1 Talking Point 4 The Week in 60 Seconds 5 Aviation Week in China 6 M&A 7 Energy and Resources 8 Banking and Finance 11 Chinese Character 30 March 2012 13 Society and Culture Issue 144 18 And Finally www.weekinchina.com 19 The Back Page

The fight over Kong m o c . n i e t s p e a t i n e b . w w w

y b g u in Last weekend’s election in could have far-reaching consequences for China 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 30 March 2012

This time it wasn’t dull China mulls the consequences of Hong Kong’s erratic election

The new boss: CY Leung won last Sunday’s election to lead Hong Kong

tanley Ho, the casino mogul, but wanted to highlight the inade - A quick recap... Sonce said that he would quit quacies of the electoral system. Until recently, Tang was the shoo-in Hong Kong if CY Leung became Hong Kong’s election this year candidate, as well as Beijing’s choice, Hong Kong’s chief executive. has been significant, standing out for the top job. In fact, Ming Pao According to Ho, Leung “hates as the most rancorous, divisive and Daily reckons that Leung was seen as the rich” and the tycoon may not be scandal-plagued leadership battle a makeweight, there only to provide the only one to think so. The South to date. a veneer of competition. China Morning Post speculated this And for the first time since 1997, Certainly Tang seems to have month that, despite urging from Beijing seems to have been wrong - taken the chief executive job for Chinese vice president Xi Jinping, footed by events, as its succession granted, failing initially to elaborate Li Ka-shing, Asia’s richest man, also plans for the top job in Hong Kong on his policies or show much en - refused to vote for Leung in last blew up. thusiasm for political debate. Sunday’s election. The businessman Many think the ramifications That didn’t impress the wider told reporters he would vote for could be far-reaching. Some suggest public. The beneficiary of inherited Leung’s rival, Henry Tang. that come the next election in 2017, wealth (the son of a Shanghai in - Both the billionaires backed the China’s leaders may decide the cur - dustrialist), Tang was soon being losing candidate. That’s because an rent system is more trouble than its portrayed as lazy – and likened to a election committee of 1,193 mem - worth, and endorse a more demo - pig by the more vitriolic elements bers has chosen Leung as Hong cratic ballot. of the local press. P h o t

o Kong’s next leader. He secured 689 Others demur, predicting a re - For the people of Hong Kong,

S o u r votes, beating both Tang and Albert doubling of Beijing’s efforts to Leung was easier to identify with. A c e :

R e Ho, a pro-democracy campaigner stage-manage results of the next policeman’s son, he found his feet in u t e r s who ran with no hope of winning leadership vote. the property business before mak - 1 Week in China Talking Point 30 March 2012

ing the transition into politics (the he appeared to blame his wife for suggests they were worried that they BBC calls him a “self-made busi - the illegal basement. It was desper - would be seen as foisting him on nessman”). Until last year, he was ately ill-judged, given that his wife Hong Kong. Certainly, the bolder also convener of Hong Kong’s Exec - had publicly stood by him even as newspaper editorials were predict - utive Council, its cabinet. he admitted “straying” in his mar - ing that half a million Yet Leung is not without critics, riage earlier in the campaign. could march if Tang triumphed – especially those who query his Of course, public opinion should - much as they did in 2003 to protest rapid rise within the leadership n’t really matter in a contest in against the anti-subversion laws ranks and suspect that he is a closet which a tiny election committee (after which Beijing backed down, member of the Chinese Commu - takes its political cues from Beijing withdrawing the bill). Hence, the nist Party. in deciding the winner. shift of official support to Leung. Tai - Although he has firmly denied But a week before the election, wan’s Central News Agency saw the accusations, Leung’s decision to the afore-mentioned Liaison Office China’s decision to switch support as visit the Liaison Office of Hong seems to have started to urge the a signal that Beijing wants to stay on Kong & Macau Affairs (China’s de electors to switch to Leung instead. the right side of public opinion, even facto ‘embassy’ in Hong Kong) the Ditching Tang at the last minute in races that it controls. day after his election (he doesn’t take office until July 1) was also much remarked upon. The grumble was that it proved Leung cared more about showing his gratitude to Beijing than listen - ing to the concerns of local people. That leads to questions of whether Leung might have duped the wider public into believing that he is more reform-minded than he really is. Tang alluded to this dur - ing campaigning, with the sugges - tion that Leung had called for the use of riot police and tear gas dur - ing a huge public demonstration against proposed anti-subversion laws in 2003. Back to the animal metaphors currently doing the rounds in the Hong Kong press: the Apple Daily has been casting Leung as wolf to Tang’s pig, implying a cunning and In the future, issuers untrustworthy individual. will need to be explorers.

Why did Tang’s campaign start to In challenging markets you have to look beyond old, familiar unravel? ways. HSBC’s Debt Capital Markets teams have a track record of creating innovative structures and delivering landmark deals. Tang stumbled from one gaffe to an - Cross border and cross discipline, we connect investment other, admitting adultery, apologis - banking advice with financing solutions – to help our clients ing for an illegally-built basement navigate the future. There’s a new world emerging. and refusing to comment on ru - There’s more on debt issuance at www.hsbcnet.com/dcm mours about an illegitimate child (see WiC140). Public support dwindled with each new story. Tang’s approval rat - 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 Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA ing dipped below 20% after he and SIPC, and HSBC Bank USA, NA. 11-094 called a press conference in which 2 Week in China Talking Point 30 March 2012

