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INTERNATIONAL Happy Anniversary: Shift on N Korea SOCIETY Quack Addicts: Fall of a Faith Healer

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Volume No. 062 October 2013

ENVIRONMENT Grim Geography: Mapping Cancer Villages


EDITORIAL

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

CN11-5826/G2

NEWSCHINA I October 2013

China must prevent a “hard landing” of public frustration

I

n recent years, China has witnessed a series edge that, given the rampant injustice embedded of bombings and murders in public places, in the current legal and political system, they themkilling and injuring innocent people. Many selves are responsible for the growing public hatred have warned that China is seeing a wave of what towards China’s authorities. To a large extent, symhas been called “new-style pathy for these crimes reterrorism” – criminology flects public frustration with Many liken Chinese society the existing legal system – it professor Wu Boqin, for exto a pressure cooker with ample, has said that these is relatively easy for Chinese incidents are “individual people to understand the no release valve. crimes of suicidal terrorrationale of those who have ism.” been pushed over the edge. Conducted in public and According to Professor intended to injure both the Wu Boqin, these crimes, perpetrator and innocent bystanders, these crimes often conducted by petitioners who have failed to aim to cause chaos, and should, in theory, be con- have their grievances addressed by the authorities, demned by the public. can be seen as the release of an accumulation of However, these incidents are often been met psychological tension. Many people feel this same with understanding, and even support, from the tension, albeit to a lesser degree. When the level public. For example, when 60-year-old petitioner of tension exceeds a person’s limit, it may erupt in Chen Shuizong killed 47 people (including him- a criminal act – some have warned that everyone self) by setting fire to a crowded bus in Xiamen, wronged is a ticking time-bomb. capital of Fujian Province on June 7, he received Many liken Chinese society to a pressure cooker messages of sympathy online. According to some with no release valve. With the recent spate of suicommenters, Chen’s only fault was killing ordinary cidal violence, there is concern that societal tension people – they believed he should have targeted gov- may soon exceed its limit, and trigger widespread ernment personnel. unrest. A “hard landing” of public frustration In a more recent case, Ji Zhongxing, a disabled would be more damaging than a hard landing for 33-year-old petitioner, detonated a home-made China’s economy. bomb at Beijing airport on July 20, injuring himTo deal with the issue, China should take drasself and a security guard. Since Ji caused far fewer tic measures to reform its legal system to achieve casualties than previous attackers, he received an genuine rule of law. Not only should the courts be unprecedented outpouring of sympathy. This sets a granted meaningful independence from political very dangerous precedent – no violent act directed intervention, the legal rights of the people must be at the public should be tolerated or encouraged. respected. This is the only way to maintain stability But for its part, the government must acknowl- in the long run.

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Contents

Brawn and Order

Photo by CFP

Do China’s urban management officials deserve their reputation as a brutal, quasi-legal enforcement agency? NewsChina explores the murky world of the chengguan

Editorial

politics

Cover Story

society

01 China must prevent a “hard landing” of public frustration 10 Environmental Policy : Polluters Promoted

12 Urban Management Officers : Mean Streets/Turf War

24 Filial Piety Law : Who Cares? 26 Airport Blast : Last Resort 28 Wang Lin : The Guru 31 Silent Execution : Villain Turned Victim

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P28

P31 NEWSCHINA I October 2013


Contents

P38

P58 34 Prostitution Scandal : Judges, Johns, and Justice international

36 North Korea : The New Normal

Environment

38 River Pollution : Death Maps economy

44 Interest Rate Reform : Spills, No Thrills culture

48 54

Liu Heung Shing : With My Own Eyes Feng Xiaogang : Maverick No More?

outside in

62 65

Chongqing/Guizhou : Kaili Calling Flavor of the Month : Chillin’ in Chinatown

Commentary

P48 P10

70 Squeezing Toothpaste 72 Liberalization is the real growth engine 04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 46 China by numbers 64 real chinese 66 ESSAY 68 CULTURAL LISTINGS

visual report

58 Scorched Earth

NEWSCHINA I October 2013

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NewsChina Chinese Edition

Oriental Outlook

August 12, 2013

July 29, 2013

Government on Trial

Military Think-tanks Discredited

In 2003, Zhao Faqi, founder of a private energy investment company based in Shaanxi Province, invested US$2 million jointly exploring local ore deposits with the provincial geological institute. However, after geologists proved a total of two billion tons of coal, Zhao was dropped and his contract given to another government-backed program, allegedly on orders from the provincial authorities. Although a lower court found that Zhao was entitled to compensation for the illegal termination of his contract, an appeal by provincial authorities to a higher court saw this judgment overturned, allegedly as a result of a government order which insisted that to rule in Zhao’s favor would be a violation of State property rights. The case has dragged on for 10 years, with Zhao at one point being detained for over 100 days for“illegal registration”of his company. Chinese legal figures are now urging the government to stop interfering in court proceedings in order to secure a final verdict.

Century Weekly August 5, 2013

The China Strategic Cultural Promotion Association, a non-government military research center, drew fire this July for issuing its own 2012 report on the military strength of the US and Japan – even though both countries publicize vast volumes of information on their military apparatus. Neither funded by the government nor willing to receive commercial donations, such non-governmental military thinktanks in China often fall short of funds despite having the approval of senior retired military leaders. As China’s military remains one of the most secretive organizations in the country, access to information and the right to publish also leads to shoddy findings and half-baked reports. For example, before China officially announced it was building an aircraft carrier, non-governmental organs were expressly forbidden to speculate around the issue. Now, non-governmental think tanks are clamoring for the recognition afforded to their US equivalents.

China Economic Weekly August 8, 2013

Confused Standards Lacking a unified management system for trade standards, China saw nearly 29,000 national standards and 100,000 local standards introduced by the end of September 2012, with many overlapping and even contradicting one another. According to industry watchdogs, many of these so-called standards designed years ago should have been updated or withdrawn but that the bureaucratic cost of doing so was considered too great. In most cases, setting trade standards, especially at the local level, is dominated by businesses who lobby for lower thresholds in order to increase profits. Given that many food scandals are blamed on China’s confused public health and safety regulations, the government now plans to spend two years unifying industry standards, starting with food and beverages. Who will actually determine what is and isn’t an acceptable standard, however, remains unclear.

Whose Sky? According to official statistics, growing numbers of commercial aircraft in China are grounded or delayed each year due to the Chinese military’s jealous control over national airspace. Only 20 percent of the country’s airspace is open to civil aviation, a major cause of mid-air “traffic jams,” particularly around airports. Although the military occasionally opens additional air corridors during peak travel periods, it has steadfastly refused to expand the amount of airspace available to commercial flights, despite an explosion of growth in the sector. The punctuality rate of China’s civil carriers, once some of the most reliable in the world, has plummeted to 30 percent, with fistfights due to delayed or canceled flights now commonplace at the country’s airports.

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Xinmin Weekly August 1, 2013

App Bubbles China’s vast population of smartphone users are among the most app-addicted on earth, according to market data, with hundreds of development startups flooding the sector. However, due to the fierce competition between similar products plus China’s rampant piracy habit, most developers end up making a loss. For every successful paidfor app there are a dozen freeware rip-offs which can displace it, driving many developers to fraud in order to secure high enough rankings to turn a profit. Concerned of a looming bubble like those that hit other tech sectors, some developers are falling back on pop-up ads and product placement as well as offering custom services to enterprises. NEWSCHINA I October 2013


Illustration by Wu Shangwen

“A fatal problem for Top 500 Chinese enterprises is that they are Top 500 in scale but not even on the radar in terms of brand competitiveness.” Critic Yang Bo expressing reservations about Top 500 listings.

“Online remarks do not represent public opinion. Public opinions do not represent public wishes. Public wishes do not represent truth.” Writer Yu Qiuyu speaking out against online mob rule.

“I do not agree with the idea that high housing prices are due to the government printing money. It is all rather over-hyped.” Director of the Investigation and Statistics Bureau under the People’s Bank of China Sheng Songcheng courting controversy.

“From now on, we stick to talking about business. Never talk about politics – it’s not your place.” Liu Chuanzhi, founder of Lenovo group, taking flak for claiming that Chinese businesses are powerless to affect government policy.

“The children of migrant workers are still migrant workers, and so are their grandchildren. If people believe that they can’t change their destinies, no matter how hard they work, they’ll become desperate.” Professor Li Yining from Peking University decrying China’s stratified urban centers. NEWSCHINA I October 2013

“An economist would be good for nothing if he spends all his time denying his past.” Xia Bin, a financial researcher under China’s State

Council, calling upon economists to avoid flip-flopping in line with public opinion.

“I do not think it is worthwhile to talk morality with businessmen. Nobody, no matter how wealthy or how upstanding, can resist the temptation of huge profits.” Zhou Hongyi, president of Qihoo 360, China’s biggest network security service provider, on why he got into the search engine market.

“Eachyearwehavetospendfourmonthskeeping societystable,twomonthspreparingforinspections, andanothertwoonmeetingsandstudy.Thatleaves uswithfourmonthstodoourjobs.” Zhao Guanghua, former deputy mayor of Shibao Town, Gulin County, Sichuan Province, giving his reasons for tending his resignation.

“My careful analysis and detailed academic research tells me that Chinese soccer is even worse than the Chinese stock market.” CCTV anchor Bai Yansong jumping on the bandwagon of criticizing the national soccer team.

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Top Story

China Punishes Foreign Milk Formula Producers for Pricing cussion in the milk formula industry, with many proposing that it is no more than a crackdown on foreign producers, who have remained dominant over since the 2008 toxic milk powder scandal. On August 3, when New Zealand milk formula producer Fonterra announced a recall of products potentially tainted with

China’s National Development and Reform Commission (NDRC), the State’s economic planning body, announced on August 7 that it had fined six milk formula producers a total of 668 million yuan (US$106m) for price fixing, the largest fine ever imposed for antimonopoly violations in China. The six producers include Biostime, MeadJohnson, Dumex, Fonterra, Abbott (Shanghai) and Friso (Shanghai), with another three, Wyeth, BeinMate and Meiji exempted from punishment for voluntarily reporting themselves to the authorities and supplying evidence. The investigation was launched since March after the NDRC found that the major milk formula brands in the Chinese market had seen a 30 percent rise in price, while the raw materials had remained the same. The investigation teams found strong evidence that the companies had implemented measures, such as supply restriction, rebate reduction and fines, to force sellers to market their products at a mandated price. “Data show that the relevant producers spend 20 to 40 percent cost in distributor sales, far higher than the international level of 4 to 14 percent,” claimed the NDRC. The investigation has triggered heated dis-

lactoalbumin, domestic producers saw a chance to win back their market share. However, since foreign brands were forced to cut their prices in the wake of the NDRC’s antimonopoly investigation, analysts worry that domestic producers may still lose out if they are unable to regain the trust of Chinese consumers.

Fined 6 percent of the total sales volume of 2012, about 163 million yuan (US$25.9m)

Fined 3 percent of the total sales volume of 2012, about four million yuan (US$0.63m)

Fined 4 percent of the total sales volume of 2012, about 204 million yuan (US$32.4m)

Fined 3 percent of the total sales volume of 2012, about 77 million yuan (US$12.2m)

Fined 3 percent of the total sales volume of 2012, about 172 million yuan (US$27.3m)

Fined 3 percent of the total sales volume of 2012, about 48 million yuan (US$7.6m)

Politics

Senior DPP OfficialVisits the Mainland Chen Chu (pictured, left), mayor of Kaohsiung and a senior official in Taiwan’s opposition Democratic Progressive Party (DPP), visited the mainland cities Tianjin, Xiamen, Shenzhen and Fuzhou from August 9 to 14. The purpose of Chen’s tour was ostensibly to invite the four cities to attend the 2013 AsiaPacific Cities Summit held in Kaohsiung from September 9-11. Until now, no mainland city has ever participated in the event, which focuses on business trends, the environment, culture and various other current issues.

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However, what caught more media is that during her visit, Chen no longer referred to the mainland as “China” (as the DPP traditionally has), instead using the term “the Chinese mainland,” triggering wide speculation that the DPP plans to extend an olive branch. On the first day of her visit to Tianjin, Chen told the media that her Party wishes to tell Taiwanese people that if elected, the DPP is capable of dealing with cross-straits issues. NEWSCHINA I October 2013


Society

Trial of the Decade

Singer Detained for Online Threats

Bo’s Charges:

Corruption: Embezzling five million yuan (US$790,000) during his tenure as Party secretary of Dalian, Liaoning Province and later as governor of Liaoning Province. Bribery: Accepting 21.79 million yuan (US$3.5m) in bribes from two Dalian companies between 2000 and 2012.

Abuse of power: Attempting to prevent Wang Lijun, then Chongqing’s police chief, from reinvestigating the Neil Heywood murder case, and unlawfully dismissing Wang from his post without advance approval from the Ministry of Public Security.

North America

North America Europe Othersa Asia

Asia

Distribution of Chinese Students Abroad Europe

Doctors or above

Masters

Bachelors

Nearly 400,000 Chinese students were studying abroad in 2012, 93.7 percent of them at their own expense, making China the world’s biggest source of overseas students. The statistics were included in a recent report on the employment of overseas students issued by China’s Ministry of Education. According to the report, a total of 2.64 million Chinese students studied overseas between 1978 and 2012, covering 100 countries and regions, with the UK, the US and Australia the top three destinations. The report also shows obvious growth in the number of students who return to China after completing their studies, revealing that around 86,700 more students returned in 2012, a 46.6 percent rise on 2011. So far a total of 1.09 million former overseas students have returned to China. Given China’s increasingly tough labor market, however, experts say that only those with a doctorate degree or higher can find a comparatively good job.

No Degree

China Becomes Biggest Source of Overseas Students

Doctors or above Bachelors Degrees of Returning Overseas Students No Degree Masters

Education

Singer Wu Hongfei was detained by the Beijing police after tweeting about her desire to bomb two government buildings in Beijing. Expressing frustration at the difficulty of accessing archives at the two departments, Wu claims the post on her Sina microblog account, posted on July 21, was made in jest. She was detained the following day. Wu’s arrest triggered hot discussion, with many questioning whether her remarks should constitute a crime, and why so many others tweeting similar sentiments remained safe. Under pressure from the very public controversy, Wu was transferred to administrative detention on July 30 for “disturbing social order.” On August 2, she was released on the condition that she wrote a statement of repentance, promising not to hype the case. Critics said Wu’s words seemed particularly sensitive after petitioner Ji Zhongxing injured himself and a security guard by setting off a homemade bomb at Beijing airport (See also: “Last Resort,” P26-27). Othersa

Bo Xilai, former Politburo member and Chongqing Party secretary, stood trial from August 22. 110 persons were in attendance, including five family members and 19 journalists from State media outlets. No foreign journalists were admitted to the courtroom. At press time, the trial was entering its fifth day. Bo was detained in February 2012 following a dramatic defection to the US consulate in Chengdu, Sichuan in January by former Chongqing police chief Wang Lijun. Bo is accused of embezzlement, abuse of power and bribery. Bo denied all three charges, instead diverting blame to his wife Gu Kailai, who received a suspended death sentence last year after being convicted of the murder of British businessman Neil Heywood. Gu provided video testimony against her estranged husband, but refused to appear in court.

Economy

China Audits Local Debt In August, China’s National Audit Office launched another census of local government debt, which analysts estimate to be 15 to 18 trillion yuan (US$2.38-2.86tn). The country’s last audit of government debt, which concluded in 2011, revealed that local governments owed 10.71 trillion yuan (US$1.7tn) by the end of 2010. This June, the office conducted a sample audit of local debt in 36 cities and regions, and found that the local governments there were 3.85 trillion yuan (US$611.1bn) in debt by 2012, 12.94 percent more than in 2011. Analysts believe that this census aims to investigate the growing amount of illegal financing by local goverments, and control the hidden risk brought by local bonds issued by non-government financing organs. Given that local governments mostly pay their debts by selling land, the profits from which often fluctuate, analysts have called for the central government to grant lower-level governments more access to revenue sources. NEWSCHINA I October 2013

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Photo Credit: Politics, Xinhua; Society, IC

Laws


What’s Amusing China ? To stay cool during China’s hottest ever summer, divers from Xiangtan, Hunan Province sought to play mahjong at the bottom of swimming pool. About 5.5 meters down, the temperature was a pleasant 24 degrees Celsius, rather than the 40-plus degrees Celsius at the surface.

Poll the People Would you choose to have two children if State policy allowed it? Respondents: 1,922

1,112 (57.9%) Yes, only children are too lonely. 505 (26.3%) No, babies are too expensive. 207 (10.8%) I don’t want children.

What’s Amazing China ? A woman attempting suicide by jumping off her fifth-floor apartment balcony had her feet caught by her boyfriend and a neighbor who were on the floor below. The woman from Harbin, Heilongjiang Province, had a fight with her boyfriend on August 10 and locked him out before announcing her decision to kill herself. The man from the fourth floor was later dubbed “China’s best neighbor” by netizens.

98 (5.1%) Don’t know.

Source: www.weibo.com

Most Circulated Post Retweeted: 197,427 times

What’s Making China Angry ? An obstetrician named Zhang Shuxia from Fuping, Shaanxi Province was arrested on charges of trafficking newborn babies. She would reportedly tell new parents that their baby had died or would soon die from congenital disease, then sell the healthy newborns to a child trafficking ring. A string of implicated health officials were dismissed from their posts after Zhang’s arrest.

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The post by State television CCTV reminded people to refrain from littering to lighten the burden of street sweepers: A number of street sweepers died from heatstroke this summer while collecting garbage. Beverage bottles, used tissues and fruit peel could be deadly, so please be considerate and do not to drop litter carelessly. NEWSCHINA I October 2013


Top Five Search Queries On

over the week ending August 15 Lin Dan 222,907 The photogenic badminton player claimed his 18th world championship title in early August. 13 Stamps for a Birth Permit 125,757 Migrant workers in Beijing revealed they need to gather 13 stamps from eight government departments before they could legally have a baby at a city hospital.

WHO’S

HOT? WHO’S NOT?

Lethal Fountain 58,579 A man from Beijing died from an electric shock while playing with his pet dog in a fountain at a local park.

Whistleblower A businesswoman named Bi Meina exposed the assets of a senior official from Dalian, Liaoning province. On the list were three houses, including a six-bedroom villa, and nine luxury cars. The man was ultimately removed from his post.

Kiss Contests 12,507 Contests were held around the country prior to China’s Valentine’s Day on August 13.

Top Blogger Profile Tong Zhiwei Followers: 86,916 The 59-year-old professor with the East China University of Political Science and Law was one of the few academics who dared to criticize Bo Xilai, the disgraced former Chongqing Party chief, while he was still in office. Since the fall of the former Party strongman, fans have flocked to Tong’s microblog, many of them those who formerly praised Bo’s now-discredited populist style, which covered an alleged litany of abuses.

NEWSCHINA I October 2013

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

Cheng Baocheng 41,986 This reporter was detained by Shandong police for campaigning against local government officials attempting to demolish his house.

Neighbor from Hell A self-styled “professor” from Beijing built a two-story villa on the rooftop of a 26-story residential building over the course of six years, despite opposition from neighbors who suffered leaks, constant construction noise and subsidence as a result.

President of the Past Considerate Government The government of Shaoxing, Zhejiang Province provided its unused air-conditioned meeting halls to migrant workers looking for a cool place to sleep.

