VOL.49 NO.47 NOV. 23, 2006

BEIJING REVIEW JULYJUNE 3,26, 2003 2003BUSH ADMINISTRATION SEEKS WAY OUT OF IRAQ1

VOL. 49 NO. 47 CONTENTS NOV. 23, 2006 2 EDITOR’S DESK 2 Making China Charitable 3 PEOPLE & POINTS 4 WEEKLY WATCH 10 WORLD 10 Exit Strategy Many Americans want out of Iraq, but now? 12 Coping With Climate Change A new study predicts world-war like disaster 14 Toward an Influential Partnership The Year of Russia in China marks a turning point 16VIEWPOINT 16 Managing a One Trillion Dollar 20 Nest Egg COVER STORY Many appreciate cultural differences NATION between China and the United States, but no one should 18 when it comes to charity. U.S. individual contributions make 18 Underpinning Charity Work China needs better laws to promote altruism up 85 percent of charitable donations there. But in China, 75 percent of donations come from overseas. We need 20 One Man’s Odyssey Young philanthropist sends kilos of care to the change. We—backpackers, middle-income makers and countryside China’s wealthy included—need to care more. And, in fact, we are trying. Backpackers are taking extra kilos to the 22 For Junior’s Achievement A charitable figure promotes financial countryside. Local entrepreneurs are thinking up new ways education to help those in need. And intellectuals are calling for a better regulatory environment to engender more of this. 24 No Quickstep for Hip Hop in China China has plenty of shaking booties, From children used as peddlers in Beijing to poor but not often to this beat countryside farmers, China’s people are still indeed in need. As for those of us who can help—and we are many—we 28 Warm and Fuzzy Efforts to reform how we get warm are should. underway 40 Content Is Key for Digital TV Digital TV is pretty, but it’s more of a program 32 BUSINESS revolution 32 Aluminum Blues Is Good News? 41 Do What Others Can’t For other industries...yes Media big whig shares secrets to success 34 Boob Tube Boobs? 42 Legal-Ease: Doing Business in China Old-style TV manufacturers don’t get the flat 44 State of the Market screen craze 36 The Selling of Cell TV 46 FORUM Industry is ready to profit now that mobile 46 Is the Government Entitled to Sell phone TV standards are set the Rights to Place Names? 38 The Annals of Annuity Annuity may begin to benefit China’s 48 EXPAT’S EYE retirees more 48 Keeping a Lid on Crime