Tang lost, but the public still un - happy, it seems? In truth, only 1,200 people out of Planet China Hong Kong’s 7 million population Strange but true stories from the new China got to vote on Sunday, with most of the electoral committee selected MISSING MASERATI. Bus drivers in Jinhua in Zhejiang province are now as pro-Beijing political and busi - much more knowledgeable about luxury cars than their counterparts ness elites. elsewhere, reports Zhejiang Online. That’s because the city’s public No wonder, then, that China’s in - transport bureau is circulating diagrams of the names and logos of luxury ternet users seem to have been less cars. The message: don’t crash into them. As WiC reported in issue 139 there have been a number of traffic accidents involving top-price cars, interested in the outcome of Hong with repair bills almost bankrupting the drivers involved. Bus companies Kong’s leadership election than the also fear the cost of a collision with the likes of a Rolls-Royce, hence national elections in (see Jinhua’s decision to make drivers aware when to steer clear. WiC135) or even the more recent vil - A staff member who spoke to Zhejiang Online said that most drivers lager vote in Wukan in Guangdong knew the logos of luxury cars like BMW and Mercedes-Benz but had no (see last week’s issue). idea about super-expensive marques such as Maserati and Lamborghini. “You Hong Kong people are get - “You think about it, a collision with those luxury cars costs several ting poorer and poorer. Chinese hundred thousand yuan,” said one bus driver. “How can we afford this people are becoming richer… Hong compensation? So when we see luxury cars we now avoid them.” Kong’s election isn’t even a real one. The move is not without controversy. Netizens say the city’s richest Save your time and energy to make folk now enjoy another privilege: the right of way over buses. Another a little money,” was one dismissive hammer blow to China’s socialist paradise... comment online. Still, Leung versus Tang had more of the look-and-feel of a democratic Still, with China’s reformist fac - Alongside the optimism there contest than the previous leader - tion in the ascendant (see issues 140 has also been gloomier coverage of ship run-offs in Hong Kong. At least and 142), others think that Hong the conservative instincts of the Tang and Leung participated in tel - Kong’s next leader might be selected Chinese political elite. evised debates and campaigned by a wider electorate. Leung and Tang The University of Hong Kong last among the general public – in spite both endorsed the idea of a universal week ran a mock election to gauge of the fact that the public couldn’t franchise for the next election during how the people might have voted. vote for the final outcome. their final debate. But the online poll was soon sub - “Hong Kong for the first time un - China’s premier, Wen Jiabao, of - verted by what organisers called derwent a political struggle with fered hints as well, suggesting at the “high-level cyber attacks”, leading to ups and downs,” says Caixin maga - National People’s Congress this the inevitable speculation about in - zine, adding that this month’s elec - month that “[Hong Kong] should terference from across the border. tion could serve as a dry run for elect a chief executive who is sup - (The poll was soon back online, and direct five ported by the majority of the peo - saw half of the nearly 223,000 re - years from now. ple.” Some see this as a declaration spondents cast blank ballots – a sit - of sorts. After all, if handled right, uation that, had it happened in the So Hong Kong will be able to elect Hong Kong could serve as a testing real election, would have seen the its leader? ground for China’s own (longer need for a fresh poll in May involv - The Beijing authorities indicated term) political reforms. ing new candidates.) back in 2007 that Hong Kong would “People in mainland China are Ah Lo, one of those protesting have universal suffrage for the chief urging for political changes, so against limited voting rights in Hong executive election of 2017, and for a they look up to Taiwan and Hong Kong, told the New York Times that local parliamentary assembly by Kong for ‘live demonstrations,’” he doubted China would ever allow 2020, although details of the selec - Robert Chung, head of the Univer - the city universal suffrage. tion process have not been decided. sity of Hong Kong’s Public Opin - “Beijing first promised us one per - Many are sceptical, believing that ion Programme, told TIME. son, one vote in 2007, then in 2012,” mainland policymakers will find a “Success in Hong Kong’s democra - he said. “Now they say we may have way to retain control, possibly by tisation would also help China to it in 2017. I don’t think they’ll ever vetting candidates on the ballot. move forward.” allow democracy here.” I 3 Week in China The Week in 60 Seconds 30 March 2012

Manufacturing profits fall The major news items from China this week were...

Celebrity sighting: Apple’s chief executive Tim Cook 1was in China this week, triggering speculation about the intent of his visit. He was spotted leaving the offices of the country’s three wireless carriers, China Mobile, China Unicom and China Telecom. Some said Cook is on a mission to try to sort through some of Apple’s recent headaches in China, including labour issues at its man - ufacturing partners and an ongoing trademark dispute over the iPad name. Xinhua reported that he met with Chinese Vice Premier Li Keqiang too.

The British business consultant Neil Heywood who 2died in a hotel room in China is now a key element “I just thought I’d visit our second biggest market” of China’s biggest political scandal in decades. There was speculation that Heywood had been poisoned, said the The Australian government has blocked Chinese Wall Street Journal. Former Chongqing police chief, 4telecommunications manufacturing giant Huawei Wang Lijun, who sought refuge in the US Consulate in from making a bid to supply equipment for the coun - Chengdu on February 6, allegedly claimed that Heywood try’s $39.7 billion National Broadband Network. The re - had been involved in a business dispute involving the jection marks the first time Australia has blocked a family of former Chongqing Party boss Bo Xilai. Mean - telecom application from China, its largest trading part - while, China’s censors have banned internet searches of ner. The move has been seen as a reaction to a report by Heywood’s Chinese name, Hai Wu De. Australia’s intelligence agency, which raised concerns over cyber attacks originating from China. Profits for China’s manufacturing sector dropped 35.2% in the first two months of this year, the first slide The State Council approved a broad package of fi - since the third quarter of 2009 when the economy 5nancial reforms in Wenzhou, including allowing res - began to recover from the global financial crisis, said the idents to invest abroad directly and encouraging private South China Morning Post. The decline in profit was de - investments in local financial institutions. According to spite a 14.3% rise in sales to Rmb12.1 trillion ($1.9 trillion), Reuters, the “general financial reform zone” experi - indicating a squeeze in profit margin. ment in Wenzhou may be rolled out to other parts of the country if it proves successful. The move also marks an important step towards liberalisation of China’s cap - ital account (see page 10).

A major scandal rocked Hong Kong this week. Bil - 6lionaire property developer brothers Thomas and Raymond Kwok were arrested on suspicion of bribery, reports the BBC. The Kwoks run Sun Hung Kai Properties, the city’s biggest real estate firm and are estimated to be P h o t

o worth $15.4 billion. They are the most powerful tycoons

S o u r to be arrested by Hong Kong’s Independent Commission c e :

R e Against Corruption (ICAC). Local media say a former gov - u t e r s Times are tough for China’s manufacturers ernment official was also arrested by the ICAC. I 4 Week in China Aviation 30 March 2012

Facing turbulence? Qantas to launch budget Chinese airline

his month saw the launch of a are “starting to throw their weight Tnew all-business class service around: by targeting international between Hong Kong and London. passengers and freight. The daily flight is operated by Hong For example, China Southern has Kong Airlines, a carrier that’s owned started using its Guangzhou hub to by China’s HNA Group. The hope? offer discounted long haul flights, To win market share from the dom - pricing travel between Sydney and Fly the Sino-Australian skies inant player, . Paris at as little as $1,150, or around Hong Kong Airlines is flying the half the fare asked by Australia’s Hong Kong’s only other budget route with aircraft configured with Qantas, reports the newspaper. carrier Oasis collapsed in 2008, al - 34 Club Premier seats (i.e. those Undeterred, Qantas announced a though Hainan Airlines has ambi - that convert to flat beds) and 82 new strategic initiative of its own tions to see Hong Kong Express – an - Club Classic seats (those resem - this week – a new airline to be run in other of its subsidiaries operating bling the business class experience partnership with China Eastern, from Hong Kong – emerge more of the 1980s – bigger seat and bet - based out of Hong Kong. strongly as an LCC operator. ter legroom, but not fully reclin - The partners say that the airline In fact, LCCs have grabbed only ing). And in its launch promotion, – Jetstar Hong Kong – will be a low about 5% of the passenger mar - it is offering two companion seats cost carrier (LCC) flying a fleet of 18 ket out of Hong Kong, far less in Club Classic for HK$29,980 Airbus A320s from next year. than places like Singapore or Aus - ($3,860). That might entice couples The primary passenger focus tralia itself. reluctant to fly economy on will be flights into China, focusing Still, HSBC’s Webb thinks that Cathay but hesitant to cough up on cities currently underserved by Hong Kong’s two main incumbents – for full business class fares. After other carriers. Cathay and its subsidiary Dragonair all, a couple will save more than Not everyone is convinced that – have little to fear from the Jetstar HK$70,000 if they opt for the Club Jetstar will take off. One key issue is anouncement. Classic deal over two seats in whether the proposed airline can “We have difficulty under - Cathay’s own business cabin even qualify as a Hong Kong carrier, standing how like-for-like seat (based on fares for April being as neither China Eastern nor Qan - costs will be lower than Drago - quoted on its website). tas can claim the territory as their nair’s [which also flies from Hong Yang Jianhong, president of Hong principal place of business. Kong into China] by 50% in a high Kong Airlines, is confident that the Even assuming the regulatory jet fuel price environment,” he pricing strategy will lure new pas - hurdles are met, other industry ex - concludes. sengers. He told the Wall Street Jour - perts are already querying whether Nonetheless, bosses at Cathay Pa - nal that he expects the route to break the LCC model will work in Hong cific won’t be impressed to hear the even in its first six months at a tar - Kong. Jetstar spokesmen are pre - news that Qantas and China Eastern geted 75% load factor. dicting operating costs per seat will be trying to muscle in on their The move seems to follow a trend half those of the existing full serv - home turf. – with Chinese airlines getting more ice carriers. But the problem, says Qantas especially could have aggressive with fares for interna - HSBC analyst Mark Webb, is that some explaining to do at the next P h o t

o tional travellers. The Journal says Hong Kong is a “relatively expen - gathering of the Oneworld alliance,