The newly-issued diplomas from the Chengdu University of Traditional Chinese Medicine had to be revoked in early June because the signee, the former president of the university, had been arrested for corruption. Only a month later, the re-signed and re-issued diplomas were recalled again, as the new signatory, the former Party secretary of the university, was also arrested.

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points for mayors,” said the report. The team collected and analyzed data for 283 of China’s 287 city-level governments from 2000 through 2009 to summarize decisive factors leading to environmental protection projects, and the effects these projects had on land prices, local living environments and, most crucially, the career paths of the officials who pushed them through. The authors went on to conclude that only “environmentalist” cadres venture to “offend” their superiors by prioritizing environmental protection over GDP. According to their claims, only “less career-minded” cadres with “less hope for promotion” are typically inclined to invest in environmental protection. This only reaffirms what CPC officials have known for decades – that investment in transportation and infrastructure and other tangible contributors to GDP growth is the best way to work towards promotion.

Correlation

In 2011, air pollution in Beijing and other cities across China reached “crisis” levels. With both State and international media increasingly focused on this most visible of public policy issues, the general public also began to focus on the public health impact of China’s economic policies. Experts even began to posit that perhaps air pollution data might become as important as GDP growth figures in determining officials’ career paths. “We tried to find out the reasons behind China’s environmental problems from a political standpoint,” Wu Jing, associate professor from Institute of Real Estate Studies at Tsinghua University told our reporter. In 2011 Wu, together with Deng Yongheng and Bernard Yeung from the National University of Singapore, Huang Jun from Shanghai University of Finance & Economics, and Randall Morck from University of Alberta, began research into how the political climate affected air pollution. Their report was published in February 2013. In their research, the team identified one factor which seemed to have a tangible impact on general air pollution data across China – government policy. NEWSCHINA I October 2013

“Since the early 2000s, government investment in environmental protection dwindled,” Wu told NewsChina. Local governments actually scaled back funding for urban environmental improvements such as drainage and sewage treatment as well as urban greening. According to government statistics, on the national level, investment in environmental improvement as a fraction of total urban spending investment fell from a peak of 25.4 percent in 2000 to a nadir of 19.1 percent in 2006, before recovering slightly to 21.3 percent in 2009. However, over the same decade, transportation infrastructure spending as a share of total urban infrastructure investment rose from 60.2 percent in 2000 to 72.7 percent in 2010. Through analyzing speeches and articles made by 82 provincial-level officials from 27 provinces from 2000 to 2009, the team noticed that provincial level cadres emphasized transportation over environmental protection in every case. “That’s why city-level cadres increase transportation spending – it’s a direct response to their provincial-level superiors emphasizing such investment. But if their superiors emphasize environmental concerns, they take no action,” claimed Wu’s report. This came at the same time the central government was upholding former President Hu Jintao’s “Scientific Outlook on Development” philosophy as a guiding principle for social and economic development. The importance of environmental protection, despite being repeatedly emphasized in policy, was ignored and even subverted when it came to enforcement.

Urban Nightmare

Wu and his team draw similar conclusions to other experts investigating how China’s political climate has affected its environment. The GDP-centric promotion system for local officials is a disincentive to protect the environment. Consequently, it is this system that is a decisive contributing factor in worsening air pollution. Wu and his team argue that any and all investment in environmental protection either has no bearing on an individual’s career pros-

pects or harms their chances for promotion. “GDP growth remains the decisive factor in the promotion of city officials,” Wu said. “The GDP-based evaluation system only serves the purpose of economic construction,” commented Kuang Xianming, director at the China Institute for Reform and Development. “That is why some projects, though they might not bring employment or tax revenue, are welcomed by local officials simply because they boost local GDP.” City-level cadres, keen to be promoted, prefer to invest in projects which offer decent guarantees of short-term growth. One such area is transportation infrastructure. “Better transportation infrastructure elevates land prices, and local government revenue,” he said, thus all but assuring future promotion for the officials responsible. An official who opposes the construction of a highway, rail line or port facility on environmental grounds, meanwhile, might as well be picking the government’s pocket. Wu freely admits that any report looking for a correlation between China’s official promotion system and air pollution will “lack any credible means of explicitly confirming what causes what.” However, he shares the view held by most economists that not only does this correlation exist, it is actively preventing environmental protection policy from becoming practice. “From the new urbanization point of view, I regard sustainability as a key to abide by,” Wu told NewsChina, adding that only an overhaul of the official promotion system can avert further environmental deterioration. Previously, certain institutions have tried to win support for a system encouraging “Green GDP” growth, placing a dollar value on the protection, rather than destruction, of natural resources. According to Kuang Xianming, “Green GDP” is being trialed in a few places, however, he has little hope it could be effectively rolled out at the national level. The government is launching unprecedented investment in further urbanization, and unless issues like air and water pollution, urban sanitation and public health are addressed, China’s ever-expanding cities could quickly become uninhabitable. 

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cover story

Discord is brewing between a surging population of impoverished urban residents and the quasi-legal government personnel employed to “manage� them. NewsChina wades in

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NEWSCHINA I October 2013


Photo by CFP

A chengguan officer issues a hawker with a fine, June 2, 2013 NEWSCHINA I October 2013

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cover story

Urban Management Officers

Turf War

China is seeing increasingly fierce conflict between street hawkers and “urban management officers,” a national body of seemingly unchecked regulation enforcers. Both sides claim to be mistreated – but who has it tougher? By Xie Ying

The bandits are here!” shouted Huang Xixi, a watermelon hawker in Linwu County, Hunan Province. Before she could escape, a team of urban management officers (or chengguan), the arch nemesis of China’s street hawkers, had surrounded her. One was trying to wrestle Huang’s weighing scale from her grasp. In the scuffle that ensued, Huang’s husband Deng Zhengjia took a blow to the head with a measuring weight, and fell to the floor.

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When the fight was over, Deng was found to be dead. Deng’s death immediately triggered a mass protest over the chengguan’s unchecked use of violence to drive away unlicensed street hawkers. A group of Linwu residents placed Deng’s dead body outside a local government building, appealing for compensation and a public apology. The government, however, dispatched a troop of armed police to disperse the crowd and recover the body.

Although the government later detained six chengguan for further investigation and removed two local chengguan leaders from their posts, a recent spate of particularly gruesome incidents has led to public outrage at the violent enforcement of laws by this legally ambiguous quasi-police force. The chengguan, for their part, have attempted to defend themselves in the media, claiming that despite their apparent power, officers themselves remain at the bottom rung of society, NEWSCHINA I October 2013


Photo by CFP

A Beijing hawker flees from chengguan, May 9, 2013

and are frequently the target of unfair public criticism.

Into Thin Air

Today’s conflict can be traced back to 1997, when the Chinese government established autonomous chengguan bureaus in cities across the country. The authorities tasked chengguan with the responsibility of maintaining a pristine urban environment in areas dealing with expanding populations of

NEWSCHINA I October 2013

migrant workers in search of a living wage. Since then, Chinese pedestrians have become accustomed to the sight of hakwers hurriedly packing up their wares and fleeing, often pursued by several officers in uniform, or a chengguan patrol car. “They can pack up their stalls in a flash – they vanish into thin air before you even realize something’s up. Sometimes they’re even spooked by the sound of a car horn,” said Chen Jing, a frequent visitor to Beijing’s

night-markets, crowded collections of stalls where unlicensed salespeople can sometimes hide in plain sight. “What we fear most is that they’ll confiscate our goods and the tools of our trade [often a bicycle, tricycle or wheelbarrow], since that’s all we have,” Gao Fengxia, a hawker in Beijing, told NewsChina. This is why, when caught, most peddlers will fight tooth-and-nail to protect their property. Huang Xixi, the watermelon seller,

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Photo by CFP

cover story

Deng Zhengjia,a watermelon hawker in Linwu County, Hunan Province, is killed after being struck in the head by a chengguan, July 17, 2013

grabbed the side-view mirror of the chengguan van in an unsuccessful attempt to prevent officers from confiscating her watermelons. In most disputes, the chengguan win. Numerous photos and reports have shown helpless hawkers crying over wheelbarrows and stalls that have been destroyed by chengguan, leading the public to accuse chengguan of being bullies, bandits and robbers. The public’s antipathy toward chengguan, largely born out of the lack of accountability they enjoy, has led China’s netizens to joke about the force’s apparently limitless power. “Give me a team of chengguan, I would

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retake Taiwan overnight. Give me a whole troop, and I could conquer the world,” goes a popular maxim.

Cat and Mouse

But while the public generally associates the chengguan with an image of boundless power and violence, this is untrue of the majority of officers, according to Yang Mo (pseudonym), a former Beijing chengguan who served for around three years. According to Yang Mo, due process requires chengguan to persuade or warn peddlers before confiscating anything, but such

warnings normally fall on deaf ears. “We are allowed neither to detain them nor check their ID cards for their real names and addresses, so confiscation is our only method of punishment,” he said. “[Confiscated goods] are like collateral for the fines we impose. We will return the goods when the fines are paid.” However, Yang said that few hawkers ever pay their fines or reclaim their goods, often leaving chengguan storehouses packed with all manner of seized items, varying from fruit and vegetables, to toys, to other mundane intems. “We have to dispose of things regularly, since some of them rot with the passage of time,” he said. “The punishments for violating [sales licensing regulations] are really very light,” he added. Hawker Gao Fengxia did not agree. “The fines are more expensive than the goods,” she argued. “If my cabbages are confiscated, I lose a whole day’s income.” A vegetable vendor from a village in neighboring Hebei Province who has kept a stall in downtown Beijing for five years, Gao is experienced in packing up her entire operation in an instant should the chengguan appear, and she tends to avoid selling during times of day when they are most likely to be on patrol. “At worst, I reopen the stall after they leave, or just move somewhere else,” she told NewsChina. “I don’t want to have to fight this ‘guerilla war,’ but it’s my only source of livelihood,” she said. Gao Fengxia is just one of dozens of migrant workers who have opened stalls in and around Yuejiyuan Community, an old resiNEWSCHINA I October 2013


Photo by CFP

The chengguan team of Haidian District, Beijing, mourn for their teamleader Li Zhiqiang, who was killed by a hawker, August 13, 2006

As China sees a rising rate of urbanization, the chengguan’s range of responsibilites, though differing between regions, is expanding. In addition to dealing with unlicensed hawkers, they also inspect unlicensed construction, illegal advertisements, and unlicensed pets. In some regions, they are even responsible for demolition. “Any department is entitled to throw their toughest problems to us, especially those likely to trigger fierce social conflict,” said Zhou Yaying, director of the local chengguan bureau of Guangxi Zhuang Autonomous Region, in his book I Am a Chengguan. China has no national law that clearly defines the chengguan’s remit, causing intensifying public debate over the legality of their power. The public’s interest in the case became particularly intense in 2009 when Zhao Yang, a chengguan officer in Nanjing, capital of Jiangsu Province, took to the InterNEWSCHINA I October 2013

A chengguan patrol car in Kunming, Yunnan Province, is vandalized by hawkers, July 15, 2013

Photo by CFP

Violence vs. Violence

Photo by CFP

dential compound located on the north side of Beijing’s busy third ring road. In his days as a chengguan officer, these streets and compounds were Yang Mo’s beat. Besides routine inspections, Yang’s team often worked overtime, including in the evenings, whenever a member of the public made an official complaint. Complaints were typically about the noise made by hawkers, the traffic congestion caused by their stalls, or the litter they had discarded. “We had to respond quickly to any complaint, or we would be criticized by the public,” said Yang Mo.

A group of over 20 Wuhan chengguan stares down hawkers, September 19, 2012

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cover story

net to expose an “insider training” book that taught chengguan “how to beat up peddlers without leaving bruises.” Although the local government tried to ease the controversy by claiming that the book had never been distributed to frontline chengguan, many were deeply outraged by the implicit approval of the use of violence. “I have never seen such a book,” said Yang Mo. According to Yang, by the time he became a chengguan in 2008, the authorities in the capital had begun referring to officers as “public servants,” a title generally reserved for government workers with a university degree. “We were instructed to refrain from beating or abusing hawkers, even if they attack us first,” he said. However, he also admitted that not all chengguan possessed the patience to deal with the challenge of real conflict with hawkers, particularly since many chengguan officers are technically “temporary employees” (see: “The Expendables,” NewsChina August 2013, Vol. 061). A recent online video showed Zheng Yuanyuan, a plainclothes “temporary” chengguan officer in Yan’an, Shaanxi Province, kicking a bicycle seller who her colleagues had already beaten to the ground. Moments later, her colleague delivers a flying double-footed stomp to the bicycle seller’s head. “[The shop owner] verbally abused me once I got out of my car, and I could not control my temper. Why must we keep silent in the face of abuse or even [the threat of] stabbing?” said Zheng, in an interview with State broadcaster CCTV.

18

“It seems to have formed a vicious circle whereby violent conflicts between chengguan and peddlers have pushed the government to bolster the chengguan. The group’s ballooning numbers have resulted in poor supervision, further intensifying peddlers’ resistance against chengguan,” read a CCTV report. “Many peddlers make desperate attempts to save items that are to be seized,” said Sun Yi (pseudonym), a temporary chengguan in Hangzhou, capital of Zhejiang Province. “I once encountered a peddler who cut his own finger and wiped the blood on his face, then lay on the ground shouting that we’d beaten him.” In 2006, Beijing chengguan Li Zhiqiang lost his life when peddler Cui Yingjie stabbed him in the neck with a steel knife. Three years later, Shen Kai and Zhang Xudong, chengguan officers in the northeastern Chinese city of Shenyang, suffered the same fate. “Chengguan are actually vulnerable to violence from hawkers. I was abused by hawkers nearly every day, and would sometimes receive light injuries,” said Yang Mo. “Personal safety is one of the biggest worries in our work,” he added.

Who’d be a Chengguan?

However, peddlers are at an obvious disadvantage compared to the chengguan, and the public tends to side with the weaker party. Cui Yingjie, the peddler who killed Li Zhiqiang, for example, attracted great public sympathy by arguing in court that his stabbing was a last-gasp attempt to stop the chengguan from confiscating the tricycles he had

bought just one day earlier. “Why don’t the chengguan find a milder way of enforcing laws? If chengguan let them go with dignity, hawkers won’t be forced to go to extremes,” said movie star Yao Chen in a post on Sina Weibo, China’s Twitter equivalent, where she has the country’s most followed account. With their public image deteriorating rapidly, chengguan bureaus in some regions have tried to change their modus operandi. Chengguan in Wuhan, capital of Hubei Province, sent flowers to those who followed the rules, while another Wuhan chengguan troop once surrounded a group peddlers and faced them down wordlessly. A chengguan officer in Jinan, Shandong Province, went as far as to kneel before a hawker, refusing to stand up until the latter agreed to leave. Such efforts, however, have ultimately failed to stem the violence, just as the Linwu chengguan’s move to designate a shed for watermelon vendors did not stop them from beating Deng Zhengjia to death. “Such soft-touch methods are not a permanent cure [for conflict], since hawkers cannot, and will not, give up their livelihoods. Meanwhile, we also have our responsibilities to fulfill,” said Yang Mo. Two years ago, the chengguan bureau in charge of Yuejiyuan Community, where Gao Fengxia kept her stall, tried to tidy up the street by moving hawkers to an emptied basement. However, few were willing to move. “I cannot afford the management fee, and the basement is not as open to customers as the busy streets,” she told NewsChina. NEWSCHINA I October 2013


Photo by Wu Fang

50-year-old Mrs Zhang, from Hefei, Anhui Province, makes her living peddling vegetables

Now, the community has become one of the most popular residential compounds for unlicensed vendors, who crowd the sidewalks with small shops or stalls. “[The chengguan] once dismantled all the unlicensed structures, but we rebuilt them after the crackdown,” a peddler surnamed Wei told NewsChina. “We have actually got tacit approval from the compound’s building management committee, and the chengguan will turn a blind eye as long as nobody brings complaints.” According to Yang Mo, the numerous countermeasures that peddlers employ are making chengguan’s work increasingly difficult. “They even station sentries to guard NEWSCHINA I October 2013

against us,” he said. Even Zhao Yang, the chengguan officer who is relatively critical of his own profession, told the media that sometimes “a strong hand” was necessary to get the job done. During the interview, Yang Mo repeatedly argued that the chengguan would do a better job if their powers were increased, a belief popular among chengguan but strongly unpopular with the public. In 2010, the Beijing government appointed a police officer as the head of the local chengguan bureau, provoking widespread complaints that the move was an attempt to facilitate the use of violence by making the chengguan into

a parallel police force, answerable to no-one but themselves. In 2009, rumor was rife that the Beijing chengguan were likely to be disbanded, since the organization was noticeably absent from the first round of major government restructuring that took place earlier that year. Yang Mo eventually chose to quit his job as a chengguan in 2011. He told NewsChina that a major reason behind his resignation was the huge emotional pressure that came with the job. “Nobody outside the chengguan would understand us – even my family members were ashamed to tell people that I was a chengguan,” he said.

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cover story

Urban Management Officers

Mean Streets

The chengguan system has become the most visible symptom of a deep-rooted problem in China’s cities By Yuan Ye

E

very time urban management officers (chengguan) end up in the news, Chinese people fear the worst. This summer, scandals and violent clashes involving chengguan have occurred with unprecedented frequency. The rapid growth of the Internet has served to make chengguan a target of abuse, both online and on the streets. Perhaps the most visible example of unchecked government power, the chengguan tend to provoke vicious public criticism. Yet chengguan, often uneducated and with fragile job security, tend to deal with trivial matters, carrying out arguably the most tedious of all government jobs. The majority of entry-level chengguan are not contracted civil servants, but “temporary employees,” who earn a pittance and can be fired at any time. When enforcing regulations, chengguan often encounter violent resistance, and

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have no legally sanctioned means of protecting themselves. The legality of the chengguan has been in question for many years, yet rapid urbanization has forced China’s authorities to allow chengguan power to expand significantly – officers now carry out a wide range of responsibilities. Their power is granted by local governments, meaning they are largely subject to local government interests, and the social conflicts they cause present a serious challenge to urban management in today’s China.

