1 Talking Point 5 The Week in 60 Seconds 6 Auto Industry Week in 7 Merger and Acquisitions 8 China and the World 9 Banking and Finance 11 Chinese Character 16 September 2011 13 Society and Culture Issue 122 17 And Finally www.weekinchina.com 19 The Back Page

China’s euro dilemma m o c . n i e t s p e a t i n e b . w w w

y b g u in Will China buy Italian bonds and bail out the crisis-struck eurozone? o k y n o a t B s t l t h a e g b k u o r o l a r G M B C d B n S a H Week in China Talking Point 16 September 2011

Will cross Rubicon? Italy asks China to buy its government debt and help save eurozone

fter 10 years of restoration by Askilled artisans the George C Marshall Center was reopened in the Hotel de Talleyrand in May last year. The timing was telling. After all, it was from this building that Eu- rope was last saved from economic collapse. From this iconic Parisian head- quarters, US secretary of state, George Marshall executed his eponymous plan to rescue a bank- rupt and beleaguered Europe in the aftermath of the Second World War. Almost $13 billion of Ameri- can aid helped Europeans rebuild their shattered economies and avoid financial disaster. Once again, debt-ridden Europe needs to be rescued. But with its fi- nances vying with Europe in the feckless stakes, Washington is in no position to repeat the rescue act it staged nearly 65 years ago. So who else has trillions of dol- lars of spare cash lying around? No prizes for guessing the an- swer: China. The big story this week was whether Beijing would also seek to earn political goodwill, with a re- suscitated version of the Marshall Plan, this time from the East.

China to the rescue? As the week began, markets were Not exactly a symbol of strength these days... selling off after a spate of grim head- lines from Europe. Italy, with investors worrying that who suggested Germany would In brief: the Germans seemed its own debt burden was unsus- exit the euro and revert to the ready to allow the erstwhile ‘un- tainable. An Italian default would Deutschmark. thinkable’ outcome of a Greek de- be much, much worse than a Greek Respite for battered investors, Photo Source: Reuters fault, despite rising French anxiety equivalent, say analysts – probably however, then seemed to come that their own banks would be enough to sink the euro. On Mon- from an article in the Financial worst hit by the prospect. Mean- day Bloomberg TV even inter- Times. while the contagion had spread to viewed an American fund manager It reported: “Italy’s centre-right 1 Week in China Talking Point 16 September 2011

government is turning to cash-rich lion overseas. “A similar amount in serious dent in Italy’s €1.9 trillion China in the hope that Beijing will the second half would allow China to debt pile too… help rescue it from financial crisis cover the cost of redeeming all the by making ‘significant’ purchases debt the Italian finance ministry has But are the Chinese keen? of Italian bonds and investments in falling due,” reckons the Wall Street The newsflow from China on its po- strategic companies. According to Journal. tential role as Europe’s saviour has Italian officials, Lou Jiwei, chairman In April The Economist wrote a been mixed. of China Investment Corp, one of piece along similar lines. “China On the one hand, officials clearly the world’s largest sovereign wealth could buy all of the outstanding sov- like to be cast as responsible global funds, led a delegation to Rome last ereign debt of Spain, Ireland, Portu- citizens. According to Sohu Finance, week for talks with Giulio gal and Greece, solving the euro one senior source said in an inter- Tremonti, finance minister, and area’s debt crisis in a trice. And it view that financial help for Italy Italy’s Cassa Depositi e Prestiti, a would still have almost half of its re- “benefits China and the world”. Wu state-controlled entity that has es- serves left over,” it mused. Xiaoling, a former vice-governor of tablished an Italian Strategic Fund The half that’s left over – al- the central bank and current Na- open to foreign investors.” most $1.5 trillion – could make a tional People’s Congress member The news cheered up markets immediately. “Reports that Italy is in talks with China to buy some Italian sovereign debt have com- pletely turned around the stock market. The Dow has regained about 100 points in a very short pe- riod of time,” reported the Wall Street Journal. Asian stock markets rose on Tuesday morning, buoyed by the idea of a China bailout. Other media were quick to pick up on the wider implications. “Euro propped up by China,” ran the head- line in The Australian. “The idea that the Chinese may step up and buy Italian bonds puts a halt to the idea of contagion,” Jim Bianco of Bianco Research told Bloomberg Television. “The big question is whether they follow through and buy Italian bonds.” Dim Sum bonds: The news alone was enough to the comprehensive menu help Italy auction off €7 billion of Since the Dim Sum bond market opened in Hong Kong government bonds on Tuesday (al- last year, HSBC has successfully completed 49 issuances: the largest share of the market*. beit it at an average yield of 5.5%) The recipe is simple: experience, familiarity with relevant and thus complete 70% of its regulations and an unrivalled distribution network. If you have an appetite for Dim Sum bonds, talk to HSBC. fundraising for the year. Find out more at www.hsbcnet.com/rmbmenu

Does China have the firepower to make a difference? On this score most people think yes. China has $3.19 trillion of foreign

Renminbi (RMB) is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to certain restrictions. Clients should be reminded of conversion risk in RMB exchange reserves, and they keep products. In addition, there is a liquidity risk associated with RMB products, especially if such investments do not have an active secondary market and their prices have large bid/offer spreads. RMB products in Hong Kong are denominated and settled in RMB deliverable in Hong Kong, which represents a market which is different from that of RMB deliverable in Mainland China. For individual clients, conversion of RMB is subject to the daily limit in Hong Kong, the clients may have to allow time for the conversion of RMB from/to another currency of an amount exceeding the daily limit. HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc, authorised and regulated by the Financial Services Authority, The Hongkong and Banking growing: in the first half of this year Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC, and HSBC Bank USA, NA. 11-065 *Source: Bloomberg Dim Sum Bond League Table, 2010 - June 2011, excludes self-led and synthetic RMB bonds. alone it invested a further $274 bil- 2 Week in China Talking Point 16 September 2011