S o u r that China Southern “has been the sive location” to choose as a base, the network of partner airlines in c e :

R e most aggressive in marketing itself” and at least twice as costly as neigh - which both it and Cathay are u t e r s but that all of China’s major airlines bouring Shenzhen. founder members. I 5 Week in China M&A 30 March 2012

Not zooming Investors question motives behind an M&A deal

t’s not often that a written legal sweeping machinery to waste com - Ijudgement is described as a pression and landfill equipment. “must-read”. But the New York Times Still, it is a fast growing business: in clearly thought a decision delivered 2011, the division made Rmb917 mil - last month by Delaware’s Court of lion in profits, up from Rmb592 mil - Chancery fell into the compelling lion the year before. category. Government targets on improv - The judge’s findings were critical ing rubbish disposal services of (among others) the CEO of El Paso, should also mean that demand for a gas pipeline company in the US. ESM products should stay high for Particularly, the judge thought the Zoomlion deal sparks controversy some time. Indeed, ESM’s future chief executive had been “influenced looks healthy, perhaps more so than by an improper motive” in selling business for Rmb2.78 billion ($441 Zoomlion’s core business which the firm too cheaply to its acquirer, million), reports CBN. may suffer from a slowdown in the Kinder Morgan. Apparently, the ex - Investor concerns heightened Chinese property market. ecutive then planned to buy El Paso’s when it became clear who was bid - It also turns out that the plan is exploration and production arm ding for ESM. One bidder in the deal for only the assets to be transferred back from its new owner. is Hony Capital, part of the Legend to the new entity, with the liabili - Investors in China might wonder Group. But the other bidder is a firm ties of the former environmental if something similar is afoot at called Hesheng Investment Devel - operations remaining with Zoom - Zoomlion Heavy Industry, where opment. Zhan Chunxin, currently lion. “With such a bright future, they suspect that company man - chairman of Zoomlion, and another such high-quality assets are being agement may do rather better out of 14 Zoomlion managers own 49.4% transferred without a penny of lia - a proposed deal than they will. of Hesheng. bilities. The transferee is probably In late February, the Hong Kong The suspicion is that Zoomlion’s Zoomlion management who are and Shenzhen-listed manufacturer management has moved the better manipulating the matter, how can of construction equipment an - assets into the subsidiary, which investors be made to understand nounced plans to establish Zoom - they are subsequently trying to buy this?” one disgruntled shareholder lion Environmental and Sanitation at a bargain price. The deal values told National Business Daily. Machinery Company (ESM), with a the transferred assets at 1.65 times Zoomlion’s largest shareholder is registered capital of Rmb2.1 billion. price-to-book ratio or 5.11 times the Hunan province branch of Sasac, It would also transfer Zoomlion’s price-to-earnings. This looks cheap the organisation in charge of large pre-existing environmental assets compared to Zoomlion’s biggest state-owned companies. Its local di - into the new company. competitor, Sany Heavy Industry, rector, Wu Zhixiong, is also paying The move was presented as a log - which is valued at a price-to-book of close attention to the deal, reports ical one: as a way for state-owned 5.4 times and a price-to-earnings ra - National Business Daily. He has Zoomlion to strengthen its position tio of 10.24 times. stressed Zoomlion’s importance to in the sanitation business by trans - Zoomlion’s main businesses are Hunan’s economy, and said Sasac ferring assets into a separate, more concrete-making and heavy-lifting would veto the deal if management P h o t o focused company. machinery, with environmental looked to be profiting dishonestly.

S o u r c By mid-March, Zoomlion’s in - equipment constituting about 5% of Zhan meanwhile has tried to pla - e :

I m

a tentions became clearer, much to revenues. The division makes the cate stockholders, stating that Hes - g i n e

C the annoyance of some investors, heavy equipment needed to keep a heng will be a strategic investor and h i n a with its plan to sell 80% of the new city clean – from washing and own no more than 20% of ESM. I 6 Week in China Energy and Resources 30 March 2012

Trading places China’s iron ore exchange signs up Fortescue

n January, China soft-launched to sell an unspecified volume of ore Ithe China Beijing Mining Ex - through the platform, where it is al - change (CBMX), an online iron ore ready rubbing shoulders with the 26 trading platform. The full launch is founder members; 13 steel mills, like planned for early May. Baosteel and Wuhan Iron and Steel, At the time, Nev Power, chief ex - and 13 other mineral firms, such as ecutive of Fortescue Metals, Aus - Minmetals. tralia’s third largest iron ore miner, Will Fortescue be joined on the “Count me in”: Fortescue’s Power said that it was still “very early days” CBMX by its international rivals? for the China platform. ABC News, part of the Australian the major iron ore miners (see “We will continue to evaluate it Broadcasting Corporation, says WiC56), who command 70% of the going forward,” Power promised that there are rumours that the global sea-borne trade. Their critics Reuters. three largest iron ore miners – Vale, believe that this gives them too But in just two short months, the BHP Billiton and Rio Tinto – are much power over prices, even af - evaluation job has been completed. also in talks to join CBMX. To ter a shift in 2010 from annual Last week Fortescue joined the emerge as the leading sales plat - benchmark contracts to quarterly CBMX, the first foreign member of form, it will need the international index pricing. the exchange. The CBMX is chal - miners to sell a portion of their ore This transition is still not com - lenging another new exchange, the through its exchange. plete but the industry is moving Global Ore Market, which is based Correspondingly, t he China Iron towards floating prices based on in Singapore and backed by another and Steel Industry Association (CISA) daily indices. miner, BHP Billiton. has been making confident noises Hence the scramble to establish a Fortescue’s move is not entirely that the three will soon commit to dominant exchange at which iron unexpected. Unlike its bigger Aus - the CBMX. ore is priced and sold. tralian rivals, it has not diversified “All of the major suppliers will All of this comes too at a time in into other mineral production, and sign accords soon to join,” the CISA which the wider outlook for the in - Chinese steel mills currently buy chairman told media last week. “We dustry is also unclear. 95% of its iron ore output. Despite expect to create a fair, transparent Last week comments from an ex - recent volatility in the iron ore mar - environment for spot iron ore trad - ecutive from BHP that Chinese de - ket, Fortescue is also going ahead ing. We’ll set up a minimum volume mand was “flattening” spooked the with an $8.4 billion expansion plan of ore that they should sell through markets, especially given that all the to treble production by 2013 to 155 the platform.” leading players are implementing million tonnes. By 2017 it expects CISA’s interest in fair and trans - expansion plans. output as high as 355 million tonnes. parent pricing platforms doesn’t “Uncertainty surrounding Chi - That means it makes sense for the seem to extend to the rival Global nese growth rates, coupled with a Australian miner to strengthen its Ore exchange, however, with both it weakening outlook for steel and the ties with Chinese customers and and the China Chamber of Com - simultaneous growth in Chinese Zhang Jiabin, an iron ore specialist at merce of Metals warning its mem - scrap steel supply, could offset Umetal.com, told Caijing magazine bers not to “blindly join the Singa - some of the positivity surrounding P h o t

o that joining CBMX is part of Fortes - pore platform”. expected iron ore demand and