Comprehensive Enforcement

In May 1997, China’s first urban management unit was established in Beijing’s Xuanwu Disctrict. As China’s reforms carried on into the late 1990s, Chinese society moved into a phase of accelerated urbanization. The household registration (hukou) sys-

tem was relaxed, and a great number of rural people flooded into the cities. In the meantime, State-owned enterprises were being reformed, and their workers were laid off in droves. Numbers of urban poor grew rapidly. Social safety nets were far from well established, but large number of grassroots people found opportunity in China’s rapidly growing markets, and many chose to become street hawkers. Official data show that in 1996 alone, there were more than 1,000 street markets in Beijing. The sudden growth in numbers of nomadic street vendors began to cause worry among China’s city managers. Dealing with the problem was technically the responsibility of multiple separate administrative departments, including those of industry and commerce, health, transportation, and the police. Law enforcement had to be coordinated between these departments, but this was grossly NEWSCHINA I October 2013


Photo by CFP

Over 140 chengguan from Henan Province undergo drills, August 24, 2012

mismanaged. Departments often meted out multiple punishments for the same offence, or shirked responsibility altogether. The Xuanwu chengguan unit, the first of its kind, was intended to be a concentrated group of law enforcement personnel, but the only concrete legal justification for the unit’s existence is from the Law on Administrative Punishments promulgated in 1996, which allows the State Council (or local governments authorized by the State Council) to designate an administrative organ to mete out punishments on the authority of other administrative organs. As Xuanwu’s chengguan assumed the power to penalize street vendors, other cities around the country soon adopted the model and set up their own urban management departments. The trend caught on, and the country saw a boom in chengguan bureaus nationwide. NEWSCHINA I October 2013

City Blueprints

“The chengguan are a product of urbanization,” said Professor Guo Weiqing of the Administrative Management Research Center at Guangzhou’s Sun Yat-Sen University. Statistics show that the urbanization rate increased from 30.5 percent in 1996 to 51.3 percent in 2011, and that there are now about 650 cities and nearly 3,000 urban counties in China. “In areas such as the Yangtze and Pearl River deltas, huge numbers of rural laborers have migrated to cities,” said Guo. In Guo’s opinion, rural labor forces have created prosperity in cities, but have also made urban management more difficult. City management officials are under pressure to appear modern, and the chengguan serve a visible, expedient purpose. “The main responsibilities of chengguan include the enforcement of sanitation laws, parking inspection, and meting out punish-

ments for uncertified construction and illegal use of public areas,” said Professor Yuan Defeng of the School of Humanities at the Beijing Institute of Petrochemical Technology. “However, there are frequent conflicts during enforcement, and chengguan are failing to leave the public with a good impression.” According to a survey of over 10,000 people conducted by the Social Investigation Center of the China Youth Daily newspaper, 40.7 percent responded that chengguan were “bad” and “a symbol of violent law enforcement,” while only 25.7 percent said that chengguan were “OK.” The urban management system also threatens the livelihoods of those who survive by hawking goods in the street. The chengguan’s attempts to shoo away hawkers spark frequent clashes, but China’s city streets have proven to be a lucrative marketplace for lowcost goods.

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cover story

Therefore, planners resort to this method under all circumstances.”

City Housekeepers

Photo by Wu Fang

In the early 2000s, urbanization in China sped up once again, and city management inspectors were endowed with greater responsibilities, including clearing away street vendors, management of public advertisement boards, and reporting illegal construction. Urban management has become a broad enterprise. The number of officers on the books has also mushroomed. This June, after a scandal caused by leaked video footage of chengguan in Yan’an, Shaanxi Province stamping on the head of a street vendor, it came to light that the Yan’an Urban Management Department was Urbanization and the growing income gap has left increasing housed in a building over 30 numbers of street hawkers fearful of persecution stories high. Official data show that this city of two million “After establishing the city management people employs no fewer than 3,200 chengsystem, city governors focused on clearing guan officers. Since the chengguan system was estabout and controlling vendors. They did not consider how to absorb newcomers into the lished, the power wielded by its officers has city,” said Guo. “When this group of new- been insufficiently supervised. While legiscomers reaches a certain threshold, it takes lation dealing with urban management has more than a simple clearout to deal with been in the pipeline for many years, it has stalled for the past few. There is currently no them.” Guo believed the problem can be traced law that defines the legal status of the chengback to the “urbanization blueprint” fol- guan, nor one that sets their code of conduct. lowed by many city planners. This local characteristic has further compli“The philosophy of city planners is too ide- cated the framework of urban management alistic. All they want is a clean and tidy city and the supervision of departments that carry that excludes outsiders. They are either influ- it out. For example, there are at least four difenced by systems of the planned economy ferent names referring to urban management era, or by impressions gleaned from short- departments in different cities. Luo Yameng, term visits to Western cities,” said Guo. “Also, director of the China City International Ashighly concentrated power is more effective sociation, an independent urban planning when managing changing social conditions research center, pointed out that the chaos in and an increasingly mobile population. China’s urban management system is mainly

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caused by the lack of coordination between departments across the country. “There are not even national regulations for the uniforms chengguan wear,” he said. As a comprehensive urban regulation enforcement body acting under local governments, city management inspectors are unaccountable to any legal or administrative bodies.

Carrot, Not Stick

Experts believe that due to the expediency that the chengguan system provides, the authorities have been keen to delay the clarification of its legal foundations, employment practice, pay conditions and code of conduct. “Currently, there is no specific law or regulation for monitoring the conduct of chengguan,” says lawyer Du Liyuan of Beijing Dacheng Law Offices. He said that chengguan can only carry out their enforcement activities by “borrowing” laws – while they freely impose administrative penalties, they themselves are not recognized by administrative laws. “Chengguan play a fundamental role in managing cities, but the institution is a double embarrassment because it lacks both morality and legal status,” added Du. The lack of laws and regulations means that in every conflict between chengguan and street hawkers, both sides follow their own rules. Inspectors need to justify their own existence by enforcing regulations, and hawkers are confrontational because they need to survive. “From the perspective of fairness, everyone has the right to live in cities,” said Professor Guo Weiqing from Sun Yat-sen University. “In fact, the law does not prohibit street vending.” Guo believes that the city belongs to whoever lives in it. Therefore, city management must be fair, and fairness requires broad public participation. “During the rapid urbanization of Chinese society, city planners have not left sufficient room for street vendors, who are now fighting for their survival,” said Li Wei, director of the Social Development Office at the Chinese Academy of Social Sciences. NEWSCHINA I October 2013


What are chengguan responsible for?

Chengguan Demographics Chengguan bureaus currently work under local governments Early on, the majority of chengguan officers were transferred from other government organs, including:

over 300 separate tasks

Li believes that even though there is clear demand for a street vending economy in cities, buyers are also concerned about food security, environmental pollution, and the impact on public transportation. “Public order is also indispensable,” said Guo. He suggests that the function of city management should shift toward providing services to vendors, and that the government should recognize the legality of street vending, then manage it appropriately. In recent years, some city management officials have realized that allowing chengguan to rule the streets with an iron fist not only harms street vendors, but also inconveniences local residents. Some cities have loosened their measures on vendors, and have issued regulations allowing them to sell in certain areas and times of day. “In essence, urban management is a process whereby the public transfers their right of management to professional departments and personnel. Therefore, the interests of the manager and the managed fundamentally converge,” says Professor Yuan Defeng of the Beijing Institute of Petrochemical Technology. “To improve the current city management system, officials must find a way to trim down their management.” NEWSCHINA I October 2013

Beijing Chengguan

Guangzhou Chengguan

Urban Construction

Industry and Commerce

Shanghai Chengguan Environmental Protection

167 tasks

Demobilized soldiers

232 tasks

ess Cleanlin

d Unlicenseion construct

cupancy Illegal ocand of roads streets

d sales Unlicense nesses and busi rvices Public se

ainteUrban m nance

Other industries

Graduates

After posts in China’s law enforcement departments were available through the national civil service exam 2006, the chengguan began to recruit university graduates

Later, de-mobbed soldiers started to join

General Responsibilities:

The chengguan started recruiting workers from other trades

Chengguan departments have employment quotas. Take Beijing for example: In 2011, Beijing was home to over 7,000 officially employed chengguan, roughly equivalent to the number of traffic police

pply Water su ndUrban la scaping

Parking ion sites Construct

kes Urban la

ental Environmn protectio

s and river

In 2011, chengguan accounted for

0.0347% of the capital’s total population of 20.186 million

More specifically: Overloading of construction vehicles Unlicensed taxis Littering

Improper signage

Unlicensed tour guides

Sale of pirated CDs and DVDs on the street Noise complaints Unlicensed construction

However, the chengguan still claim to be lacking manpower, and Beijing employs a further 6,500 “temporary” chengguan

Hawkers blocking the street

Fouling

Violent incidents involving chengguan are often blamed on these “temporary” officers, who work alongside their officially employed colleagues.

…and any other work mandated by superiors, such as forced demolition.

Source: www.sina.com.cn

Source: www.sina.com.cn

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society

Filial Piety Law

Photo by CFP

Who Cares?

A new law decrees that all Chinese citizens are now obliged to visit their parents regularly. Is forcing filial piety on the public the best way to stamp out neglect? By Li Jia

A

presenter on a popular Beijing TV gourmet program wasted no time in jeering at China’s newest law for commercial gain. “Hey, you’re breaking the law if you don’t visit your parents often enough. So why not enjoy a dinner with them at one of the wonderful restaurants we recommend?” Taobao, China’s wildly popular eBay equivalent, soon followed suit. “Honey, it’s your legal responsibility to visit your parents or contact them. Too busy? We can do that for you,” ran one ad for “filial child surrogates.” While locals may be turning a blind eye to such advertising gimmicks, they may struggle to sidestep the law. On July 1, the revised law on protecting the rights and interests of the elderly took effect. Adult children living apart from their retired parents are required by law to visit or greet their parents “often.” On the same day, in Wuxi, Jiangsu Province, a court ordered a middle-aged couple to visit the wife’s mother once every two months, plus an annual minimum of three visits on public holidays. If they failed to comply with the ruling, the couple were told, they would be fined or detained. Several similar verdicts have been issued by courts around China, which has the country’s legion of overstretched single children worried. While few parents would be likely to take their child to court, this

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new law is a somewhat unusual attempt to redress a growing social problem – namely, the neglect of vulnerable, elderly people by their families. As China’s social safety net is at its thinnest after retirement, the government hopes to further defer responsibility for its oldest citizens to their families, a state of affairs which, in traditional Confucian culture, makes perfect sense.

Filial Duty

Filial piety is one of the cardinal Confucian virtues, and for millennia the elderly have been afforded a huge level of respect and veneration in Chinese society. Confucius himself urged people to “never travel afar when your parents are alive,” a proclamation which jarred somewhat with the Great Sage’s own well-documented wanderlust. With the advent of Communism, however, family ties were given secondary importance to class consciousness, and it was routine for children to denounce their parents and other relatives as counterrevolutionaries during the Cultural Revolution (1966-1976). Since Reform and Opening-up began in the 1980s, rather than staying home to care for one’s parents, children were exhorted to find lucrative work to support their families financially, leading many to abandon their ancestral villages for the booming cities, leaving entire households beNEWSCHINA I October 2013


hind in the process. Despite this, a strong philosophical bent has endured in Chinese culture which automatically affords respect and veneration to one’s elders. Professor Xiao Jinming from Shandong University, one of the drafters of the law, explained to our reporter that “legislators believe that moral obligations should receive strong enough legal emphasis to help preserve the tradition of filial piety in Chinese society, which is being eroded by the unprecedented economic and cultural transformation taking place today.” This is why a widely-broadcast pop song called Go Home and See Your Parents Often, released in 1999, has been so popular that even the newly-revised filial piety law has been named after it.

Pressure

A combination of an improved standard of living and the One Child Policy has meant that one out of every six Chinese citizens are over the age of 60, nearly half of these living alone according to a survey released in July by the Office of the China National Committee on Aging. Many elderly people, cut off from their families, succumb to mental and emotional distress, according to Gao Xin, a judge in Wuxi who has more than 10 years of experience in dealing with domestic disputes between seniors and their children. He told our reporter that aged parents often lose contact with their children following domestic disputes. He believes this new law means that these parents can forcibly reestablish contact with their offspring. The new law has divided the public, with many criticizing the judiciary’s attempt to interfere in what many acknowledge is a moral and ethical issue. Predictably, the older generation are reported to be broadly supportive of the legislation, while young people tend to oppose it. Mrs Liu, a 47 year-old staff member in a supermarket in Beijing, agrees that society’s morals are loosening, and approves of punishment for those who neglect their parents. However, she is unconvinced by the vague wording of the law. “How ‘often’ should visits or contact be made?” she asked our reporter. “What if those [children] spend just one minute complaining to their parents when they are forced to visit or call?” Others simply dismiss the law as a triviality which distracts the public from far more worrisome problems. Mr Li, a senior mechanical engineer in his late 50s, told our reporter he was “disappointed by the use of legal resources on such things, which are much less serious than food safety.” Gao, the judge, told our reporter that most adults who have mistreated their parents are aware of their actions, but simply do not care because nothing could be done with them. He claims that many changed their attitudes after being told possible legal consequences. This has led him to support the law as effective. “The wellbeing of your parents is part of your own interest, not something to be compromised for the sake of your interest,” Gao told our reporter. Indeed, judges have been offered considerable discretionary powers NEWSCHINA I October 2013

when it comes to the application of the new filial piety law, determining the necessary frequency and form of contact between parents and offspring. In practice, they need to take into consideration the relative distance between the two parties and their personalities. “Even in the worst case scenario in which the ruling is not implemented, the elderly feel more relieved than otherwise, because finally justice is done and their dignity is safeguarded by this last resort – the law,” said Li Dongfang, head of a Shanghai law firm which has provided free legal consultancy for elderly people for a decade.

Forced to be Filial

Many people complain that they do not neglect their parents out of choice, but merely out of necessity. A report by UBS revealed that it took a worker in Beijing 36 minutes to earn the money for a Big Mac in 2012, compared with the 28-minute global average. This index does not take into account the quantities of overtime most Chinese employees are compelled to take on, whether to fulfill quotas, secure contracts or cultivate relationships with business associates – a practice almost as old in China as that of caring for one’s parents. This is why many have decried the law as an attempt to shift blame for the state of China’s senior care infrastructure directly onto private citizens. While insisting that happiness in family life can only be provided by family members themselves, Professor Xiao also stressed that public policies are necessary if laws such as the filial piety law are to be effective. A better social security net, for example, could reduce a family’s financial burden and make it possible for adult kids to pay more attention to their parents. There are some nods to such policies within the text of the law, which also requires that employers guarantee vacation time for employees wishing to visit their parents – but with the caveat that such vacations be guaranteed “according to relevant rules.” This has reminded China of a decades-old but effectively dormant home-leave rule which gives paid days off to public employees to visit parents or spouses living in other cities. There are calls to revive this rule and extend it to the private sector. Since 2008, all employees in private or public entities are entitled under the labor law to annual paid leave, however, few make use of their entitlement outside of national holidays as they are concerned that taking additional vacations will threaten their career prospects. Xiao disclosed that a policy was being worked out to give financial aid to people to purchase property in their home towns in order to live close to their parents. However, even with subsidies in place, few city workers would willingly return to low-paid, dead-end jobs in their home towns simply in exchange for cheaper housing. “If the income gaps weren’t so vast, who would leave their home towns?” remarked Mr Peng, an Anhui native who runs a newsstand in Beijing. Until the imbalance between where most Chinese people have come from and where they are now is redressed, the government may be able to force people to visit their parents more often, but it is beyond even the power of a court order to force families to be happy. A popular post currently circulating on the Internet lists 10 icy exchanges described as “things that hurt parents the most.” One of them is: “What’s up, mom? Nothing? Then I’m hanging up.” 

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society

Airport Blast

Last Resort A recent airport bombing staged by a disabled man marks an alarming new trend among the country’s sizeable population of disgruntled petitioners

Photo by cfp

By Yu Xiaodong

Ji Zhongxing’s wheelchair in his home in Heze, Shandong Province, July 21

W

hen wheelchair-bound Ji Zhongxing entered the international arrivals hall at Beijing Capital International Airport on July 20, no-one batted an eyelid. Ji began handing out flyers to the passers-by, but save for a security guard who tried to shoo him away, few took any interest. Moments later, with a commotion, a sudden boom and a flash of light, Ji detonated a homemade bomb, injuring the security guard and himself. News of a blast at Asia’s busiest airport immediately went viral online, accompanied by eyewitness photos of a man in a wheelchair holding aloft a flaming explosive device. But instead of drawing condemnation, Ji’s act of desperation provoked an outpouring of sympathy from the public.

‘Wronged’

On Ji’s blog, uncovered by Internet users shortly after the explosion, Ji detailed eight years of abuse and indifference from the authorities. He claimed that in 2005, when he was 25, he had been beaten with metal pipes by a gang of security guards while working as an unlicensed motorcycle taxi driver in Dongguan, Guangdong Province. Crippled by the attack, which

26

Ji claims was unprovoked, he has been confined to a wheelchair ever since. In the following years, Ji Zhongxing had embarked on an endless and seemingly futile campaign to petition the authorities, begging for justice. The local law enforcement departments insisted that Ji injured himself falling over, and in 2007 and 2008, both the local court and the Guangdong provincial court ruled against his claims, arguing that there was no evidence to prove his injury was caused by the security guards. Since then, Ji has repeatedly resorted to petitioning to the central authorities, in an effort to have his grievances redressed. During the Beijing Olympics in 2008, Ji was put under temporary house arrest by Dongguan authorities to prevent him from going to Beijing. Ji was not deterred – he continued to petition to various authorities, but still to no avail. With his persistent efforts, officials from the police department of Dongguan came to visit Ji at his home in 2009. Offering him 100,000 yuan (US$16,200) in “humanitarian aid,” the officials requested that he stop petitioning, or he would face “swift law enforcement action,” Ji Zhongji, Ji Zhongxing’s brother, told the media. Subsequently, Ji reportedly tried to make the

best of his desperate situation. But with no income except for a monthly welfare allowance of 140 yuan (US$23) provided by the government in his hometown of Heze, Shandong Province, Ji found himself in dire straits. Moreover, years of confinement to his shabby home with no external support except the comfort offered by his elderly father, Ji sank into desperation. He was now at the end of his rope. “I look up to the sky, the sky looks away; I call to the earth, the earth does not answer,” Ji wrote in a final blog post before embarking on his journey which would end at the Beijing airport.

