proactive stance in defense. NEWSCHINA I May 2014

Photo by IC

Foreign Minister Wang Yi at a press conference at the National People’s Congress, March 8, 2014

In the meantime, China’s strategists have also begun to reevaluate the international environment. The Study Times, a journal published by China’s Central Party School, for example, has published a series of articles elaborating on China’s new “proactive” strategy throughout 2013 and early 2014. A common conclusion of these articles is that, due to the threat from regional territorial disputes, rising right-wing nationalism in Japan and the US’s pivot towards Asia, while a fullscale war with a major country remains unlikely, smaller-scale conflicts are far from impossible. At a press conference at the NPC, when asked about his response to the view that China is becoming more assertive in handling its disputes with neighboring countries, Foreign Minster Wang Yi stressed that the general situation in China’s “neighborhood” is both positive and stable. “China has been interacting with its neighbors for thousands of years. And all along, we have valued harmonious relations and treated others with sincerity. When others respect us, we respect them even more,” he said. “As for China’s territorial and maritime disputes with some countries, China would like to carry out equal-footed consultation and NEWSCHINA I May 2014

negotiation, and properly handle them by peaceful means on the basis of respecting historical facts and international law. There will not be any change to this position. We will never bully smaller countries, yet we will never accept unreasonable demands from them. On issues of territory and sovereignty, China’s position is firm and clear. We will not take anything that isn’t ours, but we will defend every inch of territory that belongs to us,” said Wang. In its latest article on the subject, published on January 27, the journal argued that the idea of the Chinese dream implies “a new military thinking,” which will need to be adapted to the “great revival of the Chinese nation,” serving to “protect national development and secure China’s major power status.” “China’s goal is to become the major active party in the international landscape of the Asia-Pacific region, instead of being passive,” said Ding Pu, senior commentator of the Hong Kong-based Phoenix TV. “As the largest country in the region, China sees this as its natural right.” Responding to a question concerning China’s growing military power, Fu Ying, spokesperson for the NPC, said China as a major power is responsible for regional peace and security.


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But “based on our history and experience, we believe that peace can only be maintained through strength,” she told a press conference. Fu said China, whose military policy is “entirely defensive in nature,” has “never treated any country as an enemy or a threat.”

“Proving Ground”

Photo by IC

The strategy shift’s most direct impact is upon the bilateral relationship between China and the US. Ever since China launched its policy of Reform and Opening-up in 1979, and economic growth became the primary goal of both its domestic and foreign policies, China’s foreign policy has largely been centered around securing a close relationship with the US, China’s biggest trade partner. In the past, Chinese officials and experts have frequently labeled the Sino-US relationship China’s “most important bilateral relationship.” In some cases, Chinese leaders are seen to be pushing for better relations with the US. Most recently, for example, when Wang Yang, China’s vice-Premier visited the US in July 2013, he likened bilateral ties to the relationship between “husband and wife.” But with a new assessment of its international environment and its

The owner of a second-hand appliance shop watches a live broadcast of the annual session of the National People’s Congress, March 13, 2014



military capabilities, China has adopted a new understanding of the bilateral relationship. One result of this understanding is that the concept of a “new type of major country relationship,” first raised by Xi in a 2012 speech in Washington. By emphasizing that the new type of relationship should be based on “mutual respect” and “tolerance of each other’s social systems and core interests,” China appears to demand an equal status in the bilateral relationship, at least in the Asia-Pacific region. While Washington has not rejected the concept openly, it is far from ready and willing to accept China as an equal-status player in Asia-Pacific. Viewing China as a challenging rival, the US has stepped up its military presence in the region, and is determined to remain dominant there. The issue was a focal point of the high-profile news conference held by Wang Yi, China’s foreign minister, during this year’s NPC session, in which Wang summarized China’s diplomacy in 2013, and outlines its direction for 2014. Calling on the two countries to engage in “positive interaction” to achieve “peace and stability,” Wang again emphasized that the bilateral relationship should be a “new type of major-country relationship,” and that the Asia-Pacific region should be “the proving ground for our commitment to build a new model of major-country relations, rather than a competitive arena.” This “proving ground” appears to be a major scale back from vicePremier Wang Yang’s earlier “husband-and-wife” metaphor. Some analysts even interpret it as a warning that China is not afraid to confront the US, at least in its own backyard.


Alongside its adjusted understanding of its relationship with the US, China’s new leadership has called for a “global and strategic perspective” in its foreign policy, and has carried out what some have called a dipomatic “multi-pivot” in the past year. “China’s diplomacy in 2013 was broader in horizon and more active in conduct,” said Foreign Minister Wang Yi in the news conference. According to Wang, over the past year President Xi Jinping and Premier Li Keqiang visited 22 countries, received 65 foreign heads of state and government, and reached around 800 cooperation agreements with other countries. The most notable “pivot” in China’s foreign policy was its closer ties with Russia, a relationship dubbed a “quasi-alliance” by many Chinese strategists. “The Sino-Russian relationship has reached its historical high in 2013,” said Wang. Due to Russia’s confrontation with the West in Ukraine over the Crimea crisis, analysts believe that Russia may move closer to China in the future, though others argue that a more hawkish Moscow may not be an ideal international partner. Another key component of China’s multi-pivot strategy launched in 2013 is the so-called “peripheral diplomacy,” as Chinese leaders have raised various initiatives to seek further economic integration NEWSCHINA I May 2014

with neighboring countries, including the “Silk Road economic belt” initiative in central Asia, the “maritime Silk Road” with Southeast Asian countries, and a similar economic belt initiative proposed to India and other South Asian countries. It is believed that China’s peripheral diplomacy is designed both to counter the influence of the US’s pivot policy in Asia, as well as to seek more potential economic development. In his speech during the NPC session, Premier Li pledged that “peripheral diplomacy” will remain the top priority of China’s diplomacy in 2014.


Calling 2013 “a successful year of innovation and harvest for China’s diplomacy,” Foreign Minister Wang concluded the conference with an assertion that China will continue to pursue a more active foreign policy in 2014, and will “take new measures and new ideas and present a new image with a more innovative spirit.” Several ideas and innovations were proposed during the NPC sessions. For example, Major General Gao Guanghui, commander of the PLA’s 16th Group Army and an NPC delegate, called for speeding up legislation over projecting armed forces overseas to “follow international norms” in providing legal grounds for overseas military action. Just a week prior to this year’s NPC session, the Standing Committee of the NPC made a decision to set December 13 as a national memorial day to commemorate those killed by Japanese soldiers during the Nanjing Massacre, which began in Nanjing on December 13, 1937, in which at least 200,000 people perished according to the International Military Tribunal of the Far East. The decision also named September 3 “Victory Day of the Chinese People’s War of Resistance Against Japanese Aggression.” The decision was made after a heated international propaganda war against Japan following Japanese Prime Minister Sinzo Abe’s controversial visit to the Yasukuni shrine, which commemorates Japanese war dead, including convicted class-A war criminals. Chinese officials readily admit that the decision was a response to “increasing Japanese historical revisionism.” Both initiatives indicate a more proactive stance in their respective areas in the coming year. Then finally on March 15, one day after the annual NPC session concluded, China’s State media announced that Xi Jinping would take charge in the “leading group for deepening reform of national defense and the military,” a group whose existence was mentioned for the first time by the State media. The report did not elaborate on the relationship between the new group and the Party’s Central Military Commission, on which Xi serves as chairman, making him commander-in-chief of China’s military. It remains unknown what specific role the group will take in the decision-making process regarding China’s military strategy. But what seems sure is that China will not be abandoning its assertive strategy in the region in the coming year.


cover story Personalities

Road Warrior One outspoken official has spent ten years trying to put the brakes on China’s “corruption on wheels” By Min Jie



e Qing, a delegate to the National People’s Congress (NPC), China’s top legislative body, is proud of his efforts to bring the topic of government vehicle reform from the fringes to the center. Nearly every year throughout his 10-year stint as a delegate, Ye delivered a proposal to put the brakes on the abuse of official vehicle privileges in China, which, together with overseas trips and receptions, are often called the “three guzzlers” of public funds. His proposals eventually garnered widespread plaudits from the public, but put him in the bad books of the officials whose perks he aimed to curb. “Throughout my tenure, I displeased a growing number of people in the government system,” he said. “But I really want to serve another five years, because many reforms on the agenda need a push.”

Road Battle

The year 2003 proved to be a turning point for Ye. In February that year, he became a delegate to the 10th NPC. Three months later, he served as the deputy chief of the Hubei Provincial Statistical Bureau, after a tenure of more than 10 years at Zhongnan University of Economics and Law. Rather than seeking a good reputation among his colleagues, often a litmus test for suitability for promotion in the government system, Ye quickly sought to send a clear moral message. His first move was to “fire” his full-time driver, an act that caught all his colleagues off-guard. In a country where senior officials are entitled to a public vehicle and a private driver, Ye chose to drive. In his words, he was “self-imposing government vehicle reform,” alone. “You know what, I can save 80,000 yuan (US$13,000) a year for the government by using my own car,” said Ye, holder of a PhD in finance. A professor-turned-official, Ye’s research area includes government vehicle reform, one of his favorite topics. In his days as an academic, he was notorious for his vow that if he were to become a government official, his first order of business would be to push car reform. He later made good on this promise. However, he gained a reputation as a “difficult leader to please,” and claimed he felt “ashamed to meet drivers in the bureau afterwards.” The second year, Ye formally made his proposal to the NPC on curbing the overuse of government vehicles to rein in “corruption on wheels.” As of now, the specific number of government vehicles and related costs remains anybody’s guess – a situation that is causing a greater outcry year on year. Ye’s first motion failed to win widespread attention, and few delegates were interested. But the second year, after full preparation and based on his own self-experiment with car reform, he jointly proposed five motions, backed up by four other delegates. However, despite his effort, his proposals have not yet NEWSCHINA I May 2014

come to fruition. Ye has come to realize that his reform plan will not be accomplished in one fell swoop. Ye has told the media that he “never imagined that internal resistance would be so strong.” Even at the Hubei statistical bureau, his own employer, only one other official, on a temporary placement, has joined Ye in eschewing government vehicles. What’s more, vehicle reform has become a sensitive topic with Ye’s boss. “We try to avoid the topic, which [I see as] a kind of support, as long as he does not object directly.” Ye said that his most exciting day at work was March, 5, 2011, when former Premier Wen Jiabao pledged to push forward vehicle reform in his government work report. “At that moment, all my efforts paid off,” he said. Over the years, Ye has published more than 100 articles on abuse of government vehicle privileges.

High Profile

In 2013, Ye retired from his post as a delegate, but still keeps a watchful eye on the annual sessions. “If I were a delegate this year, I would deliver another proposal – targeting private members’ clubs and high-end entertainment venues owned by governments at different levels.” He said many of these clubs, built with public funds, are located in downtown or resort areas, and only serve government insiders and retired cadres. “Compared to government vehicle abuse, these clubs have an even more negative impact.” Ye feels just as much indignation towards other forms of malpractice. For example, when he found the driver of a high-ranking official asleep in his car with the air conditioning running in the rainy season, Ye demanded the driver switch the engine off. He called the extravagant decoration of a conference room “a waste of taxpayers’ money.” “I made proposals as a delegate, and try to lead by example,” he said. An admirer of Jack Ma, China’s most successful e-commerce entrepreneur, for his efforts to change the rules of business in China, Ye said he hoped to “do the same in the government system.” Ye said that every year before the NPC meeting, he had to work long into the night preparing documents and reading media reports – indeed, he has a reputation for maintaining good relations with the media, and has a policy he calls “the three no-shuns” – interviews, lecturers and users of Weibo, China’s Twitter equivalent. “I do not like those delegates who raise their hands but do not speak out,” said Ye. In 2006, the Party mouthpiece the People’s Daily invited 15 delegates to open blogs, but to this day, Ye is the only one whose account remains active. He now curates a total of eight Weibo accounts. In China, senior government officials are unlikely to ride bicycles to work, not least because they would be accused of putting on a show for the media. However, Ye claims always to keep a foldaway bicycle on standby in his office, and that he strives to walk distances within three kilometers, cycle within five kilometers, and drive or take a bus beyond 10 kilometers. “Many of my colleagues prefer walking to cycling,” Ye said. NEWSCHINA I May 2014

Popular Proposals by NPC Delegates Replace politics lessons with civic education Li Yifei, headmaster of the No.1 Middle School of Ji’ning, Inner Mongolia China’s politics lessons, which focus on socialist theory, remain mandatory throughout China’s secondary and further education despite a widely held belief that they are pointless. Civic education would be more useful and acceptable to students in establishing value systems based on Chinese traditional culture.

Extend current nine-year compulsory education to 12 years, using remote and poor regions as pilot zones Yan Chunhua, deputy dean of Peking University Children from poor families, especially those in rural areas, should receive a free middle-school education.

Abolish the death penalty for financing fraud Entrepreneur Jiang Ming and 34 other delegates More space should be allowed for the development of private finance, which, according to current Chinese law, can be defined as illegal if the amount of funds involved and the number of debtors exceed the legal limit.