also donned the Superman cape, telling investors that they “need not fear” as China was ready to boost market confidence. However, Wei Jianguo, a former vice minister of commerce, told CBN that China cannot be “the sav- iour of Europe’s debt crisis”. Wei said too that China should be in no hurry to buy more European bonds, having already made losses on ex- isting purchases (CBN reckons Eu- ropean debt makes up a quarter of foreign exchange reserves). Wei added that the future of Eu- rope could only be settled by Euro- peans themselves (pretty much mirroring what Beijing likes to say about its own affairs) and what China can do is limited. China Securities Journal was also negative: “The debt crisis in Europe has been reduced to a terrible black Would you lend your hard-earned cash to this man? hole, which means no matter how much money is injected it will be to sitions. The European Council on a larger trade deficit with the Chi- no avail.” Foreign Relations told Reuters that nese than with the Americans. Public opinion was also largely Chinese firms had invested $64 bil- The relationship with Europe sour. Though not a scientific meas- lion in Europe in the six months to remains complex. The Financial ure, Sina’s popular Twitter-like March this year. Times points out that the man Weibo gave a good idea of the mood. In an op-ed in The New York now going cap-in-hand to the Chi- One commentator asked whether Times Parag Khanna and Mark nese, Giulio Tremonti, Italy’s fi- China hadn’t learned from buying Leonard argued that China in- nance minister, has written Fannie Mae bonds. Another queried creasingly favours a G3 world – extensively in the past about his why the Chinese should foot the bill with the EU alongside the US as fears of China’s “reverse colonisa- for over-spending Italians. The gen- global partners. tion” of Europe. eral tone was that the reserves be- “The United States, the European Readers of WiC will recall our longed to the people of China and Union and China are the three Talking Point in issue 93, after a should not be wasted by bureau- largest actors in the world, together number of attempted Chinese ac- crats from Beijing on buying “re- representing approximately 60% quisitions in Europe had been spect” in Europe. of the world economy — with the thwarted by apparently national- A poll on Sina of almost 11,000 EU being the largest of the three,” ist responses (“They suck us like respondents asked whether China they write. vampires”). should buy Italian bonds. A re- (Khanna is a non-resident sen- Such experience had the China sounding 74.5% said no. ior fellow at the European Council Securities Journal asking what And asked whether the European on Foreign Relations, where China would get in exchange for debt crisis would get worse, 82% Leonard – author of the excellent lending Europe a hand. said they thought it would. book What Does China Think? – is “No matter how many times the also a director.) Chinese leaders visit Europe or buy What does it mean for China’s re- The two men see this triangular the debt of European countries, Eu- Photo Source: Reuters lations with Europe? relationship as vital to China: Eu- rope still blocks arms sales to The EU is a major market for China’s rope is a major source of high tech- China, still will not recognise exports, and likewise a significant nology and invests more in China China’s market economy status, source for potential overseas acqui- than the US. The Europeans also run still criticises China’s human 3 Week in China Talking Point 16 September 2011

rights, and still tries to force China this situation.” But when Premier 2008, with exports falling off a cliff to revalue its currency.” Wen Jiabao spoke at the World Eco- because of a drop in US and Euro- Fu Ying, the vice foreign minis- nomic Forum on Wednesday, he pean consumer demand.” ter, aired similar grievances in an sounded much less enthusiastic. HSBC chief economist Qu Hong- interview with China News Service. Speaking to an audience in Dalian, bin agrees that the eurozone debt She complained that Europe was yet he said European governments crisis remains a “big unknown” for to show that it regarded China as a should “put their own house in China’s policymakers – and there is “true partner”. order”. Wen then seemed to suggest a fear that it will drag the global that so-called richer nations now economy into recession. But he A new ‘coalition of the willing’? needed to examine the cost of their thinks China is better prepared this After breaking the story, the Finan- social models (i.e. entitlements and time than in 2008. cial Times then wrote a follow-up welfare), as well as adapt to the new “China’s growth is much less de- piece noting that China’s track realities of globalisation. pendent on exports so the amount record of delivering on its bailout He also indicated a quid pro quo of stimulus required will be much promises was unreliable. may be necessary for a deal: speak- smaller if the government has to In the past Beijing has spoken ing in terms of how ‘friend should fight a new global recession,” he publicly of buying the bonds of var- help friends’, he suggested the EU says. Back in 2008 net exports con- ious eurozone countries. Usually it should affirm China’s full market stituted 7-8% of GDP, and accounted has failed to follow through. economy status (a technical desig- for 3% of GDP growth (of 9%). Now But could the rescue party dis- nation which would get Chinese exports are 2-3% of GDP. In the first patched this time be bigger? Brazil- more favourable treatment in trade half, Qu says, net exports con- ian business daily Valor Economica disputes with the EU). tributed “almost zero” to the GDP quoted Guido Mantegna suggest- But can China afford to be com- growth rate. The upshot? Thanks to ing Brazil, Russia, India, China and placent about what happens in Eu- more domestic consumer demand South Africa were all considering a rope – and a potential knock-on and infrastructure spending, plan to switch more of their assets effect in the US? China may be in a position to be into euro-denominated debts. Patrick Chovanec, a professor at less concerned about a slowdown Mantegna, Brazil’s finance min- Tsinghua University, thinks Beijing in its export markets in Europe ister, said: “We’re going to meet probably is worried about the im- and the US. But whether it could next week in Washington and we’re pact on economic growth. “The big escape the fallout from a full- going to talk about what to do to fear for China is that it will find it- blown European financial crisis is help the European Union get out of self back where it was at the end of another matter entirely. n

Pharma firm makes netizens sick

Speaking of Europe, the Palace of Versailles has also been in the news this week, with many Chinese asking if it has been moved to Harbin. Photos of the headquarters of Harbin Pharmaceutical Group have been circulating on the internet, showing interiors with painted angels, gold leaf wallpaper and room designs worthy of Louis XIV himself. The imitation palace has stirred a mixture of bemusement and outrage, given the firm is state-owned. CCTV anchor Li Xiaomeng said on her blog: “According to Ministry of Finance data, state-owned enterprises realised a total profit of nearly Rmb2 trillion in 2010, but paid only a 5% dividend to the government. It is said the state-owned firms are the people’s enterprises, so people should know how the the profit is used.” Photo Source: China Imagine The company’s rather unlikely response? That the palace is not a corporate HQ at all, but actually intended as China’s largest woodblock print museum. “We built it for the public good,” insisted Harbin Pharma’s PR department. The entrance to the new Versailles

4 Week in China The Week in 60 Seconds 16 September 2011

Wen lectures Europe The major news items from China this week were...

It’s party time in Dalian, although the mood prom - 1ises to be a sombre one. The World Economic Forum, also known as the Summer Davos, kicked off in the city this week. Rather than a bailout, Europeans have been getting advice. Premier Wen Jiabao called for “responsi - ble” fiscal and monetary policies and also that Eurozone governments “handle their own affairs well.” He also said that if Europe and China were to treat each other as friends – i.e. if Beijing is to help with the debt crisis – the EU should accord China full market economy status (a technical designation which would get Chinese more favourable treatment in trade disputes with the EU).

Italy is keenest of all to solicit Chinese funds. Offi - 2cials in Rome announced early this week that they Wen Jiabao tells Europe: “Get your house in order” are in discussions with China over a “significant” pur - chase of Italian bonds and industrial assets. The Italians Southern China is facing a new round of power join the Spanish, Greeks and Hungarians in hoping to 4shortages, the Economic Observer reported. Manu - see more concrete steps follow the initial expression of facturing enterprises in all major cities in the Pearl River Chinese interest. Delta area were asked to cut power at different hours of the day, for two to four days per week. Analysts are wor - Two of China’s leading telecommunication equip - ried that the power cuts might increase the likelihood of 3ment providers – ZTE and Huawei Technologies – are an economic slowdown. back on the ground in Libya, two days after China offi - cially recognised Libya’s National Transitional Council China’s bank lending quickened to Rmb548.5 billion as the ruling authority, said Caijing. 5in August, rebounding from a seven-month low of Rmb492.6 billion in July, due to a slight relaxation in Bei - jing’s credit tightening campaign, said Reuters. Further policy loosening is unlikely while consumer inflation re - mains stubbornly high.