Sympathies

Public sympathy for Ji, especially online, has been overwhelming. In an online survey of 50,000 Internet users, conducted by online portal qq.com, 96 percent of respondents answered that they sympathized with Ji. “Ji has given the legal system multiple chances to correct its wrongdoings, but they did not take them,” Xiang Renli, a well-known writer, commented on Weibo. “The legal system gave Ji no chance at all.” This sentiment was echoed by popular TV host Yang Jinlin. “You can’t attract the attention of someone pretending to be asleep by speaking NEWSCHINA I October 2013


NEWSCHINA I October 2013

Photo by Xinhua

Photo by Xinhua

to them, but you can sure wake him up if you shake him,” said Yang in a post on Sina Weibo, China’s Twitter equivalent. Even State media outlets such as the nationalist Global Times published sympathetic editorials. Local officials in Ji’s hometown also backed Ji’s claims, blaming the Dongguan authorities for their “inaction” that caused the tragedy. In the past few years, China has seen a spate of high-profile suicide bombings and murders carried out by disenchanted petitioners. In Fuzhou, Jiangxi Province in 2011, explosions in three government buildings killed three people, including bomber Qian Mingqi. It was later revealed that Qian had spent a decade petitioning the authorities to redress his grievances after his land was forcefully appropriated without compensation. Qian’s efforts had also been fruitless. In June 2013, a man named Chen Shuizong set a bus on fire in the prosperous port city of Xiamen, Fujian Province, killing 47 people including himself. It is reported that Chen had pleaded unsuccessfully with local officials for entitlement to social security payments. Some even compare Ji’s plight to the famous case of Yang Jia, who killed six police officers and injured several others in Shanghai in 2008. Yang claimed that his genitals had been seriously damaged when he was beaten up by police, and his complaints to local authorities had gone unanswered. Yang was swiftly convicted and executed. It was reported that Yang’s last words before carrying out the murders was: “If you don’t give me an explanation, I will give you mine.” But none of these disgruntled outcasts won as many hearts as Ji did, perhaps due to the heavy death tolls left in their wake. To a large extent, public sympathy for Ji was due to the fact that he had no intention to hurt any innocent people. According to eyewitnesses, Ji repeatedly warned bystanders to stay away from him before he detonated his bomb, which Ji’s lawyer has said was made with gunpowder taken from fireworks. So far, no details have been released concerning the condition of the security guard, who is believed to have sustained light injuries. The show of sympathy has put the authorities in a difficult position. On the one hand, the government needs to address Ji’s grievances to appease the public – on July 21, the Guangdong authorities announced that they would

Ji Zhongxing prepares to set off a bomb at Beijing Capital International Airport, July 2013

The scene shortly after the bombing

reopen his case. But on the other, the government needs to take legal action against Ji because of the bombing, in order to send a clear message that it won’t tolerate what some have called “terrorist” tactics. On the day following the airport blast, the Beijing Public Security Bureau announced on its official Weibo account that it had detained a 39-year-old man who called the police later on the night of Ji’s protest, and threatened to bomb the airport because of a land dispute. On the same night, another 31-year-old man was arrested for threatening to bomb a commercial complex. The next day on July 21, 30-year-old Wu Hongfei, a well-known Beijing-based singer, was taken into police custody for 10 days after she said on her microblog that she wanted to bomb the Beijing Construction Commission. On July 29, Ji, who has since undergone surgery to amputate his left hand, was officially charged with the criminal use of explosives. Following the incident, Beijing and other major cities have now mandated that anyone who buys gasoline without a vehicle is required to present their identity card. But few believe these measures are enough to prevent similar attacks from happening in the absence of the reform of China’s often ineffective legal system.

more difficult,” He said on his Weibo. In recent years, China’s legal system has repeatedly failed to help address petitioners’ grievances, which are often linked to land requisition, forced demolition and, in Ji’s case, brutality. In other words, the legal system has fostered a large disgruntled petitioner population. Unable to have their grievances redressed at the local level, the petitioners usually try to bring their cases to Beijing, but are often “intercepted” by personnel dispatched by their local governments. Many are thrown into illegal temporary holding cells, commonly known as “black jails,” before being forcefully sent back home. Even if their cases reach the relevant central authorities, the petitioners themselves are usually returned to the custody of their local authorities. As petitioning the central authorities has proven to be an equally ineffective method of achieving justice, petitioners are now appealing directly to the public and the media, often through violence or extreme action. Ji, for example, told his lawyer that the purpose of his stunt was to draw attention to his case. He got what he wanted, this time at least. In a commentary published in the Stateowned Xinhua Daily Telegraph, Judge Shu Rui warns that the public’s complete lack of confidence in the country’s legal system has led to what he calls the rise of “a new type of terrorism” that the existing legal system is unable to deal with. “No severe punishment can deter someone who has no faith that justice will be served to them,” Shu warned. “Without this faith, every person wronged becomes a ticking time bomb.”

New Tactics

He Bing, a lawyer and law professor, warned that Ji’s case may indicate a shift in the preference and mentality of the country’s petitioners. “Instead of ‘besieging’ the central authorities with complaints, petitioners will probably adopt ‘guerrilla-style’ tactics, making the difficult task of maintaining social stability all the

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society

Wang Lin

The Guru

Wang Lin, a well-connected mystic who made a career out of convincing China’s elite of his supernatural powers, recently fled to Hong Kong to avoid investigation. How did he fool so many people for so long?

Photo by CFP

By Wang Yan

Wang Lin at his residence in Hong Kong, July 30, 2013

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NEWSCHINA I October 2013


Downfall

In mid-July, the Chinese Internet was awash with photos of Wang and his numerous celebrity clients and admirers, including the late Indonesian President Haji Mohammad Suharto. Wang’s guru status in elite circles, combined with his supposed abilities, were more than enough to arouse the curiosity of China’s cynical netizens. After the photos of his high-profile meetings with celebrities dragged Wang into the limelight, Sima Nan, a Beijing-based media commentator noted for his exposure of pseudo-science and fraud, accused Wang of being a swindler, and challenged the authenticity of his feats. Sima sent an invitation to Wang, asking him to come to Beijing to demonstrate his qigong. In response, Wang Lin cursed Sima Nan, and threatened to use his telekinetic powers to “impale” him. More and more public figures, particularly government officials, were found to have close links with Wang. The media began to probe into the secrets behind Wang’s qigong.

NEWSCHINA I October 2013

Zou Yong, a former qigong student of Wang Lin’s, revealed to the media that since 2008, being Wang’s disciple had cost him tens of millions of yuan (millions of US dollars) in cash, presents and property. For many years, using his unverifiable “powers” as bait, Wang Lin set about weaving a complex net of connections, and succeeded in attracting a large following of famous, rich and powerful Chinese people. In mid-July, the Beijing News newspaper accused Wang of being a fraud and a usurer, among other allegations. The paper also revealed how he had acted as a matchmaker between rich business people and officials with the power to grant government resources and contracts. After the publication of her expose, the Beijing News reporter received a phone call from Wang, who said that she and her family would “die miserably” as a result of her accusations. Fearing arrest and a potential investigation, Wang fled from the mainland to Hong Kong in late July. “If I go back, I’ll certainly be arrested. I made my money honestly, and never took money from officials or from my patients who came to me for help,” Wang told the New York Times in Hong Kong. July 30, Xue Xiaolin, an official from the National Health and Family Planning Com-

mission, said that the commission would ensure that the relevant government department in Jiangxi Province verified the facts concerning Wang’s alleged “illegal practice of medicine.” Xue said that if wrongdoing was proven, Wang would be dealt with accordingly.

Devotees

According to Zou Yong, the former disciple, Wang Lin’s bank savings could be as high as two to three billion yuan (US$327490m). “Wang’s income comes from various sources, including treating the illnesses of the wealthy, teaching his disciples qigong, and loan sharking. Besides, he also makes money by helping businesspeople win government contracts,” Zou Yong told the media. Zou also added that Wang Lin would never treat patients who had no powerful background or social standing. Normally, patients came to seek treatment on the introduction of a mutual friend, and treatment fees were known to exceed tens of thousands of yuan. A couple of years ago, Wang placed an order for a Rolls-Royce with a price tag of 7.6 million yuan (US$1.2m). Zou claims Wang made a deposit of 200,000 yuan (US$33,000) and asked Zou to pay the remainder, insisting this was “a kind of tuition.”

Photo by IC

I

n its comparatively humble surroundings, the gaudy 7,000 square-meter mansion looks incongruous. It boasts a six-floor main wing guarded by two gilded stone lions who flank the high front gate, which is observed by a battery of surveillance cameras. A golden plaque above the gate proclaims the building “Wang’s Mansion.” Its owner is Wang Lin, a self-proclaimed master of qigong, a traditional Chinese breathing practice traditionally considered to be a form of exercise, alternative medicine, and meditation. The house, in Luxi County, Jiangxi Province, is not Wang’s only property – he owns similar eyesores in various other parts of the country. Over the decades, the esoteric Wang has cultivated a reputation as a qigong master, whose supernatural powers enable him to conjure snakes out of thin air and treat terminal illness with what appear to be little more than hand gestures. His miracles have attracted thousands of visitors, among them disgraced senior officials like former railways minister Liu Zhijun and captains of enterprises like Alibaba Group founder Jack Ma, as well as stars of the entertainment world including Jet Li, Faye Wong and Zhao Wei.

One of Wang Lin’s villas, Yichun, Jiangxi Province

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society

Wang boasts in his autography of healing the supposed terminal lithiasis of late Indonesian president Haji Mohammad Suharto

Wang with Alibaba chairman Jack Ma and renowned actress Zhao Wei shortly before fleeing to Hong Kong

When Zou did as he was told, Wang rewarded him with a book on meditation, and a “meditation cushion”. The master gave the disciple some simple instructions, and told him he would gain supernatural powers with 49 days of hard practice. Zou saw the practice through, but claims that “nothing happened.” It was at this point that Zou began to sense that something was not right – his suspicions were compounded when he discovered, to his dismay, that Wang’s “qigong manual” was a Taoist meditation brochure that sold for 11 yuan (US$1.80). Zou Yong has told the media that Wang Lin was adept at manipulating people’s expectations. “Wang often told his visitors that he could help them to make money, or get promoted up the ladder of officialdom, so they resorted to every means possible to please and accommodate him,” Zou Yong said. “But gradually, I realized he was cheating them. He made use of common people’s awe and respect of gods and supernatural forces. Wang himself therefore became the incarnation of an omnipotent god.”

Susceptibility Problem Wang and Jackie Chan

Wang and Jet Li

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Qigong clubs boomed across China in the 1990s. Most focused on the health benefits of qigong, but some had superstitious overtones. In the past few decades, blind belief in self-styled “masters of supernatural powers” has never disappeared. The most recent example was Li Yi, a Taoist abbot in Chongqing who claimed his impressive displays of “magical powers” warranted a sainthood. He was exposed as a fraud by the State Administration for Religious Affairs (SARA) in 2010, and was ordered to stop recruiting disciples. “Wang Lin is just one more in a long line of charlatans,” Gu Jun, a professor from the sociology department of Shanghai University, told the State-owned Global Times newspaper. Liu Xiangdong, a senior lecturer at the Shanghai Municipal Party School, claimed that the phenomenon that Wang’s close association with government officials has tar-

nished the image of the government. “We cannot ignore the possibility that they worshipped Wang to serve their own interests,” Liu said. Zou Yong has admitted that he himself won a contract for coal supply from China’s Ministry of Railways in 2006 when the now-disgraced Liu Zhijun was in charge. Another major factor contributing to the “Wang Lin phenomenon,” in the opinion of some scholars, is the lack of genuine religious beliefs among average Chinese people. Yu Shicun, a writer in Beijing who has been studying traditional beliefs for many years, told the New York Times that due to the rigidity of Chinese education, many people crave a reliable belief system, and often place their faith in almost any religion. “China has many traditions that appeal to people, but those traditions have become distorted or ruptured by the environment they must survive in,” said Yu. Despite China’s staunchly secular education system, according to a poll on spirituality conducted in 2007 by Horizon Research Consultancy, 85 percent of Chinese adults claimed that they held some form of “religious belief,” or kept to some kind of religious practice, including the pursuit of “supernatural powers” like Wang Lin’s. In Sima Nan’s opinion, the Wang Lin phenomenon reflects the mentality of ordinary Chinese people. “Through Wang Lin, we can see a reflection of ourselves. If we didn’t long for easy gains, immediate success and cherish the illusions to win the whole world without doing anything, how could Wang Lin become such a popular ‘master?’” Sima also believes that a major reason for this is the anxiety that China’s rapid development has caused among its people. “There are many disrupting factors faced by society today, including people’s lack of a feeling of security, soaring prices and difficulty in finding affordable, reliable medical treatment. All these were exploited by Wang Lin, and fed into his carefully designed craft.” NEWSCHINA I October 2013


Silent Execution

Villain Turned Victim The hushed-up execution of disgraced entrepreneur Zeng Chengjie for “fundraising fraud” has aroused considerable public ire due to the political background to the case

Photo by CFP

By Sun Zhe

Zeng Chengjie’s son, Zeng Xian, receives his father’s ashes three days after the execution, which took place without his knowledge, Changsha, Hunan Province, July 15

D

uring a brief honeymoon period in the mid-2000s when his business enjoyed rosy relations with the local government, Zeng Chengjie’s company shared the same floor of an office building with officials in charge of infrastructure. Small wonder, then, that Zeng was offered the contracts to build a public library, a theater and a gymnasium in Jishou, capital of the Xiangxi Tujia and Miao Autonomous Prefecture, Hunan Province. To get funding for these projects, Zeng set about raising funds from local residents, promising unbelievably high returns on any investment. Zeng’s fundraising, which he conducted literally under the noses of local officials, was allowed to continue, despite its technical illegality. Most of Zeng’s investors were trusts holding officials’ savings, and numerous government statements and speeches ensued, extolling

NEWSCHINA I October 2013

the virtues of tapping private capital in order to build local infrastructure. This love-in quickly went sour when Zeng failed to cough up the high returns he had promised. Mass protests by individual investors broke out in 2008, calling for Zeng’s head. In the meantime, this troubled entrepreneur fell out with local authorities over the settlement of his own loans. The government thus confiscated all his assets and, in spite of their previous endorsements, accused him of fundraising fraud, a crime they had only been too happy to turn a blind eye to merely a year before. Zeng was eventually arrested, sentenced to death and was executed by gunshot on July 12. Unfortunately for Zeng’s former partners, his story did not end there.

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society

Despite being the only local businessperson formally charged with fundraising fraud, Zeng’s supporters claim he neither raised the most funds nor was the first entrepreneur in Xiangxi to engage in this commonplace activity. Despite its poverty, Xiangxi and the surrounding area abounds in nonferrous metal resources. Since the 1980s, local mining companies have been raising funds from local residents, offering impressive interest rates into the bargain. A high default rate meant that State banks wouldn’t sign off on loans to Xiangxi businesses, meaning that illegal fundraising quickly became the only fundraising that could conceivably be conducted in the area. When the local government planned to jumpstart the local economy by promoting real estate development in the 2000s, illegal fundraising once again became an attractive source of capital for a government-sponsored construction boom. Xiangxi’s old city was reconstructed and a new economic development zone launched with funds raised outside the approved channels. Once again, nobody raised an objection, so long as everyone was getting rich. Competition between fundraisers for loans and the sheer thirst for money had driven the local interest rate from 25 percent in 2004 to around 60 percent by early 2008, about 10 times the benchmark lending rate set by China’s central bank and exceeding the legal boundaries, being set at four times the benchmark rate. Almost all urban families in the area and two out of three rural households sank money into development projects – even households on welfare, according to a research report by Lu Mingyong, a professor from the local Jishou University. Lu added that most of individual lenders put in their life savings, while others put their homes up as collateral. Some even sold their homes outright, sinking the money into infrastructure projects spearheaded by the local government. With no regulation and no legal protection even when the government attempted to step in to calm down the fundraising frenzy, it was too late. Amid a nationwide campaign to promote social stability ahead of the 2008 Beijing Olympics, the government released an internal order on June 2008 to ban public servants from taking part in fundraising, while fundraisers themselves were told to scale back their interest rates. Sensing a coming crackdown, officials and government departments soon started pulling their money out, along with all existing profits, placing the full burden of responsibility on fundraisers and private investors. Tuanjie newspaper, the mouthpiece of the local government, withdrew 20 million yuan (US$3.3m) after the ban was imposed, according to a report by the China Economic Times. The report disclosed that it was common practice for local government bureaus to apportion their expenses to ordinary staff, who were then in turn allowed to reinvest money in the fundraising and pocket the interest as a bonus.

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Zeng’s “execution by stealth” triggers public indignation and suspicion of the local government

Even local banks got in on these scams. It was estimated that a total of 1 billion yuan (US$163m) was withdrawn almost overnight by government departments and officials after the ban was issued. This set in motion the total collapse of the capital chain. One of the earliest casualties was Zeng Chengjie, who had to force his interest rates through the roof simply to secure the additional capital to keep his business operations afloat. In the three months prior to the complete collapse of the local capital chain in August 2008, the interest rate topped out at 100 percent. By this point, new investors were a lost cause and existing investors could see the writing on the wall.

Crackdown

Most of the lenders that rushed into the frenzy in its last phase were those who had either just sold all their landholdings or those recently laid off by local State-owned companies who had invested their compensation packages. Too poor to get involved in the fundraising during its boom years, these latecomers shouldered all of the risk for none of the potential profits. After Zeng and other investment managers halted payments to NEWSCHINA I October 2013

Photo by IC

Gold Rush


principals in August 2008, anger and desperation soon drove creditors onto the streets. Knowledge of the earlier government pullout that had left them and their fellow investors high and dry only served to exacerbate public anger – most of which was directed at the government officials whose withdrawal from the market had led to its collapse. In the aftermath of these incidents, the government, fearing a coup, denounced all fundraising activities, seizing the assets of all known fundraisers. In a meeting to which 22 major fundraisers, Zeng among them, were summoned in October 2008, police stormed into the room and arrested everyone present, in the process, guaranteeing their debts remained unpaid. For some reason, Zeng’s company was specifically targeted and was sold out from under him without his knowledge. The other 21 detainees enjoyed the luxury of personally settling their debts with government help from jail, but Zeng was already being set up as a scapegoat. Zeng’s assets were confiscated and, even before his trial opened, sold to a State-owned company by the working team dispatched to Jishou City for 330 million yuan (US$54m), less than one-seventh of Zeng’s own assessment which put their value at 2.38 billion yuan (US$388m). Zeng’s lawyer Wang Shaoguang argued that Zeng’s personal assets could easily have covered the debt of 710 million yuan (US$116m) owed to his creditors, however the government’s appraisal estimated Zeng’s assets to be worth 829 million yuan (US$135m). One asset which the government investigation simply refused to acknowledge was 100,000 tons of mineral ore. In addition, Zeng’s considerable real estate holdings were evaluated at cost, rather than market price. Zeng went to trial, during which the government withheld evidence that Wang claimed would have exonerated his client. Two separate trials each sentenced Zeng to death without reprieve. This verdict came in spite of inconsistencies in the prosecution’s case, which gave wildly fluctuating figures for Zeng’s personal wealth and outstanding debts. One court report valued Zeng’s outstanding debts at 1.77 billion yuan (US$289m), only to contradict itself pages later and claim that his debts totaled 1.25 billion yuan (US$204m). Wang claims that both these figures were simply invented by the prosecution, who used shoddy accounting to simplify and accentuate Zeng’s liability. Nevertheless, even an appeal to the Supreme People’s Court resulted in a death sentence for Zeng. The government wasn’t about to let their fall guy go.

Stealthy Execution

Of all the 22 illegal fundraisers jailed in the government sting operation, Zeng alone was sentenced to death, despite the defense claiming he had invested all the funds in government projects, keeping nothing for himself. Of the others, one early-bird fundraiser was sentenced to 10 years

NEWSCHINA I October 2013

in jail. Another, who had raised the most funds in total, received a life sentence, while another who had opened an illegal casino with his illegally-acquired funding received a death sentence with reprieve, typically commuted to life imprisonment in China. A clue to the reason why Zeng was singled out for the most severe punishment may lie in a letter which his lawyer smuggled out of jail in May. According to the letter, once he perceived a crackdown coming, Zeng went over a local government head when determining what would happen to the funds he had raised illegally. While others were happy to accept government control in exchange for lighter punishments, Zeng’s attempt to beat the system got him into hot water with one top local official in particular. Zeng’s claims to lenders, blaming local officials for the collapse of his capital chain, was, according to a report by China Business Journal, the final straw. Zeng had made too many enemies to save himself. With her mother and elder sister also jailed for their involvement in the case, Zeng’s youngest daughter Zeng Shan continued to petition the Supreme People’s Court after her father’s death sentence was upheld in February 2012. She also publicized the case on Twitter equivalent Sina Weibo in the hope of attracting sufficient media attention to save her father’s life. A similar campaign in Zhejiang Province concerning private fundraiser Wu Ying had spurred the Supreme People’s Court to commute Wu’s death sentence, and Zeng Shan hoped the same might happen for her father. On July 12, however, unbeknownst to his family, Zeng was quietly escorted from his prison cell and shot. Only after two days had elapsed did his family receive a letter informing them of his execution. Even if he had been informed of his execution date, Zeng was never afforded the opportunity to speak to his family beforehand. In their attempt to keep Zeng’s case quiet until Zeng himself had been permanently silenced, however, the local government has once again become the target of public fury. Later reports announced that Zeng’s death warrant had been approved by the Supreme People’s Court one month before his execution, but neither he, his family nor his lawyers were informed of the fact, meaning it was impossible for them to appeal. Wang, Zeng’s defense attorney, said that in his two decades of practice as a criminal defense lawyer, he had never known judges from the death sentence review board of the Supreme People’s Court to fail to inform a convict’s lawyers of their client’s death date. Zeng’s lawyers learned of his death the same way his family did – after being instructed to come to collect his ashes. Had Zeng been treated more leniently, the Xiangxi local government and the provincial judicial authorities may have gotten their wish of a swiftly-resolved case. Now, however, they have all but ensured a full-blown scandal, which has cast the harshest of lights upon the subversion of Chinese justice in the interests of political expediency.