Put funding for big public hospitals in the government’s budget Zhong Nanshan, chairman of the Chinese Medical Association

Introduce legislation to resolve medical disputes Ge Minghua, vice-president of Zhejiang Cancer Hospital To ease the increasingly violent conflicts between doctors and patients. Many delegates believe the root of the problem lies in the self-financing system of Chinese hospitals.


cover story Personalities

Tough Questions At the yearly session of China’s top legislature, one delegate is demanding answers By Wang Chen and Li Jia



his is the fourth consecutive year that He Youlin, a delegate to China’s top legislature, the National People’s Congress (NPC), has called for the complete and systematic abolition of the country’s controversial One Child Policy. The various other proposals He brought to Beijing this year, as in the previous six years, focused on the lives and rights of ordinary Chinese people. The 59-year-old middle-school principal from Guangdong Province is well-known for his outspokenness, his policy proposals to improve the lives of disadvantaged groups, and his insistence that the government answer his calls. Contrasting sharply with the many delegates who either remain silent or make absurd proposals during the NPC, He is in the minority among the nearly 3,000 attendees at the conference. “I can hardly imagine how poor people with no more than US$350 income a month can survive,” He said in his speech at the 2011 session. He suggested that government officials stop using clichés like “Let the people live a better life,” since, as he noted, the word “let” makes the prospect of a better life sound like “a favor from on high.” His direct and sometimes emotional expressions of sympathy and criticism gained him plaudits both inside and outside the assembly room. He has been nicknamed “Brother Youmin,” meaning “caring for the public,” by netizens, a quality seen as all too rare among those involved in China’s political apparatus. However, He Youlin hasn’t always been seen as a hero. The first time he pushed for the abolition of the One Child Policy during the 2010 NPC session, he was met with total silence. Unperturbed, He put forward a written proposal the next year, but again received no reply. He delivered a “notice of dissatisfaction” to the agency in charge of the policy, known at the time as the National Family Planning Commission, which was then required by NPC rules to apologize and send officials to discuss the matter with him. He was told that new policies would be adopted after the Third Plenary Session of the Communist Party Central Committee in 2013. Now, several provinces have begun to implement a “Two Child Policy” for couples either one of whom is an only child. Ma Xu, a senior official from what is now known as the National Health and Family Planning Commission, told the media during this year’s NPC session that about 20 provinces would have the new policy in place this year. He Youlin, however, insisted that this “Two Child Policy” be extended to all families. NEWSCHINA I May 2014

However, it is serious research, not strong emotions, that makes a qualified NPC member. As a middle school teacher and principal for more than 20 years, He has borne witness to the grief of parents who have lost their only child, and the corruption of family planning officials. Born and raised in rural areas of comparatively less developed Jiangxi Province in central China, He places much emphasis on education, particularly in the countryside. One of his five proposals in 2008, his first NPC session, was to increase subsidies for class teachers, who are responsible for every aspect of the school lives of 40 to 60 students in an elementary or middle school. The Ministry of Education adopted his proposal. In a video interview with the People’s Daily Online on March 10, 2014, He argued for the provision of improved pay and work conditions to attract better teachers to less developed areas and ordinary schools in cities. Children in poor areas, he said, are disadvantaged even before their formal schooling begins. He repeated his suggestion this year that kindergarten become part of compulsory education. According to the Ministry of Education, in 2013, less than 70 percent of children receive a preschool education. The rate is lower in China’s western provinces. He’s career as a teacher has also given him insight into various other aspects of society. Through discussions with parents of his students, he learned that the legal system in populous places like Guangdong was short-staffed because distribution of legal personnel was based on the size of the locally registered population, without considering massive migrant populations. However, the central government’s effective monopoly on the allocation of central funding often means that local governments are left with insufficient funds with which to address such problems. Since 2010, He Youlin has been one of a number of delegates advocating redress of this imbalance. He has tried to work with delegates from less developed areas within Guangdong Province, in order to attract the attention of the media and the central government. However, even though He was fighting in their own interests, he met with little enthusiasm from rural delegates. “They may not want to look defiant when facing the central government,” he told NewsChina. Apparently, few delegates share his belief that “it is the responsibility of an NPC member to criticize the government,” a claim he made during the 2013 NPC session. He has not hesitated to criticize delegates who he feels are shirking this responsibility. In 2010, he openly questioned those who were spending their time networking with higher-ups, shopping and promoting their own businesses. He Youlin was somewhat shocked to be given a second five-year term as an NPC delegate in 2013 – he has said that he sees this as a sign that the government is becoming more tolerant of critical voices. Positive changes like this, he hopes, will pick up momentum. For the billions of Chinese people not privy to the goings-on inside the Great Hall of the People, they can only hope that the rest of the delegates are gradually beginning to take their jobs as seriously as He Youlin takes his. NEWSCHINA I May 2014

Redefine “Soliciting an Underage Prostitute” as “Statutory Rape” Sun Xiaomei, professor from China Women’s University The current definition reduces sentences for those who have sex with minors, and causes more children to be forced into prostitution. Given that children cannot consent to sex, “soliciting an underage prostitute” should be redefined as “statutory rape.” Sun has submitted the same bill at four consecutive NPC sessions since 2011.

Establish a community-level service network for the elderly Wu Zhenshan, an entrepreneur from Hebei Province Many elderly people are neither qualified for entry to government retirement homes, nor can they afford private ones. A community network would help them live comfortably at home.

Impose heavy punishments on smog producers, even to the point of criminalization Fu Qiping, Party secretary of Tengtou village, Zhejiang Province

Popular Proposals by CPPCC Members Introduce legislation to supervise income distribution and publicize officials’ property Wu Jiang, researcher at Chinese Academy of Personnel Science It is unfair that the leaders of State-owned enterprises earn much more than those in the private sector. Preliminary distribution should be determined by the market, which should be open, transparent and under the supervision of the people.

Grant preferential social insurance to single-child families and those who have lost their only child Mo Yan, winner of the 2012 Nobel Prize for Literature These families are under higher pressure to support the elderly, let alone those who have lost their only child.


cover story Personalities

Toothless, but not Voiceless This outspoken delegate to the Chinese People’s Political Consultative Conference (CPPCC) still believes that talking can make a difference By Cai Rupeng


niversity professor, librarian and CPPCC delegate Ge Jianxiong doesn’t mince his words. Before setting off for Beijing from Shanghai Airport in March for this year’s session of the CPPCC, often called “China’s rubberstamp parliament,” he opened fire on China’s ubiquitous and heavily nationalistic TV dramas about the Sino-Japanese War. “These shows turn history into myth. The eight years of the war against Japan were not a game, as these shows make it seem,” Ge told an enraptured group of reporters in the airport’s departure lounge, also bound for the conferences in Beijing. “I have wondered why the regulator would allow such nonsense to be produced and aired.” A year earlier, at the 2013 CPPCC session, Ge challenged China’s Minister for Education Yuan Guiren head-on about the leak of exam papers prior to the national postgraduate entrance exam earlier that year. Ge pushed Yuan to apologize to all the examinees, and to investigate the possible corruption within the ministry that some had alleged to be the reason for the leak. The episode became one of the most discussed public events that year. Ge has since earned the nickname “Cannon Ge” in China’s blogosphere, though Ge himself has claimed to be unimpressed with the nickname. Ge has more than one million followers on Sina Weibo, the most popular microblogging service in China. “I am not really the hard-edged type,” Ge said. “I just want to tell the facts.” Ge’s boldness has made many uneasy, since his employer Fudan University and over 100 other top Chinese universities fall under the direct administration of the Ministry of Education, which takes charge of the allocation of State funds and appraisal of these schools. A year later, four education officials involved in the scandal were convicted and were given sentences between nine months and six years.

Public Property

In 1999, Ge joined the Revolutionary Committee of the Chinese Nationalist Party, one of the country’s eight largely symbolic “minority parties,” and became a member of the Shanghai CPPCC a year later. He took up a post as a columnist with a local newspaper, which he used to discuss public issues large and small, from Shanghai’s taxi driver strikes to “copy-cat culture,” and from the erosion of rural culture to excessive parking fees. Some have wondered why



a professor would care about such trivial matters. Ge would reply that he “does not live in a schoolbag.” The 69-year-old, a prominent historian and chief librarian at Fudan University, became a delegate to the CPPCC in 2008. Though many delegates complain that their speeches at the CPPCC tend to fall on deaf ears, Ge disagrees. He believes that if delegates bring persuasive arguments backed with solid facts, the media will help to communicate their ideas to the public, thus influencing policy in the long run. “Even if the conference is nothing but a decorative vase, should hold real flowers,” said Ge in a recent entry in his diary on the Chinese website of the Financial Times chronicling the “Two Sessions,” the collective name given to the simultaneous meetings of the CPPCC and the NPC, China’s legislature. Ge’s Two Sessions Diary has been running since 2011, a rare move for a CPPCC delegate. Ge never declines media interviews, and will often talk long into the night with journalists – he once received a reporter at the hospital where he was taking a physical exam. He has joked that he himself is a piece of public property – and an overused one, at that. “I use to the full my opportunity to speak at the conference, where I talk at any possible occasion, to the people or the media. [Only this way] can I say I’ve fulfilled my duty,” Ge said. “It’s not up to me whether or not my talk will have any effect. I hope it does, but all I can do is keep talking.” Ge’s tenacity is another reason behind his popularity with the public – he is known for refusing to give up until his proposals are adopted. For instance, since 2009, Ge had persistently proposed that tolls on China’s expressways should be lifted during national holidays. In 2012, the Ministry of Transport eventually agreed. However, the lifting of the toll caused such heavy congestion that many of China’s expressways were gridlocked at the height of the season. More of Ge’s proposals, many of them somewhat unorthodox, have yet to yield any effect. For years, he has been arguing that government cars should be painted with bright colors, in order to make them easily identifiable and prevent abuse of privilege – a proposal that has yet to gain traction. Ge is also a longtime advocate for the establishment of rules governing the treatment of retired State leaders, to address the widespread belief in China that the privileges afforded to retired senior officials are a waste of taxpayers’ money. This proposal, too, has as yet failed to provoke any response from the authorities. “Whether or not our advice is adopted and executed is up to the ruling party and the National People’s Congress.” Ge’s fame tends to earn him high volumes of correspondence from those petitioning for his help – since Ge does not use a cell phone, this usually comes in the form of letters. “I used to reply to every letter, but now I can’t, since there are too many,” Ge said. In most cases, all he can do is to relay the letters to relevant ministries or provincial governments, usually with no response. Ge told reporters that he believes CPPCC delegates should be valued according to whether or not they talk sense. “Since bicameral congress is precluded in China, I hope I can at least be judged by this standard,” said Ge in his Two Sessions Diary. NEWSCHINA I May 2014

Establish a rating system for movies Wang Xingdong, director of China Movie Literature Society Such a system would better protect children. Wang has submitted the same proposal at over 14 sessions of the CPPCC.

Legislate protection of minority languages Qi Dechuan, Jingpo ethnic language researcher from Yunnan Province Many ethnic languages and cultures are on the brink of extinction.

Include migrant workers in the government’s affordable housing plan Zhang Hongming, researcher from the Chinese Academy of Social Sciences Shanghai Branch Migrant workers are in urgent need of housing in the cities where they work.

Make the Internet a part of national strategy Lei Jun, founder and CEO of mobile phone maker Xiaomi Technology The Internet industry is playing a growing role in promoting industrial upgrading in traditional sectors.

Collect a resources tax for natural water Zhang Minghua, deputy mayor of Ningbo, Zhejiang Province Despite water shortages, water resources are heavily abused due to low utilities charges.

Raise the threshold of taxable income Zhang Shiping, vice-president of All China Federation of Trade Unions The actual income of Chinese workers is growing at a much slower rate than inflation.

Issue an anti-terrorism law By Guo Chengzhen, vice-president and secretary-general of the China Islamic Association



Black Lung

Left in the dust China’s central government is being called upon to help the country’s vast population of black lung sufferers

By Du Guodong


t a time when residents in China are voraciously debating the impact of smog on their lungs, a far more lethal chronic illness has failed to catch the attention of either the authorities or the public. Pneumoconiosis, better known as black lung, once prevalent in industrializing Western countries, has been revealed to be rampant in China, affecting a great number of migrant workers, especially coal miners. The illness, caused by long-term exposure to hazardous dust particles, is leaving hundreds of thousands of Chinese families bereaved each year.

In Limbo

Statistics from the Ministry of Health have shown that 27,420 new cases of work-related illness were reported in China in 2012, among them 24,206 were pneumoconiosis, accounting for nearly 90 percent of the total and causing a direct annual economic loss of 8 billion yuan (US$1.3bn). As of the end of 2011, over 702,000 cases of pneumoconiosis had been reported nationwide, and 22 percent of sufferers have died. Wang Keqin, founder of Love Save Pneumoconiosis, a charity set


up in 2011 to help treat migrant workers who have contracted the disease, told NewsChina that since a large number of patients had been working for small- and medium-sized enterprises outside the jurisdiction of the health authority’s occupational disease supervision program, these figures are underreported. Wang, a former investigative reporter, said that in reality, roughly six million people across China are affected, and “the majority of them are migrant workers.” “The official figures only count patients who sought diagnosis of an occupational injury from disease control centers,” said Wang, “but nearly 90 percent of black lung sufferers are migrant workers, and less than one tenth of workers have medical coverage.” It is not uncommon for enterprises, especially small coal mines, to employ workers without contracts, and many have no work-related injury insurance for migrant workers. Only 29 percent of the 250 million migrant workers in the country had workplace insurance by the end of 2012, according to the Ministry of Human Resources and Social Security. Roughly 10 percent of employees in China receive regular occupational health checks, said Yu Wenlan, a health expert with the Chinese Center for Disease Control and Prevention during an interview NEWSCHINA I May 2014

Photo by IC

Workers unload dried tapioca chips imported from Thailand at a factory in Lianyungang, Jiangsu Province, August 2013

with China Daily. In 2002, China implemented its first occupational disease prevention law aimed at trying to protect workers employed in dangerous industries. Under the law, with a confined diagnosis from a designated government occupational disease control centers, patients could be awarded compensation from their employer and insurer. But getting hold of compensation remains a difficult task. Patients are required to provide documentation, including proof of employment, health check results and workplace risk evaluations before they can apply for an occupational disease diagnosis. A recent report by Wange Law Firm in Guangdong Province said that it would take 1,149 days for a black lung patient to be fully evaluated. “The lengthy procedure would discourage even professional lawyers, let alone migrant workers who most likely have only an elementary school education,” Cheng Haitao, a lawyer specializing in labor disputes at the firm, told the Southern Metropolis Daily. To make matters worse, Wang said, migrant worker patients are “caught in the middle,” as they are entitled to neither urban nor rural basic medical insurance. “Irresponsible enterprises and the difficulty in making them accountable, plus the bumpy road to diagnosis, have NEWSCHINA I May 2014

become the main burdens for black lung sufferers,” Wang told NewsChina. Nowadays, the majority of sufferers are aged between 30 and 50, and most are the main breadwinner in their family. After developing the disease, sufferers’ families are likely to be reduced to poverty by high medical costs. A volunteer from Love Save Pneumoconiosis, surnamed Zhang, told our reporter that some patients even commit suicide after failing to get compensation, to avoid becoming a burden to their family. He said he had once dealt with three brothers in Leiyang, Hunan Province, all of whom had contracted black lung. Cao Manyun, the youngest brother, died after jumping off the seventh floor of a hospital two years ago. When he met Cao Jin, the eldest brother, on April 8 last year, Cao said he wanted to abandon his treatment. 20 days later, he killed himself. “These tragedies are not rare. The number of patients who have received compensation is far lower than those who have contracted the disease and passed away,” he said. As of January, 2014, Love Save Pneumoconiosis has raised over 12 million yuan (US$1.95m) and aided over 900 patients, accounting