Beijing Review (ISSN 1000-9140) is published weekly for US$64.00 per year by Cypress Book (U.S.) Co., Inc., 360 Swift Avenue, Suite 48, South San Francisco, CA 94080. Periodical Postage Paid at South San Francisco, CA 94080. POSTMASTER: Send address changes to Beijing Review, Cypress Book (U.S.) Co., Inc., 360 Swift Avenue, Suite 48, South San Francisco, CA 94080. EDITOR’S DESK Making China Charitable A News Wee k l y Published Since 1958 ht t p : // ww w .b j r evi e w.c o m . c n By ZHANG ZHIPING E-mail: [email protected] ec e n t l y, some vol u n t e e r s in China have begun to carry books and President & Editor in Chief: Wang Gangyi Vice President: Qi Wengong st at i o n e r y with them when traveling in the country’ s remote area s . Associate Editors in Chief: Li Jianguo By adding an ext r a kilogram of these items to their backp a ck s , Huang Wei R their trip is no longer a journe y in the conventional sense, but one of Executive Editor: Zhou Jianxiong co n t ri b ution. Although they do not mean to act as cha r ity activists, they Assistant Executive Editors: Yao Bin, Ding Zhitao, ar e offer ing aid and spreading love while enjoying their holidays. Zhang Zhiping, Francisco Little Although the mate r ial donations are just books and stati o n e r y, Editorial Administrators: Li Ning, Shi Bosen Senior Consultant: Shao Haiming these backp a c ker s are giving chi l d r en in far flung areas wha t they so Opinion Editor: Yao Bin de s p e r ate l y need. And that is to learn more about the grea t wide World Editor: Ding Zhitao wor ld they live in, whi c h may inspire the chi l d re n ’ s passion for life Nation Editor: Tang Qinghua Business Editors: Yu Shujun, Lan Xinzhen and even cha n g e their attitude towar d livi n g . Editorial Consultants: Linda Mattson, To do a kind deed is not a difficult job. As long as they have the Matt Young will to do so, ever yone can do something to help others. It makes more Staff Reporters: Tang Yuankai, Feng Jianhua, sense to make a contrib ution within one’s own abi l i t y , than to complain Zan Jifang, Ding Ying, Ni Yanshuo, Ding Wenlei, Wang Jun, Yan Wei, about people’s indiffer ence and the fic kleness of human rel a tionships. Tan Wei, Li Li, Liu Yu, Liu Yunyun, Ac c o r ding to official statistics, China has 10 million regis t e re d Yin Pumin, Jing Xiaolei, Pan Xiaoqiao en t e rp r ises, but those that have a rec o r d of cha r ity donation amount Photo Editor: Wang Xiang Photographers: Jiang Xiaoying, Wei Yao to no more than 100,000. Tha t means 99 percent of the enterpri s e s Art: Li Shigong fail to lend a helping hand to the needy. In addition, no entrepre n e u r s Design & Layout: Xu Husheng, Hou Lina, topping the 2006 list of China’s ric hest released by British journa l i s t Wang Yajuan Ru p e r t Hoogewerf are found on the top of China’s cha r ity rol l . Proof Reading: Qin Wenli Online Editor: Li Zhenzhou St a tistics issued by the China Charity Fed e r ation show that China’s wea l t h y people, who possess 80 percent of the country’ s fort u n e , Advertising Director: Cheng Guangyan Distribution Directors: Wang Weiwei, Pan Changqing co n t ri b ute less than 20 percent of the total cha ri t a ble donations. Human Resources: Zhang Xiaoli We have reasons to accuse enterpr ises of their indiffer ence to International Cooperation: Pan Shuangqin social res p o n s i b i l i t y , but while doing so, we may have neglected a Legal Counsel: Yue Cheng st r iking cha ra c t e r istic of the cha r ity cause: Charity is not the privi l e ge North America Bureau of millionaires, but society as a whole should get invol ve d . Chief: Wang Yanjuan Ac c o r ding to the China Charity Fed e r ation, ever y year 75 per- Reporter: Chen Wen Tel/Fax: 001-201-792-0334 cent of the donations come from over seas, while 15 percent come E-mail: [email protected] fr om China’s wea l t h y and 10 percent from ordi n a r y people. General Editorial Office Ho wever , in countries with wel l - d e veloped cha r ity systems, like the Tel: 86-10-68996252 United States, big companies only contrib ute 10 percent, big funds 5 Fax: 86-10-68326628 English Edition pe r cent, while individual contrib utions make up 85 percent. Tel: 86-10-68996259 This fact shows that the gap in the cha r ity cause between China Advertising Department and the United States does not result from the limited company Tel: 86-10-68995813, 68326072 do n a tions alone. In order to improve the cause in China, cha ri t y Fax: 86-10-68329398 E-mail: [email protected] or gan i z a tions need to speed up and win more trust from the publi c . Distribution Department The r e is a need for more rel e vant laws, regu l a tions and system Tel: 86-10-68310644, 68995807 im p r ovement, so as to crea te a favor able envi r onment for the devel - Fax: 86-10-68328738 E-mail: [email protected] opment of cha r ities in China. This development is still in the embry- Published every Thursday by onic stage. Peo p l e ’ s awar eness of cha r ity is yet to be devel o p e d , and BEIJING REVIEW, 24 Baiwanzhuang Lu, a law gover ning cha r ity activities needs to be drawn up. Existing Beijing 100037, China. la ws and regu l a tions are incapa ble of promoting the sound devel o p - Overseas Distributor: China International Book Trading ment of the cha r ities and allied institutions. Corporation (Guoji Shudian), P. O. BOX 399, Beijing 100044, China Ch a r ity organ i z a tions should be disengaged from direct connec- Tel: 86-10-68413849 Fax: 86-10-68412166 tion with the gover nment, so that cha r ity activities will be based on E-mail: [email protected] pe o p l e ’ s willingness to give, instead of on gover nment demand. http://www.cnokay.com Website: Mo r e importa n t l y, how donations are used should be made more General Distributor for Hong Kong, Macao and Taiwan: tra n s p a re n t . Peace Book Co. Ltd. 17/Fl, Paramount Bldg, 12 Ka Yip St, Chai Wan, HK Although a late starte r , China is beginning to make inroads into Tel: 852-28046687 Fax: 852-28046409 de veloping an effec t i ve cha r ity struc t u r e. When society begins to see giving to help others as an honorable action, attitudes will cha n g e. SUBSCRIPTION RATES (1 Year) Australia...... AUD 135.20 On the road to entren c hing this it will be rea l i z ed that cha r ity rea l l y New Zealand ...... 