Home transactions in first-tier cities in China fell 6significantly in early September, reported Shanghai Securities News. New home transactions in the first 12- day period in September in Beijing averaged just 135 units, the lowest level since February.

An axe-wielding man in Henan province killed six people on Wednesday, including two young girls. It

P 7 h o t

o was the latest in a series of similar attacks, despite gov -

S o u r ernment pledges to prevent them. Police detained Wang c e :

R e Hongbin, a 30 year-old farmer they say has a history of u t e r s Cuts: power outages expected in Southern China mental illness, in connection with the deaths. n 5 Week in China Auto Industry 16 September 2011

Shifting into third-tier Why foreign carmakers are excited by Chinese cities you’ve never heard of

oreign car companies are look- directly, with buyers trading up as Fing for growth in some of the price gap narrows between the China’s remotest regions. cheaper entry-level vehicles and the Take Gansu, which has more mid-tier brands now being offered than its share of mountains, desert at more of a discount. and scrub. Home to a stretch of the Selling outside the big cities is ancient Silk Road, the western not an entirely new tactic, mind you. province has long been traversed In 2004, in one of the previous peri- by horse or camelback. But trav- ods of sales slowdown, China Auto- ellers should now forget beasts of motive News, an industry publica- burden and buy a Volkswagen, says tion, launched its first National Car Liu Xiaojun. Tour, visiting 100 cities. Car bosses In charge of marketing the Ger- came away with a better awareness man brand, Liu has been promoting of the potential purchasing power Volkswagen at a series of “town It is the people’s car after all: VW outside the big cities and the more square” events across Gansu. He has developed coast. a straightforward plan: park his are holding off: waiting to see if There was another push during Volkswagens in the centre of town, there will be further reductions or the 2009 financial crisis, when and locals will gather to see what put off by the rising cost of credit. sales growth dropped to 8% and the the fuss is about. Then send in the Worsening traffic in the bigger cities government introduced subsidies salespeople to talk face-to-face with may also have disssuaded some po- for some vehicle types sold in the potential customers. tential buyers. countryside. Up to 300 people per event have Even during the days of acceler- But generally it has been the do- been expressing an intention to buy, ated growth, third and fourth-tier mestic brands that are better es- Liu told the Nanfang Daily. cities offered better-than-average re- tablished outside the larger cities. Volkswagen is one of a number sults, with an executive telling What’s different this time is that of foreign car brands making a push Southern Weekend that Volkswagen the foreign marques are also mak- into China’s less developed regions, experienced 100% sales growth in ing more of an effort to expand. As with Nissan, Ford and Chevrolet also 2009 and 50% in 2010. But there these models also tend to be holding similar events in third and now seems to be a more deliberate higher-priced, the move can also be fourth-tier cities. effort to chase sales outside the ma- interpreted as evidence of im- The focus on frontier territory is jor urban centres. The newspaper proved spending power in the in- being driven by slower sales in more also spoke to a Nissan representa- land economy. mature markets. After two years of tive who said that more than 50% Hence the need to widen sales annual sales growth of 45% and 32% of its sales are coming from third- and distribution networks, in search respectively, the industry is now tier markets and below. of a broader commercial footprint. having a breather. Car sales are now It helps, of course, that few of Zhengtong Auto recently an- forecast to grow just 3-5% this year, these locations have the restrictions nounced that it would pay Rmb5.5 according to the most recent pro- on car ownership now introduced billion ($860 million) to acquire jections from China’s State Infor- in cities like Beijing, Shanghai and Shenzhen SCAS, one of China’s Photo Source: Reuters mation Centre. Guangzhou. largest dealerships. It is the third As a result many brands are The dropping of a two-year sub- such acquisition that Zhengtong has struggling to meet targets, and sidy programme for purchases of made this year. some are cutting prices. Consumers smaller cars may also be helping in- Next stop Gansu, perhaps. n 6 Week in China M&A 16 September 2011

Haier ground Sanyo’s white goods business bought by Chinese firm

n 1998, Haier chairman Zhang world-class solar panel manufactur- IRuimin became the first Chinese ing facilities. entrepreneur to give a speech at This also looks in keeping with a Harvard. And he grasped the oppor- trend among Japanese conglomer- tunity, offering up his personal take ates to defend higher-value sectors, on mergers and acquisitions, suc- while ceding ground on lower mar- cess in which he approximated to gin businesses like white goods. Up- “reviving shocked fish”. stream materials, components and Not a business philosophy famil- their applications “will be the foun- iar to much of the Harvard faculty, dation of success in the future in- perhaps. But actually rather a strik- ternational electronics industry,” an ing analogy. According to Zhang, industry insider told the National shocked-fish companies have po- Business Daily. tential but lack solid management. Haier will be hoping that its Get the leadership right, and they low-cost manufacturing model will stop flapping about. Replete with a be able to squeeze more cash out of new sense of energy and purpose, the Sanyo name. And it’s following they are ready to compete. in the steps of other Chinese com- (Zhang is famous in China for his Haier: promises to deliver panies to turn a little Japanese this innovative management philoso- year. In March, BYD bought a fac- phies. When he became Haier’s boss competition from local rivals keen tory from metal die maker Ogihara in 1984 one of his first acts was to to keep the Chinese newcomer off Corp, and Shandong Ruyi, a textile take a sledgehammer to a poorly- their patch, leading to Sanyo Haier’s group, also became the largest made fridge. After that dramatic closure in 2007. shareholder in Renown, a Japanese gesture, quality control improved But Haier didn’t give up on the clothing company. The acquisitions rapidly. ) Japanese market. Although it fo- suggest that completing of overseas Zhang’s fans will now be looking cused on sales of cheaper appliances deals is becoming less of a problem to see whether Haier’s recent acqui- at first, it changed strategy last year for Chinese companies than it once sition of Sanyo’s white goods busi- by releasing a higher-end product was. But the real work then starts in ness accords with his fish funda- range, along with a target to quadru- integrating the international assets mentals. The Chinese company ple local sales to ¥30 billion ($390 into a profitable operation. agreed to pay Panasonic a reported million) by 2015. The incorporation “The current level of internation- $130 million for its Sanyo washing of some of Sanyo’s local assets into alisation of domestic enterprises is machine and refrigerator units in the business will be expected to help not high,” says He Maochun, pro- Japan and southeast Asia. As part of achieve that goal. fessor of international relations at the deal, Haier has also purchased The deal has drawn criticism too, Tsinghua University. “The key for rights to Sanyo’s Aqua washing ma- with some analysts questioning the them is not the M&A itself but chine brand. worth of the Aqua sub-brand. rather the ability to manage effec- The two companies have a his- Sanyo’s overall image is also per- tively post-merger, which will then tory of working together. In 2002, ceived as weaker than most of its allow the company to develop sus- Photo Source: Reuters they established joint venture, Japanese competitors. tainably.” Or as Haier’s Zhang would Sanyo Haier, which sold Haier prod- Nor did Panasonic sell all of its put it rather more pithily: they need ucts through Sanyo sales channels Sanyo assets to the Chinese, keep- to make sure the fish stops flapping in Japan. It was met with intense ing businesses like the company’s once they’ve caught it. n 7 Week in China China and the World 16 September 2011