Photo by cns

for 10 percent of those care system, one of the who sought help at the three basic medical insurfoundation. While black ance schemes that cover lung is incurable, Wang both urban and rural resisaid that currently, the dents. best way to treat first-stage Since the rural healthsufferers is lung flush surcare system covers only gery, which costs around relatively basic medical 10,000 yuan (US$1,630), treatment, Chang Kai, a price that no NGO or professor with the Instigrassroots charity foundatute of Labor Relations tion can afford. at Renmin University of Zhang Haichao, a migrant worker who underwent a biopsy to prove that he was “Black lung has become China, said during a semiaffected with black lung before seeking compensation, studies his X-rays, September 16, an extremely serious social nar on black lung preven2009 problem in China, and the tion attended by NGOs, government should stand labor experts and lawyers up and take responsibility,” he added. “The role of NGOs is only a in February, that it is of high priority for the State Council to set up a drop in the bucket.” coordinating body to address the issue. He told NewsChina the foremost task is pushing the central government to conduct a nationwide survey of the disease. “This is the Way Out As early as 1987, China unveiled its first regulation on the preven- starting point and the fundamental issue before a remedy can be put tion of black lung following a spate of outbreaks nationwide, requir- forth.” Chen Jingyu, a deputy to the National People’s Congress (NPC), ing enterprises with dust hazards in the work environment to take meaningful action to protect workers, incurring warnings, fines or China’s top legislative body, submitted a motion at this year’s NPC suspension of production if they fail to meet standards. But the dif- session in March urging the central government to set up a “national ficulty of supervision and comparatively light penalties have made the special relief fund” to provide all the medical expenses and day-to-day living expenses of patients and their families. It was the second time regulation little deterrent to unscrupulous enterprises. In 2003, the China Coal Miner Pneumoconiosis Prevention and that Chen, a lung specialist at the Wuxi People’s Hospital, Jiangsu Treatment Foundation was set up by the State Administration of Province, had submitted a proposal relating to the disease. His proposal was signed by a number of delegates and deputies at Work Safety, the first of its kind in China. As of 2014, the foundation has raised 150 million yuan (US$24.4m) to subsidize a dozen the “Two Sessions,” the colloquial term for the annual meetings of the NPC and CPPCC. In 2013, Chen’s hospital had conducted 70 specialist hospitals. On December 3, 2013, the State Council, China’s cabinet, issued percent of the nation’s lung transplant operations, plenty of which a guideline to build “environmentally friendly” cities in China from were linked to black lung. “Palliative care is necessary, but we cannot 2013 to 2020, and vowed to make greater efforts in the prevention neglect the importance of prevention,” Chen told State broadcaster and treatment of black lung. Shortly afterwards, several local govern- CCTV. As for the sources of funding, both Chen and Chang have proposed ments, including Shiyan in Hubei Province and Renhuai in Guizhou Province, have unveiled a series of measures targeting the disease. The to use the surplus from the national work-related injury insurance Shaanxi provincial government has moved to set aside relief funds for fund. As of the end of 2012, the fund had a balance of 84.4 billion yuan (US$13.7bn), while the overall social insurance fund surplus hit all its sufferers. The occupational disease prevention law stipulates that a patient 3.75 trillion yuan (US$610bn), according to the Ministry of Finance. But these funds are unevenly distributed across the country. The can seek help and compensation from local civil affairs departments after failing to make the employer accountable, since the disease and majority of the work-related injury insurance surplus was in comits wider effects remain “too heavy a burden, especially in central and paratively developed areas in eastern and southern China, which have western parts of the country,” according to Li Shiming, vice-chairman large migrant worker populations. Chang said the central governof the All China Federation of Trade Unions and a member of the ment can macro-manage the surplus by concentrating more funds on Chinese People’s Political Consultative Conference (CPPCC), Chi- poorer provinces. na’s highest political advisory body. “The central government is not lacking money, and it is within its Li suggested during the annual CPPCC session in March to in- capacity to rein in black lung, both in theory and reality,” Chang said. clude black lung sufferers under the new rural cooperative medical “It is only a matter of determination.”




Heavy Lifting Chinaâ&#x20AC;&#x2122;s authorities are finally talking tough on air pollution. But there remains debate over how to solve the problem â&#x20AC;&#x201C; and even its causes

The statue of famous economist Chen Daisun in Peking University is masked during the February smog NEWSCHINA I May 2014

Photo by CFP

By Yuan Ye



Two “tent” gymnasiums costing US$5 million are inflated over an international school’s playing fields in Beijing at the end of 2012 to protect students from smog


n Beijing, 14 days after Chinese New Year, the smog rolled in, with hourly averages of PM2.5, particulate matter believed to be harmful to human health, surging from 90 to 270 micrograms per cubic meter overnight. As dawn broke, a gray haze blanketed this city of some 20 million people. Satellite monitoring data from the Ministry of Environmental Protection (MEP) indicated that two days later most provinces in central and eastern China were also hazebound. The epicenter, over the Beijing-Tianjin-Hebei area, covered 1.43 million square kilometers, of which 810,000 square kilometers saw severe air pollution warnings issued, with 20 cities recording PM2.5 averages over 150. The State media, which once rarely mentioned China’s horrific air pollution, ran the headline nationwide: “one-seventh of the country under attack from smog.” 15 provinces, an area of 1.81 million


square kilometers, were smog-bound until February 26, with 980,000 square kilometers of territory classed as heavily polluted. Only strong winds from the northwest dispersed the smog, which had returned to “acceptable levels” by February 27. During the NPC (National People’s Congress) and the CPPCC (Chinese People’s Political Consultative Conference) sessions in March, smog was top of the agenda. Nearly ten bills related to reducing urban smog, and nearly one hundred bills were related to environmental protection, accounting for 30 percent of all tabled legislation during the meetings. Premier Li Keqiang vowed in a government work report on March 5 that the government would “declare war on pollution.”

Necessary Evils

In 2013, 25 provinces and regions (out of a total of 28) and 100 large- and medium-

sized cities reported smog levels of “serious” or above, with air pollution affecting an estimated 600 million people. The average number of smoggy days reached 29.9 nationwide, hitting a 52-year high, with some media outlets comparing the effects to that of a nuclear winter. Xie Zhenhua, vice director of the National Development and Reform Commission, China’s top macroeconomic planning agency, admitted in a November 2013 press release that the severe and regular air pollution in China had hugely impacted people’s daily lives. A research report in British medical journal The Lancet indicates that in 2010 alone, air pollution resulted in the premature deaths of 1.2 million people in China. In the past ten years, lung cancer diagnoses in the country have risen by 60 percent. In January 2013, at the height of the smog in northern China, the Beijing Children’s Hospital received 7,000 patients in one day, NEWSCHINA I May 2014

Photo by CFP

most of them suffering from respiratory problems. In late October that year, smog descended on the northern city of Harbin, with local hospitals recording a 30 percent jump in outpatient admissions. In November, an eight-year-old girl in Nanjing was diagnosed with lung cancer, China’s youngest-ever diagnosis of the disease.


Wu Xiaoqing has attributed China’s everworsening smog problem to industrial pollutants in the atmosphere. In 2010, total emissions of sulfur dioxide and sulfur hydroxide exceeded 22 million tons, making China the worst emitter of these hazardous pollutants worldwide. Industrial smoke and dust poured from China’s smokestacks to hit a peak of 14.461 million tons, far above the country’s official environmental capacity. In addition, 100 million cars were on China’s roads in 2012. Many think tanks have NEWSCHINA I May 2014

correlated increasing automobile ownership with the rise in pollution. Bao Xiaofeng, vice director of the Automobile (Ship) Pollution Prevention Professional Committee of the China Environmental Science Society, claims that 80-90 percent of carbon monoxide emissions, 70-80 percent of carbon dioxide emissions and 50 percent of nitrous oxide emissions come from automobile exhausts. However, it is disputable whether these pollutants are the main contributors to the thick, visible smog that regularly blankets China’s cities. In 2011, China consumed 60 percent of the planet’s cement, 49 percent of its steel and 20.3 percent of its energy. China’s power stations are currently top of the list of the heaviest polluters, with coal burning currently producing 70 percent of China’s power. These energy-consuming, polluting and resource-hungry industries, most of them State-owned and with their business fueled by favorable government development policies, have largely escaped official blame for their massive contribution to China’s smog problem, with the State media and many government figures continuing to focus on private automobile ownership.


Immediately after the smog lifted in February, State media reported that the government is planning to build the world’s largest “smog box” in Beijing’s Huairou district, part of a comprehensive range of simulators designed to allow scientists to come up with innovative ways to combat pollution, a project with a preliminary budget of 500 million yuan (US$80.6m). Director of the China Academy of Sciences Bai Chunli believes that more meticulous and detailed research is necessary, because the sources differ according to geography and lo-

cal conditions. In a recent interview, Bai says that secondary formation of PM2.5 particles is an important contributing factor to the smog clouds affecting major cities. “We have discovered that coal burning and automobile exhausts account for 70 percent of smog production. Nitrogen compounds and sulfides cause secondary production and lead to explosive increases in the number of PM2.5 particles,” Bai told NewsChina. “A horrifically smoggy day sometimes follows a clear one. This is due to secondary emissions. So it is important to find out the reasons behind these, especially the specific chemical reactions.” In September 2013, the State Council issued its first Plan for Air Pollution Prevention, vowing to take serious action to reduce air pollution and improve air quality through cutting coal burning, limiting car usage and reducing industrial dust. Beijing, the epicenter of China’s February airpocalypse, proposed to curtail regional cement production by the end of 2014. Hebei Province proposed to reduce steel production by 15 million tons, cement by 10 million tons, glass by 18 million shipping crates and coal by 15 million tons. Yet many bills proposed during this year’s NPC and CPPCC sessions pointed to the need for “multidimensional methods” to combat smog, indicating more sweeping and drastic measures to come. According to NPC delegate and director of Shanghai’s Environmental Protection Bureau Zhang Quan, effective smog controls need a coordinated network and associated prevention systems that cross regional barriers, backed up with legal enforcement. “Because smog is both fluid and regional, it is impossible to improve air quality through prevention efforts in a single city or province,” he said.



Child Labor


Learn or Earn?

ost Chinese schoolgirls living in the country’s burgeoning cities have similar wish lists for Chinese New Year - new clothes, jewelry, maybe an iPhone. But for Lu Jia, 15, a dropout student from Xiagu Village, Sichuan Province, there was only one thing she wanted this year – a paying job. Her wish was fulfilled on January 7, 2014, when 46 migrant workers from her village gathered in a recruitment agency in Dongguan, Guangdong Province, where they were photographed and assessed by potential employers. Lu was the youngest of the potential recruits. This school-age girl could have been forgiven for occasionally glancing over her shoulder as she jostled for an urban job. Just days before, 41 underage workers had been “deported” to their hometowns by police after being found on a factory floor in Shenzhen, Guangdong Province. “If I’m caught and sent back home, I’ll just come back again,” Lu said. “My parents are very happy to see me working. My only losses are my travel expenses.”

China’s ongoing poverty problem continues to thwart efforts to eradicate child labor

Flocking Out


A child on his way to collect firewood in the mountains near Xiagu Village, Liangshan, Sichuan Province

Photo by yang di

By Yang Di

On January 4, Lu Jia and her cousin Lu Haiying, 17, walked nearly three hours from their home to the foot of a mountain in their home prefecture of Liangshan to join another 14 migrant workers waiting in a minibus. In neighboring Muli County, another 32 people boarded. 27 hours later, the bus disembarked in Dongguan, where every one of the passengers was immediately set to work in a factory making cell phone batteries. None of the workers was asked for an interview, or to sign a contract. Despite being visibly underage, Lu Jia was assigned a job cleaning solder from battery cases, while her cousin was made a welder. They each made 9.5 yuan (US$1.60) per hour, an amount below Dongguan’s minimum wage standard, and worked 12 hours a day, from 8 AM to 8 PM, with two hours for meal breaks. While on break, Lu Jia and her cousin would sit and chat, and told NewsChina they were happy with their salaries. “After working for the whole year, I can save up at least 10,000 yuan (US$1,632) to send to my parents,” said Lu Haiying. “Working outside earns much more than doing farm work at home.” The factory job in Dongguan was Lu Jia’s second away from home. In 2013, she worked in a shoe factory in Shenzhen with another of her cousins, spending 10 hours a day wiping excess glue from the soles of cheap shoes for a salary of around 2,300 yuan (US$375) a month. As the work required her hands to be submerged in cold water for most of the day, Lu described how her fingernails turned white, though she maintained that “it took less effort than farm work.” After working for 10 months in the shoe factory, Lu went back home for the traditional new year’s celebration for the Yi ethnic group, which falls around two months before Chinese New Year. She described to NewsChina how every January, migrant workers from her home county, most of whom are Yi, flood into cities to fill the job openings left by their ethnically Han counterparts. Pan Jiao, a professor of anthropology with the Minzu University of NEWSCHINA I May 2014


Lu Jia’s family live on a few square meters of arable terraces where they grow grains and potatoes. She said that during the year they rarely saw meat on their dinner table. “Laboring the whole year is only enough to fill your stomachs if the rains come on time,” said Lu Aka, Lu Jia’s father. Aged 39, his face has the weather-beaten look of a much older man. Lu Aka said that he previously kept 40 goats, but that when his elder daughter married at the age of 17 and his second daughter Lu Jia took a job in the city, he had to reduce his flock to 20 in order to keep it at a manageable size. His youngest son, aged eight, is still in elementary school and unable to work. The family became reliant on selling their best goats every December, the proceeds of which could keep them fed through the winter. Lu Jia could not remember when she started working for her family. Besides the traditional “women’s work” of cooking and washing clothes, from the age of 10 she would climb mountains alone to gather wild mushrooms and chop firewood. “She was very hardworking and can lift bundles of firewood weighing 25 to 30 kilograms,” Lu Aka said. “Local adults can only carry 35 to 40 kilograms.” Liangshan is home to two million ethnic Yi ethnic people distributed through 3,700 villages, mostly in mountainous areas. Before 2004 when paved roads were finally constructed, it could take three days to reach the nearest town, meaning the majority of communities had to be entirely self-sufficient in goods. Liu Dongxu, a lecturer in anthropology with the Minzu University of China said that, once the roads opened, locals began to buy readymade clothes, beer, television sets, washing machines and even moNEWSCHINA I May 2014

Photo by yang di

China said it was only at the end of the 1990s that ethnic Yi began to work in cities en masse, as a general lack of education and Mandarin fluency had traditionally held this group back in the employment market, along with many other ethnic minorities in China. Lu Jia’s two working excursions were both arranged by 33-year-old Lu Jian (no relation), a foreman who left from Muli County in Liangshan 15 years ago to find work in the cities. After a three-year stint in the Army, he became a construction worker, with his military background as well as his affable demeanor proving popular with ethnic Han employers. Lu Jian’s relatively high social status allowed him to assist other ethnic Yi to migrate to the cities for work. In November 2013, Lu Jian returned to his hometown for the first time in two years, bringing with him a suitcase stuffed with 800,000 yuan (US$130,560) in cash, 600,000 yuan (US$97,929) of which was earmarked as salary for his fellow workers. This “prodigal son” became revered in his hometown, and soon half the local workforce was attempting to replicate his success, with local parents even bribing Lu to take their children to the cities to work. “Without money to send their children to school, work outside seems the best option [for rural youngsters],” Lu told NewsChina. “It can enrich their experience, or at least allow them to brush up their Mandarin skills.”