S o u r cue’s plan to ensure more buyers of The emergence of the CBMX is push prices below the $120 a tonne c e :

R e its expanded production. the latest development in a long - barrier,” predicted the ratings u t e r s In return Fortescue has pledged standing row between China and agency Moody’s. I 7 Week in China Banking and Finance 30 March 2012

Where’s my reward? Police demand ‘incentive fees’ from insurers to track down stolen cars

“ e’re delighted to inform you not been paid and the newspaper Wthat we’ve found your stolen reports that Wang is still without car” is one of the more pleasant his car. pieces of news a police officer can Ironically, Wang was probably deliver. worse off for having purchased fully But for Mr Wang there was a less comprehensive insurance coverage. welcome follow-up: to get his car In another case last year, a Mr Qin back, he needed to pay Rmb38,000 from Beijing had his own car stolen, ($6,026). and a day later was told that police Wang had purchased an off- in Zhuozhou City in Hebei had road vehicle for Rmb257,800 in found it. 2011 and bought full insurance However, in Qin’s case the car was coverage from Ping An. Last worth only Rmb20,000 and was not month his car was stolen from insured against theft. That meant Anyang, a loss which he immedi - that police couldn’t ask the insur - ately reported to police. ance company for a reward, and in - The Worker’s Daily reports that stead asked Qin to pay an incentive two days later he received a note fee. He haggled them down to from police in Zhengzhou, another “Do you think I do this for fun?” Rmb500 and drove home. city in Henan province, telling him The Worker’s Daily then con - “they’d cracked the case and found So a reward scheme was agreed: if sulted an expert to check if the cur - his car”. a stolen car was found the insurer rent arrangements are legal. Liu Jing, But the newspaper adds that paid the police 10% of the value of a doctor of law from Zhengshou when Wang went to Zhengzhou to the vehicle (if it was discovered fur - University reckons they aren’t. He reclaim his vehicle, he was told by ther afield than the city in which it cites two regulations promulgated officers that “in accordance with was stolen, the percentage could go by the Ministry of Public Security the relevant provisions”, he needed as high as 20%). in 1998, both of which bar the police to pay “an incentive fee” to get his Wang’s car was found in the same from collecting “arbitrary charges” car back. province but in a different city, for the recovery of stolen vehicles. Wang reports being exasperated which meant the fee was calculated “Clearly, the practice of charging an by this – weren’t the police just do - at Rmb38,000. ‘incentive fee’ is inconsistent with ing their job? – until he discovered Not keen to pay this sum himself, the relevant provisions of the Min - that this was in fact a longstanding Wang was helpfully told by police istry of Public Security,” the practice. officers that his insurance company Worker’s Daily concludes. The Worker’s Daily confirms that was liable for the sum. So he ap - Liu says too that the practice of the arrangement dates back to 1994, proached Ping An, only to be in - collecting these fees raises much when the Ministry of Public Secu - formed that he himself should pay more basic questions. Does it mean rity and the People’s Insurance the fee, get an invoice from the po - an officer will work less hard to Company of China did a deal. lice, and then seek reimbursement. solve crimes in which an incentive PICC – which then had a near mo - Matters then took a Kafkaesque fee is not going to be offered? And P h o t

o nopoly on vehicle insurance cover turn when Zhengzhou police re - what about other public servants?

S o u r – wanted the police to recover more fused to issue an invoice. After “Should the fire brigade be re - c e :

R e stolen cars as a way to keep down days of dispute, the matter is still warded for successfully fighting a u t e r s its payouts. not resolved. The incentive fee has fire?” Liu asks. I 8 Week in China Banking and Finance 30 March 2012

Bank accounts Reporting season reignites fears about the banking sector

fter a great start to the year, AHong Kong’s Hang Seng Index dropped by 3% last week, its largest weekly decline in four months. One of the poor performers was Agricultural Bank of China (ABC). Shares in the lender fell 3.1% after it reported its first quarterly drop in profits since listing in 2010. Net in - come at the bank was down 14% to Rmb21.2 billion in the last quarter, from Rmb24.7 billion over the same period in the previous year. The bank’s full year numbers were also an issue. Despite posting 29% profit growth for 2011, reach - Bitter harvest: quarterly profits dropped at Agricultural Bank of China ing Rmb122 billion ($19.3 billion), the market reaction was disappoint - shows signs of slowing once more, dropped to Rmb30.2 billion, signifi - ment. Analysts were looking for a also hitting profitability. cantly lower than the Rmb42.2 bil - growth of 36%, according to the Fi - That means that analysts are lion in the quarter before. nancial Times. looking for clues on credit quality. CCB’s bad loans also rose by al - The slowdown in profit at ABC Hence the attention given to ABC’s most 10% in the most recent quarter, also stirred concerns about the wider announcement that it had put aside with the bank blaming worsening health of the Chinese banks. In con - Rmb22.8 billion in provisions for conditions in manufacturing, real trast to Western banks, many of bad debt in the last quarter, more estate and retail, reports Reuters. which required huge cash bailouts than twice as much as the same pe - The bulls will be cheered by In - after the financial crisis, the Chinese riod last year. Investors wondered dustrial and Commercial Bank of lenders were called upon to do much how to react to the news. Was this a China, which this week reported a of the bailing out, by lending ag - sign of ABC acting prudently in look - 17% increase in its fourth quarter gressively when the Chinese econ - ing at its lending profile and prepar - earnings, beating analyst expecta - omy started to slow three years ago. ing for a few rainy days ahead? Or tions, reports Bloomberg. Earning The fear now is that the effects of did it mean that the bank feared a Rmb208.3 billion in the full year, the all this easy credit will start to show much more damaging deluge in bank made Rmb44.4 billion in the up in their balance sheets in bad coming months, when larger provi - last quarter. debt. A senior banking regulator sions would have to be made? “ICBC has extended its edge over said recently that the banks had There was similar speculation rivals with its long- standing prudent started to experience an increase in about China Construction Bank management and better risk con - non-performing loans (NPLs) in the (CCB), which reported its own results trol,” an analyst told the newswire. final quarter of 2011, stemming back on Sunday. It posted a 25.5% increase Despite the good earnings, ICBC to the greater exposure to credit risk in net profit to Rmb169.4 billion was no different from its peers by P h o t

o during the economic downturn. over the last year, citing better net showing cracks in its loan book. Bad

S o u r And industry insiders now wonder interest margins, as well as rising loans were only slightly up, from c e :