India outmuscled New Delhi worries about China’s growing might

“ eapons are like money; no Liberation Army (PLA) numbers Wone knows the meaning of 2.25 million versus India’s 1.1 mil- enough,” British author Martin lion troops. New Delhi spends 1.8% Amis once warned. Today, two of of national GDP on defence, com- Asia’s military giants are working pared to an official spend of 2.25% on proving him right. in China. China has hiked its annual de- Aside from the amount, there is India’s thin red line fence budget this year by 12.7% and also the question of how effectively now spends $91.5 billion on its it is spent. According to Indian web leased a white paper on China’s armed forces. Or perhaps more: a portal Rediff News, boosting expen- “peaceful development”. In case of recent article in the Financial Times diture will not necessarily solve all confusion, it points out: “The Chi- quoted a retired lieutenant-general the problems plaguing Indian de- nese nation loves peace. China will from the Indian military with an es- fence policy. The country’s defence not engage in arms races with any timate of unofficial spending tak- acquisition process has been mired other country, and it does not pose ing the total to $150 billion. in corruption, preventing the de- a military threat to any other “How are we going to compete?” fence ministry from spending its country.” he wondered. His counterparts in full budgetary allocation for years. To be fair, there have been a few the military are asking the same And then there is the leadership widely-reported incidents that have question, and have urged New from the top. As the retired lieu- run counter to that claim (especially Delhi to beef up its own spending. tenant-general put it in the FT arti- a maritime tussle with Vietnam, see India’s defence budget is $32 bil- cle: “We have celebrated our 64th in- WiC111). However, it appears one re- lion – almost a fifth of Beijing’s dependence day, and we still don’t cent military controversy was a me- outlay (if the estimate of ‘unoffi- have a national security strategy.” dia invention. In July it was reported cial’ spending is to be believed). But do the Chinese feel the ri- that the Indian Navy ship INS Aira- WiC has covered before some the valry with India quite so keenly? vat was confronted by the Chinese of uneasy history to Sino-Indian In fact, the question extends into en route to Vietnam, asked to iden- military rivalry. India lost a border other spheres of Indian society: the tify itself and explain its presence in war with China in 1962, and the New York Times reported recently ‘Chinese Waters’. This inflammatory two nations continue to disagree that making comparisons with news caused anger in India. on the demarcation of a 4,000km China had become a “national ob- But the Economic Times now re- stretch of shared frontier (see session” for many Indians. ports that an Indian navy spokesper- WiC35). India also worries about But the fixation looks a little one- son denied it even happened: “There the nuclear and financial assis- sided. “India measures itself against was no confrontation involving INS tance provided to its rival Pakistan a China that doesn’t notice” was the Airavat. Media reports of it being by the Chinese (see WiC72). There article’s headline. stopped by a Chinese vessel are in- have also been spats over water se- In fact China’s PLA seems much correct.” curity (Chinese dams in Tibet), as more energised by evening-up the And on the business front a more well as anxiety about perceived balance of power with US forces in cooperative tone too: Dow Jones re- naval encirclement (see WiC35 to the Asia-Pacific region. Meanwhile ports that Chinese banking giant Photo Source: Reuters read about Indian distress at a new China’s own government wants to ICBC has just opened a maiden Chinese-built port in Sri Lanka). get out the message that it has no branch in India to fund investments Numerical comparisons don’t hostile intent. in the power, telecom and infra- augur well either. China’s People’s Last week the State Council re- structure sectors. n 8 Week in China Banking and Finance 16 September 2011

Our word is our bond IOUs, bonds and local government finance

wo years ago, Liang Weishi be- Another anticipated benefit is Tcame interested in family his- that the new bonds could satisfy tory. Rooting around in the demand for more investment op- ancestral home, he found the infor- portunities in fixed income prod- mation he was a looking for, reports ucts, with banks and insurers get- the Nanfang Daily. It took the form ting a steady return on local of IOUs given to his grandmother government bonds. by a squadron of Chinese guerillas. That is only if the issuer proves Dating back to 1941, they men- capable of paying the money back, tioned the rice, silver and gold she of course. And fears about credit- had lent them on pre-agreed repay- worthiness inform the opposing ment rates. side of the debate: that it is a mis- Liang presented one of the docu- take to allow local governments to ments to the Jiangmen local gov- issue debt because so much of their ernment and received a one-off pay- tax revenue is unpredictable, with ment of Rmb20,000 in recognition a heavy reliance on land sales. of his grandmother’s loan. But when Local governments are also al- he took a second, larger claim to the ready burdened with existing debt. authorities, he was told that this National Audit Office figures put lo- debt would not be honoured. Offi- cal debt at Rmb10.7 trillion at the cials questioned his right to inherit “Will they ever repay?” end of 2010, representing 27% of na- the commitment from his grand- tional GDP. mother before insisting that troops initial quota of Rmb10 billion for How does that square up with at the time had been representing fundraising, which is expected to be the stipulations under the Budget the national government and not released by the end of the year. Law that local governments have the local authorities. This could prove to be a radical to balance the books? In fact, local But there was another good rea- shake-up of the current system. Lo- treasurers have been borrowing son for Jiangmen’s civil servants to cal governments have been forbid- money but only indirectly, with the reject the request for repayment. den from issuing bonds since 1993, central government issuing bonds Private loans made before 1949 usu- when the central government be- on their behalf. Or funds have been ally paid monthly interest. And on came concerned that they would raised via an intermediary, like the this basis, some netizens have cal- not be able to pay back their loans. local government financing vehi- culated that Liang is owed Rmb3.4 Furthermore, a national Budget Law cles now undergoing so much trillion, which would take the city introduced in 1995 decreed that lo- scrutiny after the tidal wave of in- 342 years to pay out of it current fis- cal governments were unable to op- vestment that has gone into infra- cal revenue. erate under a deficit. structure projects over the last Institutional investors may want But the hope is that relaxation three years. to take note of Liang’s experience, as in the rules may help create a Proponents of the pilot scheme it bodes ill for a new scheme that more systematic framework for argue that, if local governments do will soon allow local governments other local governments to follow start tapping the bond market more Photo Source: Reuters to issue bonds of their own. when issuing debt in future. Local directly for credit, it might help with The pilot phase will start in richer governments will also enjoy lending transparency. Investors will provinces such as Guangdong and greater freedoms to manage their also pick issuers with better credit Zhejiang. Each will be allocated an own finances. records, rewarding those who run a 9 Week in China Banking and Finance 16 September 2011