Migrant workers from Xiagu Village wait to be hired outside a recruitment agency in Dongguan, Guangdong Province in January

torcycles, completely transforming their lives but also exponentially increasing the average cost of living. “It is increasingly hard for locals to meet their needs by living on the meager income from their land,” he said.


Unlike her cousin Lu Jia, who never enjoyed school, Lu Haiying was a top student and the only child in Xiagu Village to be enrolled in a high school in September 2013. However, by December, her family was broke, having spent roughly 6,000 yuan (US$979) - the bulk of their annual income - on tuition fees, books, meals and accommodation. “Our family didn’t have a penny left to keep her in school,” Lu Haiying’s father told NewsChina. Lu Haiying was pulled out of school and put to work in Dongguan, where she has remained ever since. “Students drop out nearly every day,” said Lu Wujia, a teacher at the Muli County Middle School, adding that local middle schools have the highest dropout rate. Asked for figures, she said she recalled 60 students in the first year class of the local middle school, of whom only 20 would graduate. The rest, she said, “either got married or went to cities to work.” Lu Wujia added that her main task as a teacher was persuading parents to keep their children in school. “I would beg them in every way I could think of short of prostrating myself at their feet,” she said. Lu was a debate champion in school, but, she admits, the county’s intractable parents “beat her every time.” When we met with Lu Haiying in the cafeteria of her Dongguan workplace, she remarked that she still hoped to return to education. “I do not want to work like this for my whole life,” she said. No doubt she would be dismayed to find that, back home, her father has already wrapped all her schoolbooks for sale to garbage collectors.



Three Gorges Dam

Hydro Power Corrupts Absolutely The Central Committee for Discipline Inspection has trained its crosshairs on the State-owned Three Gorges Corporation - putting a previously untouchable prestige project in the firing line of its expanding anti-corruption campaign By Xie Ying



Photo by CFP

The last set of generators connected to the Three Gorges Dam is put into operation, July 4, 2012


dream floated by Chairman Mao that, once realized, destroyed the ecology of the Yangtze River, forced the evacuation of over one million people, and has perhaps even increased the likelihood of a range of natural disasters from drought to earthquakes, the Three Gorges Dam was once, despite its controversy, firmly out-ofbounds when it came to domestic criticism. Now, however, China’s Central Committee for Discipline Inspection, the Party’s anticorruption watchdog, appears determined to take this sacred cow to task. A three-month inquiry into the Three Gorges Corporation, the State-owned entity in charge of the dam, NEWSCHINA I May 2014

has concluded that corruption has dogged the project since its infancy. Among a raft of charges levied include claims of insider trading, embezzlement and general negligence. Given the prestige attached to the Three Gorges project, these revelations, though hardly surprising, were followed by a wave of media coverage on the dirty deals conducted by the dam’s parent company, though the State media has been careful to tiptoe around criticizing the project itself, focusing instead on the Three Gorges Corporation as emblematic of the corruption which is perceived to have taken root in most of China’s Stateowned enterprises (SOEs).

With the investigation turned over to higher authorities, observers are waiting to see if the leaders behind the Three Gorges Dam prove to be among the corrupt “tigers” that President Xi Jinping has repeatedly pledged to strike down as part of his anti-corruption drive.


According to media reports, the China Three Gorges Corporation rigged the bidding process for at least 100 billion yuan (US$16.7bn) worth of construction projects every year, allegedly offering contracts to cronies of its leaders. A bidder who gave



the alias Liu Hu told Time Weekly, a Guangzhou-based newspaper well known for first specifying the corporation’s scandals, that his company’s bid was passed over in favor of a much more expensive bid by a company which, according to Liu, had faked its business licenses. “When I sent all the proof to the Three Gorges Corporation, one of the corporation’s leaders told me that fraud is ‘common practice’ in the bidding process,” said Liu. “Even though I had proven fraud, they refused to reopen the bidding process.” He added that the corporation had previously attempted to solicit a one million yuan (US$162,800) bribe from him, a demand he turned down. Both the winning bidder, China Huashi Enterprises Ltd and the China Three Gorges Corporation have refused to comment on the case, but NewsChina found an open letter posted on the bulletin board of the online portal NetEase in 2012 which made similar allegations against both companies. According to the 21st Century Economic Report, another Guangzhou-based financial journal, Rao Daoqun, a retired electrical engineering director formerly of the China Three Gorges Corporation, was put under disciplinary investigation at the end of 2013 on suspicion of insider trading. Media said the bid invited by the Three Gorges Corporation for electrical engineering equipment values at 200 billion yuan (US$33.3bn) in total. Wang Jingping (alias), a construction company owner from Sichuan Province who had also bid on projects related to the dam, told Time Weekly that China Three Gorges Corporation generally nominated bidding panels itself rather than determining eligible bids on the suggestion of higher officials. Although Chinese law explicitly forbids collusion between project managers and bidders, these laws are routinely flouted by large enterprises in order to maximize potential kickbacks.


While official sources are remaining tightlipped as to whether any such collusion took place, the inspection group indicated in their work report that many “leaders” of the China Three Gorges Corporation, along with their friends and relatives, had “interfered” in various bidding processes, despite the fact that some had no background in the technical fields in which contracts were being awarded. “[Fraud] is quite common in the [Three Gorges] Corporation and a great number of people will be incriminated if the investigation goes any deeper,” an anonymous insider told the 21st Century Economic Report. “The problems exposed thus far are only the tip of the iceberg.”


Although Cao Guangjing, chairman of China Three Gorges Corporation, has claimed publicly that the media is “hyping up” the corruption in his company, which, he believed, was “nothing special” compared to that in other SOEs, the fact that the entire project is publicly funded has outraged taxpayers. Since 1992, when ground was broken on the Three Gorges project, China’s State Council slapped a 0.2 fen (0.03 US cent) surcharge on the price of every kilowatt-hour of electricity nationwide to fund the dam, a charge named the Three Gorges Fund. Although it was a tiny amount of money for individuals, the fund, thanks to China’s huge population, had collected over 107 billion yuan (US$17.3bn) by 2008, according to official data. The dam was finished in 2010, but the fund has continued to collect its toll. According to Tan Qiwei, director of the fund’s local office in Chongqing, a municipality in which part of the dam’s reservoir falls, the fund’s assets will reach 240 billion yuan (US$40bn) by the end of 2019, when it is scheduled to be liquidated. Half this amount is slated for

Access to the Three Gorges Dam is heavily restricted

use on follow-up work on the Three Gorges Dam. “How could the Three Gorges Dam, the ‘good child’ paid for by all the Chinese people, turn out to be a black sheep?” ran an acerbic commentary on the Tencent online news portal, which drew criticism from conservative outlets as attempting to provoke public anger against the dam itself. “The Three Gorges Dam has greatly eased electricity shortages and played a big role in flood prevention. Besides this, it also generates a lot of tax revenue,” said Zhang Boting, an irrigation engineer from the China Society of Hydroelectric Engineering, quoted by the official Xinhua News Agency. Such claims that the dam generates more money than it costs ring hollow when its parNEWSCHINA I May 2014

Photo by CFP

ent corporation spends millions on, to date, three luxurious headquarters, in Beijing, Chengdu in Sichuan Province and Yichang in Hubei Province, while also spoiling its executives with free, brand-new Audi sedans generally valued at tens of thousands of US dollars. A raft of other allegations against the Three Gorges project have spilled out in Chinese media, among them claims that the corporation manipulated its government ties to procure land through a third-party company at a massive discount, which, according to the developer, it planned to sell cheaply on to employees and officials. All of these sidelines were believed to have been paid for with taxpayers’ money, which has infuriated the Chinese public. NEWSCHINA I May 2014

In 2009, Beijing resident Ren Xinghui made a Freedom of Information request to the Ministry of Finance demanding publication of the China Three Gorges Corporation’s expenditure and revenue stream, only to be rebuffed. Ren then made the same demand to the State Council, China’s cabinet, as well as the State-owned Assets Supervision and Administration Commission and the China Three Gorges Corporation. Unsurprisingly, all three entities turned down his request. “The corporation is neither a government department nor a government-funded organization, so regulations on government information disclosure do not apply,” ran the response from the Three Gorges Corporation. Ren refused to buy this explanation. “As a taxpayer, I am a sponsor of the Three Gorges Project. I have the right to know how my money is being spent,” he told the media.

Government Ties

As with most allegations against Stateowned enterprises, the public remain cynical about the prospects for genuine openness when it comes to SOEs and their dealings with the government. “How can we ensure that corruption will not return as soon as this campaign ends?” ran one online post in response to Cao Guangjing’s pledge that his company “will not tolerate any corruption.” Since the end of 2013, the Party’s Central Committee for Discipline Inspection has expanded its anti-corruption investigations into SOEs, which are major targets of public anger over the misappropriation of public funds. So far, 17 senior officials have come under scrutiny, however this has only led to greater calls for answers, with many asking how so many top leaders have been able to avoid censure for so many years. “The close relation between SOEs and the government has facilitated the monopolization of State resources, abusing power under the guise of doing business,” economist

Zhao Xiao commented in Economy & Nation Weekly. A typical example is the recently-detained Jiang Jiemin. The former president of CNPC (China National Petroleum Corporation), Jiang also served as the former director of the State-owned Assets Supervision and Administration Commission – other than the country’s highest leaders, few people had authority over him. The leaders of China Three Gorges Corporation typically hold dual roles in government. Cao Guangjing, for example, serves as the deputy director of the Three Gorges Committee under the State Council, a ministerial-level position. The committee leadership also includes governor of Hubei Province Wang Guosheng and mayor of Chongqing municipality Huang Qifan. Thanks to its government backing, the corporation, which reportedly possesses over 220 billion (US$36.7bn) yuan in net assets, has now monopolized the development of all four huge hydroelectric stations along the downstream stretch of the Jinsha River that demarcates Sichuan’s border with Tibet. The corporation even holds exclusive rights to tourism resources in the Three Gorges zone, charging every visitor an entry ticket price of 105 yuan (US$17), despite calls at the highest level for the area to be freely open to tourists. “Heads of SOEs are usually too powerful to be supervised and they often have the sole say in major decisions,” the inspection group warned in its work report. Calls for the separation of top SOE personnel from government posts have been growing for years, but the tight web of connections between State enterprise and the organs of State has prevented any significant reform. With everything from freedom of information to the court system firmly in the hands of the government, those wishing for true transparency will likely have a long wait ahead.



Passenger Aircraft

Up in the Air A string of accidents involving domestically-built passenger planes is casting a shadow on the larger models in the pipeline

Mechanics check the landing gear of an MA-60 aircraft, February 25, Shenyang, Liaoning Province


n the evening of February 25, the officials and managers of the Aviation Industry of China (AVIC) and Joy Air gathered to deal with the outcome of the accidental retraction of the landing gear of one of the airlineâ&#x20AC;&#x2122;s MA-60 aircraft three weeks previously, an accident that caused the plane to hit the runway nosefirst but resulted in no injury to crew or passengers. The meeting was interrupted after 15 minutes by news that another


Photo by IC

By Liu Chang

MA-60 was currently unable to land due to a problem with its landing gear. The plane, operated by Okay Airways, had to keep circling for two hours above an airport in Shenyang, Liaoning Province, reportedly causing distress among its passengers. The aircraft was eventually forced to land when it ran out of fuel, fortunately also resulting in no injuries â&#x20AC;&#x201C; the problem turned out to be signal failure. NEWSCHINA I May 2014

Bad Record

Photo by IC

also in the pipeline. The ARJ21, a 70 to 90-seater regional jet develThe MA-60 model, a 58-seat turboprop plane manufactured by oped by the Commercial Aircraft Corporation of China (COMAC), Xi’an Aircraft Industry, a subsidiary of the AVIC, has a troubled his- another subsidiary of AVIC, is expected to be available for commertory, and a long record of tricky landings, mostly due to malfunction- cial use next year, though the project is already several years behind ing landing gear. schedule. According to a report by the 21st Century Business Herald newsFounded in 2008, COMAC is also developing the 190-seat C919, paper, among a total of 56 aviation China’s first jumbo jet, the prototype accidents in China in 2013, 10 inof which is to be assembled before volved the MA-60, even though the the end of this year, and is expected model accounts for a negligible porto be certified by 2017. The model tion of the total planes in service in is intended to compete with Boeing the country. and Airbus models of similar size. The MA-60’s safety record is no With tens of billions of yuan in better overseas. In January 2009, loans injected into the State program an MA-60, the first made-in-China for the development of the C919, passenger plane to be exported overan initiative known as the “Big Jet seas, veered sharply after landing at Program” coordinated by China’s an airport in the Philippines, and State banks, the model was originally crashed into a concrete barrier. In scheduled to be developed within 10 2011, another MA-60 was forced to A passenger calls his family after landing in a MA-60, February years after its initiation in 1998, and land without its front landing gear 25, Shenyang, Liaoning Province be in mass production by 2020. fully deployed due to a mechanical In a market forecast report by COfailure. An almost identical incident MAC, it was estimated that China’s occurred in the same country a year civil aviation market, one of the later. world’s fastest-growing, would need 4,439 new airplanes, worth a toAlso in 2011, another MA-60 carrying 33 passengers performed tal of around US$450 billion, over the period from 2010 to 2029. an emergency landing in Bolivia after the landing gear in the aircraft’s The C919 aims to seize a piece of this market, which is currently nose cone locked up. Again, no one was injured in the incident. dominated by Boeing and Airbus. Just 10 months later in January 2012, the same model experienced COMAC has received 400 orders for C919 planes, mostly from another fault that resulted in it landing without deploying its under- State-owned airlines, including the domestic market oligopolists Air carriage. The aircraft suffered substantial damage, but no casualties. China, China Eastern Airlines and China Southern Airlines. It was only after the latest incident in late February 2014 that the As for orders of its ARJ21 model, a significant portion have come Civil Aviation Administration of China (CAAC) ordered that 15 from Chengdu Air, a carrier controlled by the COMAC itself. SimiMA-60 aircraft be grounded for landing gear checks, even though a larly, among the total 19 MA-60 models currently in service in China, total of 88 planes had been delivered worldwide, the majority of them eight are operated by Joy Air, an airline controlled by the plane’s manto Africa, Southeast Asia and Latin America. ufacturer Xi’an Aircraft Industry. Joy Air’s registration was approved Given that the MA-60 model has yet to be certified by the US in 2008 by the CAAC as an exception to the aviation authority’s preFederal Aviation Authority (FAA) and its European counterpart, its vious announcement that no new airlines would be approved. The market has so far been limited to the developing world. exception was made in view of the sales of the new planes. “It’s only been 14 years since the MA-60 was marketed, and it is still The rest of China’s MA-60 planes are flown by privately-owned in the early stages of its development,” said Xu Yongling, a military budget airline Okay Airways, based in Tianjin. aviation expert. The ARJ21 has yet to be certified by the Federal Aviation AdminThe MA-60 was first certified by the CAAC in June 2000, and so istration (FAA), despite the company’s continued efforts. If this enfar its maker has received a total of 210 orders from domestic and deavor were eventually to fail, the model is unlikely ever to be sold international carriers. outside China. “China’s civil aviation industry is lagging 40 to 50 years behind the “The civil aviation market of the US and Europe is mature and has West, and the country is pooling national resources to narrow the embraced very high standards,” Xu said. gap,” Xu said. These standards continue to keep Chinese planes out of the Western market. But while their low price point currently remains attracNew Models tive to buyers in developing countries, mounting safety concerns may In addition to the MA-60, two other passenger aircraft models are cause Chinese plane sales to crash-land worldwide. NEWSCHINA I May 2014