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2 BEIJING REVIEW NOVEMBER 23, 2006 New Approach PEOPLE & POINTS The United States is attempting a new method to “People have forgotten ta c kle its widening trade imbalance with China. This is wha t Ca r los Gutierrez ’s latest China visit, on about this in a market where No vember 13-17, has signaled. the dollar bears are winning This time round the U.S . secret a r y of commerce out.” focused on “expansion of U.S . exp o r t opportu n i t i e s , ” instead of pressing Beijing to concede on issues such Mike Moran, senior currency strategist at as textile trad e , intellectual prop e r ty and ren m i n b i ’ s Standard Chartered Bank in New York, reval u a tion that dominated his previous three trips. reacting to the dollar’s fall after Chinese The cha n g e in tactical direction coincides with central banker Zhou Xiaochuan’s comments the proven fai l u r e of Was h i n g t o n ’ s for mer hardl i n e that China will keep diversifying its foreign po l i c y. According to U.S . statistics, the United State s ’ exchange reserves and reducing the share Se ptember current-account deficit stood at $64.3 bil- of U.S. assets it holds lion, a 6.8 percent drop month on month. In contras t , its negati ve trade balance with China remained an “We are not expecting up t re n d , rising to $22.96 billion from $21.96 billion in that Rumsfeld will appear in a August. The future should be focused on exp o r ting to court, but we are hoping China as a way of improving our balance,” Gutierrez investigators will begin looking told repo rt e r s in Beijing, into the case.” Gu t i e r rez ’ s high-stakes delegation consisted of Wolfgang Kaleck, a German lawyer, after exec u t i ves of 25 big fir ms, including companies alrea d y civil rights groups filed a suit with German op e r ating in China such as Lucent Tech n o l o gies and prosecutors on November 14 seeking war Mc G r aw-Hill, as well as newc o m e r s like Westinghouse and crimes charges against outgoing U.S. Am e ri c a ’ s second largest insurance company Aon Group. Defense Secretary Donald Rumsfeld for the En c o u r agin g l y, China is also positive towar d Americ a ’ s new app ro a c h. “It is not in alleged abuse of detainees at Abu Ghraib its interests to have too high a trade surplus with the United State s , ” said Chinese and Guantanamo prisons Minister of Commerce Bo Xilai. In the nine months ending in Sept e m b e r , U.S . exp o r ts to China totaled $40.2 billion, making China the United States’ fou r th largest exp o r t market . “While complacency would be A recent study repo r t from the U.S . Depa r tment of Commerce has listed the area s misplaced, our insights whe r e U.S . companies have an edge over China’s other suppliers. China’s 2006 imports provide grounds for optimism in these areas, including telecom equipment, semiconductors, water supply and sewage disposal techn o l o gies and equipment, auto parts and medical equipment, are estimated at about the prospects for $49 billion. returning forests.” Gu t i e r rez revealed in Beijing that the U.S . Gover nment will issue new rules in the Pekka Kauppi, a scientist from the University ne xt few months to cla r ify req u i r ements for of Helsinki, releases a study result showing te ch n o l o gy exp o r ts to China. the world is recovering from deforestation, “T he new rules will be an with China showing the most improvement im p r ovement because they will hope be more focused and more that by “It’s really in many ways sp e c i fi c ,” Gutierrez told the enhancing media. “The y provide pre- “I about the expansion of access di c t ab i l i t y , and that your understanding about to financial services to all should make things this [Chinese] market place, strata of people. There are cle a r er for both par- ti e s . ” you can get better access into hundreds and hundreds of Gu t i e r rez also this market.” millions of people who are said that positive indi- Chinese Vice Premier Wu Yi very economically active and ca tions had been seen from the don’t have basic bank De m o c r atic leaders .S. exports to China are services.” of the newl y elected already at record levels, Robert Annibale, Citigroup’s Global Director U.S . Congress in so but we’re not satisfied— for Microfinance, eyes the huge untapped far as trade is con- “U there’s room to grow. China is a key market of the world’s poorest people ce rn e d . “The initial export market for American busi- signals and state m e n t s “People have the right to have and comments that we nesses and workers, and we ha ve heard from have a great group of American dogs, but people who don’t Co n g ress have been ver y business leaders who are have dogs also have rights.” po s i t i ve from the stand- Bao Suixian, Deputy Director of the Public point of supporting trad e ,” excited about expanding Security Management Bureau under the he said, adding it was impor- their exports.” Chinese Ministry of Public Security, defends tant to be awar e of any steps Carlos Gutierrez regulations aimed at limiting numbers of ta k en that signaled prot e c t i o n i s m . large and aggressive dogs in cities