R e whether loans are going to start go - commission and fee income. 0.91% to 0.94%. But the bank's tar - u t e r s ing bad just as China’s economy But income in the last quarter get to keep NPLs below 1.2% in 2012, 9 Week in China Banking and Finance 30 March 2012

suggests that bank is expecting a pool has more than tripled since lish legitimate loan companies. tough year ahead. June, from just 0.37% to a current The changes are presumably de - If bad debt turns out to be larger 1.74%, reports CapitalVue. It cites signed to ensure that Wenzhou’s en - problem for the banking industry analyst predictions that local NPLs trepreneurs have a broader range of than anticipated, all eyes will turn to could go as high as 2% by the end investment opportunities so that how the government is going to ad - of 2012, or even 5% if the economy they feel less compelled to engage in dress the issue. Currently, investors slows significantly. underground private lending (to seem confident that policy remedies It shouldn’t be much of a surprise make a return on their capital). But will be found, reports the Financial that Wenzhou’s banks are hurting. if they do decide to go into the loan Times. This is partly evident in the Last year, the city was at the centre business, they can now do so in a strong performance of the Big Four of a debt crunch, brought about by more transparent, regulated way. bank stocks, which have risen by disintegrating networks of private A communique issued by the 50% since October, outperforming lenders. Many of these ‘private State Council describes the changes the general market rally. loans’ start out as a bank loan that is as “of the utmost importance”, not ‘guaranteed’ by a local businessman only for Wenzhou, but also as a first with good credit, before being lent step for wider financial reform. out to less creditworthy borrowers. Indeed, if Wenzhou’s pilot When the chains of debt collapse, scheme is successful the ramifica - Watch Wenzhou the bank is left with a new NPL. tions will be far-reaching. Not only Private lenders legalised Beijing’s response, decided in a will Chinese individuals be able to meeting of the State Council this invest more easily abroad – a major inancial reforms got a big boost week, was described as “momen - loosening of capital controls – but a Fthis week, in the city often said tous” by an economist speaking to private sector banking system to be at the forefront of China’s bad the China Daily. New rules will al - could emerge to counterbalance loan problem: Wenzhou in Zhe - low local investors to invest abroad the state-owned one. That could jiang province. Banks in the city directly, while at the same time per - then give entrepreneurs much face an NPL crisis – the bad debt mitting private investors to estab - needed access to finance. I

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10 Week in China Chinese Character 30 March 2012

The billionaire’s wedding All China is talking of Xing Libin’s lavish marriage ceremony for daughter

s word spread of the spectacu - Alar wedding on Hainan island of the daughter of Xing Libin, some Chinese reacted with envy, some with anger, but the most common reaction was – who is he? That’s because Xing, 44, is little known in China, despite the Shanxi coal baron being one of the wealth - iest men in the country. According to Xin Caifu maga - zine, Xing was worth at least Rmb5 billion ($793 million) in 2011, hav - ing added about Rmb1 billion to his fortune since 2010. That makes him the 252nd rich - est Chinese, the magazine said. But International Coal Online, a Chinese website, reported that villagers in Liulin county, where local boy Xing got his start with a single mine in 1990, believe he’s worth at least dou - ble that. Some small wedding gifts for the groom “Tens of billions” is the guess, that reflects both the fabulous run a coal mine,” he told the news - and the Shanxi capital of Taiyuan to wealth that has been amassed in paper. But the Hainan wedding Hainan, where the proud father had China’s “black gold” triangle of coal seems to indicate that the low-key booked the Ritz-Carlton, the Mar - provinces in Shanxi, Shaanxi and approach has now been jettisoned. riott and Hilton hotels for the cele - Inner Mongolia; likewise it points Attracting most attention was the bration, Chinese media reported. to the fact that few outsiders really sheer cost of the event: reportedly CCTV presenters Zhu Jun and know quite how much the often se - more than Rmb70 million, as Zhou Tao then hosted the evening cretive barons have managed to dozens of media outlets reported. festivities on a giant, high-tech stage stash away. Then there was the bride’s osten - constructed especially for the party A thin and bespectacled man, tatious dowry: six Ferraris (see pho - at the Ritz-Carlton, according to me - Xing looks more like an accountant tograph of the cars lined up outside dia reports. than a coal baron, judging by pho - the hotel venue, above). Taiwan singer Jay Chou turned up tographs that made it online from The groom is Li Bo, the son of an to perform, as did Wang Lihong and his daughter’s wedding in Sanya on unnamed Hainan Island property Han Hong. In all over a dozen of the March 18. In a rare interview with developer (the bride herself was country’s top stars entertained the P h o t o 21CN Business Herald in 2010, he not named in any of the reports on crowd in an event that was com -

S o u r c was also described as being “dully” the wedding). pared to CCTVs own annual Spring e :

I m

a dressed and looking “nervous”. Other wedding costs included the Festival Gala (see WiC136). g i n e

C “In the past I haven’t dared say hire of three aircraft to fly guests A white, horse-drawn carriage, h i n a that I’m a coal mine owner or that I and entertainers from both Beijing driven by a (presumably bemused) 11 Week in China Chinese Character 30 March 2012

foreign coachman, delivered the bride to the venue. The event has drawn plenty of comment, including comparisons with feudal times. In an online post on Xinhua’s weibo , or microblog, commentator Lei Zhongzhe said the wedding re - minded him of two of the most fa - mous lines of classical Chinese po - etry, by Du Fu: “Wine and meat rot behind ver - milion gates/ while on the road peo - ple freeze to death.” Xing hasn’t given any post-nup - Dream wedding in Sanya costs Xing Rmb70 million tials interviews himself, so we don’t know what made him put on such a as part been ongoing, with thousands post - high-profile ceremony after so of a deal with Fushan International ing their opinions online. many years of attempted Energy and Fulong Group, The main debate is whether it is anonymity. www.xici.net, a business news web - morally right to spend this kind of While there is a dearth of infor - site, reported that year. money on a wedding in a country mation about the mysterious coal Xing has only become richer where annual per capita income baron, we do know that he was born since then. In 2009, of the 24 large still averages just Rmb6,000 for ru - in May 1967 and attended Shanxi coal mines in Liulin county, Lian - ral residents and Rmb19,000 for ur - University, where he studied law. sheng controls about a third. Xing ban ones. Graduating in 1990 aged 23, Xing also has a joint venture with state- Xinhua quoted the views of neti - worked first at a steel mill, setting owned China Resources Group in zens who lamented how many im - up several companies and making which he holds 42% of the shares. poverished children could be fed his first real money renting the Jin - According to Xing, the long-term and clothed for such a huge sum of jiazhuang coal mine in nearby Liulin goal of China Resources Liansheng money. Xinhua’s commentator Lei from the cash-strapped local gov - Group is to own an annual produc - also added that many other online ernment, Zhejiang Online reports. tion capacity of 100 million tonnes remarks complained of the wed - According to China Entrepreneur of coal. The company has spent ding’s ostentation and contrasted magazine, an unnamed “technolog - Rmb7 billion annexing coal mines that with the many Chinese miners ical innovation” of Xing’s then en - in Lüliang’s Xingxian and Shilou who had died in mining disas - abled him to increase the mine’s counties, as well as other emerging ters.“Shanxi’s Black Gold is soaked output from 100,000 tonnes to resource areas, the Economy and in blood. So many families who 600,000 tonnes. Nation Weekly reported. have lost members, so many poor By 2002 he had bought the far Xing has also turned his atten - workers,” wrote Lei. larger, state-owned Xingwu coal tion to agribusiness recently, taking But Lei also cautioned that some mine, also near Liulin, six kilome - over a 154 square kilometre area of of the criticism of the Xing wedding tres away from the nearest public Shanxi province, or 52 villages and was simply envy. road, for just Rmb80 million. their surrounding land, which he is “Doesn’t Rmb70 million spent on He paid “a cabbage price,” or very turning into an “agricultural busi - hiring airplanes and hotels, paying little, remarked 21CN. ness district” where he plans to performers and buying goods also With an estimated 15 million plant walnut trees, among other help other people’s incomes?” tonnes of coal, the mine was “cheap things. The investment here may to - That seems to strike a chord with in the extreme,” agrees China En - tal Rmb10 billion, according to 21CN. an earlier comment from the P h o t o trepreneur. “Money is not a sin, but we have Shanxi coal magnate.