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society

Prostitution Scandal

Judges, Johns, and Justice

After losing an expensive lawsuit, a Shanghai businessman has become an overnight celebrity after bringing down the judge he blamed for his losses By Su Xiaoming in Shanghai

Screen shots from the video featuring Zhao Minghua (circled in the first shot) and other judges soliciting sex in early June

N

i Peiguo joked that he could be China’s best “business detective” after disclosing a sex scandal implicating a senior judge who had, according

34

to Ni “exerted unfair influence” in a previous lawsuit against this Shanghai businessman. Ni’s response was to trail the judge for a year until he dug up some dirt.

He could never have imagined the windfall he would ultimately reap with his informal investigation. After trailing Zhao Minghua, deputy chief tribunal judge of the No.1 civil court NEWSCHINA I October 2013


of the Shanghai Higher People’s Court, for over a year, the 55-yearold Ni posted video footage online of Zhao and three of his colleagues with known sex workers at a local resort. All four men were dismissed, with Ni becoming something of a vigilante folk hero in the process.

The Feud

In 2009, Ni lost a contract dispute with a former employee, and was forced to pay 7 million yuan (US$1.1m) in compensation. From the outset, Ni claimed there had been conspiracy between Zhao Minghua, the presiding judge and the plaintiff. As a relative of the plaintiff worked in the Shanghai Higher People’s Court, Ni alleged that pressure had been exerted upon Zhao to rule against him. After selling his house to settle the case, he began to plot his revenge. He first tried to petition the higher judicial authorities in Beijing by submitting paperwork to the Supreme People’s Court demanding a retrial, but received no reply. After spending 300,000 yuan (US$49,020) on six visits to Beijing, he realized that his efforts to obtain justice via official channels were futile. Instead, he shifted his focus to the individuals who he blamed for ruining him. In early 2012, he trailed the former plaintiff in the case back to their hometown. After talking to local residents, Ni discovered that Zhao Minghua was their brother-in-law. He soon found a picture of Zhao online, and began to loiter outside the judge’s office, trailing him from work to his home and, on weekdays, to luxurious dinners paid for by local lawyers hoping to curry favor with the courts.

NEWSCHINA I October 2013

Ni said he was able to identify Zhao’s hosts because he was helped by his friends in the police department who agreed to trace their license plates. At one of the most extravagant dinners, Zhao was lavished with food and drink worth 20,000 yuan (US$$3,270) at an exclusive club. By posing as a fellow diner, Ni managed to snap a photo of the check on his cell phone.

Road to Revenge

Ni went about his mission like a genuine gumshoe. He changed his mode of transportation between four different cars and a motorcycle in order to avoid arousing suspicion. He would sit in his cars for hours, subsisting on bread and water, in order to avoid being seen. Only rarely would he lose his target in a crowd or in traffic, and would simply return home to play poker with friends and resume surveillance the following day. Ni had pledged to devote three years to the scheme. But his first break came after the first twelve months, when he found that the judge seemed to have formed a friendship with a woman, visiting her at home several times a month, for hours at a time. He also found that Zhao owned at least four properties in Shanghai worth far more than his legal income could have paid for. However, Ni still lacked a smoking gun. This duly arrived when he learned that Zhao and a lawyer had summoned some escorts to join them after a banquet. He called the police, but was surprised when Zhao and the lawyer disappeared before officers arrived on the scene. Convinced that someone in the police

bureau had tipped Zhao off, Ni panicked, concerned that Zhao would, knowing he was being watched, refrain from further criminal activities. However, another opportunity presented itself only two months later, when Ni followed Zhao to the popular Hengshan Resort in Shanghai’s Pudong District. Ni used cigarettes to bribe resort security into showing him surveillance footage, claiming he had lost some belongings at the resort. He recorded the footage with a pinhole camera installed in his spectacles. Ni realized he had hit the motherlode – miniskirt-clad young women were entering the judges’ rooms, with one emerging later tucking cash into her brassiere. Ni employed a professional video editor to cut together eight minutes of footage that he eventually posted online early May. After the video went viral online, Zhao handed in the three-hour-long unedited original version to the Party’s discipline inspection commission in Shanghai. Chen Xueming, chief judge of the No.1 civil tribunal of Shanghai Higher People’s Court, and Chen’s deputy Zhao Minghua, were both expelled from the Party and fired from their jobs, as was Ni Zhengwen (no relation to Ni Peiguo), a member of the Court’s own discipline committee. Wang Guojun, deputy chief judge of another tribunal, was placed on a two-year probation. Ni has pledged to seek a retrial for his own 2009 suit, believing that the removal of the man he blamed for his initial losses might guarantee him a fairer hearing. However, as some commentators have pointed out his own investigation has, if anything, proven that corruption goes further in China’s judiciary than a single bad apple. 

35


international

North Korea

The New Normal China’s lukewarm attitude toward the commemoration of the 60th anniversary of the Korean War armistice indicates a subtle but significant policy shift By Xu Fangqing and Yu Xiaodong

O

n July 27, the 60th anniversary of the signing of the Korean Armistice Agreement ending the Korean War in 1953 was marked by grand commemorative ceremonies in both North and South Korea. A memorial ceremony was also held in Washington DC, where President Obama made a highprofile speech honoring veterans of the conflict. China, however, did not officially mark the occasion, despite the People’s Liberation Army’s pivotal role in the war. While China did not intervene in the conflict until October 25, 1950, when the PLA crossed the Yalu River into North Korea, the absence of any official ceremonies, usually an opportunity for the Communist Party of China (CPC) to reassert solidarity with the North Korean regime, was unusual. China’s relationship with North Korea has previously been compared to the relationship between “lips and teeth” in reference to the Chinese proverb “if the lips are gone, the teeth will suffer the cold.” In recent years, however, both lips and teeth appear to be feeling a chill. On the 50th anniversary of the armistice in 2003, a grand ceremony was organized in Beijing at which the then Chinese President Jiang Zemin made a speech. The government’s silence this year comes after a difficult decade of relations with its closest Asian ally. Repeated North Korean nuclear and missile tests in defiance of UN resolutions and North Korean attacks on South Korean targets in the last few years have left the Chinese leadership frustrated with the DPRK. Hundreds of thousands of PLA soldiers died in defense of North Korea, and the Party is perhaps becoming reluctant to overstress the PLA and China’s vital role in both creating and

36

perpetuating the rule of the Kim dynasty. The only official participation in the anniversary celebrations by China was a visit by Vice President Li Yuanchao to Pyongyang during the commemoration. Observers believe that although Li’s visit was a nod to China’s partnership with the North, there are signs that China is adjusting its strategies regarding the Korean Peninsula.

Chill

One of the delicate changes is reflected in terminology – a key indicator of policy in China’s secretive government. In announcing Li’s visit to North Korea, Hong Lei, spokesperson for the Chinese Foreign Ministry, said on July 24 that the vice president would be present at the grand parade in Pyongyang to commemorate the end of “the Korean War.” The seemingly routine announcement immediately raised eyebrows, as China has traditionally referred to the war as “the War to Resist US Aggression and Aid Korea,” a term coined in official language on the eve of the PLA’s entry into Korea. The significance of this change was not lost on Koreans. “Beijing uses the term ‘Korean War’ for the first time,’” ran one headline in South Korea’s Joongang Daily on July 26, a publication which has long floated the idea that Beijing is edging away from its commitment to the North in light of Pyongyang’s increasing belligerence and resistance to Chinese-style economic reforms. Although Chinese officials tried to downplay the change in language, it is clear that Vice-President Li Yuanchao is easing out a watered-down official line on China’s historical role in the Ko-

rean War. In response to North Korean Supreme Leader Kim Jong-un’s remarks that the North “values its traditional friendship with China,” Li stopped short of drawing a clear line between the two camps engaged in the conflict and said rather generally that China entered the war “to defend peace and justice.” “We deeply feel that today’s peace is hardearned and, for this reason, should be cherished all the more,” said Li in remarks interpreted by many as a veiled warning against North Korea’s bellicose behavior in recent years. Besides the change in language, Li’s visit itself has been interpreted to indicate cooling relations. Despite his official position, making him by far the most senior Chinese official Kim has so far received in Pyongyang, Li Yuanchao is not one of the seven members of the Standing Committee of the Politburo – China’s paramount leaders. Unlike earlier Chinese leaders who visited Pyongyang in both Party and government roles, Li represents the government alone – essentially the Party’s administrative arm. In both North Korea and China, Party to Party relations are the most important diplomatic avenues. While not exactly a snub, it is hard to imagine that the absence of a senior Chinese Politburo member from the podium in Pyongyang was not intended to send a message. “It [Li’s visit]means that China will handle the bilateral relationship on a government-togovernment basis,” Professor Zhang Liankui, an expert on North Korea from the Institute of International Strategic Studies of the Central Party School, told NewsChina. Zhang suggested that this again affirms Beijing’s disavowal of a miliNEWSCHINA I October 2013


tary alliance between China and North Korea, which Beijing consistently characterizes as a normal diplomatic partner. Zhang’s observation is echoed by Professor Zhu Feng, an expert on international policy from Peking University, “What used to make the China-DPRK relationship different from other bilateral relations was that it was primarily a relationship between the two parties, for the war 60 years ago was largely driven by ideology,” argued Zhu in a commentary published by Singapore’s Lianhe Zaobao. “By downgrading the bilateral relationship from the party level to the government level, China has made it clear that it will not restore its traditionally close ties with the North unless the latter makes concrete steps towards denuclearization,” Zhu added.

Change in Priority

In view of North Korea’s nuclear tests and military provocations, China has been pushed into taking a tougher stance on Pyongyang. Many believe that North Korea’s third nuclear test, conducted in February this year, proved to be the tipping point. Geng Xin, deputy director of Japan’s JCC New Japan Research Institute, for example, argues that China’s strategic priority regarding North Korea has undergone important changes. “In recent years, China has adopted three basic principles in the region: maintaining peace and stability, solving disputes through dialogue and nuclear non-proliferation,” Geng told our reporter, “In the past, China emphasized the former two principles, but now denuclearization has become the primary concern.”

NEWSCHINA I October 2013

Photo by Xinhua/ KCNA

Photo by Xinhua

Photo by Xinhua

Kim Jong Un (R) meets with visiting Chinese Vice President Li Yuanchao in Pyongyang, July 25, 2013

North Korean military parade marking the 60th anniversary of the end of the Korean War, July 27, 2013

Geng’s view is echoed by Professor Qu Xing, director of the China Institute of International Studies and a member of the Advisory Committee on Foreign Policy under the Foreign Ministry. “Since North Korea launched its third nuclear test earlier this year, China has stepped up demands that North Korea abandon its nuclear program.” On May 24, Chinese President Xi Jinping told Choe Ryong-hae, special envoy of Kim Jong-un, that denuclearization in the Korean Peninsula represents “the will of the people and the general trend.” This statement has been taken as a new “bottom line” for the BeijingPyongyang relationship. According to a report in South Korea’s Joongang Daily, China also turned down Kim’s proposal to stage joint military exercises. Newly released figures by China’s General Administration of Customs also show that Chinese exports to North Korea in the first six months of 2013 shrank by more than 13.6 percent to US$1.59 billion over the same period of the previous year. The flow of Chinese crude oil, upon which North Korea’s military has become reliant, was the most significantly hit.

New Strategic Thinking

The apparent coldness Beijing showed towards Pyongyang contrasts sharply with its friendlier relationship with South Korea. In late June, Beijing rolled out the red carpet for the newly-inaugurated South Korean President Park Geun-hye, who offered to send back the remains of about 360 Chinese solders buried in a cemetery just south of the demilitarized zone separating North and South Korea. This friendly and unexpected ges-

Kim Jong Un visits Chinese war graves in North Korea, July 29,2013

ture was taken to signify warming ties between the two former adversaries. In early June, Fang Fenghui, chief of the People’s Liberation Army General Staff met with South Korea’s top military chief Jung Seung-jo, a meeting interpreted as an effort to strengthen military ties between the two countries. It was also a meeting dubbed by some Chinese media outlets as “the first step to turn former foes into military partners.” According to Professor Zhu Feng, Beijing’s recent moves indicate that it is ready to get rid of its historical liability by adopting a “forwardlooking” approach in dealing with North and South Korea. “It is part of the grand new international strategy under China’s new leadership,” commented Zhu. However, despite China’s tougher stance, North Korea’s leaders have remained intractable on the issue of their nuclear program, though officials occasionally pay lip service to international hopes of a disarmed Pyongyang. North Korea’s vice foreign minister Kim Kye-gwan remarked during a June 19 visit to Beijing on that denuclearization is the “teachings and wills” of both Kim Il-sung and Kim Jong-il, but stopped short of mentioning the views of Kim Jong-un. When Li Yuanchao reiterated China’s nonproliferation stance to Kim Jong-un, the latter made no direct response, other than promising to “support China’s effort to restart the six-party talks.” While Beijing is a long way from abandoning an increasingly isolated and unpredictable North Korea, the new leadership, unlike their predecessors, seem willing to entertain the idea, at least, of change. 

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environment

River Pollution

Death Maps A new government-approved “cancer atlas� shows the correlation between water pollution and high cancer rates in the Huai River Basin By Wang Yan

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NEWSCHINA I October 2013


O

n June 28, SinoMaps Press published the digital edition of its Atlas of the Water Environment and Digestive Cancer Mortality in the Huai River Basin, a collection of 108 maps showing the severity of water pollution in the Huai River and its tributaries, and rates of digestive cancer deaths in the region. Environmentalists have hailed the publication as the first official acknowledgement of the causal relationship between water pollution and the emergence of “cancer villages” in the Huai River Basin. Since the late 1990s, along with rapid social and economic development in the area, industrial pollution, particularly water pollution, has led to a sharp increase in the numbers of “cancer villages,” settlements with abnormally high incidences of cancer deaths. The Huai River runs north-south between the Yellow and Yangtze rivers, flowing from central China’s Henan Province eastward through Hubei, Anhui and Jiangsu provinces before emptying into the Yellow Sea. Thanks to its abundant water resources, flat landscape and mild weather, the basin is ideal for human habitation and has historically been one of China’s major agricultural production bases, producing nearly one-fourth of China’s marketed grain, cotton and oil seeds while occupying only one-eighth of the country’s farmland. The river basin encompasses over 30 cities and some 180 counties, and its population of more than 165 million exceeds all other Chinese river basins in terms of population density. One of the fastest growing regional economies in China, the Huai River Basin has been haunted by cancer villages over the past few decades. In the late 1990s, the drive to address the devastating water pollution in the basin, headed up by grassroots environmental NGOs like the Guardians of the Huai River, began to catch the attention of the media, and in turn the central government.

Photo by cfp

Reading the Signs

NEWSCHINA I

On April 4, 2013, Sun Aizhi, a villager in Jiaowan, Anhui Province, visits the grave of her husband who died of liver cancer in 2011, after his father died of stomach cancer in 2010 October 2013

Shocking images and video footage showing the river’s foamy surface and black sewage-like water were constantly released by various media outlets, including State broadcaster China Central Television (CCTV). In October 2004, then Vice-premier Zeng

39


environment

Peiyan convened a meeting aimed at curbing this severe water pollution, attended by all the government leaders of the 35 cities in the four provinces along the Huai River. In 2005, the Ministry of Health (MOH) tasked the Chinese Center for Disease Control and Prevention (CDC) with conducting research on the correlation between water pollution and the region’s high cancer rates. According to Yang Gonghuan, former deputy director of CDC, in the first phase of the project, the research team chose their

40

study and control areas from three major pollution-infected counties, namely, Shenqiu in Henan, Yongqiao in Anhui and Xuyi in Jiangsu. Due to the lack of cancer-related mortality records over the past 30 years, a retrospective survey of causes of death was carried out. “Since cancer is a complex disease and it is difficult to prove a definite causal relationship with water pollution, we carried out extensive comparative research and analysis, collecting detailed data on death tolls, diseases, and cancer-risk factors,” Yang told

NewsChina late July. “An epidemiological study was designed in 2005 to compare the numbers of deaths and the causes of death between the study areas haunted by water pollution and a sample of control areas,” Yang added. The results of the research indicated that both mortality and prevalence of digestive cancers were much higher in the study areas than in the control areas. For example, the annual average mortality rates due to cancer in the study areas of Shenqiu County and NEWSCHINA I October 2013


Photos by cfp

Some areas of Henan and Anhui provinces are suffering due to pollution in the Huai River

Yongqiao District were 277.8 and 223.6 per 100,000 persons respectively, three to four times higher than the recorded rate in control areas. “The research results also gained approval from the MOH and were finally presented to the State Council in 2006,” said Yang Gonghuan, adding that the report on the one-year project was not made public at the time. Upon receiving the report, the central government ordered the Ministry of Environmental Protection to conduct environNEWSCHINA I October 2013

mental rehabilitation projects and the MOH to launch cancer prevention programs in the region.

Prolonged Battle

Late 2006, the Ministry of Science and Technology began a project named “Research on Evaluation of the Association between Water Pollution and Cancer along the Huai River,” to be implemented by the CDC. Yang Gonghuan led a team of over 70 experts from various fields including epide-

miology, environmental science and oncology to conduct further research. They spent another five years in 14 counties in the Huai River Basin. A comparison of causes of death between the periods of 1973-1975 and 2004-2005 in the Huai River Basin showed that in areas where long-term water pollution was the most severe, mortality due to digestive cancers, particularly liver and gastric cancer, had risen rapidly – several times faster than the national average.

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Photo by cfp

environment

43-year old Lou Shiping rests at home, April 5, 2013. Lou has had two operations since being diagnosed with carcinoma of the salivary gland in 2012

Yang’s team issued thorough “verbal autopsy” questionnaires to determine likely causes of death where no medical records existed. The results of the five-year study appeared in the international journal Population Health Metrics in late 2011. The second phase of the project, according to Yang, involved the drawing and compiling of the cancer maps. “Based on results of previous studies on the correlation between cancer and water pollution, we intended to define the scope of both water pollution and cancer, so as to guide government policy to invest in the right places, in terms of pollution management and finding alternative drinking water resources,” said Yang. Historically, the Huai River has suffered from multiple sources of pollution, making it virtually impossible to pinpoint exactly which kind of pollution is responsible for the high cancer rates among locals. Experts argue that preventive measures need to be taken, particularly in the severely polluted areas identified in the atlas.

Official Acknowledgement

Since the result of the first phase of the research and data collection was submitted to the central government in 2006, local governments in this vast area have launched vari-

42

ous counter-pollution and medical treatment measures. Many small polluting factories have been shut down, hundreds of sewage treatment plants established and water filters installed in many villages. Local governments have also dug deeper wells to obtain uncontaminated drinking water. In Shengqiu County alone, a total of 721 factories engaged in paper production, leather manufacturing, chemicals and textiles have been closed down. Besides the government-sponsored investigation, non-governmental environmentalists such as Huo Daishan, founder of the Guardians of the Huai River, have also played a big part in aiding the mapping efforts and investigating and supervising the sources of pollution. “Official research is based on scientific evidence and data analysis, but it needs support from civil groups, particularly environmental NGOs, whose efforts can promote the participation of the masses,” Yang Gonghuan said. She admitted that the completion of the eight-year Huai River Basin project is the result of cooperation between the government and NGOs. “The task of detecting factories’ secret sewage outlets can only be fulfilled by local farmers organized by NGOs, not by government personnel,” Yang explained.