Pawn Shops

credit at All Costs

A familiar sight on the streets of China, official pawnshops are an impotant constituent of the country’s vast shadow banking sector. NewsChina looks into the future role of this market in China’s investment landscape By Nona Tepper


ast Year, Yang You went to California for the first time. The redwoods were beautiful, In-N-Out was delicious, but the director of the board for Huaxia Pawnshop said what really caught his eye was Gold & Silver Pawnshop. “In America there are so many different items,” he said. “Chinese pawn shops have to develop a more American style of sell-


ing purses and celebrity memorabilia, and change their minds.” Although Mr. Yang works in the pawn business, he deals primarily with apartments—the most commonly pawned item, according to store manager Xiong Zhi. Many small-and-medium-sized enterprises are pawning real estate and cars for quick cash, even at much higher interest rates, as they’re

finding it difficult to get loans from banks. Especially during Spring Festival, traditionally a time to settle debts, business at Beijing’s oldest pawnshop sees business boom. “Pawn shops are not the first choice for companies unless they are really desperate, and just trying to survive and hope conditions improve,” said Ismael Pili, Head of Financials Research Asia at Macquarie Group NEWSCHINA I May 2014

Ltd. “In the meantime they’re probably servicing a loan that has very low recourse.” Pawnshops fall under China’s shadow banking industry - basically any lending agency outside the traditional banking system - and since 2004, the Middle Kingdom has seen a rise in these underground banks. In 2013 alone Huaxia opened seven new stores in Beijing and, according to Chinese media, there are now 7,000 pawnshops registered throughout China. While these underground banks provide credit to individuals who have little chance of getting it from a bank, the loans come at a cost. “There’s certain risks in regards to the shadow banking industry: one, It’s not well regulated, two, there’s still opacity with regards to what’s going on and three, it’s become a sizable portion of the economy,” Pili said. Yet for many small and medium-sized enterprises (SMEs), pawnbrokers are the only option. Chinese banks hesitate to offer loans to companies outside State-owned enterprises, and often after issuing loans to the local government and national companies, there’s just no credit left. Enter the pawnshop. The People’s Bank of China (PBoC) charges approximately 0.5 percent interest per month on real estate, while Huaxia Pawnshop charges 3.525 percent interest - almost six times higher. But the issue of access can’t be priced. Chinese media makes the following points in defending the practice: “The pawn business is a sector that often gets a bad rep. But in reality, pawn brokering is not only a great way for SMEs to receive fast cash, but also a nice addition to large banks. Pawnshops can also help recycle second-hand products,” China Daily Europe reported in November 2013. In the Shanghai Free Trade Zone, pawnshops are even open to foreign investment. But what investors would be throwing capital into is uncertain. Huaxia Pawnshop doesn’t disclose the names of its customers, but Xiong remembers a man who pawned his Beijing apartment for approximately 300,000 yuan in September 2013 so he could buy mobile phones for his shop in Beijing’s ZhongguanNEWSCHINA I May 2014

cun Electronics Market. Three months later, the man paid off the principal loan and interest. While this is a success story, the man owned a tiny phone stand located in a crowded market, likely situated next to vendors selling the exact same products. His success depended on his and his customers ability to bargain, and was by no means guaranteed. So the spirit of unregulated borrowing and lending continued. Today shadow lending is the fastest-growing part of China’s financial sector, and J.P. Morgan Chase & Co. estimated that it accounted for 69 percent of China’s gross domestic product—or 36 trillion yuan—in 2012. “It’s a conduit for economic growth,” Pili said. “But it’s not very well regulated, and there are emerging risks.” For example, in the fall of 2011, dozens of entrepreneurs in Wenzhou fled town to escape creditors despite strong sales. These private business owners faced financial ruin because of their inability to service loans secured by the city’s underground banks. By October 5, the crisis was so severe that thenPremier Wen Jiabao visited the city to take stock of the situation. Later, it was revealed that 89 percent of Wenzhou households and 60 percent of local businesses were involved in shadow lending, according to a survey conducted by the PBoC branch in Wenzhou at the time. That November the State Council responded by placing pawnshops under the direction of the Ministry of Commerce. After analysis of the Wenzhou incident, many found that people were pawning apartments to play the stock market. That practice was banned in May of that year, although regulations remain lax. “The stock market is bad these days, so not many people are doing that,” Xiong said. “People know it has a bad effect on social stability.” Recently, the government has been trying to crack down on underground lending, with initiatives such as State Council Document No. 107, which looks to clarify the central bank and the banking, securities and insurance agencies’ responsibilities in policing shadow banks, and Document No. 9,

which limits inter-bank lending. “The biggest concern is not the people, that’s more retail. It’s more about the corporate side, and if their loans go bad the banks will have to answer for it,” Pili said. “But the thing is, the corporations are mostly Staterun, and the banks themselves are State-controlled, so it’s going to come back to the same group: The government. “So, I don’t think there’s going to be a banking crisis because the government will just basically save itself again, as they’ve done over the past several decades. Every decade it seems they come in and bail out the banks.” While pawnshops do not pose a direct threat to China’s economic system, Pili mentioned that if a large amount of their loans went bad it could undermine consumers confidence in the traditional banking system—namely, leading to customers to question banks lending authority or turn to an alternative route for funding. In November 2013, China Daily reported that pawnbrokers nationwide were enjoying more than 23 percent annual growth. From 2012 to 2013, Xiong said the total sum of loans issued at his branch of Huaxia grew by 15 percent. Apartments are the most commonly pawned item, luxury vehicles the second and jade, expensive stones and watches make a close third. Today’s Huaxia looks more like a luxury department store than a loan agency. The pawnshop’s aisles gleam with Cartier, and a display case houses rare jades from Xinjiang. Xiong’s silver Longines was bought from the store’s second floor. “In China, fewer people go to pawnshops than department stores or shopping malls. They always want the new style of clothes or purses,” Xiong said. “But we can guarantee good quality and low prices.” About 100 customers push through Huaxia’s door every day, Xiong said, and half of them are pawning real estate—desperately seeking credit from one of China’s underground banks.  (Nona Tepper is a freelancer based in Beijing. A version of this article previously appeared on



Auto Market

Rallying Cry

Privately-owned Chinese car brands hope to take the fight to their foreign and joint-venture competition. Will they be able to level the playing field? By Li Jia


n 1985, Volkswagen’s first China plant was opened through its Chinese partner SAIC, which held 50 percent of the company’s shares. Both VW and the Chinese government agreed that the half-half shareholding was a good starting-point for their new venture. The plant, built in the suburbs of Shanghai, was to produce the VW Santana (known as the Quantum in North America). Carl Hahn, VW AG’s chairman at the time, recalled in his memoirs how hard it was for him to persuade his skeptical board of China’s potential to become an even bigger auto market than the US. In the mid-80s the global auto industry was struggling to recover from soaring oil prices and economic downturn, but few thought that a developing nation like China could ever have the purchasing power to revive the marketplace. Indeed, initially, these suspicions looked correct. Sales of the VW Santana were largely attributed to government officials and taxi companies catering to the few Chinese who could afford such luxuries.


China’s leaders even had to mothball their own domestically-developed sedans in order to offer VW a clean run at the market. At the time, even the Chinese government wasn’t planning to put a car in every garage. Rather, the leadership hoped that production of the Santana would shore up the country’s meager foreign exchange reserves, and, in the best-case scenario, bring a little cash in through exports. Now, China’s economic miracle has made the country the world’s largest auto maker and market, a title it claimed in 2009. Despite ongoing restrictions on auto purchases in big cities designed to ease congestion, this trend has continued to grow. Effectively, all major auto makers from Europe, the US, Japan and South Korea have gone into business with Chinese partners since the late 1990s. The resulting joint ventures accounted for about 60 percent of China’s domestic passenger auto sales in 2013. An ongoing preference for foreignbranded vehicles has ensured that China’s own car brands have had sales restricted to the absolute lowest end of the market. NEWSCHINA I May 2014

Photo by CNS

China-made autos await a cargo ship in the port city of Dalian, Liaoning Province, October 15, 2012

This undisputed dominance has led foreign giants to call for something anathema to themselves previously and China’s rulers - a relaxation of the 50 percent investment cap imposed on foreign joint auto ventures operating in China. While these calls have been rebuffed by both their erstwhile Chinese partners and the government, however, they have been taken up by perhaps the most unlikely of champions - China’s indigenous auto makers.

Broken Shield

The 50 percent investment cap limit was first enshrined in a national auto policy in 1994 which determined to make this particular industry a pillar of China’s national economy. In 2004, as a result of its joining the WTO, China had to surrender a similar cap imposed on the auto parts industry, however managed to retain the limits on completely built units (CBUs). The government was also forced to abolish auto import quotas and the requirement for “local content” to NEWSCHINA I May 2014

be used in all auto manufacturing. Then, in 2005, China started to impose 25 percent tariffs on imported auto parts valued at above 60 percent of the purchase price of a CBU, rather than the 10 percent tariff on auto parts it had previously levied. This practice was stopped in 2009, however, after China lost a 2008 WTO lawsuit to the EU, the US and Canada. Two shields remain, at least on paper, “protecting” China’s domestic auto industry from foreign competitors. Firstly, according to China’s auto policy, a foreign-owned company can only have two CBU joint ventures in China at any one time. Secondly, the 50 percent foreignowned share cap has remained in place. The former provision has already been broken, at least in practice. In 2002 General Motors invested in Liuzhou Wuling Motors through its joint venture with SAIC, and other companies are likely to follow their example. This has left the 50 percent shareholding limit the last defense against total foreign domination. Consequently, it is frequent-



Photo by CFP

Photo by CNS

ly cited as inviolable by refusal to allow fully the country’s hawkish foreign-owned subsideconomic planners. iaries of any company In November 2013, to open up on the ChiShen Danyang, spokesnese mainland. Many person for China’s have suggested that to Ministry of Commerce take this step would (MOFCOM) said at dramatically reduce the a press conference that cost of foreign-branded China would “further autos sold in China. relax restrictions on regThis situation is proof istration requirements, positive that China’s shareholding and busihypothesis that restrictness” currently imposed ing foreign auto brands’ on foreign investors in Volkswagen and Hyundai taxies at Beijing Capital International Airport, November 24, 2009 domestic presence to China-based steel, auto joint ventures has not and chemical concerns. helped foster indigIn February 2014, Xiao enous innovation. In a Chunquan, spokesperseries of articles posted son for the Ministry on the CAAM website, of Industry and InforDong Yang, executive mation Technology deputy president of (MIIT) responded to the organization, said a question on the 50 that all R&D profits, percent cap by promisalong with the bulk of ing to implement furrevenue derived from ther opening, reinforcequipment manufacing pledges made in an turing, factory building agenda set during the and parts manufacturhigh-profile Chinese ing, have flowed out Communist Party’s pleof China, leaving joint nary session in Novemventures to carve up the ber 2013. meager remains. Dong These commitments, concludes that foreign one clear and the other companies overwhelmvague, immediately ingly benefit from the triggered ferocious de- French Prime Minister Jean-Marc Ayrault (left) visits the Dongfeng Peugeot-Citroën Automobile current market condibate. In February, the (DPCA) plant in Wuhan on December 7, 2013 tions. China Association of While the joint venAutomobile Manufacture model has not turers (CAAM) warned mitigated Chinese comin a public statement that lifting the cap would “give foreign compa- panies’ reliance on foreign technology, it has reduced foreign partners’ nies with the advantage of global supply chains the chance to fatally reliance on their Chinese partners to understand the local market. smash China-made autos” by undercutting domestic firms. Dong, along with other observers, has raised concerns that today’s Autos made by Chinese joint ventures are priced higher than the joint ventures would immediately fall under foreign control were the same models sold on foreign markets, largely as a consequence of the shareholding cap to be removed. mandatory “development fees” paid by joint ventures to their foreign At the end of February, representatives from major Chinese auto parent companies. These fees were imposed as a result of China’s companies with joint ventures, GAC, FAW, Dongfeng and Chang’an,



gathered at a forum in Beijing to express opposition to easing the foreign shareholding policy. A glance at their books explains why. About 95 percent of sales by the SAIC Motor group in 2013, for example, were derived from its joint ventures with VW, GM, Volvo and Iveco. The message at the forum from these companies was simple: Give us more time, or watch China’s indigenous auto industry collapse. The question analysts are asking, however, is whether these foreigndependant so-called domestic auto manufacturers can even claim to represent China’s indigenous auto industry.