tighter fiscal ship. The rule changes ing to concerns about what will Debt levels were “controllable”, will “open the front door, close the happen in event of defaults. Xu Lin, head of fiscal and financial back door and build fences,” Jia We may soon find out, as large department of the NDRC, the state Kang, director of the Research Insti- chunks of the debt begins to mature planning agency, told the China tute of Fiscal Science, told National this year. Cracks first began to ap- Daily. Regulators “at all levels” have Business Daily. WiC’s quick transla- pear in Yunnan, where a local high- been paying attention to risk con- tion: open and transparent system way project defaulted earlier this trols, Xu assured the newspaper, (the front door); harder to squander year (see WiC113). But rumours in- and “active measures” had been (the back door); and clearer to po- tensified this month, following an taken in some regions. lice (the fences). article in Xinhua suggesting that The consensus view is that there As things stand today, much of 85% of the funding platforms in is little likelihood of widespread de- the lending is being forced through Liaoning province have already fault, especially since much of the quasi-official channels, including missed payment deadlines. The re- repayment will likely be rolled over the murkier world of the local gov- port said 156 out of 184 financing onto longer-term schedules. ernment financing vehicles. Regu- platforms in Liaoning were unable The next big change will be to lators are still struggling to work to make repayments because of in- improve the revenue side of the lo- out exactly how much has been sufficient revenues. cal government balance sheet. For borrowed, with different agencies State officials then tried to rebut example, if property taxes are in- coming up with competing esti- the claims, as well as emphasise troduced, those buying the new mates. Nor is the legal status of all once again that the burden is man- municipal bonds will do so with of the financing vehicles clear, lead- ageable. more confidence. n

Who’s Hu: Liu Baolin Profiles of China’s business leaders

Born in Yingcheng, Hubei province, Liu Baolin dropped out of good timing: the golden years of China’s pharmaceutical industry,” school to support his family. At 16 he became a barefoot doctor, Liu told China Youth Daily at the time. working in poor neighbourhoods to deliver basic healthcare. In 2010 Jointown Group had sales of Rmb21.2 billion, with Buoyed by the experience, he decided to change tack. In 1985 he profits of Rmb360 million. Operating 14 province-level logistic set up a medicine wholesaler in his hometown. bases and 25 distribution centres to supply more than 20,000 different medical products, Getting started Jointown Group is the leading non-state Liu was his own leading salesman. He shuttled medicine distributor in China. back and forth between villages, carrying a basket of medicines on his shoulders and Need to know. knocking at the doors of clinics. The business did His many years as a barefoot doctor have given Liu well enough for Liu to buy a house locally and a different perspective to some of his competitors, take a break from work while he looked for other he says, making Jointown different from the state- opportunities. Figuring that logistics for owned firms, like Shanghai Pharmaceutical Group pharmaceutical firms would become a profitable and Sinopharm, which focus more on sales to sector he travelled south to Hainan, where market hospitals in the bigger cities. reforms had been accelerated. Then he began But Jointown also targets small hospitals and planning for a wider distribution network, linking drugstores, as well as rural areas, meaning that it medical wholesalers with local pharma firms. understands how important it is to keep prices down to the minimum, as even a cent less in price Big break can mean a medicine is purchased. Liu claims that Liu’s opening came in 1999, when restrictions on private this is giving Jointown a commercial edge itself, with a widening investment in the pharma industry were further relaxed. The distribution but an ability to generate profits on low-priced following year, he founded Jointown Pharmaceutical in Wuhan medicine. Recently, he inked a deal with Pfizer, to sell Pfizer

Photo Source: China Imagine focusing on pharmaceutical distribution, logistics and retail. products in rural areas. Jointown made sales of Rmb300 million in its first year, and was hitting Rmb1.2 billion in revenues by its third. In 2007, Liu brought And to relax in foreign capital through a new joint venture, and last year the Think of the company as your home, says Liu. And he seems to company listed in Shanghai, raising Rmb900 million. “We’ve had mean it literally, by keeping a bedroom next to his office.

10 Week in China Chinese Character 16 September 2011

Icy reception Meet the property tycoon who wants to buy up Iceland’s wilderness

ancy a trip to the Country Music FHall of Fame? Probably not. But more than four million fans have al- ready visited the museum in Nashville, doffing their ten-gallon hats in homage to luminaries like Dolly Parton, Tammy Wynette and Hank Williams. Perhaps the hillbilly boogie was what first brought Huang Nubo to the city in Tennessee, where he has invested in a high-end resort. At least it makes a little more sense than his latest tourism target: Grimsstadir a Fjollum, a desolate patch of northeast Iceland. Huang, 55, spent $9 million on 300 square kilometres of the Ice- landic wilderness and says he will spend another $150 million to build a luxury hotel and golf course. The new resort will join a list of more than 40 tourism properties that Huang: “I’m just a businessman – I didn’t want to be a bureaucrat” Huang’s company is said to own around the world. wrote on his blog: “It reminds me Zhang Bo, a Chinese military ex- But the South China Morning of the plot of a James Bond movie – pert, also says that the conspiracy Post summed up much of the media a mysterious Chinese tycoon sud- theories are unfounded. “It is too commentary on the latest acquisi- denly pops up and buys a huge piece much effort and cost to develop a tion, saying the deal seemed “fool- of land in the middle of nowhere.” strategic base thousands of miles hardy and eccentric at best”. Huang insists he’s no Blofeld, away in Iceland. This does not meet Hence the rumours that the proj- even though he’s listed by Forbes as the reality of China’s current devel- ect is a cover for darker motives. China’s 161st richest man with a for- opment, as well as the interests of Some suspect that the purchase tune estimated at $890 million. the Chinese people.” from the former official in the Com- But he is annoyed by the fuss be- Huang says his motivations are munist Party’s propaganda depart- ing made around the deal. rather simpler, and that he fell in ment is part of a “Trojan horse” “The government may say: love with Iceland after sharing a strategy, in a broader move by Bei- ‘Please do not go, do not make trou- room with an Icelandic student dur- jing to get access to trans-Arctic ble’,” he told Reuters in an interview, ing his time at Peking University. shipping lanes. referring to his application to the His attachment was confirmed last These could soon open up as po- Chinese government to approve the year when he travelled to Iceland for Photo Source: China Imagine lar ice caps melt, says the Financial purchase. the first time to sponsor a poetry Times. “Maybe they will think: ‘Do not festival (Huang is an avid poet). So Icelanders aren’t too sure what to arouse any unhappiness for Sino- much so that he pledged to invest $1 make of it either. Iceland relations.’ Then I will just million to establish a ‘China-Iceland One of them, Uffe Ellemann, give it up.” Cultural Fund’ for cultural exchange 11 Week in China Chinese Character 16 September 2011