BEIJING REVIEW NOVEMBER 23, 2006 3 WEEKLY WATCH

OPINION to farm e r s, most drugs are quite exp e n s i ve while che a p ones are In Tune With the Masses rare l y seen. In fact, many common diseases can be cured with che a p Ac c o r ding to Xinhua News Agen c y, to make it easier for lead- dr ugs. Thi r d, there are few ret u r n visits to patients. Differ ent from ing officials to learn about public complaints, demands have been other kinds of countrys i d e - o r iented services, medical care should made in Lanzhou, Gansu Provi n c e , for heads of all govern m e n t focus on the spread of health knowl e d g e and helps to cure farm e r s dep a r tments to go online daily to “hear the voices of the people.” su f fer ing from common diseases and endemic diseases. So ret u r n Fol l o wing a series of similar programs whe r e senior officials take visits to patients are abs o l u t e l y necessary to che c k whether the pre- pa r t in TV and radio shows, the Internet option adds a new dimen- sc r ibed medicine is effec t i ve or not and whether new trea tment is sion to tran s p a re n c y. ne c e s s a r y. Un d o u b t e d l y, the more channels there are to hear public voi c e s , With so many prob lems, the cash-thirsty medical teams are the better. However , why is it always necessary for senior gover n- un l i ke l y to become popular with farm e r s. It fails because the orga- ment officials to be avai l a ble to the masses? Whe r e are the gras s - ni ze r s care more about economic prof its than wel fa r e of farm e r s and, roots officials who should direc t l y interact with local people? If grad u a l l y, they are losing farm e r s’ trust in them. these officials try to give an ear to locals, the many measures that Peo p l e ’ s Daily in vol v e senior officials are actually unnecessary. Gra s s r oots officials are not interested in the voice of the people Food Safety Supervision Needs Upgrade and the current system imposes no punishment on those who turn a In China, red - y olk duck eggs are trad i t i o n a l l y regar ded as more deaf ear to the publi c . In this situation, wha t the gover nment should nut r itious than ordi n a r y eggs, and are also more exp e n s i ve. It has do is not to have higher-l e vel leaders avai l a ble in the electron i c been exposed by CCTV, the national broa d c a s t e r , that some so- media, but to rather urge gras s r oots officials to activel y listen to local called red - y olk eggs in the market place are produced by fee d i n g pe o p l e , as they are more in tune with wha t people need. du c ks industrial dye Sudan I, whi c h can increase the risk of cancer. China Youth Daily The “red - y olk egg incident” comes in the wak e of a series of food safety prob lems cropping up in recent yea r s. Two yea r s ago, Exploiting Farmers Destroys Trust Zhong Nanshan, a key man in China’s successful SARS fight in To some extent, mobile medical teams in rur al areas should have 2003, warn e d , “If food safety remains deterio r ati n g , 50 yea r s from made it easier for farm e r s to get better health services. However , no w, many people could become steril e .” However , even today, there some improper practices are cha n g ing this well-intended servi c e ar e still no measures in place for this urgent probl e m . into something that hurts farm e r s’ interests. Cu r ren t l y, most foo d - p r ocessing businesses are small and pri- By exa gger ating the graveness of the diseases, doctors usually vate l y run, whi c h often pay little attention to food safet y . Peo p l e ’ s coax farm e r s into taking exp e n s i ve medicine; sometimes, healthy health cannot be put at the mercy of these businesses, but the prob - farm e r s are convinced that they have chr onic diseases, so have to lem is that market regu l at o r s alone cannot solve this prob lem. If they buy a lot of medicine. co u l d , the “red - y olk egg incident” would not have been found only The r e are curren t l y sever al striking prob lems in the pres e n t after media inves t i g ation. mobile service system. Fir st, few medical institutions are rea l l y In the face of the urgent food safety prob lem, divers i f ied means in t e r ested in helping the farm e r s to improve their health, but most are ar e called for . While the gover nment takes its due res p o n s i b i l i t y , selling drugs for more prof its. The y seem reluctant to diagnose dis- th e r e should be standard brand and code systems to prevent the eases or offer consultation. Second, in terms of the medicine offere d in fl o w of fak e and low-quality products into the market. If any acci- dents occur, regu l at o r s at the production and wholesale links mus t ta k e accountabi l i t y . More sample surveys should be carried out in the retail cha i n . Yanzhao Metropolis Daily Everyday Heroes Ea r lier in Novem b e r , the “China Pride 2006” poll revealed the wi n n e r s of its “Per sons of the Year” priz e. Those awar ded wer e ordi n a r y citizens who had ris k ed their lives for the sake of national and others’ interests. Among them are fir e- fig h t e r s who give their oxy g en masks to victims, a woman who lost her own life in order to save fel l o w villager s in floods and an old man who saved 30 people with an old wooden ladde r . The y are all common people, but all acted bravel y in the time of da n ge r . Their braver y, wisdom and love for humanity is a grea t example to all. Di f fer ent from other perso n s - o f - t h e - y ear polls, China Pride 2006 no longer focuses on prof essional contrib utions, but people’s contri- bution as common citizens. When they offer ed crucial help to oth- er s, it was not because their prof essions demand them to act in this way, but only because those in trou b le are their fel l o w countrym e n . The commendation of so many citizen heroes is surel y to boost pe o p l e ’ s sense of responsibility and obli g ation to society as common GUARDERS: Frequent food safety incidents have given ci t i z ens, and to encourage them to make contrib utions outside of their families and wor king commun i t i e s . prominence to the government’s role in defending Wor ker s’ Daily public health