Real Players

It is no coincidence that all Chinese companies currently involved in joint ventures with foreign auto manufacturers are State-owned. Indeed, it was not until 2001 that the Zhejiang-based Geely became the first Chinese private company to receive a government license to build a passenger car. Even this move, observers said, was a reluctant acquiescence from the central government to stipulations made by the WTO. Many got the sense that the government would have preferred

to keep the auto industry entirely in State hands. Once private companies were allowed market access, they grew fast enough to achieve what the joint ventures had failed to - not only to build Chinese autos, but to successfully sell them. Great Wall, for example, sold 47 percent more SUV units in 2013 on the domestic market than the second name on the top ten list, Beijing Hyundai, according to the website China Automotive Information Net. Chinese brands under private enterprises like Geely, Great Wall, Lifan and JAC are now the mainland’s main exporters. A study released in February by international consultancy Roland Berger found that Chinese automakers were “using new, alternative distribution models to enter the European market more quickly than previously possible,” though the study acknowledged that it would be a tough road ahead. Nevertheless, change is afoot. Over the past few years Geely has acquired Manganese Bronze, the British auto maker behind London’s iconic black cabs. Geely also acquired the Volvo brand from Ford, and Australian auto parts company DSI. Meanwhile, electric buses made by BYD, a Hong Kong-listed com-

The Venture Week for International Elites in Suzhou, to open in July, is now seeking professionals across the world to participate in. Those who have backgrounds in new energy, new materials, smart power grid, nanotechnology, medicine and biotechnology, modern equipment manufacturing, software and service outsourcing, financial services, and creative industries are welcome to take part in. Talents and entrepreneurs who have participated in major research projects or have intellectual property rights are particularly welcome. The application is now online ( and will be available throughout the year. Participants will get a partial reimbursement of their traveling fees. Starting from January,2014, the project evaluation review will be held every month. First come, first served. We are looking forward to seeing you in Suzhou.




pany in which Warren Buffet holds a 10 percent stake, are already in service in Europe, Canada, Southeast Asia and South America. The company’s first plant in California began production in 2013. Lifan, on the other hand, has been the champion Chinese auto brand in Russia since 2011. Nearly all of these companies have overseas R&D centers, and work with various international partners while maintaining their independence. China’s joint ventures might be forgiven for turning green with envy. Joint ventures have been trying to develop their own brands in the past few years, though the market has failed to open its arms. Based on old models of foreign brands, there is little that is new in these products, and many see them as token projects simply to give the illusion of innovation. Even the government does not show much interest in these “Chinese brands,” omitting them from government procurement lists in favor of privately-owned brands of indigenous autos. Jia Xinguang, a well-known independent auto industry analyst, described the idea of developing local brands under the joint venture umbrella as “weird.” When Chinese SOE giants in joint ventures make money from foreign brands, he explained to NewsChina, they do not have the motivation to invest as much effort as private concerns lacking market share in terms of developing their own brands from scratch. Even for those so-called local brands developed by

joint ventures, the Chinese side will end up having to pay for the full ownership of the trademark if their foreign partners decide to cease the partnership in future, said Jia. By contrast, private makers like Geely and BYD, have already developed their own competitive spirit. Predictably, critics of the status quo have accused the government of coddling SOEs, and not giving due credit to more efficient, successful and profitable private enterprises.

On the Road

Li Shufu, founder and chairman of Geely, is a strong advocate for easing all the artificial market barriers extant in China - including those imposed on foreign automakers. Li has made several calls for fair competition based on an open market for all. At a press conference in Beijing on March 4, he criticized the existing joint venture model as a “State-owned and foreign alliance” against private Chinese enterprises “at the cost of consumers’ interest and national competitiveness.” Li also recognized that his company would face higher market pressure if more foreign investment were allowed into China, but insisted that “fair play” would give everyone, including Geely, a “fair chance.” Indeed, China’s private auto makers desperately need more room to grow, as joint ventures, particularly those from Japan and Korea, have begun to eat into their market share, particularly at the lower end, which peaked in 2010 at 46 percent. At a forum in February in Chengdu, Sichuan Province, Li told delegates that he had to “cover his factory and warehouse with a cloth” to stop government inspectors from discovering he was attempting to develop a passenger car. Despite the lifting of the ban on private firms in the auto industry, industry standards adopted in 2004, which remain effective today, set high access requirements criticized by analysts for being out of reach for most private investors. The policy also says that private investors cannot get licenses by buying into SOE auto makers, a way that most today’s private auto giants like Geely and BYD started their businesses. Li claimed that a company of a size comparable to electric sedan manufacturer Tesla could never go into business legally in China so long as the current restrictions remain in place. Over the years, China’s auto industry has very often been on the government’s list of overheating sectors. However, when carrots are of-

Haval, an SUV made by Hebei-based Great Wall Motors




bynumbers fered, they typically go to SOEs, leaving private enterprises to bear the brunt of the sticks wielded by regulators when things get out of hand. Many auto makers, State and private, expect to die once China’s market is fully open, Jia Xinguang told our reporter. He added that the fear of going under is good for the industry, and that automakers should be given an equal fighting chance. Local governments prefer locally produced auto brands, either joint ventures or Chinese, for use as taxis and as targets for new energy auto subsidies. This “buy local” policy disadvantages auto makers from other cities or provinces. As foreign brands by joint ventures already enjoy national recognition and Chinese private brands do not, this market fragmentation disadvantages Chinese brands more. This is why the practice has been criticized for years. An open war is now seen as the only chance for local brands to secure their survival. At a forum in Wuhan, Hubei, in October 2013, Chen Lin, a senior MOFCOM official, stated that there were no shareholding limits imposed in foreign markets where Chinese auto companies were increasing their investment. This, he commented, proved an “imbalance of policy.” The US and EU have threatened to hinder Chinese investment in their markets if China continues to obstruct foreign companies wishing to enter China. This pressure has only increased since the launch of China’s investment negotiations with the US and the EU, and the development of the US-led Trans-Pacific Partnership which, depending on the circumstances, could make or break China’s fortunes in international trade. On March 5, Miao Wei, MIIT minister, finally made it clear that the limit would remain for some time, but he stressed that “time is limited” for local brands to turn things around. China’s genuinely indigenous automakers, meanwhile, continue to chafe. NEWSCHINA I May 2014


Ratio of net non-FDI capital flow in China’s additional forex reserves 50

Share of non-FDI capital flow, generally regarded as less stable than FDI, of China’s US$432.7 billion 2013 increase in foreign exchange reserves, compared with -296% in 2012.


Source: China State Administration of Foreign Exchange


0 -50

-150 -200 -250

US$10,764 China’s annual per capita GDP in 2013, calculated according to the total numbers of full-time workers rather than total population, an indicator of productivity. China’s per capita GDP, US$















China’s rate of inflation when calculated according to the consumer price index in February 2014, a one-year low. China’s year-on-year CPI growth on monthly basis, % 3.5

12000 10000


8000 6000


4000 2000 0

2.0 2009





02/2013 03/2013 04/2013 05/2013 06/2013 07/2013 08/2013 09/2013 10/2013 11/2013 12/2013 01/2014 02/2014

Source: China National Bureau of Statistics

Source: China National Bureau of Statistics



Value of China’s maritime economy - mainly fishing, aquaculture, shipbuilding and salt production - representing 9.5% of total GDP in 2013.

The percentage of rural residents’ per capita income (US$1446 in 2013) represented by government subsidies. Breakdown of China’s rural residents’ income

Salaries 45.2% Farming 44.6% Land transfers and deposits 8.9% Subsidies 3.3% Source: State Oceanic Administration of China

Source: China Ministry of Agriculture



Liao Fan

A Silver Bear for a Dark Horse With his recent awards success at the Berlin Movie Festival, Chinese actor Liao Fan has finally been rewarded for his persistence in pursuing the complex and unpopular. But will this change Chinese perceptions of what constitutes a “marketable” star? By Liu Danqing


ressed in black tie and sporting his signature mustache, actor Liao Fan was the center of attention at the glamorous party thrown for him by producers the Huayi Brothers. Few would begrudge Liao his night of glory - his producers were rewarding him after the actor brought home a Silver Bear award from the 64th Berlin International Movie Festival. Just half a month earlier, Liao’s boss Wang Zhonglei was still ironically calling this almost unknown character actor China’s “movie king.” When auditioning for the role that would secure him the Silver Bear, nobody other than Wang had any idea who Liao was. Now, on the red carpet of a five-star hotel in Beijing, Liao was speaking to a rapt press pack for the first time in his career. “Words fail me,” he remarked when first asked how he felt


about receiving the award. When Liao’s plane touched down at Beijing Capital International Airport upon his return from Germany, he had even waved reporters away. “I’m too tired. I want to rest,” he said. When asked if he was worried he might fade from public attention as quickly as he’d captured it, Liao was nonchalant. “I was never popular with the public anyway,” he remarked. Within months, however, Liao was giving interviews like an old pro. According to his agent, Liao had accepted several dozen interviews within 10 days since his win was announced in late February – more than he had previously given in his entire ten-year career.

Low Life

Liao Fan’s career-making performance was an earnest turn NEWSCHINA I May 2014

as an alcoholic ex-cop in director Diao Yinan’s Black Coal, Thin Ice, which clinched the Berlin Movie Festival’s prestigious Golden Bear for Best Picture. This modern movie noir tells the story of the washed-up cop Zhang Zili on the hunt for a killer who dismembers his victim. Zhang falls in love with the widow, Wu Zhizhen (Gwei Lun-Mei) - who herself is not what she seems. The whole movie is set in the deep winter in the northern city of Harbin – a cold, dark and evocative setting – but, as the director put it, “love helps solve the mystery and warms depressed hearts.” Black Coal, Thin Ice earned praise from the Berlin jury for its central character study. “Nobody could interpret [my] role unless he had some of the same experiences,” Liao Fan said in an interview with Southern Weekly, hinting at his own perNEWSCHINA I May 2014

sonal struggles. Just like his on-screen persona, who was forced into early retirement by a work-related injury, Liao Fan was hard-pressed to secure regular acting work after a fall from a horse on set in 2010 left him with 12 pins in his shoulder, giving him an asymmetrical aspect and an odd gait. “For a long time, I felt that I was poorly treated [by the industry]. I kept asking: ‘Why me?’” he said. “I was 36 years old, but couldn’t see a glimmer of hope for my career. I began to wonder if my efforts were worth it.” “So I stopped demanding things of myself, and turned my injury into an excuse,” he continued. Liao went on to admit that, in the two years between his injury and the screenplay for Black Coal, Thin Ice crossing his desk, he only appeared in three movies.



Liao Fan and Gwei Lun-mei in Black Coal, Thin Ice

“I know why Zhang Zili would drift through life,” said Liao. “Anyone who has had that kind of experience could relate to his lethargy.” It was Diao Yinan’s script that galvanized Liao to change. He gained 20 kilos for the role by overeating and drinking heavily. “Getting older, fatter or injured is a good impetus to simply give up on life and become a drifter,” he explained. “I work on pure instinct,” Liao said. “I instinctively turn down any role that I believe sucks.” Liao struggled to suppress the deep connection he felt to his character while on set. During one snow scene, a runner was knocked down by one of the dollies, and injured his back. Liao, in full makeup and costume, lying in the artificial snow, found himself weeping uncontrollably. Diao tiptoed up to his leading actor, who was almost hysterical. “Aren’t you a little out of control?” the director asked.

In the Shadows

While almost unknown in the Chinese mainland, where the majority of movie stars get by on their looks or brand recognition rather than their performances, Liao Fan is no stranger to the awards circuit. As well as his Silver Bear, Liao won the 2006 Singapore International Movie Festival’s Best Actor Award for his turn in Green Hat, and was nominated for the Golden Horse for Best Actor at the 2008 Taiwan International Movie Festival, where his performance in subversive romance Ocean Flame caused a stir. Both movies were directed by Liao’s longtime patron Liu Fendou. Liu himself is under no illusions as to why Liao’s star on the mainland has remained distinctly static. “Liao Fan is simply


too nondescript-looking. He’s neither handsome, nor odd to look at,” Liu Fendou said of his favorite leading man. Looks are seen as crucial to the success of any Chinese actor, and without distinctive features, even the most gifted performers struggle for work. Others have speculated that Liao’s choice of nuanced antihero roles is the cause of his problems securing star turns. According to director and close friend Meng Jinghui, few mainland directors are ever presented with screenplays featuring the kinds of characters that Liao has a knack for playing. In addition, Meng added, Liao’s shy personality has also prevented him from being noticed. In China’s market-oriented and heavily censored movie market, therefore, there’s not much space for subtlety. While other character actors might satisfy themselves with playing cartoonish villains, Liao Fan, according to Meng Jinghui, is deeply opposed to being typecast as a cardboard cut-out “bad guy.” “Being ‘bad’ is just too simplistic,” Meng told reporters in a recent interview. “Few (leading) roles suit Liao, especially in the mainland market,” he added. A complex and enigmatic leading role such as that in Ocean Flame therefore came as a rare opportunity for Liao to showcase his considerable talents. Adapted from a novel by literary enfant terrible Wang Shuo, Ocean Flame documents a tragic love story that develops between a pimp and a bar waitress. Abusive sexuality, suicide and violence are all explored, with Liao’s charming but dangerous character at one point yelling: “I am not a f*cking good guy!” Liao Fan later admitted that he had seized the opportunity presented by Ocean Flame too eagerly, and felt his perforNEWSCHINA I May 2014

Liao Fan in Let The Bullets Fly

mance bordered on the hammy – a view seemingly supported by the movie’s many critics. “To draw back your fist makes your next blow more powerful. If you overreach, you will exhaust yourself,” he told Southern Metropolis Entertainment Weekly. Meng Jinghui believes that Black Coal, Thin Ice gave Liao the opportunity to create a slower-burn character. “Without his degree of acting skill, Liao Fan could never have embodied Zhang Zili’s decisiveness, his conflict or his neurosis,” commented the Chinese video website iQIYI. While admitting he was aware he had put in a good performance, the Silver Bear nod still came as a shock to Liao, and he mostly attributes his success to luck. “I sometimes wonder what I would have done if I’d lost,” he told the media. “Maybe just drink with my friends as I did before.” He went on to state that he believes it will be hard to find another role that suits both his temperament and his abilities as that of Zhang Zili.

Too Soon?