over the next 10 years, says the 21CN World Heritage Site, for its “out- then started to turn his attention Business Herald. standing example of traditional hu- overseas. Huang says he is only interested man settlement”. But the real break In 2003, Zhongkun spent $4 mil- in Iceland’s tourism potential, and came when the village was featured lion building a 20,000 square metre that its natural landscape will attract in Ang Lee’s Crouching Tiger, Hid- commercial centre in Los Angeles. tourists. den Dragon. Visitors began turning Huang also owns a holiday resort in “I’m just a businessman – why up by the busload. Hokkaido, Japan’s northernmost is- does everyone think I have the gov- After success in Hongcun, Huang land. And the firm purchased a ernment at my back? It’s true that I turned to other tourism projects 1,000-hectare land parcel in have a government background but around the country: stone villages Nashville with the goal of con- I didn’t want to be a bureaucrat,” he and tombs along the old Silk Road in structing a resort. The project was told the Beijing News. Xinjiang; hunting and skiing resorts suspended after the onset of the Indeed, Huang spent the early in Inner Mongolia; and temples in subprime mortgage crisis. part of his life on the wrong side of Mentougou in western Beijing. Still, Huang hasn’t given up in politics. When he was only two years Huang’s critics say he got first Nashville, with Zhongkun resuming old, his father committed suicide af- dibs on these deals because of his construction of the resort in last ter being branded “a rightist”. To government connections. Another year. It hopes to add it as an attrac- counter the stigma, Huang changed gripe is that local people themselves tion for members of the Hawthorn his name from yuping, which haven’t made much from Vacation Club, a club that it oper- means “jade-peaceful” to nubo, Zhongkun’s investment. Take Hong- ates. This gives China’s wealthy ac- which means “angry wave,” so he cun: it welcomed more than cess to it resorts and helps them to could join the Communist Party 530,000 visitors in 2005, collecting buy properties in the vicinity. when he was 16. ticket sales of $2.3 million. But of When he’s not talking about His fortunes turned in 1977, when that amount, two-thirds went to property, the tycoon prefers to dis- he was enrolled in Peking Univer- Zhongkun. cuss poetry. As vice president of sity. After he graduated, Huang Huang refutes the allegations, the Contemporary Chinese Poetry found a job in the propaganda de- telling the Los Angeles Times that Research Institute of Beijing Uni- partment and became department he reinvested all profits from Hong- versity, Huang’s verse is composed director at the age of 29. Like many cun in developing local hotels and under the pen name Luo Ying, and other entrepreneurs, Huang left his other attractions. has been published in English, government position to set up on He also denied receiving special Japanese and French. Huang says his own, in his case the property favours from government officials: he is now working on a new poetry company, Zhongkun. “I was just an ordinary civil servant collection, as well as studying for a His big break came in 1997, when at the time and did not want to work doctoral degree. he signed a deal with the govern- at the government anymore so I Perhaps he is also hoping for a ment of Hongcun in Anhui to turn started my own business, which is little inspiration from the Icelandic the impoverished village into a not unreasonable. If somebody says landscape. “I am always craving new tourist attraction. Huang invested that I still have government back- horizons and new challenges. Like Rmb5 million to repair roads and ground, this is a completely false any poet, I am imaginative and not upgrade nearby hotels. In 2000, the speculation,” he complained. very practical,” Huang told Shen- United Nations named Hongcun a Like many other tycoons, Huang zhen Daily. n

Confident in China

“China got through the Asian crisis, and the 2008 financial crisis, with an almost unchanged growth pattern. We are confident China will manage it this time too.”

* Dieter Zetsche, chairman of Daimler, speaking to Bloomberg TV at the Frankfurt car show Dieter Zetsche

12 Week in China Society and Culture 16 September 2011

Talking about a revolution New film deals with the sensitive subject of the 1911 Xinhai revolt

lmost a century ago, on Octo- Aber 10, 1911, Qing dynasty sol- diers and members of Sun Yat-sen’s Chinese Revolutionary Alliance rose up against the ancestors of Aisin Gioro Wei Ran, ending 278 years of rule by the once-mighty Manchu. Today, the 50-something busi- nessman Wei Ran (Aisin Gioro is his full family name, matching that of the former ruling dynasty) dodges questions about his royal heritage. That’s a reflection of how the family name has faded, along with the Manchu language itself (only 100 people still speak it, reckons the South China Morning Post). But Wei may find himself back in the spotlight soon, after the Sep- tember release of a film about the overthrow of his family. The Xinhai Revolution marks a crucial moment in republican his- Li Bingbing: stars in movie alongside Jackie Chan tory, culminating in the abdication of boy-emperor Pu Yi in February “That name only applies in Tai- ring-do general Huang Xing, Sun’s 1912, after almost two decades of de- wan,” Zhang replied, according to fellow revolutionary. termined, if sporadic, resistance to 163.ent.com. Actress Li Bingbing plays Huang’s the Qing by Chinese nationalists. It was a wise response. Commu- love interest and wife, while Tai- In a world increasingly connected nist orthodoxy relegates Sun to a wanese actor Winston Chao is play- by telegraph, rail and ship, Qing position below Mao Zedong in the ing Sun Yat-sen. mismanagement and corruption political pantheon, brushing over The Xinhai Revolution started al- had become impossible to obscure. the tensions that still simmer from most by accident, after explosives The perception that the dynasty was China’s contentious modern history assembled by the revolutionaries incapable of reform then fuelled the (Sun’s political successors lost the went off in Wuchang, or present-day wider discontent that spurred Sun civil war in the 1940s and decamped Wuhan. and his fellow republicans. to ). Army units sympathetic to Sun Not that Sun himself will be given Still, the film itself promises to Yat-sen’s Chinese Revolutionary As- top billing by the film’s promoters, be great fun, if only for the specta- sociation then rose up to avoid cap- who have been cautious about over- cle of Jackie Chan appearing in his ture by Qing officials. Photo Source: China Imagine doing the red-carpet treatment. hundredth movie but just about After 20 years of abortive up- Hence director told a re- his first in a serious (and appar- risings, this one finally took hold. cent news conference he doesn’t re- ently romantic) role. Insurrection spread around the gard Sun as “the father of the na- Chan crowns a cast of about 70 country like “the single spark that tion”. well-known names, and plays der- can set off a prairie fire”, to use a 13 Week in China Society and Culture 16 September 2011

phrase coined by Deng Xiaoping a ordered the abolition of the luniso- cept for China, where the People’s few decades later. lar record, the 60-year cycle of days Daily ran a story about a tour made Other themes from the revolu- and years in use for 3,000 years – by Zhu Rongji, then premier. tion will also resonate for modern and which gave the name to the year In fact, the majority of Chinese Chinese audiences, some of them a 1911: Xinhai (辛亥). viewers never even saw footage of little uncomfortably for Deng’s suc- the terrorist attacks that day. cessors. For one, the problem of cor- That’s because CCTV elected not ruption, which present-day leaders to run the story that night. Only regularly attest as the greatest threat Phoenix TV, the satellite station, re- to Communist Party rule. Also the Towering time ported the event, to an audience of aspiration for reform: in 1911, the China and the anniversary of about 150 million. Qing were thrown out after shying September 11 Shortly before the attack on the away from economic or administra- World Trade Center, Sino-US rela- tive change. hen CCTV news anchor Bai tions had taken a turn for the worse. Scholars look back at 1911 as a wa- WYansong went to visit the A collision between an American tershed moment, and a time when Newseum, a museum in Washing- surveillance plane and a Chinese China made a decisive break from ton that collects the world’s major fighter off the Chinese coast had its historical traditions. Even the cal- national newspapers, he had a sud- quickened the diplomatic pulse in endar was torn up by the republi- den shock. After the September 11 April the same year, and George W cans, according to Daniel Kwok, writ- attacks on the World Trade Center, Bush had labelled China “a strategic ing in a paper presented to the almost every newspaper around the competitor”. He also pledged to do University of Hawaii in March. Sun world had headlined the event. Ex- “whatever it takes” to help Taiwan.