During the past decade, despite the media and environmental NGOs’ frequent efforts to bring cancer villages to the attention of the government and the general public, it was not until early this year, one decade after the problem was revealed, that the central government officially acknowledged the villages’ existence. The Ministry of Environmental Protection first used the term “cancer village” in February this year, referencing the link between China’s use and production of toxic chemicals, the contamination of drinking water, and high cancer mortality rates.

Out of the Mainstream

Some in China have expressed hope that the newly published atlas could be used as evidence in future environmental public interest lawsuits (see: “The Voice of the Polluted,” NewsChina, September 2013, Vol. 062) aimed at winning compensation for victims of pollution. However, in Yang Gonghuan’s opinion, this notion is unrealistic. “The atlas only shows the scope of pollution and its correlation with cancer incidence – it contains no information about who the polluters are, or proof that polluted water is solely to blame for a specific cancer case,” she said. Although pollution in the Huai River Basin was largely brought under control after 2005, relatively serious water pollution remains in some parts of the tributaries of the Huai River. Local refuse and excessive use of fertilizers and pesticides continue to pose a significant threat to the fragile water system. Many still face a higher risk of developing cancer. Zhuang Dafang, co-author of the atlas and a researcher from the Institute of Geographic Sciences and Natural Resources Research, said that while water quality in the main stream areas of the Huai River had visibly improved, the situation in tributary areas was far from satisfactory. Today, on the Shaying River, the largest branch of the Huai River and once the most polluted waterway in the basin, people can NEWSCHINA I October 2013


be seen fishing by the riverside. According to a local farmer who fished in the Shaying River interviewed in a recent CCTV report, marine life in the river has increased dramatically over the past five years: “There has been no bad water flowing down from the upper stream in the past five years, and the fish are

coming back,” he said. However, at the same time, tributaries of the Shaying River remain polluted. “The dams on the tributaries block the polluted water’s route into the trunk stream, so people see clear water in the Huai River now. But the pollution is now concentrated in its various tributaries, and this is one of the key

issues to be tackled in future pollution control work,” said Zhuang Dafang to CCTV. Yang Gonghuan remains pessimistic about the water pollution situation in the region. “Although water quality has improved slightly in recent years, it will still take at least 10 years for cancer mortality to drop to a significantly lower level,” Yang said.

Relationship between water pollution and cancer rates in 14 key study areas along Huaihe River (1973-2006)

Water pollution level 90-100% 80-90% 70-80% 60-70% 50-60% 40-50% 30-40% 20-30% 10-20% 0-10%

R ai

Hu

r

ive

Cancer rate change >100.0% 25.0-99.9% 16.0%-24.9% <16.0%

Source: SinoMaps Press

NEWSCHINA I October 2013

43


economy

Interest Rate Reform

Spills, No Thrills No matter how “thrilling” pundits may have found the prospect of interest rate liberalization in China’s stagnating economy, the process is unlikely to be fast By Li Jia

I

f the movie Wall Street taught us anything, it was that “Money Never Sleeps.” In the financial world transformation is often a silent, invisible process, and yet one that can ultimately shake the global economy to its very foundations. Few thought that the financial liberalization that took place under the Reagan, Bush and Clinton administrations would ultimately cause the most catastrophic recession since the Great Depression. But then, few people pay attention to financial policy when things are going right. On Saturday July 20, the People’s Bank of China (PBoC), China’s central bank, posted an announcement on its web site that the mandatory minimum yuan loan interest rate (previously 70 percent of the PBoC benchmark one-year lending rate), had been permanently removed. With no cap, borrowers and commercial banks were suddenly free to negotiate their own interest rates. The decision made headlines in financial media worldwide the next Monday morning, providing a shot in the arm for Chinese and international analysts wearied by the implications of the Fed’s move to wean the US economy off stimulus and China’s ongoing economic slowdown. Loans are generally inaccessible to private

44

and small-scale commercial borrowers in China, and very few loans have been issued below the benchmark rate. Few analysts believe that the new policy will bring down the cost of borrowing. However, the move has left only one on interest rates - the deposit rate cap. If this final hurdle is cleared, China’s banks, the most profitable in the world, will lose their most important safeguard against losses. As a result, the new policy has triggered investor concerns over shares in China’s main banks shares while also garnering support from financial liberals who have long argued that China is in desperate need of a mature and efficient financial market unburdened by macro-level meddling by the central government. Financial media were awash with speculation as to when the deposit rate cap would be removed. However, there are signs that such excitement may be premature.

A Thrilling Jump

Before Reform and Opening-up, almost every commercial transaction in China was brokered by the State. From soft drink peddlers to steel concerns – every enterprise was directly or indirectly owned by the govern-

ment, meaning the State also guaranteed commercial security. China’s economic takeoff in the past 35 years was rooted in the easing or lifting of restrictions on manufacturing, marketing and consumption of most industrial products and select services, allowing market forces to determine the future of a sizeable chunk of the national economy. However, rigorous State controls over factors of industrial production, land resources, capital and the labor force have remained rigidly in place. As a result, the full marketization of China remains incomplete, leading to the vastly inefficient use of the country’s economic resources, which has begun to threaten growth. In China, the groups which possess the largest and cheapest capital resources loaned by State-owned banks are those controlled, backed or intimately connected with the government. This has hurt depositors, private small and medium-sized enterprises (SMEs) and the general health of the national economy. Reform so far has focused on depriving banks of the protection offered by the dual safeguards of a mandatory deposit rate cap and a bottom line for lending rates. The market competition which is supposed to result NEWSCHINA I October 2013


NEWSCHINA I October 2013

cates, who are the minority of depositors and are better-protected to stand against risks, before moving down the chain. A deposit insurance system will be established. So far, so orthodox. With this expectation in mind, some medium-sized Chinese banks recently increased their deposit rates to match the mandatory cap in anticipation of its removal. This further fueled confidence that a fully marketoriented interest rate system is in the pipeline. Some market analysts even trumpeted the “experience” of Chinese banks in pricing interest rates according to market principles through the relatively new raft of wealth management products (which are not subject to the mandatory caps and floors) rolled out in recent years. Some might argue that it’s time for the central bank to take the final leap of faith. But, perhaps, they might want to consider – does China have a functioning financial market for banks to set their prices to?

Pork Barrel

19th century British economist J.R. McCulloch joked that a parrot can be an economist as long as it is trained to speak “supply and demand, supply and demand.” Market

prices arouse from the relationship between the two, and the key is to provide ample choice to both. China’s central bank has struggled to learn this mantra, and thus its commercial underlings are run more like trusts than independent enterprises. Each year the PBoC sets restrictions on how many new loans can be allowed by State banks. With a restricted supply, prices remain stagnant. The central bank also directly imposes benchmark interest rates on commercial banks, which then become the basis of all loan prices along with other financial products – particularly bonds. This means the regulators will continue to directly control pricing in the market, meaning that the market will only grow as much as the PBoC allows it to. This makes the removal of interest and deposit rate caps seem like a red herring. With administrative intervention at the core of the system, Professor Wang Guogang, director of Chinese Academy of Social Sciences Institute of Finance and Banking, does not see any substantial progress in building a market-oriented interest rate system. Wang argues that, in order to create a genuinely efficient banking sector, banks should be able to set prices according to competition

45

Photo by Xinhua

from removing these safeguards is intended to force banks to bid up deposit prices and court snubbed borrowers in untapped sectors. Banks will also have to invent more innovative services to diversify revenue. Depositors will enjoy higher returns and thus consume more, private SMEs will get more access to bank loans and the economy will benefit. In addition, market-determined interest rates are the foundation for the openness of capital accounts, a change crucial for the internationalization of the yuan. Deposit rates are the fundamental in this system, because the price and size of deposits underpin the entire financial system. Relentless competition may lure banks to overprice deposits, a misstep which led to the collapse of hundreds of smaller banks and the financial market turbulence during interest rate liberalization in the 1980s in the US. To avoid this, deposit rate caps are usually the last to go when liberalizing interest rates – a final leap dubbed the “thrilling jump” by media and analysts. China’s central bank has a clear road map, and it follows US-set precedents almost to the letter. Market pricing will be applied to holders of large long-term deposit certifi-


economy china

46

bynumbers US$173.5bn

Balance of yuan deposits in Chinese banks by non-Chinese residents and institutions by the end of June, 2013

US$185bn

China’s fiscal surplus in the first seven months of 2013 Difference between fiscal revenue growth and spending growth, % 10

Non-Chinese individuals: US$80.5bn 46%

5 0 -5

Non-Chinese institutions: US$93bn 54%

-10 -15 -20 -25

Source: China State Administration of Foreign Exchange

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012 2013.1-7

Source: Ministry of Finance of China

US$5.7bn Amount seized in anti-tax-avoidance action against multinationals with operations in China in 2012, almost 28 times more than the amount seized in 2008. Source: China State Administration of Taxation

9

Number of 102 US business leaders recently surveyed by HSBC who said they had conducted cross-border yuan transactions.

US$1.1bn Box office revenue of Chinese-made movies in the first half of 2013, US$400m more than the revenue of imported movies. Market share of imported movies in China’s box office first half year

80 70 60 50 40

2013.1-6

10

2012.1-6

20

2011.1-6

30 2010. 1-6

in the broader financial market, with the central bank in an indirect role whereby it can only determine its own lending rates to commercial banks. In this process, both pricing and intervention will be determined by the market. “Is a market that sells pork but no lamb, chicken or beef really a market?” he asked. For Chinese investors, their “pork” is represented by bank deposits. For enterprises, it is bank loans. Regulators have repeatedly promised to provide other choices, but consistently fail to deliver. Investors are fed up with irregularities and losses on China’s stock market, already written off as a worthless crapshoot by most analysts, and sometimes turned to speculative commodities trading in goods such as tea and orchids. Bond, a debt instrument which so far is the most developed alternative to deposits and loans, is controlled by different government agencies. In addition, banks use deposits or wealth management products to buy up bonds en masse, turning even this “option” into simply more deposits and loans in disguise. Trusts, insurance and securities have all gone the same way, creating a massive shadow banking sector, according to a recent report by the Chinese Academy of Social Sciences. In June 2012, the Securities Regulatory Commission launched a trial project allowing private SMEs to issue bonds through non-public offering. Though yields were much higher than bank loans, financial institutions show little interest in such unsecured, uncollateralized products. Professor Wang urges the issuance of bonds in line with China’s extant Corporate and Securities laws without official administrative approval, and sell directly to “smart individual investors” who are capable of taking relatively higher risks for higher returns. For the central bank, most of its assets are foreign exchange reserves which are mainly invested in US Treasury Bills. The PBoC simply lacks the assets needed to significantly liberalize its operations. In Professor Wang’s view, therefore, in China at least, interest rate liberalization is “a process, not a jump.”

0 Source: HSBC

Source: China State Administration of Radio, Film and Television NEWSCHINA I October 2013


NEWSCHINA I October 2013

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culture

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NEWSCHINA I October 2013


Liu Heung Shing

With My Own Eyes

Liu Heung Shingâ&#x20AC;&#x2122;s photos range from rare vignettes of everyday life in China in the 1970s via star-studded documentaries of the 1980s, all the way up to the modern day. When brought together as a collection, they delineate Chinaâ&#x20AC;&#x2122;s major social changes in the past three decades By Zhu Yuchen

NEWSCHINA I October 2013

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culture

Photo by Weng Lei/IC

Visitors look at a photo titled “Chinese Punk,” which shows three young men with almost identical clothes and expressions in 1980

Liu Heung Shing stands beside one of his photos at the exhibition China Dream, Thirty Years, July 26, 2013

O

n July 25, the exhibition “China Dream, Thirty Years: Liu Heung Shing Photographs” was held at the China Art Palace in Shanghai. This ornate, unmistakably Chinese building, formerly the China Pavilion at 2010’s World Expo, seemed well suited to the event’s grandiose title. Born in Hong Kong in 1951, Liu Heung Shing moved to the United States to become a journalist in the 1970s, before returning to China as a correspondent for TIME magazine later that decade to report on the end of China’s Cultural Revolution and the beginnings of Reform and Opening-up. At the time, China remained largely closed off to

50

the outside world, a state of affairs that put Liu, a keen photographer, in unique position – he claims that a Chinese foreign ministry official told him that at one time, around 65 percent of China-related photos published in Western media were Liu’s. These pictures were published at the end of 1983 in a collection called China After Mao: 1976–1983. Three decades later, China After Mao is still deemed sensitive on the Chinese mainland, and has only ever been published in abridged form. “The exhibition mainly commemorates the 30th anniversary of the publication of China After Mao,” Liu told NewsChina. Yet the later photographs (those taken over the past sixteen years) on display in “China

A photo, taken in 1981, shows a visitor to Beijing’s Forbidden City saying that Coca-Cola “tastes just so-so” NEWSCHINA I October 2013


Photo by Weng Lei/IC

Photo by Weng Lei/IC

A visitor takes photos in front of a Liu Heung Shing photo showing a young man roller-skating around a giant Mao sculpture

Dream, Thirty Years” reveal dramatic changes in Chinese society, and what Liu sees as a clear shift from collectivism to individualism.

Photo by Weng Lei/IC

Collectivism in Black-and-White

NEWSCHINA I October 2013

Two-thirds of the works in the exhibition were selected from China After Mao, and the remainder are “new” photos shot over the past sixteen years, the most recent being a portrait of Chinese youth author Guo Jingming, a billionaire writer (see: “From Books to Bucks,” NewsChina, September 2013, Vol. 061). Works from Liu’s first eight years as a photographer are in black-and-white, and the following sixteen years are in color. Though Liu did take a number of color

photos in the early 1980s, the photos he selected from that period for the exhibition were mostly black-and-white. “Black-andwhite is better adapted to the expression of feeling and emotion,” Liu said. “Honestly, there was barely any color in China at the time. Everyone dressed alike – mostly in gray. Women did not wear makeup, and everything looked monochrome.” As an international correspondent, Liu worked in Russia before the collapse of the Soviet Union and in war-torn Afghanistan, among many other places. Yet he said that nowhere in the world had he ever seen a society so immersed in politics as China towards the end of the Cultural Revolution. The uni-

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Beijing’s Summer Palace, a stylish young man strikes an intimidating pose as he leans on his glimmering imported Suzuki motorcycle – oblivious, an old woman beside him gets on with her needlework.

Model Xiao Yao at home in 1997. Liu Heung Shing persuaded her to take the photo with no makeup

Colorful Individuals

In China Dream, Thirty Years, one set of photos features a model named Xiao Yao, who Liu first met in Shanghai in 1997. Instead of shooting Xiao Yao in a studio, Liu took her to the alleyways of Shanghai’s old downtown district. Dressed in couture and juxtaposed with her gritty surroundings, Xiao Yao contrasts strikingly with her surroundings. Crowds of fascinated locals look on as Xiao Yao poses provocatively. Liu later persuaded Xiao Yao to allow him to photograph her without makeup at her home, a tiny residence of less than 10 square meters, typical of many normal Shanghai residents at the time. Xiao Yao was tall and had to stoop to move around, stripping her of her Dior-draped confidence and lending her a more natural look. Throughout the 1990s, Liu photographed few characters like Xiao Yao. His work from this period mainly features celebrities such as actor Chow Yun Fat and director Zhang Yimou, stars who Liu said represented the shift from collectivism to individualism in China. One photo shows actress Chen Hong

Photo by Liu Heung Shing

formity and lack of color in the photos belie the politics of collectivization at the time. One of the photos, “Chinese Punk,” shot in Simao, Yunnan Province, shows three young men standing abreast, dressed almost identically: large sunglasses, army caps, white shirts, and dark jackets. As well as muted blacks, blues and grays, Liu’s early photos also show ubiquitous Mao Zedong iconography – the image of the chairman is ever present. Young people rollerskate under a colossal Mao sculpture, peasants dine together under his portrait, and college students watch television, watched over by a photograph of the Great Helmsman. Liu’s photos depict everyday life, but when shown together as a collection, they are a prescient summary of the social and political environment. “Everyday life reflects politics,” Liu told NewsChina. In the early 1980s, as Chinese people’s lives began to become more relaxed and colorful, Liu also witnessed the dissipation of revolutionary fervor, and his photos began to take on more of a human touch. He captured China’s earliest street advertisements, and the first young couples brave enough to show intimacy in public. Some of his photos also have a tinge of humor – a couple hold a bouquet for their wedding portrait, but the bride is only wearing the upper half of a gown – on her lower half, she wears black trousers. At

Photo by Liu Heung Shing

culture

Dressed in couture, Xiao Yao contrasts strikingly with her surroundings on an old street in Shanghai, 1997 NEWSCHINA I October 2013


lying on a sofa, sunbathing, with the caption: “Actress Chen Hong, third wife of [director] Chen Kaige.” Such a colorful marital history would have been unthinkable less than a decade earlier. “Every celebrity is a symbol that can attract the attention of the audience,” Liu said. “As a journalist for TIME in the 1980s, I needed to cover everything in China. There were fewer difficulties then, and I could observe with a pretty relaxed attitude. That was a golden time for observation – you could get a lot of detail firsthand.” Due to the West’s growing curiosity towards China at the time, Liu’s photos found an eager market. “I also photographed many politicians who visited China, and I visited the Great Wall and the Forbidden City hundreds of times. I knew exactly where to get the pictures I wanted,” said Liu. However, republishing these photos on the mainland has proved a difficult task – in China, the use of the images of political leaders is tightly controlled.

Common Sense

In 1991, Liu Heung Shing won a Pulitzer Prize for his exclusive photo of Mikhail Gorbachev announcing the end of the Soviet Union. In 1994, Liu left frontline reporting and founded the monthly magazine China in Hong Kong, intending it to be a Chinese NEWSCHINA I October 2013

equivalent to Vanity Fair. However, soon after its launch, the Asian financial crisis struck, and the magazine’s Thai investor dumped the publication. Liu returned to China, this time as a representative of media magnate Rupert Murdoch, negotiating with the Chinese government over Time Warner’s Chinese distribution channels. Later, Liu settled in Beijing and bought a courtyard house that became an informal discussion forum for local intelligentsia. In 2011, China After Mao was finally published on the Chinese mainland. In a new preface, Liu writes that his good friend A Cheng, after going abroad in the 1980s, told Liu that Americans and Europeans had a strong concept of universal values and ethics that was lacking in Chinese society. A Cheng referred to this as “common sense” – a definition that struck a chord with Liu Heung Shing. Almost three years have passed since the book’s publication, but Liu is still not optimistic about the concept of common sense in Chinese society. “US college students don’t [need to] ask who Lincoln was, but I’ve been asked by Chinese college students who Hua Guofeng [Mao’s successor and CPC Central Committee chairman 1976-1981] or Zhao Ziyang [CPC general secretary from 1987 to 1989] were. That is what I call a lack of common sense,” said Liu.