As with so many latter-day Chinese movie stars, it was not until Liao Fan won international acclaim with a Silver Bear that the Chinese media began to publicize his impressive resume, which included roles in Feng Xiaogang’s Assembly (2006), Jiang Wen’s Let the Bullets Fly (2010), Feng Xiaogang’s If You are the One II (2010) and Lin Xiaoxin’s Beginning of the Great Revival (2011). Despite joking with media that he “would not have been so stupid as to refuse the Silver Bear,” Liao has made no secret of his disillusionment with the mainstream Chinese movie


Liao Fan in Assembly

industry. While admitting he “dreamed of winning a big prize,” he told NewsChina that his career plan - to earn acclaim through a series of brilliant roles - did not pan out as he had hoped in his thirties. “You’d do better to be a teacher,” his acting teacher He Yan had reportedly told him. “You don’t have an actor’s personality.” Liao also revealed that many people had told him that China didn’t have a market for “supporting actors,” a euphemism for character actors in this particularly star-oriented industry. “If it hadn’t been for his Silver Bear, Liao Fan might still be stuck playing bit parts,” Meng Jinghui said. Liao is the first to admit that his awards success has changed his life overnight. 10,000 new followers were added to his microblog in the first 24 hours after he received the award, more than he usually accrued in a year. Journalists have even begun to dig into his past in search of the secret to his success. “This prize may have come too early for him,” joked friend Meng Jinghui. “A [Silver Bear] at 40 - where do you go from there?” Meng went on to say that he felt that future roles were going to be easier to come by, with Liao’s new recognition likely to translate into box office draw. Liao, meanwhile, is much more circumspect. Asked about his plans, he shot back with a line from Ocean Flame - “This is a job for you, but it’s a hobby for me.” Already he has publicly said he will neither cease playing small roles nor turn down blockbuster parts. “This prize has put a lot of pressure on me, and I fear being controlled by it,” he told NewsChina. “My bottom line is not to allow this to destroy my interest in this industry.”


visual REPORT

‘do-volution 60



ncient Chinese people never cut their hair. To do so was taboo. According to the Classic of Filial Piety, a Confucian treatise, the body, hair and skin are all bestowed upon us by our parents, and thus to intentionally “damage” them, especially for reasons of fashion, was an insult to one’s family. For millennia, long hair was not only in, it was the only way. It was only after the Qing Dynasty was set up in 1644 that men began to cut their hair, though women, except Buddhist nuns, were still prevented from doing so. Manchu men would grow their hair long, but trim it and wear it as a pigtail or “queue,” while shaving their forehead and temples. This style was forcibly imposed on the native populace, and, aside from ethnic minority groups who were generally allowed to retain their own traditions, the Chinese had to wear the queue, with those who refused put to death. So it was only in the 17th century that barbers appeared in China. In Beijing, they established stalls in the Dongsi, Xisi, Di’anmen and Zhengyangmen neighborhoods, NEWSCHINA I May 2014

where locals would come for their mandatory trims. These four designated areas couldn’t cope with demand in populous Beijing. Consequently, the Manchu elites asked army cooks to also serve as barbers. These men would walk the streets striking their shears with a whetstone to drum up business. Eventually, many of them went on to establish the capital’s first dedicated independent barber shops. After the establishment of the Republic of China in 1912, men began to cut off their queues in protest against the old regime, and instead wore Western styles. The scissors and cutthroat razor arrived in China around the same time, and women began to visit hair salons – something unthinkable in dynastic China. In the 1920s and 1930s, after the introduction of hairdryers, curling tongs, the set and the bob, street-side barbers found their trade diminished as fashion-forward clients headed to upscale stylists. However, even today, cheap roadside haircuts are still available throughout China – just don’t expect anything fancy!


visual REPORT




4 NEWSCHINA I May 2014

1. Chinese Men in the Qing Dynasty were required to adopt the queue on pain of death 2. Inexpensive roadside haircuts remain popular in Beijing among seniors 3. Zhao Zhanbing mainly serves old people in rural areas 4. Zhao Zhanbing, a 83-year-old streetside barber, takes care of a customer in Shijiazhuang, Hebei Province, 2010


5. Old-fashioned State-owned barber shops receive a dwindling clientele in Taiyuan, Shanxi Province 6. Chen Youbao, 39, owner of a barber shop in Xiâ&#x20AC;&#x2122;an, Shaanxi Province, once served several Chinese leaders including the late premier Zhou Enlai 7. A hairdresser shows off his skills at a competition in Jiâ&#x20AC;&#x2122;nan, Shandong Province, March, 2014 8. A customer receives a massage and a manicure at a hair salon in Shenzhen, Guangdong Province, 2011 9. A woman undergoes an elaborate a perm at a cosmetics and hairdressing exhibition in Beijing in 2002



7 NEWSCHINA I May 2014




OUTSIDEIN perspectives from within China

Thriving Ordos

The Ghosts Are Gone Ordos, once a city-sized metaphor for unsustainable development, may be on the rise By Matt Schrader


rdos was not something I “did,” or even necessarily experienced. Ordos was something I saw. It was, at the time, the world's most hopeful monument to sheer waste. Miles and miles of barren concrete and roads. A nine-story public library, complete with cafe and gym, with not a single soul inside. A convention center whose roof, shaped like a breaking wave, is probably long enough to land a Cessna on. The largest man-made waterfall in Asia (befitting a desert city, Ordos also has a preoccupation with water). Two magnificent horse statues, stallions rearing a hundred feet over your head. Ordos was, as popularly portrayed, seemingly a city built for ghosts, by ghosts. And Ordos was also not, contrary to what you may have heard, a real thing. It wasn't then and it's still not now. If you look on a map, it's there – e’erduosi, the Mandarin transliteration of the old Mongolian name for the place. But good luck buying a train ticket there. If you're coming in by land, your jumping-off point is not Ordos, but Dongsheng, a dusty, whistlestop boomtown an hour south of Baotou.


(Despite being the largest city in Inner Mongolia, Baotou is famous mostly for its complete anonymity; if you've heard of it, it’s probably as the nerve center for China’s rare-earth industry.) Dongsheng is technically a district under the city of Ordos, like Chaoyang in Beijing or Xuhui in Shanghai. But if you're looking for Ordos's beating urban heart, Dongsheng – with its mushrooming crazy quilt of luxury car dealerships and neo-Roman karaoke bars-cum-spas – is where it’s at. There is no “Ordos” to speak of. The ghost city most people think of as “Ordos” is in fact another district of Ordos City, called “Kangbashi New District.” The old city (Dongsheng) and the new (Kangbashi) are separated by 26 kilometers of open ground, although the eventual plan is to link the two together, creating the grassland megacity of Ordos. More than most cities, Dongsheng runs on dead dinosaurs. It sits right smack on top of the Shendong coal field, home to about a sixth of China's proven coal reserves. On any given not-quite-blue-sky day in Beijing, there's a good chance that a significant part of the particuNEWSCHINA I May 2014

HOW TO GET THERE: Ordos’s airport is, like most of the city, brand spanking new. It’s also 40 kilometers outside the city, so you’re probably better off arriving via train. Many arrivals daily on a branch line from Baotou. WHERE TO STAY: Even though Kangbashi is stirring to life, Dongsheng’s still the better bet for finding a hotel. As in most of China’s out-of-the-way places, finding hotels to take foreigners can be dicey, be sure to call ahead to confirm.

late matter residents are breathing in were yanked out of the ground near Dongsheng in the not-too-distant past. If future lung-liner is one way to think about the coal fields of Ordos, another useful way of thinking of them is as an enormous money deposit. Picture someone burying a fifty-foot-thick wad of money the size of Puerto Rico in the ground, and you begin to understand how Ordos’s GDP per capita recently rose to within kissing distance of South Korea’s. Coal prices have crashed since then, and a lot of the mines around the city were shut down, but China’s coal power plants aren’t shutting down anytime soon. Dongsheng will rumble on. The popular image of Ordos, fed by a spate of media coverage in the years immediately after the Beijing Olympics, is as a ghost-town, the pièce de résistance and logical end of a growth-addled bureaucracy run amok. It almost sounds like the end of a bad economics joke: Why bother trying to build human capital when you can just build a bunch of empty edifices instead? But that image no longer seems to square with the reality on the NEWSCHINA I May 2014

ground. The city fathers’ efforts to promote Ordos as the de facto future capital of north-central China, which at one point not too long ago seemed daft (even former Premier Wen Jiabao reportedly shook his head in disgust during a surprise inspection visit), now seem to be gaining traction. Visitors to the city over the past year report signs of a city on the rise: streets beginning to fill with cars and pedestrians, food courts filling with hungry customers, young migrants drawn from across the country telling their friends, “Hey, you really should come check out this Ordos place.” And so my recollections of Ordos now seem like a time capsule. I was last in Kangbashi in 2011, as a follow-up to my first visit in 2009. I had heard of the empty city on the plains, and I wanted to see it for myself. The first time I visited, I went without an idea, without a plan, without any clue of what I was looking for or where I would find it. I wandered around Dongsheng asking taxi drivers if they could take me to “Ordos,” which is a bit like getting in a cab in Times Square



and asking the driver to take you to New York City. Asking for a ride to the “ghost city” didn't work any better. I was about to give up and start looking for accommodations for the night (it was verging on late afternoon) when I noticed a shiny white tour bus marked with the Chinese characters for “new district.” I hopped aboard, and 26 kilometers later found myself alone on foot in an empty city. Horse statues and convention centers beckoned, but with the sun about to go down, it wasn't long before the deepening cold of Inner Mongolia in early November forced a retreat back to the warmth of a Dongsheng hotel room. The second visit I went with friends, hired a driver, and arrived just after noon. If you want to see “Ordos,” this is the way to do it. The new city's scale simply cannot be appreciated on foot. In a car, Ordos shrank to something comprehensible, but still not quite human. Writers recounting their trips to the ghost city during its years of maximum exposure (approx. 2009-2011) tended to reach for elephantine adjectives, and with good reason – the giant metaphors suggest themselves readily: rows of unoccupied, unfinished apartment buildings like the discarded playthings of giant children, the half-mile wide artificial lake scooped from the earth with their parents’ ladle, and everything empty like the whole family just got the hell out of town. And yet, at

the end of our day in Ordos, my friends and I drive by a school, and it’s open. Class has just let out and parents throng the gate, waiting to pick up their little spring shoots, blooming in a city just starting to stir to life, the long concrete winter almost over. My parents are visiting Beijing this spring for the first time since 2007. I’ve been home once a year since then. My hometown has changed – a shopping mall here, a freeway there, a new light rail line downtown – but it remains, functionally speaking, more or less the same place. The Beijing my parents will see will be, in many ways, a completely new city: a new international airport, 14 new subway lines, countless shops and streets destroyed and remade, whole districts of the city sprung into being. If you live in Beijing, ask yourself how many of the places where you spend your time existed seven years ago. But even Beijing’s breakneck sprint towards the future is but a jog compared with Ordos, a city seemingly determined to outrace even human memory. Who buries a time capsule planning to dig it up three years later? Telling you what I saw when I went hardly seems to matter, because it’s not what you’ll find when you go. If you do go, the only advice I can offer is this: bring a driver, pack a lunch, and keep your eyes open.

real chinese

hehe Hmm…

Originally onomatopoeia for the sound of laughter, hehe, literally “hur-hur,” was voted “the most hurtful word online” by Chinese netizens in 2013. According to official lexicographers, hehe is derived from Northern ethnic dialects later assimilated into Mandarin, and was commonly seen in informal letters exchanged between friends. In the modern information era, however, this formerly innocuous way of expressing amusement or interest has since acquired sarcastic, even contemptuous overtones. In some situations, when hehe appears on a bulletin board in


response to a post, it often means the speaker sees him or herself as above talking with you, giving the term a dismissive aspect. Some have compared it to the sarcastic use of “interesting” in both English and Chinese, or even to the term “bullshit.” Some commentators have called it more infuriating than simply replying to a post with naked verbal abuse. “Imagine you start typing a long, sincere response to somebody, only to receive the retort ‘Ha ha!’” ran one post in a discussion forum on the official website of the People’s Daily. “Sometimes I really want to pull that person through

my computer screen and give him a good beating.” Trendspotters claim that the term’s notoriety has made it hugely popular in the heated debates on Sina Weibo, China’s Twitter equivalent, where it is liberally used to irritate, defame and dismiss opposing points of view. According to media reports, many netizens say they see a “hehe” as a warning that a discussion is over. “I will blacklist any friend who replies to me with ‘hehe,’ since I don’t think it should be used between friends,” said another netizen in the People’s Daily forum. NEWSCHINA I May 2014

flavor of the month

Culinary Therapy By Stephy Chung


“In general, foods that are good for spring are ‘warm,’ like sweet potatoes and carrots. It is also the season to eat foods with upward energies, such as young and green vegetables,” Tan says. To learn a few seasonally orientated dishes, I attended Tan’s TCM culinary series held at The Hutong, a cultural exchange center in Beijing. The cooking class was co-led by chef and nutritionist Sophia Du, who crafted three recipes: congee with sweet potatoes, shrimp and chive dumplings, and chicken with shiitake mushrooms and carrots. “Our bodies are designed to eat with the seasons. These foods are more beneficial because they live in the same climate as you, and therefore, meet your body’s needs. So, even if I like passionfruit, for example, it’s not good for me because it is grown in the south, and I am a northerner.” Congee, a slow-cooked rice porridge, is touted in Chinese medicine as one of the most beneficial ways to start the day. The white rice grains are easy to digest and help the body absorb nutrients from other ingredients found in the bowl. Du’s sweet potato version was a bit plain and simple to my liking, as I usually prefer a good, savory fish-based congee. But the “warm” and “sweet” nature of the sweet potato has nutritious benefits that outweigh taste. It is used to support the qi and blood, and, according to Du, benefits all organs, especially the spleen and kidneys. The dumplings, another Chinese favorite that can be concocted in an infinite number of ways, were stuffed with minced shrimp and chives. “Shrimp gets the body going and encourages qi to move up and out in the spring,” Tan explains. The freshwater shrimps are “warm” in nature and are good for the liver and kidneys. But the strong winds and sour taste associated with the season can over-strengthen the liver. And so, green chives, characterized by their pungent flavor, are used to help increase balance in the stomach and improve qi and blood circulation. The chicken dish was a power bowl of sorts. Pieces of chicken were deliciously marinated in cooking wine, white pepper and garlic and braised with carrots and shiitake mushrooms. Turns out, both chicken and carrots are good for strengthening the spleen. Shiitake mushrooms, on the other hand, work to soothe reactions to food toxins and treat coughs. What began as a journey to nurture my liver, ended with a trip down the TCM wormhole. My one big revelation is that you can never regard one part of the body as singular. Thankfully, almost all Chinese recipes are rooted in these theoretical dietary principles. As for what to eat when, you just need to keep an ear out the next time you go to the market.  Photo by Robin Fall


ne of the benefits of living out in China is that you can score a 60-minute massage for cheap. Mine tend to cost just 12 dollars. Traditional Chinese massage is often used to maintain health and to treat injuries and internal disorders. Most parlors here give no illusion that the massage will be “relaxing”. You’re here to suffer or at least that’s how I’ve interpreted the whole act. Mr Wang, a TCM massage therapist, works out my kinks with the skill of his two decades’ practice. While the conversation often becomes too technical, and beyond my scope of Chinese vocabulary, a recent conversation about the spring, and food, caught my attention. “This is the time when you should nurture your liver,” Wang advised, as he painfully dug his fingers into one of the liver’s corresponding pressure points found on my foot. “Nurture my liver?” I winced. “Yes, of course. It’s spring. You need to eat more greens because they are sprouting now. And stay away from cold foods.” This wasn’t the first time I have been told to avoid “cold” or “hot” foods. Young and old Chinese readily spout advice concerning these energies, called qi, found in foods. Dietary therapy, along with massage, herbal medicine, acupuncture and qigong exercise are the five main pillars behind Traditional Chinese Medicine. According to TCM theory, there are five seasons - spring, summer, late summer, autumn and winter, that each correspond to an element, an organ, a taste, a weather attribute, and a process. Spring is characterized by the element of wood, the liver, sourness, wind, and birth. Consequently, people are generally advised to eat foods characterized as warm and sweet. In the dry, hot summers you’re suggested to eat more “cold” foods like watermelon and cucumber to help the body stay refreshed. An ice-cold beer, and all alcohol for that matter, would still be considered “hot” because it heats us up internally after being consumed. In the colder months, foods “warm” in nature, such as ginger root can help the body combat the chill. According to Alex Tan, a practitioner at the Straight Bamboo Traditional Chinese Medicine clinic in Beijing, there’s a big difference between how people in the West and people in the East describe food. “Typically in the West, we take a food, isolate it, and break it down into component parts such as fats, carbohydrates, and calories. That food, tested in any laboratory in the world, would get the same exact results. In China, however, we look at a carrot, then eat a ton of carrots, and we describe what it does to us. It’s observation-based science.”