4 BEIJING REVIEW NOVEMBER 23, 2006 WEEKLY WATCH

HIGH FIVE An Olympic Fuwa airliner is unveiled by Air China in Beijing on November 13. The company, a partner of the 2008 Beijing Olympic Games, is considering decorating two more aircraft with the five Olympic mascots to promote the Games. The mascots exhibit the characters of four of China’s popular animals—the fish, Tibetan antelope, panda and swallow—and the Olympic flame (left). Air China, which has a fleet of 206 planes, also decorated three aircraft with the “Beijing 2008” logo last year.

BEIJING REVIEW NOVEMBER 23, 2006 5 WEEKLY WATCH

SOCIETY a national icon for The magazine has st a r ting a crus a d e mo r e than 30 columns, IPR Protection as National against irregu l a ri t i e s su c h as Popular New Policy in gover nment spend- Wor ds and Phras e s , Chinese Minister of in g , a matter of kee n En i g m a tic Chinese Co m m e r ce Bo Xilai told the pu b lic concern. Ch a ra c t e r s, China fifth Sino-U.S . IPR rou n d t a ble The NAO has Al b um and Lifes t y l e . meeting in Beijing on id e n t i f ied 14.6 billion Ver sions of the maga- No vember 14 that the Chinese yuan of funds mis- zine in Japanese and Go ver nment takes protection of used by central gov- Kor ean are in the plan- intellectual prop e r ty rig h t s er nment depa rt m e n t s ning stage. over the last two (IPR) as a national strate gy and Regulating Dogs will show no mercy in its fig h t yea rs . A senior official of against infrin g ements. Vis i t i n g Taxing Luxury Se c re t a r y of Commerce Carlo s the Ministry of Publi c Gu t i e r rez attended the meeting. The Chinese Se c u r ity told a press con- Ac c o r ding to Bo, in 2005, Go ver nment is con- fer ence on November 14 pu b lic security depa rt m e n t s si d e r ing exp a n d i n g th a t the police would be ar rested 2,119 people invol ve d the list of luxury “s t r ict, but civi l i z ed” in in pirac y, up 56 percent from items subject to a spe- the latest campaign to the previous year; the total sum cial “consumption regu l a te dog own e rs h i p of money invol v ed was 1.28 tax”, Wang Li, in Beijing. billion yuan, up 366 percent. De puty Director of “W e will try to Fifty IPR service centers the State JOINT PUBLICATION Readers enjoy browsing reduce grud g es held by ha ve been set up around China Ad m i n i s t r ation of at a promotion for the serial publications of residents, especially pet to hear public complaints abo u t Tax a tion (SAT) has Culture and Civilization of China, a high-profile own e r s, whi c h may IPR infrin g ements. More than an n o u n c e d . project between Yale University Press and the result from inapp ro p r i- China International Publishing Group 15,000 complaints have been Wang told the ate law enforc e m e n t , ” handled by the centers so far . fir st annual for um on said Bao Suixian, Ch i n a ’ s fiscal refo r m in Beijing Magazine for Chinese de puty head of the Publi c High-Profile Audit th a t tax refo r m should ensure Learning Se c u r ity Management Burea u Ch i n a ’ s chief auditor has th a t personal income tax, prop - The Wor ld of Chinese, under the Ministry of Publi c pl e d g ed to kee p publi c i z i n g er ty tax and consumption tax Ch i n a ’ s only bilingual magaz i n e Se c u ri t y . audit results from govern m e n t ar e adjusted in order to for over seas Chinese language A campaign was due to dep a r tments, parti c u l a r ly those st r engthen the role of taxati o n le a rn e r s, starts publi c a tion in be gin on November 16 to che c k of the central gover nment, in a in reducing povert y . Beijing on November 12. if Beijing residents had a co n t i n uous push to regu l a te and The gover nment imposed a The Chinese-English license for their dogs, and to enhance the tran s p a re n c y of consumption tax on disposable bi m o n t h l y is co-produced by en s u r e compliance with the gover nment spending. wooden cho p s t i c ks, woo d e n the Beijing Center for the “o n e - d o g fam i l y” policy. “F iscal reven ue comes floor panels, yac hts, luxury Pr omotion of Chinese Kee ping of aggres s i ve dogs or ma i n l y from taxpayer s. The r e watc hes and oil based prod u c t s La n g u a ge Tea c hing Overs e a s do gs taller than 35 centimeters should be an exp l a n a tion to the on Apr il 1. Official stati s t i c s and the Commercial Press and is banned. Police say the policy ta x p a yer s of how the money is sh o w reven ue amounted to will mainly be distrib uted over - is aimed at reducing the num b e r sp e n t , ” said Li Jinhua, Aud i t o r 142.85 billion yuan, 5 perce n t seas. The center estimates there of people being bitten by dogs , Ge n e r al of the National Aud i t of total tax reven ue in the last ar e 30 million Chinese learne r s th e r eby lower ing the risk of Of fice (NAO), who has become fiscal yea r . overs e a s . rabi e s .