In the same preface, Liu writes, “China must face its modern history head-on, and truly begin to develop its soft power. Settling for being a civilization with a long history and many complications is far from enough for China.” Liu’s own understanding of modern history is recorded in China in Revolution: The Road to 1911 (published in 2011). The collection comprises photos from the Second Opium War from 1860 to 1928, and was intended to be a centennial commemoration of the Revolution of 1911, which overthrew the Qing dynasty. When compiling this collection, Liu hunted for thousands of photos and devoted thousands of hours to post-production. Three modern history researchers with completely different perspectives contributed prefaces to the 600-page collection, elucidating an issue that Liu said he often encountered as an international reporter: the radically different interpretation of historical events by the two sides of a conflict. Liu claims that he seeks only to clarify matters, but the details of history are often intertwined with the complexity of society. Liu strives to use his photographs to tell his audience only what he has seen, reminding viewers that: “Our works are not all-compassing – that would be impossible. I can only tell you what I saw with my own eyes.”

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culture

Feng Xiaogang

Maverick No More? China Central Television (CCTV) pins its hopes on popular movie director Feng Xiaogang to rescue its flagging televised Chinese New Year Gala from critical purgatory. But will Feng bring his trademark irreverence or just more orthodoxy to this event? By Wan Jiahuan and Yuan Ye

Feng Xiaogang

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NEWSCHINA I October 2013


F

or the past 30 years, millions of Chinese have habitually huddled before their televisions to watch the chunwan, or Chinese New Year Gala, aired by State-owned network CCTV. This oncea-year variety show attempts to incorporate both political orthodoxy and mass entertainment with a mixture of patriotic and popular musical acts, magic tricks, comedy sketches, propaganda set-pieces and acrobatics – many of which are performed by China’s top celebrities. This year, they even secured Celine Dion. However, even as budgets have expanded and the running time has extended to some four hours, the Gala’s put-upon directors have visibly struggled to strike a balance between the taste for old-school bombastic socialist realism still shared by many older Chinese viewers and by the Party faithful, and the increasingly vital preferences of the younger generation for the kind of varied entertainment they have grown up with. When once families were happy to remain glued to their screens for several hours, nowadays most switch off after an hour or less – if they switch on at all. More alarmingly for CCTV bigwigs, the young people who do tune in merely do so to update scathing criticism of the show in real-time via China’s social media. The choice of popular director Feng Xiaogang to direct next year’s Gala, a decision announced via a live prime time TV broadcast, could be CCTV’s biggest gamble yet to turn around the fortunes of its failing flagship show. One of China’s top directors, Feng Xiaogang shot to fame with a series of wildly popular “Chinese New Year blockbusters” released during the holiday seasons of the 1990s to a total box office revenue of over two billion yuan (roughly US$250m). Feng’s light-hearted, irreverent and sometimes bitingly satirical output was a revelation to audiences raised on moribund political epics and predictably gory war films, making him one of the country’s best-loved filmmakers. NEWSCHINA I October 2013

Unlike many of his peers, from the outside Feng for years maintained only necessary ties with the Chinese government’s culture departments, a policy that has, until now, largely prevented him from being written off as a sell-out. Feng has even been a very public opponent of State censorship apparatus, criticizing the movie approval system as recently as April 12 in a speech at the China Film Director’s Guild Awards, a speech that was, ironically, censored when shown on CCTV. Two months later on July 12, CCTV confirmed at a news conference that Feng Xiaogang would be the chief director of 2014’s Gala. Feng, resplendent in a purple jacket, told reporters: “I would rather not express my thanks to the CCTV leadership. As I’m taking this thankless job, they should thank me instead.” The authorities evidently hope that Feng’s presence will reverse the audience exodus to less-orthodox, more populist alternative Chinese New Year’s Eve galas aired on commercial stations and to the Internet. But is Feng Xiaogang the man for the job?

Shared History

In 1983, five years after China had embarked on the road of Reform and Openingup, CCTV broadcasted its first annual Gala, whose brand of spectacle and light entertainment won ardent fans among a generation emerging from the wasteland left in the wake of the Cultural Revolution (1966-1976). A great number of viewers wrote letters to CCTV to express their love for the show, forcing the network to set up a dedicated room just for Gala fan mail. That same year, a 25-year-old Feng Xiaogang was just embarking on his TV career, working as a runner and cook for a production company. Six years later, Feng joined forces with popular writer Wang Shuo. After having several projects killed off by the cultural authorities for being “too negative,” including one aborted shoot which cost them several million yuan, the pair managed to produce The Editorial Room, a sitcom about the me-

dia industry. Chinese audiences, raised on a daily diet of worthy TV dramas extolling the virtues of noble cadres, soldiers and police officers spouting pitch-perfect news anchor Mandarin, couldn’t believe what they were seeing. The series’ pithy dialog, naturalistic characters and satirical treatment of social issues caused a stir across the country. At the same time, the CCTV Gala re-introduced, amongst other things, pop music and sketch comedy to mainstream entertainment. Neither meticulously planned nor flawlessly designed, the show appeared more like a get-together for friends and family, down to the casually-clad audiences clearly visible in the broadcasts, and therefore always seemed a show for ordinary families. Sharp comedic commentary on current affairs, and participation by top pop stars from Hong Kong and Taiwan, ensured the Gala’s enviable ratings. However, beginning in the 1990s, CCTV began to take a more active role in determining the content of the Gala. Former president of CCTV Yang Weiguang once said that the 1990s saw the annual show’s content shift from ideological emancipation (breaking free from the shackles of the Cultural Revolution) to feeding cultural consumerism as well as providing a platform for exerting ideological control over the masses. Predictably, ratings began to drop off. According to CCTV statistics, its 2010 gala had an audience share of only 28.42 percent, a share which dropped to 11.36 percent in 2013. In 1998, its Chinese New Year Gala had secured 68.1 percent of the audience share. With budgets increasing year-on-year, CCTV was struggling to justify its investment, yet there were no signs the ideological pressure from above was lessening. In the 1990s, Feng Xiaogang’s star was still rising, thanks largely to his decision to stick to his trademark style – mocking the establishment but remaining so in-step with public opinion that he couldn’t be silenced effectively. “He had personal opinions about every piece of news. He could riff on any headline,” remarked one director.

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culture

Crossover

Nonetheless, there were signs that Feng was finding the potential commercial benefits of a stamp of approval from the authorities hard to resist. In 2007, he shot Assembly, a movie

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authorities.” Early frustrations taught Feng how to live with this reality, one faced by all pioneering auteurs operating in China’s stifling cultural climate. He learnt how to compromise to get his productions through the minefield of censorship while meeting his artistic and commercial targets. “All people should abide by a certain set of rules. That is the precondition for survival in any environment,” said Feng during an earlier interview with the International Herald Leader. However, some claim Feng has struggled to strike this balance with Korean singer PSY and Taiwanese actress Lin Chi-ling are invited to all his releases since 2000. perform on Shanghai’s Dragon TV New Year Gala, February 1, 2013 The Banquet (2006), a bloated historical epic based on Hamlet and feaabout the Chinese Civil War in the late 1940s turing a stellar cast, performed well at the box and China’s involvement in the Korean War office but was critically slammed for bendin the early 1950s. Shooting this historical ing to commercialism. Two years earlier, the epic, which broadly fit with the Party line on equally star-studded A World Without Thieves both conflicts, finally earned him some cur- received a similar critical barrage. rency with the Ministry of Culture. Feng’s follow-up Assembly (2007) was “Feng Xiaogang was not recognized by more critically successful, before Aftershock the establishment until Assembly,” Gao Jun, (2010), a story about the catastrophic Tangchairman of the Beijing Sheng Shi Xin Ying shan earthquake of 1976, broke box-office Film TV Distribution Corporation, told our records for a domestic release. reporter. A long-time collaborator with Feng, Aftershock has become known as Feng’s Gao Jun was one of the main script advisors first true “crossover” film, marking the first for Dream Factory. occasion when the director had directly ac“[Feng] is full of ideas,” said Gao. “He is cepted government backing on a commercial in the van of new movie-making trends, his project. The Tangshan municipal governproductions gain traction with the ordinary ment invested heavily in the film, requiring people, and he is relatively unorthodox.” Feng to include the city’s name in its Chinese “Yes, he has rough edges, which is both an title, amongst other considerations. The film advantage and a disadvantage,” he continued. made 660 million yuan (US$105m) at the “Being edgy means he has ideas but remains box office. Zhang Hongsen, director of the a big personality not easily accepted by the Film Bureau under then State AdministraPhoto by IC

In 1997, Feng Xiaogang’s first Chinese New Year movie, Dream Factory, was released. The movie tells a story of four young people starting a “dream-making” company that helps its clients realize a lifelong dream within 24 hours. With an investment of 6 million yuan (US$723,000), the film raked in 36 million (US$4.3m) at the national box office. Critics rhapsodized about the movie’s quality and daring, manipulating absurdism to relay social critique. Feng himself attributed his success to remaining grounded. “Without reality and life, I have no confidence in my movies,” he said in any earlier interview in 2004. After Dream Factory, Feng made a habit of releasing one blockbuster a year during the Chinese New Year holiday season – even coining a term for this “genre” – the “New Year Movie.” Despite his mounting success, Feng failed to gain recognition from China’s cultural authorities. Some critics in State media dismissed his output as populist, and “remixed soap-operas.” Feng was not discouraged. After social critique Chicken Feather earned critical acclaim, Feng directed A Sigh (2000), focusing on the commonplace but rarely-portrayed issues of mid-life crises and extramarital affairs, a movie which became the second-highest-grossing domestic release of that year. Despite the success of A Sigh, cultural authorities would not allow the movie to be nominated for the Golden Rooster Awards – China’s Academy Awards. Instead, Feng swept the board at the Cairo International Film Festival, taking home awards in every major category apart from Best Director. A Sigh also earned Feng significant recognition in Europe and America, securing overseas releases for many of his subsequent productions.

NEWSCHINA I October 2013


tion of Radio, Film and Television published a 5,000-word article in the People’s Daily, hailing the movie’s achievement. CCTV also dedicated two daily reports to the movie’s continued success. While Feng had found favor with the cultural authorities, however, he was struggling to retain his popularity with the critics. Despite a widespread international release, Assembly failed to succeed in overseas markets. Aftershock’s perceived massaging of history didn’t go down well with some critics. Others slammed the movie’s extremely graphic levels of violence, which some critics claimed bordered on the pornographic. Shi Sushi, a Chinese movie critic and blogger, wrote that “Aftershock is undoubtedly a wonderful movie of moral education… Regrettably, history is history. It can’t be wiped out or eliminated.” Last year, Feng’s Back to 1942, an account of a devastating wartime famine in Henan Province, struggled to connect even with domestic audiences. Some expressed dismay at the movie’s overwhelmingly depressing tone. As with Aftershock, others criticized the graphic content, particularly Feng’s depictions of starvation and prostitution, with some accusing the director of using gratuitous scenes to secure a bigger market share. Many observers have expressed hope that Feng’s nomination to revitalize the CCTV Gala will lead to the production of a more artistically viable and less moralistic spectacle. “Of all the Chinese movie directors, Feng is the most suitable for directing the Gala,” said Gao Jun. “What the Gala needs is sharp edges kept within a safe framework, winning the trust of the government and the acclaim of the younger generation.” However, given Feng’s recent output, it remains to be seen how much authority this former maverick will have when it comes to a vision for CCTV’s flagship event. Gao Jun, at least, remains optimistic. “Feng still has sharp edges,” he told our reporter. “But now he knows how to smooth them down.” NEWSCHINA I October 2013

Posters for Feng Xiaogang’s movies. In the past two decades, Feng has directed 16 movies, most of which have become box office hits

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travel

of Langli and Jiaogao, both of which afforded jaw-dropping views, the former over a river valley and well-appointed cemetery. The cracked and warped wood of the massive Miao houses in these villages is noticeably older than some of the more modern settlements visible from the highways, and a wizened Langli elder confirmed many were built at least 40 years ago, though he of course was substantially older and had lived in the village his entire life. Out the back of Langli one of the houses overlooking the river advertises various types of rice liquor, which are well worth a fortifying sip even early in the day.

Chongqing Weekender

Rafting along the Pengshui Ayi River is that rare thing in China, a tourist attraction that delivers on the hype. Arriving a little weary from the excesses of the night before, and wilting from the summer heat and humidity that enshrouds Chongqing like the cape of some malevolent ghoul, our group approached the park desperately in need of a dip in some refreshing river water. Handed a lifejacket and a six-foot bamboo pole, we jumped into our inflatable dinghies and set off towards a manmade rapid, whirling the pole through the water in Olympic kayaker-style. It soon emerged that relatively light rainfall had rendered the current anemic, and there were few rapids worthy of the name, but we didn’t care and were happy to drift along basking in patches of sunlight. The spectacular gorge scenery, which served to keep the full glare of the sun off our backs through most of the day, clear waters

As evening approached we reached the mountainous village of Fanpai, where we chanced upon two Miao women spinning cotton into yarn the traditional way, feeding the strands from five hubs to the most basic of looms and manually stretching them out over 25 meters before twisting them and plying them at each end. It is a painstaking and backbreaking process, but one that is fascinating to observe. It also served to illustrate how far removed these places are from the China that is developing at breakneck speed around them, and as such why they offer such a wonderful rural escape from the pressures of urban life. 

and fresh upland air more than compensated for the lack of thrills. Serious rafters should time their visit to coincide with the spring and early winter rains, when Pengshui welcomes Chinese and international visitors to try their hand at singlehandedly navigating the whirling torrents. We only managed to traverse the first section of river, but anecdotal evidence suggests that the white water becomes a more serious challenge in the second half, and in any case the split ensures there is something for everyone. Turning back at the halfway point, which offers camping, accommodation and various things to buy, we enjoyed the solitude of a riverside walk back to the park entrance towards the setting sun. One word of warning – a fearsome ascent awaits at the park exit and, banking on the weariness of the returning rafters, the authorities have invested in a 30-storey elevator, which you will be expected to subsidize to the tune of 35 yuan (US$5.70) a ride.

real chinese

pēn

Penzi Troll While the Internet has allowed Chinese people to be far more honest in voicing their grievances, there are limits to how much negative commentary China’s netizens are willing to accept. Those who overstep the boundaries of reasoned debate are known as “penzi” – trolls. Literally meaning “spray,” the term “pen” was originally a southern Chinese colloquialism meaning “to scold” or “to criticize violently.” It didn’t become popular nationwide until recent years, when it emerged as a perfectly suitable word to describe the growing number of spiteful online critics, evoking an image of an angered netizen spraying their rage around like a fountain.

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The most typical feature of a penzi is that while they are always keen to criticize, they seldom offer constructive points of view. Worse, penzi tend to be fond of foul language, and have been know to launch aggressive personal attacks on anyone who disagrees with them. Another particularly exasperating characteristic is that they are notoriously impossible to appease. Penzi will criticize a business for not caring about the public interest, but if the business makes a donation to a charity, it will be criticized for “putting on a show about something useless.” In fact, penzi didn’t start out as a particularly pejorative term – it was once seen as

zi

a badge of honor, reserved for those who dared to test the boundaries of freedom of speech and bold criticism. However, with more and more Internet users becoming amateur penzi, the word now has distinctly negative connotations. Many believe that general disaffection with society and life is to blame for the rising prominence of penzi. Regardless of the reasons behind the trend, penzi are now coming in for criticism themselves, not only for being useless to society, but also for spreading unnecessary negativity. Many popular Chinese Internet forums have laid down anti-penzi measures, call for more reasonable and constructive criticism. NEWSCHINA I October 2013


flavor of the month

Chillin’ in Chinatown by Stephy Chung

C

hina lays claim to the Four Great Inventions: the compass, gunpowder, papermaking and moveable-type printing. But, lesser known, and arguably more impactful (note, I did say arguably), is its role in inventing ice cream. Historical records suggest that the Chinese first came up with the method of freezing in 200 BC, by using saltpeter (or potassium nitrate, the same chemical compound used to make gunpowder) and snow to rapidly reduce the temperature of food. Wealthy aristocrats indulged in frozen syrups mixed with milk, rice, fruit, and spices – a tradition which later spread to India and the Middle East. Fast forward a few centuries, and ice cream has become a cultural mainstay in America and Europe. But by the 1970s, ice cream parlors and soda fountains were beginning to close, thanks to the postwar boom in the acquisition of personal home freezers. Premium ice creams churned out by companies like Ben and Jerry’s flourished during this period. Americans were shocked by then-revolutionary flavors like Ben and Jerry’s Chocolate Chip Cookie Dough. But nowadays, the mass production of say, Cherry Garcia, has undermined the casual ice cream lover’s sense of adventure. For that, you have to go back to the mom and pops, where new flavors continue to surprise and impress. In my case, I make a bee-line for the one that pays tribute to its ancestral roots. Chinatown Ice Cream Factory (CICF) opened its doors in New York City in 1978, and has since stayed true to its humble, familial beginnings – even its interior never seems to change. There’s just enough space to form a line around the counter and its mascot, a chubby green dragon, is inked everywhere, tongue out, lapping up a scoop of ice cream. His hoard is not standard by any stretch. Here, “regular flavors” include exotic options like durian, green tea, and ginger. The “exotic flavors,” as scribbled in multicolored whiteboard markers, meanwhile, are classics like rum raisin, rocky road, and chocolate. 32-year-old Christina Seid, who helps run the shop with her father, estimates that some 2,000 scoops from over 50 flavors are served on a NEWSCHINA I October 2013

good day. Who said Asians were lactose-intolerant? Seid reveals that she’s one of those dessert fanatics whose trip to Rome was “mapped out not by national monuments, but by gelatarias.” While her father came up with the classics, she’s now charged with dreaming up new additions, like the Purple Dragon. The flavor was unveiled via the shop’s secret menu on Instagram. “It’s our version of the Purple Cow. It’s a grape soda float with lychee ice cream, topped with cream and finished with wasabi sesame seeds.” The craft that goes into the ice cream is apparent in the high quality product. There’s an absence of artificiality in its flavors. The red bean, for instance, is a recipe taken from Seid’s own grandmother. “We prepare the ingredients like her traditional red bean soup, but make it into more of a paste. Then we add the sugar, cream, and the rest of the good stuff.” The resulting consistency is thick and unyielding and takes a while to melt – really showcasing the rich depth in textures and flavors. In most options, you can see pulp-like bits worked into each dense scoop. A trip to the Chinatown Ice Cream Factory always comes at the end of a greasy meal at some nearby restaurant. For me, it goes hand in hand, like a Coke and a pizza. I’m a creature of habit and often get my fix – the almond cookie ice cream. It’s perfect – smooth and almost buttery with chewy almond cookie crumbles so soft that for nearly a decade, I thought its name was actually almond cookie dough. On a recent visit, I branched out and ordered a double scoop - one taro and one black sesame, and was floored by the very different nuttiness of the two flavors. The light purple taro had a nice restraint on sweetness, and its natural starchiness made the concoction taste extra milky. The black sesame was deliciously light and boasted a subtle, toasty sort of crunch to each bite. If you think you know ice cream, think again. The Chinatown Ice Cream factory is a whole other universe of ice cream flavors, and you won’t find it pint-sized in a supermarket aisle. Where better to spend the summer?

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essay

Unwilling Fashion Victim By Niall O Murchadha

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I looked on with no surprise as an older Chinese lady plowed through a group of such shoppers at great speed on her way towards some object of desire.