S o u r c Xing promptly set up another to make good use of the money,“ he “Helping other people out of e :

I m

a company, Shanxi Liansheng Energy told 21 CN. poverty is a pleasure,” Xing is re - g i n e

C Group. In 2008, having bought sev - Maybe so. Yet the public interest ported to have told a reporter from h i n a eral more mines, Xing listed on the in his daughter’s lavish wedding has the Economy and Nation Weekly. I 12 Week in China Society and Culture 30 March 2012

Good Korea move Why South Korean actors are doing so well in China

fter she starred in the contro - Aversial espionage drama Lust, Caution , actress Tang Wei was feted. She won the best new performer category in Taiwan’s Golden Horse Awards, considered the Chinese- language Oscars, and was named by Variety magazine as one of 2007’s top 10 stars to watch. But the plaudits overseas didn’t seem to translate into success at home. Soon afterwards the Chinese authorities slapped a ban on broad - casts featuring Tang, supposedly as punishment for her unpatriotic trysts with a collaborator with the Japanese in the film (see WiC2). Tang enjoyed better luck abroad. In 2010 she was cast in the drama Ni hao : Jeon Ji-hyun is the most active Korean star in China Late Autumn , a South Korean movie shot mostly in English. Her per - of Chinese actresses that have of Asia,” Kong suggested. formance won her the best actress come to dominate the country’s No wonder that producers for last gong at South Korea’s prestigious domestic cinema. year’s mainland hit Warring States Baeksang Arts Award – the first for - Instead, audiences have grown hired South Korean star Kim Hee- eign actress to win the award. accustomed to Korean stars playing seon to play the female role rather But Tang’s success in South Ko - Chinese roles, albeit with a dubbing than going with a Chinese actress. rea is hardly the norm. In fact it’s of their dialogue in Mandarin. De - Reports say the role was originally rare for Chinese actresses to appear spite this, the South Koreans seem slated for Zhou Wei. in Korean movies – although para - to attract bigger audiences. “To cast Ironically, the China market has doxically it is increasingly common a South Korean actress is a com - also been important for some of Ko - for Korean actors to make it big in mercial decision. Korean dramas rea’s stars as a way of reinventing Chinese cinema and television. have cultivated a huge fan base in themselves in the face of waning According to China Business China and all around Asia so South popularity at home. View, South Korean actresses are Korean actors can widen a film’s Take actor Jang Dong-gun, who regularly putting Chinese starlets box-office appeal,” an entertain - has managed to resuscitate his ca - out of work. Why? Roles that might ment industry analyst told China reer prospects in China. The 40 otherwise go to big-hitters like Business View. year-old first shot to local stardom Zhang Ziyi and Zhou Xun are now Bill Kong, a Hong Kong film po - in a television drama series in 1992. going to the Koreans because of the ducer, agrees. He told TIME maga - But since 2004, Jang has concen - wild popularity of Korea’s pop and zine that Korean films also benefit trated on his career in China, ap - P h o t

o TV soap operas in China. from being more accessible to audi - pearing in several mainland pro -

S o u r Additionally, industry observers ences elsewhere in Asia, unlike those ductions like Chen Kaige’s 2005 c e :

R e say Chinese audiences are also fed from Japan. Korea’s movie culture fantasy epic The Promise . Industry u t e r s up with seeing the same handful is “closer to China, closer to the rest insiders say Jang is now more 13 Week in China Society and Culture 30 March 2012

fact of our country today,” writes – in order to meet medical demand Adam Gopnik in the New Yorker. for body parts. “Overall, there are now more people But in a speech last week in under ‘correctional supervision’ in Hangzhou, China’s vice minister America – more than 6 million – for health Huang Jiefu announced than were in the Gulag Archipelago plans to phase out inmate organ under Stalin.” removal over the next three to We suspect the New Yorker’s five years. fact-checkers were working over - “The pledge to abolish organ do - time on that statistic but as Fareed nation from condemned convicts Zakaria also points out in TIME, the represents the resolve of the gov - United States imprisons seven to ernment,” Xinhua reported Huang 10 times as many people as other as saying. developed nations. Another reason for the move (it’s Zakaria says the US has 760 pris - unlikely that the authorities would oners for every 100,000 citizens admit to being swayed by criticism) Song Hye Ko goes native (by contrast, Japan has 63, Germany is that the reliance on prison organ has 90 and even Mexico is lower at supply has stunted the develop - recognised in China than he is at just 208). And in a new TV show ment of a public donation pro - home. More recently, Jang signed called The 700 Club , evangelist Pat gramme. on for the latest adaptation of the Robertson also came up with an in - China legalised the donation of French literary classic Dangerous credible stat: “We here in America organs (outside the prison system) Liaisons (see WiC125) – this time in make up 5% of the world’s popula - in 2007, although only between Chinese – which also features tion but we make up 25% of the family members. In 2010 the coun - Zhang Ziyi and Cecilia Cheung. world’s jailed prisoners.” try began a public donation scheme But it’s Jeon Ji-hyun, best known Those numbers jar with the Amer - in 16 provinces, and this month for her role in the romantic comedy ican reputation as the “land of the Huang announced plans to extend My Sassy Girl , who wins the title for free”. But WiC imagines that readers it to the rest of the country. the most active South Korean star will be less shocked by some grim But China still has more than a in China. Jeon also appeared in the statistics emerging from China’s pe - million people waiting for organ Chinese-American production Snow nal system. In this case: the sale of transplants, according to the Peo - Flower and the Secret Fan and her the bodily organs of dead prisoners. ple’s Daily. Part of the problem is face also adorns products ranging From its inception in the early that there has been little education from Huiyuan orange juice to Midea sixties, China’s organ transplant on organ donation. Many Chinese air-conditioners. Competition for programme has relied on the body also feel uncomfortable about bury - endorsement deals can be cut- parts taken from executed crimi - ing or cremating a body which is not throat, with Jeon reportedly battling nals. This ready supply – China exe - whole, the Guangzhou Daily reports. another South Korean actress Song cutes more criminals than any other “The Book of Filial Piety says your Hye Kyo for a tie-up with a leading country in the world – has allowed it body is from your parents and you Chinese cosmetics brand recently. to run one of the largest transplant should not damage it and even after Song ended up winning the contract programmes in the world, with over death we are taught to preserve the by charging a lower fee. 10,000 operations a year. integrity of the body,” it explains. As the New York Times points But as the commentary also out, the practice is one of the coun - points out, the greater issue may try’s “most criticised human rights well be one of trust, with potential issues”. Families say organs have donors unsure that a government- Buy and cell been removed from relatives with - run system would serve all people China will stop removing out consent – although the Chinese equitably. (As a guest on the BBC Ra - bodily organs from prisoners government denies this. And groups dio Four show Moral Maze in the UK P h o t

o such as Amnesty International even pointed our recently, people are

S o u r “ ass incarceration on a scale suggest that executions can be more likely to donate their organs if c e :