RECYCLING A GOOD REST COMPETITION The population A primary of endangered school in golden monkeys Zhejiang in Baima Snow Province holds Mountain Nature a creativity Reserve of competition for Yunnan Province students using has doubled waste materials over the past 24 years of preservation efforts

6 BEIJING REVIEW NOVEMBER 23, 2006 WEEKLY WATCH

ECONOMICS in c re a s e . Price hikes of crude oil pr ices stay below the oil alterna - has instructed large State - ow n e d and non-fer rous metals in the ti ve’ s production costs for a long en t e rp r ises (SOEs) direc t l y under New Rules Against in t e rn a tional market will also pe ri o d . its control to establish special Money-Laundering ha ve an impact, says the repo rt . The move is part of a pack- dep a r tments for their stock Ch i n a ’ s central bank has age of measures released on in vestment. Another Double-digit No vember 10 to boost the devel - A circular issued by the issued two regu l a tions outlining Growth Year the responsibilities of fin a n c i a l opment of the bio-energy sector St at e - o wned Assets Supervi s i o n Also according to the central institutions in the fight agai n s t and reduce the country’ s depe n - and Administration Commission bank, the country’ s economic mo n e y launderin g . de n c y on oil. of the State Council (SASAC) growth would be abo ve 10 per- The document from the said all SOEs under direct central Financial institutions will cent this yea r . At the beginning of Finance Ministry promises a sub- gover nment control are proh i b i t - no w have to repo r t all major and the yea r , the Chinese si d y for bio-energy prod u c t i o n ed from stock dealing under per- suspicious transactions to the Go ver nment set the goal of 8 per- when interna tional oil prices can- sonal accounts and should ce n t r al bank’s anti-money laun- cent for the yea r ’ s economic not sustain its sound devel o p - enhance management and super- de r ing monitoring and analys i s growt h . ment. The gover nment also vision of high-risk investment in ce n t e r . It said the economy grew pr omises to support the planting financial derivati ves. The circu l a r All financial institutions are 10.7 percent in the fir st three of raw mate r ials for bioche m i c a l said SOE inves t o r s should clo s e - req u i r ed to set up a system allow- qu a rt e r s and would continue pr oducts and bio-energy- re l at e d ly monitor the market so as to ing them to identify their cus- st r ong momentum in the fou rt h te ch n o l o gies. China has set the st ri c t l y control high-risk and flu c - to m e r s easily. The central bank qu a rt e r . goal of brin g ing the prop o r tion of tu a ting inves t m e n t . also intends to set up a nati o n a l The central bank pred i c t e d ren e wable energy consumption SA S A C Chairman Li dat a base to kee p rec o r ds of all growth may slow down in future up to 10 percent of the nati o n a l Ro n g rong had said earli e r major and suspicious deals. due to gover nmental macro- c o n - total by 2010. SA S A C would improve supervi - The two regu l a tions comple- tr ol policies and influences from sion of central SOE investment in ment an anti-money launderin g the global economy. However , Tightening Stock hi g h - r isk products and establish a la w adopted by the national leg- the economy will continue to Investment responsibility system for heavy is l at i ve body in October, whi c h de velop fast and steadily, as the The Chinese Govern m e n t economic losses. will take effect next yea r . dr iving for ce remains stron g . Inflation Stress But it war ned that the slow- do wn of fix ed assets inves t m e n t A repo r t on curren c y policy and bank loans in the third quar- in the third quarter released by ter was inheren t l y unstable and Ch i n a ’ s central bank on China still suffer ed an imbalance No vember 14, says that inflat i o n - in interna tional payments. ar y pres s u r es still exist despite It pledged to continue a pru- lo wer consumer price index dent curren c y policy and put loan (CPI) in the fir st three quarte r s. in c r ease under rea s o n a ble con- Ac c o r ding to the repo r t, ris e s tr ol. Meanwhi l e , it would take in prices for both consumer co m p re h e n s i ve measures to goods and production mate ri a l s speed up economic struc t u ra l ar e an imminent risk. It pred i c t s adjustment and carry out policies consumer goods will be in over - pr omoting domestic demand. su p p l y in the near term. Subsidizing Bio-energy Me a n wh i l e , as China speeds TRADE EXTRAVAGANZA As a partner countr y, China organizes up its pricing refo r m on energy China will grant subsidies to a delegation of 200 companies to showcase its technological pr oducts, prices of wate r , electric - bi o - e n e r gy- p r oducing companies and engineering prowess at the seven-day India International it y , oil and gas will continue to when interna tional crude oil Trade Fair 2006 in New Delhi