Red Star: Shangjun

Who is he? grew up in Beijing and studied at the , where he met his friend , one of the most successful independent filmmaker in China’s history. Cai was the screenwriter for three of Zhang’s films: (1997), Shower (1999) and Sunflower (2005).

Why is he famous? Cai turned to filmmaking in the late 1990s. His first film, The Red Awn, won the FIPRESCI Prize at Korea’s Pusan Festival in and the Golden Alexander Award for best film at Greece’s Thessaloniki International Film Festival among other awards.

Why is he in the news? Cai: surprise winner in Venice Cai received the for best direction at the Venice Film Festival for his film Ren Shan Ren Hai (“People Moun- Each year, the title of one film in the festival’s main com- tain People Sea”). Based on a true story, the film follows a petition is kept secret until moments before its premiere. Photo Source: China Imagine man who hunts down the murderer of his younger sibling. But it seems that Beijing was also surprised by the entry. “In times of rapid change,” Cai said in a statement, As it turns out, the film was apparently not approved by “how do we find peace of mind and our true self?” Chinese censors before showing in Venice, something that The movie is also the ‘surprise film’ in Venice this year. might have negative consequences for the director...

14 Week in China Society and Culture 16 September 2011

So perhaps it should come as less can look back on their reactions with- of a surprise that some Chinese were out such shame. Pan Shiyi, perhaps soon expressing pleasure at Amer- China’s most high-profile real estate ica’s misfortune. developer, was so shocked by the ter- Plenty of netizens posted mes- rorist atrocity that he rallied friends sages suggesting that the US de- and arranged a public memorial. served it. However, even that didn’t go well. “When my teacher told us [that Bizarrely it was considered a sub- the 9/11 attacks had happened], all versive act and he was taken away by the students were shocked. Every- the police for questioning (his wife, one was silent at first, but then some Zhang Xin recalled this incident on people in the class started cheering, her Sina Weibo). saying that the US deserved what it Newspaper columnists have also got for putting pressure on other been pondering the September 11 at- [countries],” one netizen guiltily re- tacks from a different perspective: called last week on weibo. their impact on Sino-US relations. Ning Caishen, a well-known play- The mood would likely have turned wright, also admits to being one of much more hostile, says Thomas those who celebrated. A decade on, Chinese remember Friedman, a columnist at the New “Ten years ago today, I was in Bei- York Times. Instead, in the after- jing and saw on TV the first jet hit the US would go with them.” math of the attacks, the Bush ad- the first tower. I was so excited and Like many others, Ning now ex- ministration set aside ideological my heart leapt with joy. Then the presses regret for his response. Sina differences and sought common next plane hit the second building, journalist Quan Jing was similarly purpose in pursuit of a new priority and I couldn’t even contain myself,” reflective: “We should think about – the War on Terror. Ning wrote last weekend. how many of us reacted to the at- “The attacks put America and “I prayed it would hasten the col- tacks with schadenfreude. Are we China on the same side of a new di- lapse of the two buildings, and guilty of too much nationalism and vide between the world of order and hoped that the Pentagon, the Statue not enough humanism?” the world of disorder...the fact that of Liberty, the White House and all Of course, there were some who tensions didn’t increase was a big geopolitical dog that didn’t bark,” says Friedman. Some also say that September 11 Planet China has an important place in China’s Strange but true stories from the new China subsequent ascent. The Bush ad- ministration’s response was to fo- PANDA POO. Kopi Luwak is a famous coffee from Indonesia, often cus its attention on the Middle East, regarded as the world’s most expensive. Why? It’s derived from beans and China made the most of that which are eaten by civet cats and then defecated; whereupon the farmers time to make new friends, and score pick them up, wash them and dry them in the sun. new energy and commodity con- The result is an aromatic flavour less bitter than ordinary varieties. tracts, says Forbes China magazine. But what, you may be asking, has this to do with China? As it turns out an academic from Sichuan University seems to have been inspired by Kopi Luwak into creating a new and extremely expensive variety of tea. The Tianfu Morning Post reports that An Shi has recently obtained a patent from Sichuan’s IP bureau for a tea made from panda poo. An says it General chaos is the “world’s most creative tea” and should sell well on the basis of the scarcity of panda droppings alone. Plus he predicts health benefits, noting Tempers fray on Beijing roads that pandas eat bamboo (which has anti-cancer compounds), as well as significant nutritional upside (panda faeces contain 70% nutrients due to id-Autumn festival is tradi- Photo Source: Reuters the animal’s poor digestive abilities). Mtionally a time for eating, An began making Panda Tea a year ago and is currently selling 500g of it drinking, matchmaking and for Rmb220,000 (about $34,000). moon-gazing. Held on the 15th day of each lunar cycle, this year it fell 15 Week in China Society and Culture 16 September 2011