R e almost unexampled in speeded up – meaning that inmates they feel that they or a family mem - u

t M e r s human history is a fundamental have less chance for a proper appeal ber would also benefit from a simi - 14 Week in China Society and Culture 30 March 2012

lar scheme in event of an accident.) which a man from Chongqing The government’s decision to claims to have woken up to find his have the Chinese Red Cross run the kidney missing. new donation programme has com - pounded doubts. As readers of WiC will recall, the organisation’s repu - tation (it has nothing to do with the Geneva-based Red Cross) took a On my oath nosedive last year when Guo New lawyers’ pledge causes Meimei, a young woman claiming controversy to be an employee of the charity, posted pictures online of her lavish or many of China’s 200,000- lifestyle (see WiC113). Fplus lawyers, life is looking Since then blood donations have good. also plummeted (the Chinese Red A thriving economy has boosted Cross oversees this programme too) demand for corporate legal advice Put the Party first... and by the end of last year, in the 16 and family lawyers are benefiting provinces where it was possible to from a rise in the number of divorce China’s law and the constitution” – register as an organ donor, only 163 and child custody cases. was a broadly similar commitment people had applied. But for the few hundred Chinese to that made by legal professionals “Donate my heart so another Guo lawyers that have chosen to specialise in the US and Europe. Meimei can have a new handbag? in civil and human rights law, the last The new wording reads thus: No thanks!” wrote one weibo user. few years have not been so good. “I will faithfully perform the sa - “The Red Cross has found another In 2010 new legislation made it a cred duties of a legal worker under way to make blood money,” wrote crime to take on “sensitive” cases and socialism with Chinese characteris - another. dozens of lawyers were harrassed, tics; to be faithful to the mother - With no priority list existing for disbarred or detained in the wake of land and the people; to uphold the receipt of donated organs, it has also the more recent political unrest in leadership of the Chinese Commu - been easier for those with connec - north Africa and the Middle East. nist Party and the socialist system; tions to pay to jump the queue. And now, another new develop - to safeguard the dignity of the con - In 2005 there was public interest ment: the government has an - stitution and the law.” in the case of actor Fu Biao, who re - nounced that it requires all new A note accompanying the new ceived two liver transplants in the lawyers to swear allegiance to the oath on the Ministy of Justice’s web - space of a year after he got liver can - ruling Communist Party. site says that all new lawyers must cer and the first transplant failed. “The new oath is yet another omi - make the pledge within three The vast majority of people wait - nous step in a continuing campaign months of starting to practice. ing for transplants in China never in recent years to restrain lawyers It was not clear whether lawyers even get the offer of a first organ, so from representing clients seen as already holding licences will have to critics queried how Fu got two challenging Party rule,” Stanley Lub - swear the oath too. chances in such a short space of time. man, an expert on the Chinese legal “Why not just make them all join The shortages also means a thriv - system, warned in an article pub - the Communist Party?” one weibo ing black market in body parts. Ear - lished on Wall Street Journal’s China user quipped. lier this month Chinese media re - Real Time website. Some Chinese media outlets have ported that a court in Beijing was Perhaps unsurprisingly, the Peo - also made it clear they consider the trying 16 men, including doctors in ple’s Daily begged to differ, quot - move another backwards step, es - government hospitals, for broker - ing officials at the Ministry of Jus - pecially given the recent contro - ing illegal kidney transplants in op - tice as saying that the new oath versy over the new ‘secret detention’ erations worth over $1.5 million. was required to “raise the ideolog - law (see WiC143). P h o If prisons no longer provide or - ical and political quality, and pro - “The problem is that tradition - t o

S o u gans, the black market will likely fessional ethics and skills” of the ally the rule of man is greater than r c e :

S thrive further, no doubt leading to legal profession. the rule of law here,” an editorial on h u t t e r more stories similar to one in the The previous oath – which re - the Xinhua Baoya newsportal ob - s t o c k Nanfang Daily this month, in quired that lawyers “uphold served. “Our country is trying to feel 15 Week in China Society and Culture 30 March 2012

its way across the river by feeling year’s event also marked a welcome event in Hong Kong. But it’s also in - the stones, but the government return for the territory’s leading ternational, with 23 countries partic - keeps removing them.” bank. After a decade and a half away, ipating, as well as Hong Kong itself. HSBC is once again a title sponsor of And people come to watch it from all this celebrated tournament along - over the world, both our clients and side local airline Cathay Pacific. tourists. So it very much reflects HSBC’s group head of sponsor - HSBC and where we are: an interna - Having a ship and events, Giles Morgan, tionally-connected organisation, (rugby) ball talked to WiC about the importance with its roots firmly in Hong Kong. of the Hong Kong Sevens, and why HSBC returns as Hong Kong he thinks China may even win it in What was the symbolism of hav - Sevens sponsor the not-too-distant future… ing Sir William Purves present the cup last Sunday? art party, part global sporting What does it mean for HSBC to be That was a decision made by our Pevent, another Hong Kong Sev - sponsoring the Hong Kong Sevens CEO, Stuart Gulliver. He felt that it ens weekend is finally over, with again? was appropriate that our former emerging as winners. For many in It means a lot to HSBC. The Hong chairman, and someone who has Hong Kong, the Sevens is the sport - Kong Sevens really reflects the played such a major role in the evo - ing highlight of the year. And this biggest local social and sporting lution of HSBC, do this.

Key Figures: The Guangxu Emperor

Reform – or talk of it – is in the air, with Premier writes in his masterly book, The Search for Modern Wen Jiabao issuing another call in mid-March for China . From June to September that year he issued a political change, “particularly” within the series of edicts touching on many areas of Communist Party and state leadership system. For government including the bureaucracy, armed forces, good measure Wen added that China risked losing education and the economy. Modernisation and the gains of decades of economic reform if it didn’t streamlining were the goals, to develop a more change politically. flexible and more powerful government. Plus ca change, plus c’est la meme chose : Yet many officials were unimpressed, seeing the reform was also in the air over a century ago, at the reforms as harmful to “China’s true inner values,” end of the Qing Dynasty. But if the experiences of writes Spence. the young Emperor Guangxu are anything to go by, Cixi also feared that they would weaken the ruling would-be reformers had better step carefully. Qing dynasty. Details remain unclear, but amid In the summer of 1898, Guangxu, aged just 24, rumours of a possible coup, on September 21, she launched his Hundred Days’ Reform after reading a issued an edict declaring that the emperor had asked memorial presented to the imperial court in 1895 her to resume power. Guangxu was detained and by a group of influential scholars led by Kang placed under house arrest until his death in 1908. Youwei and Liang Qichao. It’s thought that the treatise frightened Many of his reformist advisers were executed. Kang and Liang conservative officials, who had blocked the memorial’s progress fled the country. through the bureaucracy for three years. But the forces of change could not be held back. In the decade For nearly four decades the Qing had been trying to modernise after Guangxu’s effective deposition, the pressure grew. In 1911 economically, with some success. But politically the empire the Qing were overthrown by Sun Yat-sen’s Republican forces in remained backward. Faced with powerful neighbours like Japan, a revolution. and Western powers including Britain and Russia, it was clear Could Guangxu’s reforms have prevented a similar fate if his that China was failing fast. government had persevered with implementing them? Wen The Emperor Guangxu, notes historian Jonathan Spence Jiabao has used similar arguments, seeing reform as a way of “undoubtedly had a wider view of the options facing China than preserving the political status quo rather than undermining it.