TRAINING SHINING FOR DOHA STARDOM China’s At the Hollywood gymnastic premiere of the team is new epic drama gearing up Curse of the for the Golden Flower 15th Asian from Chinese Games in movie director December Zhang Yimou (right), stars in the movie Chow Yun-fat (left) and Gong Li created a media circus and won over adoring fans

BEIJING REVIEW NOVEMBER 23, 2006 7 WEEKLY WATCH

RESCUING WHALES Conservation workers examine dead pilot whales after a mass stranding at Ruakaka north of Auckland on November 10. A pod of 77 whales became stranded on the beach and rescuers were only able to re-float 40 and encourage them to return to sea

8 BEIJING REVIEW NOVEMBER 23, 2006 WEEKLY WATCH

QUEEN IN MOURNING Queen Elizabeth II leads tributes to Britain’s war dead alongside political leaders during the Remembrance Sunday service in London on November 12. This is an annual event in Britain to honor those who have paid the ultimate sacrifice in the REAL SANTA CLAUS A man dressed service of their as Santa Claus reads a letter he has MORE BLOODSHED country received from a child at the post A Palestinian woman carries office of Himmelpfort, or “heaven’s her injured baby son into a ARAFAT gate,” in eastern Germany on hospital on November 8. REMEMBERED November 13. Children from all over At least 13 Palestinians were A Palestinian Germany yearly send their lists of killed when Israeli shells security officer wishes to the address “Santa Claus, struck houses in the flashpoint stands in the Christmas Post Office, 16798 northern Gaza Strip town of shade close Himmelpfort” Beit Hanun to a poster of the late Palestinian leader Yasser Arafat at the Palestinian Authority headquarters in the West Bank city of Jenin on November 10, eve of the second anniversary of Arafat’s death

MANGLED SECURITY ON CAMPUS Iraqi students walk out of al-Mustansiriyah MESS Wreckage University in Baghdad on November 14. Iraqi Ministry of Higher from a car bomb Education and Scientific Research called for tightened security in detonated by universities after armed men in military-style uniforms kidnapped suspected around 100 employees and visitors from a ministry building militants near a heavily guarded Indian ANTITERROR military base DRILL An actor in Kashmir’s portraying a summer capital concertgoer Srinagar on exposed to November 14, bio-toxins which injured released by at least 13 terrorists is run people through a mobile detoxification unit during California’s annual full-scale Homeland Security exercise “Golden Guardian” in San Bernardino on November 14