On the Offensive By Alec Ash


Had I done the same in London, I’d have been lucky to get away with a black eye.

Illustration by Xiang Zhaohui

It wasn’t even a taxi ride I needed to take – it would have taken twenty minutes to walk from the subway station to my apartment, but I had bags. The first cab I hailed didn’t stop. By the time the second one pulled over I was already beginning to second guess myself, but climbed in anyway. He wasn’t an obliging driver. Many are in Beijing, these days, but this one was old school – gruff, ill-mannered and uncompromising. I asked him not to take Ghost Street, the congested hotpot thoroughfare that is typically impassable at peak times, instead suggesting a parallel route. He took Ghost Street anyway, because it was “simpler.” When I told him to take a left at the junction near my apartment, a maneuver only possible by doing a U-turn because of day-time traffic restrictions, he needed a lot of persuading. A lot of persuading. He was one of those drivers who emanated the bad vibes that I would likely exude too, were it my job to drive demanding foreigners around all day for small change. To cap it all, when he stopped and I passed him a hundred yuan note to break (guiltily), he refused it and said I should give the exact fare, a total of 13 yuan – just over US$2. I don’t have any small change, I explained. Sorry. No can do. It was clear he couldn’t, or wouldn't, break this note. I sighed, loudly. OK, drive forwards 50 meters, there’s a newsstand. I’ll break it there. No can do. Give me 13 yuan. I don’t have it. I only have a hundred! No can do. Now he was getting irate. He either suspected I was hiding the correct change somewhere on my person, or thought I would vanish into the ether were I permitted to leave the cab. It was at this point in the conversation, despairing of a solution, that I turned away from him to think, and muttered an insult under my breath. A very offensive insult, which literally compares

the recipient to the reproductive organs of a woman – worse, the stupid reproductive organs of a woman. From a purely linguistic perspective, in Chinese, this insult is about as crude as you can get. This charming metaphor is one that every student of Chinese picks up within their first year, and, except in certain unusual circumstances, not from a qualified teacher. The English equivalent is unprintable. Suffice it to say it has four letters, begins with a “c” and coincidentally refers to the same anatomical feature. The problem is, when swearing in a foreign language, you feel badass but never fully understand the degree of the insult you’ve given. All offensive overtones fail to penetrate, much as spending foreign money feels like playing Monopoly. The word I unwisely deployed was merely a filthy arrow in my quiver, held in reserve for just such a situation as this. The cabbie reached over with a meaty hand, grabbed me by my lapel, and jerked my head close to his.

What did you call me? Nothing, I didn’t. My only thought now was to get out of this. What did you call me? I didn’t, I didn’t. With one hand I reached over for the door, but it didn’t open. The driver had locked it. He was shaking me roughly and his other hand was held in a fist above my face. I kept talking, quietly, watching my tone, repeating the same meaningless phrases that popped into my head to keep him mollified. I banged on the window to call over the attendant of the zone for locked bicycles next to the subway exit where we were parked. Between the three of us, we worked out a solution where the attendant broke my hundred, getting one yuan for his trouble. The driver let go of me, gave change for a twenty yuan note, and unlocked the door. If that were the end of the story, it would have left a sour aftertaste. But as soon as the cabbie turned on me, I had realized the enormity of the affront. Had I done the same in London, I’d have been lucky to get away with a black eye. So I did the right thing. I turned back to the cabbie, and came clean. “Mister, you were right. I did call you ‘[that word].’ That was really rude of me. I’m very sorry.” The change was instantaneous. The beetroot-red color of his face dissipated and he broke into a smile. He reached out his hand again – this time to shake mine. Because you’ve apologized, he said, it’s alright. I was too angry. Forgive me, forgive me. I wish you safe travels. We shook hands, I got out with an exchange of goodbyes, and all was good. I’ve modified my vocabulary now. These days, to insult someone I use the term “stupid melon” (shagua), accompanied with an affectionate smile. The response is normally ni shagua! – “You’re a stupid melon!” – and a grin. Try it sometime. NEWSCHINA I May 2014

Who ya gonna call? By Sean Silbert


Considering how many people will freely give personal phone numbers, it should be easy – in China, that’s just how business is done.

Illustration by Xiang Zhaohui

China nerds will recognize a familiar journalism trope: the “local friend.” Maybe it’s because speaking as an authority while remaining an exclusive outsider has an odd taste – commenting from the sidelines can feel phony, so drawing upon the “authority” of someone on the ground makes sense. This key component of journalism starts to look wacky when everyone who claims to understand China accrues an address book packed with Tibetan shamans, factory workers, artists, shepherds and captains of industry – all, of course, “good friends” with the writer. As someone who aspires to delve ever deeper, I should have more contacts to call up. Considering how many people will freely give personal phone numbers, it should be easy – in China, that’s just how business is done. But do I really want to be the BFF of some guy who approaches you outside a bar after he overhears you speaking a smattering of Chinese, proclaiming your friendship is “destiny?” What of the taxi driver in the no-name restaurant by my house, who after one meeting enthusiastically urges me to get wasted with him behind closed doors? And I’m pretty sure the uncomfortably mustachioed middle-aged woman who sat next to me on a plane that one time just wants to gab on the phone. She did plenty of that when we were up in the air. I want to ask why so many people feel so comfortable swapping digits with a stranger. Then again, perhaps making a foreign friend really is such an attractive commodity, at least at the outset. I bet the fewer strange faces these collectors see in their everyday life, the more intriguing they become. So when I go traveling, I try to keep a low profile. I do try to reach out and explore communities, however, and talk to as many people as I can. Though most of the time this just makes me look lost. This is especially true when you are lost. One of my first solo trips involved me taking the overnight train from Beijing to Shanghai. Even

a toddler could do this one – all you need to do is not stand up until everyone else disembarks. This, of course, was the first thing I screwed up, jumping off in a panic when the train ground to a halt, and watching it slide out of the station I assumed to be my destination. It wasn’t until after a couple frantic phone calls and waiting around at the wrong clock tower that I discovered that I had alighted in Wuxi, a few hours north of my train’s final destination. Smart. Wuxi might be a great place to do business, but being a tourist there, at least at the time, was a chore. The first thing I did was to ask someone outside of the train station what there was to do in these here parts, and while ambling through historic gardens sounded lovely, the attraction he suggested was too far away to get to in the two hours I had before my supplementary train departed. So I ambled through the town. It wasn’t much – signs missing characters, ragged-looking

snack joints. I went into a local Carrefour grocery store just to kill time. It was at this moment, when I was clearly on my way to nowhere, that a college-aged girl approached me and asked where I was going. Brazening it out wasn’t an option – I was clearly aimless, so I feigned a pressing need to return to the train station. No further information was needed. My new friend grabbed my hand and led me back to the platform, where we proceeded to fumble along in my broken Chinese and her weak English until my train arrived. She asked for my number – fine, I thought, it would be good Chinese practice to continue our correspondence at a safe distance. She clearly had more in mind. Less than three minutes after my train pulled away, I got a phone call from her wishing me a safe journey. Cute, but from that moment on, the calls, messages and, later, emails – continued to flow on and off for the next two years. Even after I had left China to return to the States, my “friend” continued to keep in touch, redoubling her efforts when I returned to China years later. Feelings of being flattered soon gave way to embarrassment. Classmates referred to her as my “wife,” and joked that I had to run our entire relationship through Google Translate. After some time the novelty subsided and I quit responding. Nobody wants to be a heartbreaker – until, suddenly, they do. Cross-cultural communication, a term bandied about so much that it feels meaningless, is still possible, even desirable. But, as with all communication, we must choose our partners wisely. You wouldn’t simply befriend every person you bumped into in the street, so why on Earth would you change your habit? Friends are supposed to be friends, not simply sound-bite generators. But in another culture, particularly somewhere as diverse as China, we can hope to cement friendships with people who really are from all walks of life. I know that, somewhere, some shepherd and I will get along perfectly. 


Cultural listings Cinema

Who Are You Looking for? An adaption of the novel of the same name by popular social critic and blogger Li Chengpeng, People Searching Story of Cola Lee was recently released in China’s cinemas. Li is known for his outspokenness, his sense of humor, and his sharp and distinguished criticism, especially towards social issues. In Li’s story, a young, poor man named Cola Lee runs a private detective agency. As Lee pursues his fortune, he gradually becomes entangled in fraud, and people from all walks of life are drawn into his story. The movie was directed by emerging director Zhou Wei, and Li also participated in the screenwriting. Unfolding a surreal portrait of Chinese society through his tense and ironic story, People Searching Story of Cola Lee has been called one of Li’s more successful and coherent transitions from social criticism to fiction writing.



Dead Poets Musician

City Memory

When in the 2012 final of popular TV talent show The Voice of China in 2012, the year’s hottest TV talent show, one of the finalists picked Don’t Be Afraid, a smooth melodic song with a southwest-Chinese ethnic feel, many believed the song to be a traditional ethnic folk ballad. In fact, it was the work of Moxi Zishi, an artist who remained in relative obscurity until his debut performance on this year’s talent show Sing My Song, adapting into a folk song the poem If I Die, I Must Die in Your Hands by famous poet Yu Xinjiao. The soulful and touching melody, together with Moxi’s high-pitched voice, astonished the judges and the audience, making him an overnight sensation. Now 35, Moxi, who is a member of the Yi ethnic group, grew up in Sichuan Province, in China’s southwest, and has been working in China’s music industry for years as a composer, singer and session musician. With his fame now on the rise, Moxi and his band plan to release their debut album in July, to high expectations from critics and fans.

By Wang Xuan



A Fragment of Ink Over recent decades, ink and wash, the iconic traditional Chinese painting style, has been constantly reinvented in all methods of art creation in China. Yet a paucity of research and criticism has been devoted to the beginnings of this trend for reworking ink and wash, which many art critics believe came in the 1980s. Held from late February to early April in Shanghai’s Himalayas Museum, A Fragment in the Course of Time – Landscape of Chinese Ink Art in 1980s, displays nearly 180 ink and wash paintings created in the 1980s from some thirty artists, and historical materials of ink and wash art activities during the period. Seminars are also held during the exhibition, adding academic weight to the display of these works.

“Villages within the city,” a phrase describing the “villages” besieged by modern high-rises during the expansion of cities in China’s urbanization progress, are a memory for Wang Xuan, a writer and poet born in the late 1980s. Wang, after graduation, lived in a “village within the city” for six years. These villages are crowded with shabby bungalows, whose cheap rent became a popular choice for young workers like Wang. To the urban middle-classes, these “villages” are poor and chaotic slums, but Wang developed a complex special attachment after living in one for six years. In the book City Memory, Wang tells his story of living in the “village,” drawing out memories among those who had similar experiences, and of the “cities” from which these villages are now disappearing. NEWSCHINA I May 2014




The college entrance exam keeps China’s universities stuck in the past The core of college entrance exam reform lies in weakening government influence over admissions By Qin Chunhua


ancelled in 1966 and reintroduced at the beginning of to that of a planned economy, designed to churn out standardized China’s Reform and Opening-up, the national college workers to power industrialization. entrance exam enters its 37th year this year, and the probIt is self-evident that colleges of different levels should have diflems with the current exam and the associated admissions mecha- ferent admissions standards, and the potential for creativity and nism can be boiled down to one word interest of top talents can simply not – ossification. be appraised by such rigid standards Uniformity leads to As a national examination, it must as grades from the college entrance ossification even though be standardized, but uniformity leads exam. some provinces are allowed to ossification even though some provThe ossification of the college adto administer their own test, inces are allowed to administer their mission mechanism would not be own test, independent of the national so harmful if the exam were not the independent of the national one. The admissions process is the most yardstick for a whole nation’s basic one. ossified part. education. The admission features strong heriThe courses and content that are tage from the planned economy era. not tested in the college entrance Firstly, admissions quotas at most major State universities are set exam are totally ignored in the high school curriculum. Many valby the Ministry of Education, and distributed to each province. ues and abilities that are vital for the growth of a human being can Secondly, admission is based solely on the candidate’s grades from simply not be tested with an examination, and that is precisely why a single exam; thirdly, under no circumstances can a college reject they are usually marginalized in Chinese schooling. any candidate who achieves the requisite score, or accept one who For instance, physical education classes are often reduced or canfails to reach it, as long as they fall within the quota; fourthly, stu- celled in most high schools, simply because the course does not dents are distributed among different majors based more on their count towards the college entrance exam. As a result, the physical scores in the entrance exam than their specific academic interests, fitness of China’s children is almost at an all-time low. and it is almost impossible for a student to switch from one major Long years of repetitive training will either ruin their capacity and to another. The system is a hybrid of the Soviet admission system motivation for critical thinking, and thus most will find it hard to and the traditional Chinese imperial examination system, and runs adapt to college studies. contrary to modern education principles and the needs of a modern The value of a university lies not in teaching existing knowledge market economy. to students, but enabling them to navigate the wider world. If it The major function of universities should be to cultivate good cannot achieve this, a university should not be called a university, citizens, training talent able to drive society forward, and spotting but rather a vocational school. genius that could the solve problems confronting the human race and thus change the world. The development of a human being (The author is the director of the Examination Research Institute with should be the ideal of modern education, a goal that is antithetical Peking University)







May 2014