Illustration by Xiang Zhaohui

All over China, people wait anxiously by the phone, anticipating the arrival of the next text, Weixin voicemail, and all important pictures, carefully weighing all the relevant data while they come to momentous decisions, destined to make or break their future lives. The messages they await are nothing as prosaic as results of medical tests, news of a new job, or details of a loved one trapped in a war zone. Rather, it pertains to something far more existentially crucial, that of sartorial self-expression. The messages are coming from somewhere just outside Florence, Italy, exceedingly superior to all the churches and museums that city has to offer. The place is the Mecca for Chinese shoppers - The Mall. I set off from the hotel in Florence with my wife early in the morning, planning to catch the first bus, armed with a plethora of pictures from my wife’s friends back in China. A Chinese girl in a red dress jogged passed us, urging her boyfriend to hurry up. By the time we got to the bus station there was a long line in front of us and, with the exception of one couple, and me, everyone was Asian. After eavesdropping on conversations, I discovered that, besides a smattering of Koreans the crowd was all Chinese. Despite the fact that the first bus was a double-deck, overcrowding meant we had to wait for the second. On the way there we passed through the idyllic rolling hills around Florence. As I admired the scenery and delightful buildings, I looked around and noticed no one else seemed interested, preferring instead to rest before the mammoth task ahead. As we arrived at our destination there was an intake of breath. “Gucci” said one woman, with all the passion of a devoted pilgrim to the Vatican. When the bus stopped the girl in the red dress jumped off and ran towards the Prada store, not unlike a crack addict racing towards dealers who had just received a new shipment. The occupants of the bus marched with

steely determination towards the Prada store. The newly arrived customers swarmed over the coveted bags, grasping at the objects of desire as an old person seeks out their heart medication. That was the moment the phones came out. Messages were sent and received, and running commentaries delivered. Still, pictures were taken and relayed back to Beijing, where deci-

sions were made and bags were purchased. The next destination was the Gucci store. Unlike the Prada store, this one contained more than a handful of European shoppers. I looked on with no surprise as an older Chinese lady plowed through a group of such shoppers at great speed on her way towards some object of desire. One blonde lady was almost knocked to the ground by the determined shopper, and was left with a look of shock and a bemused laugh while the oblivious consumer continued on her essential trip. It is from such instances that stereotypes are born. However, it’s important to remember that dragon ladies like this one were in the extreme minority in this situation. After the initial manic rush, the shoppers here behaved in a polite fashion, at times a little excited, but mostly shopping calmly. I had subjected my wife to a week of late nights down in Sicily while attending my sister’s wedding, so I felt I needed to show more than my usual disdain for such endeavors. I held some bags for her while she relayed messages and photos back to China. I followed her around with the purchases, freeing her up for more mobile pursuits. After what I considered a sufficient length of time assisting my wife I retired to the relative calm of the cafe. Chinese husbands came and went during the course of the afternoon, seeking respite from their duties as their wives engaged in physical exertions that might be beyond them in a non-shopping context, pausing only long enough to give their spouses a quick peck on the cheek before setting off again. It has often been claimed that the “Chinese Middle Class” is some kind of mythical creature, like a unicorn, but I have seen them, in the shops of Europe. Some may be on a shopping frenzy, but most are just looking for a good deal on a luxury item. Others may be a little unpolished, but that is a trait common to any group with new-found money, and in time they too will lose the rough edges. NEWSCHINA I October 2013


The Prodigal Puss By Lisa Gay

NEWSCHINA I October 2013

A cat making a home at a Buddhist temple, I was told, means that she’s gone to worship Buddha.

Illustration by Xiang Zhaohui

For me, a home is just not a home without a pet. A year after I moved to China with my partner, we decided to adopt a cat – as I trawled through adoption ads online, my heart was captured by a tiny, nearly slug-like tortoiseshell kitten. Not long after we brought this cat home, I heard high-pitched mewlings coming from the courtyard of my apartment complex. I rushed downstairs to find a stray kitten peeking out from underneath an aircon unit. As she was a ravenous little thing, I decided to name her Zhu Zhu, which means piggy in Chinese. I made the pretense of “asking” my partner if we could keep Zhu Zhu, although we both knew that she wasn't going anywhere else… or so I thought. It happened while I was out of the country. I asked a friend to look after our cats while my partner and I went on a much anticipated beach holiday. A week into my vacation, she nervously told me Zhu Zhu had slipped out an open window and jumped to the ground – from four floors up. I immediately flew back to Beijing. We started the search by making stacks of lost cat posters, taping them to lampposts and entrance gates in a one-block radius. I also set out dishes of warmed tuna, hoping the scent would lead her back home. Losing a cat in the chaos of downtown Beijing is scary, but I thought we had a good chance of recovering our kitty. Predators were non-existent, traffic almost always moved at a crawl, and the sheer number of alley cats thriving in our area seemed to indicate that she had a great chance of survival. But immediately, I ran into problems. I'd hang up posters in my alley, only to find someone had ripped them down hours later. I was stunned—how could anyone have an objection with lost pet posters? Even though my posters rarely made it through an entire day, there were a few people who called, claiming to have seen my cat. Although none of them

turned out to be her, I was grateful that people actually cared enough to call. Not everyone was so supportive, however. The most common expression I heard from my neighbors was bu hao zhao (“not easy to find”). I even got several phone calls from people asking if I was interested in adopting one of their kittens. I politely declined, though I wanted to scream through the phone “Why did your cat get pregnant? Don't you know to

spay and neuter your pets?” Weeks turned into months, and still no sign of my kitty. Sympathy was turning into bewilderment. “You're still looking for that cat?” At the three-month mark, I got two intriguing tips—a few of my neighbors swore they saw my cat at a local temple. But, I was cautioned, if it turned out to be her, I was to leave her alone. A cat making a home at a Buddhist temple, I was told, means that she’s gone to worship Buddha. I had my doubts that my ten-month-old kitten had rejected the secular world. I would no doubt have broken into the temple that night if I had spotted her, but luckily (for them), it was just another lookalike. There was one more crushing false positive. By this time, I had all but lost hope. There was not one legitimate sighting. Calls were drying up. My neighbors, some already well on their way to cat-ladydom, had started taking me aside, telling me it was time to give up. One man, sitting up from his usual grimy chair, told me that cats have their own fates, just like people – and if she was destined to come back, she would. If not, I should just let her go. Then, one late night, I heard a long, loud meowing in front of my apartment door. I hadn’t actually recognized the meow, but it was raining out, so I thought I’d dish out some food and leave it by the door. Then, I opened the door out my building, and saw my cat, hiding from the rain under some bikes. While she had changed a bit, what with growing bigger and dirtier, I was convinced. I scooped her up and held her tightly until I got inside my apartment. The mystery cat wound herself around my legs, seemingly relieved to be home. I knew right then, that Zhu Zhu had come back. After three and a half months of wandering downtown Beijing, she was somehow back home – and nothing I ever did for those three months had actually brought her back. Maybe the grumpy old man was right after all.

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Cultural listings Cinema

Battle for Valentine’s Day? The 7th day of the 7th lunar month (August 13 this year) is Chinese Valentine’s Day. Called Qixi in Chinese, the holiday has become an increasingly fierce battlefield for Chinese movie studios in recent years. This year, several movies were released to coincide with the date, including romantic comedies One Night Surprise starring Fan Bingbing, Crimes of Passion starring Huang Xiaoming and Tiny Times II, youth writer Guo Jingming’s second directorial effort in as many months. However, forced into competition with Hollywood blockbuster Pacific Rim, none of the Qixi releases has managed to generate much of a buzz or a respectable box office income.

Music

Book

Slow and Steady

Zhu Rongji’s Talks in Shanghai

Deeply influenced by classical minimalism, Chinese singer-songwriter Dingke’s music is mainly composed of slow, rhythmic strokes of the piano keys, melodic violins and his slightly hoarse but magnetic voice. In June, Dingke released his third album since 2011. Titled Our Home, the album moved even further towards minimalism, including piano and occasionally harp, but no vocals. Meanwhile, Our Home . Needs Slow, a modern dance piece inspired by the album, was staged at Beijing’s Post Mountain art space by the album’s label Tree Music. The performance ran for three days at the end of June. Interpreting Dingke’s minimalism with slow, simple body movements, the performance received largely favorable reviews, and was called “visible music and audible dance.”

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By Zhu Rongji

Exhibition

Overlapping Ballad Interwoven with several layers of ancient Chinese hieroglyphics and talismans, painter Xiao Yufang’s traditional inkand-wash paintings are a break from the norm. With the bottom layers in color and the top layer in black, these deformed characters transform into abstract shapes vaguely resembling faces, eyes, animals, among much else besides. Displayed in his solo exhibition Kui Ballads in early August at Beijing’s Shangyuan Art Museum, critics have called Xiao’s works a combination of ancient spiritualism, and modern cubism and abstractionism. Kui, an ancient settlement in southwest China, once stood near the town where Xiao grew up. Borrowing the symbolism once popular in the Kui region, Xiao may have been trying to reflect a chaotic modern world overlapped with ancient consciousness.

Former premier Zhu Rongji’s sixth book hit shelves in mid-August, drawing nationwide attention. Analysts see the book as a prelude to a new round of discussions over reforms ahead of the third Plenary Session of the 18th Central Committee of the Communist Party of China. The book consists of 106 speeches, talks, correspondence and notes, as well as 83 photos from Zhu’s tenure as Shanghai’s mayor and Party chief from 1987 to 1991, when he was instrumental in dealing with the municipality’s declining fiscal revenue and serious housing problems. Now, at 85 years old, Zhu is best known for his outspokenness and his firm program of reform during his term as premier from 1998 to 2003. Analysts say the recent slowdown in the Chinese economy has triggered worries, and many have begun to compare current problems to those experienced in the 1990s. NEWSCHINA I October 2013


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Commentary

Squeezing Toothpaste Chinese investors want stimulus. The government doesn’t want to cough up. Which way now? By Xu Gao

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n the first half of the year, China’s new leaders appeared far more tolerant of economic slowdown than their predecessors. The new administration showed resolve to rebalance China’s slanted growth model, refusing to print money to feed an ever-hungry investment market while promising reforms shifting resources away from the State and towards innovative private businesses. Tolerance has its limits, however. In July, Premier Li Keqiang clarified two “red lines” – a bottom line for acceptable growth and an inflation ceiling measured according to the Consumer Price Index (CPI). On July 30, the Standing Committee of the Politburo pledged to “attain the main tasks of economic and social development for the year,” a notable shift on earlier pledges to mitigate risk in a turbulent fiscal environment. All of this has signaled a nuanced but clear adjustment in attitude. Though restructuring the economy will remain top of the agenda, maintaining growth has crept back into the affections of the leadership. The reason is clear; contrary to expectations, economic growth is already hovering around the bottom line. A so-called “hard landing,” the mother of all risks, would be catastrophic both economically and politically. Investors may feel reassured by this new message, but delivering it may mean reviving some old, unpopular tools of the trade.

to its lowest ebb since 2009. Year-on-year decline in the Producer Price Index (PPI), an indicator of investor confidence, has been steady for a full 16 months. The mainstream forecasts for China’s economy in 2013 offered by economists and international institutions have generally quoted 7.5 percent growth, a rare example of the pundits showing solidarity with China’s economic planners. This means the government is now facing the imminent risk of missing its growth target, a bitter pill to swallow for an administration that calls upon its people to judge it by its economic delivery. Indeed, a bitter taste is already in certain mouths. Enterprises are struggling in the economic slowdown, which has squeezed corporate tax revenue, a significant source of government funding. In the first half of the year, national revenue grew even slower than national GDP – a situation not seen in decades. All this comes when public spending commitments are at an all-time high. An affordable housing scheme, begun from scratch in 2010, still requires a vast investment before it can move ahead. Budgets for social security, education and other social welfare projects are increasing as urbanization continues. Non-delivery of these many welfare commitments is not an attractive option. A more imminent and visible pressure is unemployment. Although, beyond a tough job market for college graduates, unemployment rates are tough to verify, indicators of business recruitment published both by HSBC and the Chinese government are gloomy. If no bailout materializes in the second half of the fiscal year, mass layoffs, and mass unemployment, could hit as early as the fall. Even if a stimulus package is adopted, this would be a reason

The most probable scenario seems to be that any new stimulus will follow a “toothpaste”modelsqueezed out slowly and only as needed

Nosedive

After falling short of expectations in the first quarter, China’s GDP growth rate fell again to 7.5 percent in the second, the exact “bottom line” announced by Li Keqiang mere weeks previously. Prospects for the coming months are grim. In June, industrial value added growth, an important indicator for economic expansion, fell

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for at best, cautious optimism at best. Further decline is possible in the third and fourth quarter. The best case scenario is that the country will maintain its 7.5 percent bottom line for the whole year. If stimulus is not forthcoming, even this modest target could well be missed.

Toothpaste

Few would expect anything similar to the generous monetary package in 2008, which has been criticized for aggregating excessive reliance on inefficient investment with cheap government capital. The most probable scenario, therefore, seems to be that any new stimulus will follow a “toothpaste” model – squeezed out slowly and only as needed. What the State Council came up with on July 24 seems to have to some extent confirmed this expectation. Private investment is more than welcome in building and operating China’s hugely expensive and indebted railway network. Many small businesses will enjoy tax exempt status. Customs declaration procedures will be streamlined to allow exports out of the country more quickly and cheaply. The purpose is to give the private sector more business opportunities, as well as reducing the fiscal burdens and red tape constraining small businesses. When the cap will come off this toothpaste tube remains unceratin, but it is clear that the government may have to be stingy. China’s dominance in the export market has failed to pay the bills since consumer demand from the US, EU and Japan for Chinese exports plummeted in the wake of the 2008 financial crisis. Even if Japanese and EU fortunes are reversed and the limping US recovery gathers pace, the kind of prosperity needed to jump-start China’s export and investment-driven economy is simply not going to materialize. Looking inward, domestic consumption has failed to rise as fast as expected, despite extended subsidies for purchases of home appliance and furniture. China’s overpriced real estate offers little of the security that might lure urban consumers to spend more, and

NEWSCHINA I October 2013

an even more fundamental problem is enduringly unfair wealth distribution which keeps the majority of the population just above subsistence level. Western consumers built China’s economic miracle, and unless domestic consumers can match the spending power of their far more affluent, if less numerous, overseas counterparts, the outlook in this area is also bleak. This has left domestic investment, already a problematic growth engine, the government’s only short-term option. As manufacturing is already facing severe overcapacity, property and infrastructure investment have become the most realistic options, as both housing and essential services remain in high demand. Despite massive strides in the last decade, China’s infrastructure level still lags far behind that in developed economies, and urban housing remains in short supply. Historical precedent indicates that suitably housed, well-connected urbanites typically have a good amount of disposable income. If properly managed, these two areas for investment could yet salvage China’s growth rate. However, infrastructure investment is constrained by the millstone of local government debt, which even the government has acknowledged as a major problem. Property development has been made controversial by the mishandling of the market by a combination of speculative developers and dodgy land sales. The government is seen as up to its neck in creating both these problems, and both indebted local governments and unscrupulous real estate developers have been pilloried in the State media. Even in China, backpedaling at this point could arouse public ire to unmanageable levels. For investors, the answer is very clear: Stimulus is necessary as soon as possible to save the economy from the dreaded hard landing, and like it or not, at least one of the flawed but heretofore best options, property or infrastructure investment, needs a boost. For policymakers, whichever way they squeeze, it is they who may ultimately feel the pinch. (The author is Chief Economist & Head of Economic Research at China Everbright Securities)

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Liberalization is the real growth engine China should learn from its recent history and go back to developing its economy by letting it off the hook By Dong Zhaohui

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urrently, China’s economic planners are challenged by two major Private enterprise, to this day the largest and most vibrant sector in China’s tasks. The first is to maintain a certain level of growth, and the sec- economy, remained out in the cold. ond one is to transform an unbalanced investment-driven growth The apparent success of these plans, which secured a growth rate of 9 permodel into a more diversified one. While all are agreed such a transformation cent or higher, won much applause, leading to the emergence of concepts like will benefit China in the long term, concerns over short term risk and the “the Chinese Model” and “Beijing Consensus.” influence of vested interest groups may still lead to the central authorities reThe celebrations, as we now see, were premature. sorting to stimulus over a shake-up. Cleaving to such a one-note model China’s leadership should learn from its has led to a massively distorted growth recent history. Since the late 1970s, China rate, for which China is now paying the Cleaving to such a one-note has experienced three periods of rapid price. Economically, as the government model has led to a massively growth. Between 1983 and 1988, China now controls the majority of available distorted growth rate, for experienced an average GDP growth rate social resources, domestic consumption which China is now paying the of 11.9 percent, which was largely the rehas stagnated, leading to a crippled serprice. sult of liberalization of price controls. The vice industry. The service sector in China second period, between 1992 and 1996, is a negligible contributor to GDP, unwhich saw an average GDP growth rate of like in developed and emerging econo12.4 percent, resulted from market reforms which dismantled swathes of the mies – both Brazil and India are currently building economic miracles of their planned economy. own thanks in no small part to booming service industries. Politically, the reA notable phenomenon in these two periods was an accompanying de- sulting income gap in China has increased social tension. cline in governmental expenditure as a percentage of GDP, a rate which fell It is now clear that China’s growth rate is not sustainable. GDP growth has from 23.8 percent in 1983 to 11.7 percent in 1997. In this period, the gov- declined for six successive quarters since 2011. In 2013, China’s new leaderernment adopted a policy of frugality and kept monetary and fiscal policy ship tried to decrease the reliance of local governments and State banks on as tight as it could without derailing growth. Economists have subsequently stimulus while advocating economic restructuring. But, as growth rate in the concluded that the rapid growth rate in these two periods was largely due second quarter of this year dropped to 7.5 percent (slightly over the central to the efficiencies of the market supplanting the shortcomings of a lopsided government’s widely-publicized “bottom line” at 7 percent), the leadership planned economy. may find its hand is forced, leading them to pump more ultimately destabilizIn the third period, between 2003 and 2007, China witnessed an aver- ing stimulus money into the faltering economy. age growth rate of 11.7 percent. At the same time, monetary and fiscal policy Decision makers must have the courage and wisdom to resist the temptawas loosened, with the government and its legion of State-owned enterprises tions of stimulus. An economic slowdown is inevitable, but, if the governcollectively becoming the country’s single biggest investor. These policies, ment can deliver effective economic reforms, the impact and duration of the launched as temporary measures in response to the Asian financial crisis, soon slowdown will be limited. China weathered a slowdown in 1989, which was became seen as all-important as they all but guaranteed maximum short-term followed by a boom resulting from further liberalization. It can repeat this growth. In the meantime, government expenditure started to expand. In cycle again. 2012, it reached 24.2 percent of the annual GDP, about the same level as it Although China does not have much of a demographic dividend left, its had in 1983, when China was still operating an inefficient, planned economy. “reform dividend” is far from exhausted. For example, there is ample room for As State-owned enterprises swallowed up smaller companies and morphed growth in slow-burning industries which ultimately generate wealth such as into gargantuan monopolies, the government took and held the lead in land healthcare, childcare and education. Through further economic liberalization, appropriation, meaning resources were slowly being reclaimed for distribution more efficient resources distribution would be able to unleash new growth by the government. In response to the global financial crisis in 2008 and fear- engines while improving the standard of living. Growth is crucial to China’s success – but only sustainable growth can enful of the impact in its backyard, the Chinese government further deepened its entrenchment in investment-driven growth by launching a massive stimulus sure that success. plan of unprecedented scale which overwhelmingly favored State-owned en(The author is an economist with the Chinese Academy of Social Sciences ) terprises and government-led construction projects.

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October 2013