on Monday. bility for his actions. Those who wanted to catch an “This is not an exaggeration,” the auspicious glimpse of the moon newspaper warned. were left disappointed. The skies of “As past lessons involving chil- northern China, normally clear at dren of privilege abusing their this time of year, were stormy after power have shown us, such small a prolonged rainy season. events can often ignite greater pub- On Thursday and Friday of last lic dissatisfaction, threatening the week, the heavy rain and pre-festival very foundations of the govern- traffic also brought many of Bei- ment.” jing’s roads to a standstill. Media In October last year, the son of an said the traffic was worse than the influential police officer in Hebei same period last year, with 146 roads province knocked over two stu- choked off completely during dents, killing one. evening rush hour on Thursday. As he fled the scene he report- The gridlock caused many driv- edly shouted “Sue me if you dare. ers to vent their frustration, and Enough to drive you crazy? My dad is Li Gang.” likewise saw many netizens ques- Since then the phrase “My dad is tion the Economist Intelligence But while the storm over Beijing Li Gang” has become synonymous Unit’s recent finding that Beijing traffic was only of interest to local with corruption, arrogance and the was China’s most liveable city. residents, another vehicle-related sense of self-privilege among elites “How can such small rain be story got the whole country talking and their family members. enough to screw up the entire – so much so that micro-blogging On Thursday, Li Shaungjiang – city’s traffic? How can this kind of websites are thought to have begun who holds the rank of general in the city be judged China’s most live- censoring posts on the subject. People’s Liberation Army (solely for able?” netizen Lanyezi fumed on his Last Tuesday evening , the 15 year- his singing abilities, mind you) – weibo account on Thursday. old son of one of China’s best known made a highly-public hospital trip Netizens also lashed out at people singers of revolutionary songs drove to apologise to the injured couple, trying to deliver mooncakes –– pas- his souped-up BMW into the back and admit to parenting failures in tries stuffed with lotus seeds and of another car. In the argument that how he’d raised his son. red bean paste. The cakes are tradi- ensued, he then assaulted its two Since then, it seems, weibo posts tionally exchanged between family passengers. relating to the initial event have dis- members but in recent years it has Witnesses to the attack, which appeared. n become increasingly common to happened at the gate of an upmar- send deluxe versions as gifts to ket residential community in north clients and government officials. western Beijing, reported that Li Keeping track Many of those entering the capi- Tianyi and another, older boy, tal were said to have descended on shouted “Who dares call the police?” In WiC119 we detailed Kan Yue-Sai’s Beijing from out of town to deliver several times before trying to run attempts to coach Miss China Luo Zilin to the crown. The their culinary presents, thereby away. event was held in Brazil on worsening the jams. Anger was then Pictures of car, sporting a park- September 12, with Luo placing a vented online that these mooncake ing pass to the Great Hall of the Peo- respectable fifth (the winner was Miss gifts (some given in boxes contain- ple, quickly spread across the inter- Angola, in case you wondered). Luo’s ing gold ingots) are just another net, feeding into existing outrage at chances of winning were dashed when she was asked what Kan symptom of a system increasingly the behaviour of some of the chil- described as an “inane” question driven by corruption (for more on dren of China’s rich and powerful – during the Q&A round. The question this gift-giving culture, see WiC120). they are called fuerdai and guaner- was: nude beaches are common in One travel website posted that dai in Chinese some parts of the world. Is public traffic had got so bad on Thursday The state newspapers also cov- nudity appropriate or inappropriate? This floored Luo. As Kan told the Wall that buses were running way behind ered the story with the Global Times

Photo Source: Reuters Street Journal: “Maybe her answer schedule and one man claimed on warning that Li Tianyi’s behaviour was too Chinese. She said you have weibo to have spent two and a half had the power to threaten China’s to respect the decision of the hours in a taxi on a ride which social order, and also that his father, government policy.” would normally take 30 minutes. Li Shuangjiang bore some responsi- 16 Week in China And Finally 16 September 2011

Return of the native Why some Chinese are deserting cities

hink of modern China, and the Another article, this time in the Timages are often of gleaming Western China Metropolis Daily, il- skyscrapers in Shanghai or the lustrates something similar. (somewhat grubbier) factories of It tells the tale of Wang Qinsong Guangdong province. and his wife. Wang was a high-flying In other words: fast-paced eco- graduate of Peking University nomic growth. (known locally as Beida) who went Running counter to the stereo- on to teach law, making a good liv- types is Yaxi, a small town in Jiangsu ing. But eleven years ago, he and his province, which has just won an wife disappeared from city life. award for going a lot more slowly. Wang’s Beida classmates heard noth- Back to nature “Yaxi is unquestionably beauti- ing more from him and speculated ful, like a tableau from China’s that he’d “gone abroad, become a very guilty as a father. Should the preindustrial past,” writes TIME. monk or committed suicide”. boy go to a school, to socialise with And what marks Yaxi out from It turned out that the Wangs had other children? Education is the peers, says the magazine, is its abil- moved to the mountains that bor- right of his son. This is the key rea- ity to offer its residents a better der Hebei province. They rented 166 son why Wang has decided to re- quality of life. In recognition, it was hectares of land, grew their own turn to society.” designated China’s first Slow City. sorghum, corn and cabbage, and Wang’s story emerged when he The award was bestowed by kept goats, mules and chickens. contacted his former classmates to Italy’s Cittaslow International, an They lived largely on a natural diet, let them know of his return (one of organisation that has grown out of as well as using natural alternatives whom was a journalist, fortunately). the ‘slow movement’. This philos- to washing powders, soaps and Wang now plans a return to Bei- ophy started out with a focus on toothpaste. One of the few things jing, where he hopes to sell organic food in 1986 (and a protest outside they bought from ‘the outside vegetables. But his great ambition a McDonald’s outlet in Rome) but world’ was salt. is to write a book about his expe- now has offshoots in areas like In this pollution-free environ- riences that wins the Nobel Prize, travel, lifestyle, design and even ment they could be much surer of he says. parenting. the food that they were eating (a A little ambitious, perhaps. But How did Yaxi qualify as a Slow major issue in China, see WiC96 or Wang’s track record shows he has City? Winners must have popula- WiC110). few qualms about aiming for the tions of less than 50,000, and be This was a particular area of con- unusual. committed to sustainable practices cern when the couple had a son, who After one former classmate had in farming and industry. grew up homeschooled in the Chi- arrived to visit him at his mountain Yaxi has done just that, booting nese classics but spent his after- home, Wang recalls how his wealthy its only polluter – a chemical factory noons as a goatherd. friend was shocked at his primitive – out of town 20 years ago. In fact, it was the boy’s growing existence. While urbanisation is usually up that began to draw his parents Says Wang: “Most people only see cited as one of the ‘megatrends’ that back towards the mainstream, the the external, what to eat, what to Photo Source: Shutterstock will propel the Chinese economy newspaper reports. wear, but do not see the inner. My forward for years, there is also a “Seeing his son’s excitement classmate said ‘I hate to see you suf- counter-culture among those disil- when he saw outsiders, and his fer, if you lack money I can give it to lusioned with the pollution and ma- great interest in one of their cam- you’. But he did not know how rich terialism of city life. eras, Wang Qingsong said he felt I am within my heart.” n 17 “Facts are completely pitiless and will smash all empty talk to smithereens”

Lu Xun (1881-1936)

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Week in China Week in China The Back Page 16 September 2011

Photo of the Week In Numbers 30.2% Percentage increase in China’s imports in August, trimming the country’s trade surplus to $17.8 billion from $31.5 billion in July, and indicating that Chinese demand remains strong even as much of the rest of the global economy struggles.

5

Photo Source: Reuters The number of models of hybrid car Honda will likely start producing in China in “two to three years” as part of a push to revitalise its brands.

A stylist applies make up on Miss China 2011 Luo Zilin before the Miss 200 million pounds Universe 2011 pageant in Sao Paulo (see page 16) The weight of pork China imported from the US in the first seven months of this year, a 500% increase on the same period last year, according to the US Department of Where is it? Agriculture. China now is the fifth largest Harbin Some of the places referred to in this issue market for US pork exports, up from the 10th last year. Xinjiang Gansu Beijing Hebei Rmb10,000 The amount Chen Ming, a teacher at a China Henan junior high school in Hefei, Anhui province Anhui Shanghai collected in cash and gift cards on the eve Wuhan of Teacher’s Day on September 10, says Sohu.com. Chinese parents sometimes shower teachers with gifts in the hope that it will give their children an advantage Guangzhou Shenzhen Hong Kong at school.

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