P any of his predecessors”. He had even been studying English, as In fact Wen was warning again of the need for renewal this h o t o part of his efforts to assert his independence from the Empress week, with another reference to corruption in officialdom as “the

S o u

r Dowager Cixi, who hovered in the background. biggest danger facing the ruling party”. If not dealt with it , the c e :

R Guangxu decided to “act on the country’s behalf,” Spence problem could “terminate the political regime” he predicted. e u t e r s

16 Week in China Society and Culture 30 March 2012

Giles Morgan (left) and fun in HSBC’s corporate box at the Hong Kong Sevens (right)

After all, we were returning as teamwork and fair play. Those kind reason why not. China has enough sponsor after a 16 year hiatus. It was of values match our own. athletes to choose from, and Sevens a very touching gesture – Willie has is a very simple game to play and just celebrated his eightieth birthday How did China do this time round? understand. – and giving him this honour was a Not so well. They beat Uruguay but It will be wonderful to see China reminder of the bank’s history. It was lost to Tonga, and also to Hong Kong rise through the world rankings. something that was appreciated by by 29 points to 5. The latter result many HSBC staff, as well as the Hong was obviously a popular one with What was the purpose of the Sev - Kong corporate community. the local crowd! ens village that HSBC set up at this But China is going to get there. year’s event? What do you think makes the It will take five or six years before Well, two things. We tried to en - Hong Kong Sevens such a special their Sevens team starts to deliver gage as much of the local commu - event? top quality results on the field. nity as we could, to make the Hong It’s obviously a huge social event It’s clear that they are committed Kong Sevens accessible. There are in Hong Kong, where everyone as a country to developing Sevens only 40,000 tickets a day, so not comes out to play and enjoy a car - – which will be played at the Rio everyone can get in. nival atmosphere. But what makes Olympiad in 2016. Every year you We wanted to make it possible it even more special now is that the are seeing fitter, stronger and bet - for people to come down and sam - International Olympic Committee ter athletes representing China. ple the atmosphere free of charge, has made an Olympic It’s only a matter of time. as well as introduce rugby through sport. It’s becoming a global game. There’s no physical barrier to en - entertaining games on the giant And the Hong Kong Sevens is pre- try for Sevens rugby. It needs screen. eminent among the modern day Sev - speed, agility and technical nouse And it was also an opportunity ens tournaments. Indeed, in my view rath er than huge, thundering men for those with tickets to get away it has been the catalyst for popularis - and women. So you are looking at a from the cauldron of the stadium. It ing Sevens rugby and ensuring that it sport where everyone is on an was just over the road and our vil - becomes part of the Olympic move - equal footing. lage was mobbed all three days – we ment. I think rugby owes the Hong think 11,000 people passed through. Kong Sevens a big debt of gratitude. So you think there’s a chance of a Our ambition is make the Sevens P h o t

o Chinese team winning the Hong Village even bigger next year and to

S o u r Why is HSBC keen to sponsor Kong Sevens in the next decade? help local people in Hong Kong ap - c e :

R e rugby? If the resources are put into it, and preciate this tremendous event u t e r s It’s a sport that’s all about integrity, there is the self-belief, there’s no they have on their doorstep. I 17 Week in China And Finally 30 March 2012

Google’s gourmets Is the best food in China served by a US firm?

oogle has long been known for Creativity seems to be rewarded: Gits generous perks. In the US, recent successes included ‘snail roll the company offers free dry clean - with millet flour pancakes’; and ing, birthday massages and special ‘-style steamed noodle parking spots for expectant moms. roll stuffed with Japanese tempura’. The search giant also has one of the Xue, who used to head up food most lavish company canteens, to and beverage at a five-star hotel in which Google invites celebrity chefs Beijing, told the Economic Ob - to cook for its employees. So per - server that all the chefs at Google haps it shouldn’t come as a surprise are challenged to think creatively. that Google’s canteen in China has To help with that, the company The home of great food also become known for serving does not impose a strict budget for some of the most avant garde cui - ingredients. The goal, enthused But work pressure in the kitchen sine in the country. Xue, is “to submerge ourselves in is also high. Xue says he reports to Google encourages its staff to the ocean of cuisine”. Google HQ in Mountain View every spend a portion of their time ex - Sounds like a dream kitchen for week via video conference, usually perimenting on new product ideas. any chef. The stats are also revealing. to discuss his new recipes and other And it seems that something simi - Between 2007 and 2010, the team culinary experiments. lar has reached the company created more than 3,000 different His secretary also uploads the kitchens. According to Xue Rong - kinds of dessert. For the main day’s menu on Google+, the search sheng, Google China’s head chef, courses, they gave up counting. “We giant’s social network, so that the kitchen staff at the tech firm exhaust all our energy in research - kitchen staff can get some immedi - are also obsessed with innovation, ing new dishes,” Xue says. ate feedback on which of their radi - albeit of the culinary rather than The chefs also like to try their cal new recipes was a hit. technological variety. hands at fusion cuisine. “We make “Traditional restaurants are slow Once a week there’s a Research- Western and Chinese bakers work to respond to the clients’ reactions and-Development menu and all the together to invent new desserts, to their food,” Xue said. “But at team – 20 chefs in total – conjures combining Beijing’s traditional bean Google, we find out about their re - up a new offering for the day. Some cake with tiramisu filling. They are actions instantly.” of the new dishes then make it onto all very popular with the workers,” Sadly, bookings are not accepted. the following week’s menu. boasts the kitchen boss. The canteen’s for staff only... I

Harbouring intent

“Existing Chinese port facilities are perfectly adequate for handling this vessel”

P Sean Wang, CFO of shipbuilder Rongsheng Heavy Industry, tells the Financial Times that it’s not h o t o

safety but vested interest that is preventing Valemax ships from docking in China. “The Berge Ever - S o u r c est, which is a Valemax, managed to dock in Dalian without any problems last year and that is the e :

R e reality,” Wang said. For more on why Vale’s ships cannot unload in China, see WiC137. Sean Wang u t e r s

18 Week in China The Back Page 30 March 2012

Photo of the Week In Numbers $11.8 billion Market capitalisation of Air China, making it the world’s most valuable airline. The market cap is almost twice that of United Continental and also surpasses other Asian airlines like Singapore Airlines and Cathay Pacific. P h Rmb180,000 o t o

S The cost of 500-grams of West Lake o u r c e Longjing, a renowned roasted green tea. In :

I m a weight terms, that makes the tea 25% g i n e

more expensive than gold. C h i n a

Hot stuff: a knitwear contest at China Fashion Week $17 billion The value of prospective deals signed between China and Indonesia after a state visit by Indonesian President Susilo Bambang Yudhoyono. The two governments Where is it? signed nine memorandums of Some of the places referred to in this issue understanding covering 15 projects in sectors including mining, hydropower, steel and agriculture, says Xinhua. Beijing

Shanxi One in three China The proportion of home appliances that will Shanghai be bought online by 2016, rising from one Wuhan Hangzhou Wenzhou in 10 two years ago, says Gome, the Hunan electronics retailer. The company’s stock dropped almost 21% in Hong Kong on Wednesday after it announced that profits Guangzhou Hong Kong Macau for 2011 fell 6.2%.

Hainan

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