BEIJING REVIEW NOVEMBER 23, 2006 9 WORLD

regim e . However , it is not powerful enough to tran s fo r m a civi l i z a tion, as can be seen fr om the trou b les in post-war Iraq. Despite the collapse of his regime and his three - yea r -long imprisonment, Saddam is still held as a symbol in Iraq. Exit Strategy Strategic nuances It is certain that the United States will The United States wants to adjust its adjust its policy towar d Iraq. The reason for this is more to do with Was h i n g t o n ’ s fai l u r e policy toward Iraq in a move prompted, in Iraq than the Repu b licans’ defea t in the mi d - t e r m elections. in part, by the Republican “thumping” Thr ee yea r s ago, the United States invad - ed Iraq under the pret e xt that Iraq had in the mid-term elections. But the wea pons of mass destruction and was spon- so r ing terror ism. Not having been authorize d prolonged stalemate in Iraq leaves it by the United Nations, the war was neither le git i m a te nor just. In fact, the United State s with few options found no evidence that Iraq had wea pons of mass destruction. Over the yea r s, it has suf- By WANG JINGLIE regret t a ble that the dominant Shiite and fer ed num e r ous setbacks in Iraq. While fai l - Kur dish politicians in the current Iraq i ing to bring peace and stability for the Iraq i s , U.S. - b a c ked Iraqi court sentenced Go ver nment are also determined to use it has mired itself in an “Iraq moras s . ” for mer Iraqi President Sadda m “M r . Hussein’s trial and punishment to fur- Ev en the Bush administration accept e d Hussein to death on November 5. ther their own political ends, as Prim e the Iraq - V iet Nam comparison. An opinion Ir aqi Prime Minister Nouri al- Minister Nuri Kamal al-Maliki has contin- poll conducted a few weeks befor e the mid- Maliki indicated that Saddam could ued to do in recent days . ” te r m elections showed that two thirds of the Abe hanged by the end of the yea r . Sa dd a m ’ s was a totalitarian regim e , Am e r icans thought that the United State s Pr esident George W. Bush hailed the adopted—besides some personal fac t o rs — was losing the war in Iraq. Moreo ver , Iraq i s ’ tr ial as “a milestone in the Iraqi people’s in kee ping with Iraq ’ s stage of social devel - resistance is unrel e n t i n g . The U.S . diplo- ef for ts to replace the rule of a tyrant with the opment. His iron hand helped maintain ma tic office near Baghdad was morta r ed on rule of law.” He hoped to take advan t a ge of unity in Iraq. Under his regim e , the country No vember 11, a new testament to the the Saddam case once again, to canvas s wielded so muc h clout that Bush senior un p o p u l a r ity of the U.S . occupiers. votes in the U.S . mid-term elections, only to be l i e ved it had the fou r th largest army in the The number of U.S . soldiers killed in be frus t r ated by the results. Defea ted in the wor ld befor e the Gulf War . Ir aq has exceeded the number of victims of elections, Bush admitted that the Americ a n s De m o c ra c y is a gradual and time-con- the September 11 terror ist att a c ks. Iraqi casu- had cle a r ly exp r essed their dissati s fa c t i o n suming process. Given the current social alties are even more shocki n g . In an arti cl e over the war in Iraq through their votes. de velopment in the Middle East, moderate pu b lished by The Lancet journal online, the In the face of widespread disapp r oval of au t h o ri t a r ianism may be an option to ensure number of Iraqi deaths as of Jul y this yea r the Iraq war among the gen e r al public as a mi n i m um social stability and development. was estimated at some 655,000. The United result of mounting U.S . casualties and fre- As the sole superpo wer in the worl d , the St a tes is in an awk wa r d situation. The Bush quent scandals involving U.S . servi c e m e n , United States was able to crush Sadda m ’ s ad m i n i s t r ation cannot bear the political con- Bush fir ed his defense secret a r y, Donald Ru m s fe l d . Controversial verdict Sa dd a m ’ s death sentence has shaken not only Iraq but also the whole of the Arab worl d . While the Shiite Iraqis and the Ir anian Gover nment believe Sadda m de s e r ved the death sentence, many Iraq i s , es p e c i a l l y Sunnis, as well as some Arab le a d e r s, do not want him to be exec u t e d . Despite their dislike of Sadda m ’ s regim e , many leaders in the Arab worl d ha ve opposed the death sentence, saying it will set a bad precedent. Egyptian Pres i d e n t Hosni Mubarak has come out stron g l y against hanging Saddam, saying that wou l d on l y make Iraq explode into more violence. The Ne w Yor k Tim e s has said that it is

The author is director of the Division of Middle East Studies of the Institute of West Asian and Afric a n HIGH ALERT: The authorities tighten security in Baghdad after Saddam’s sentence is Studies under the Chinese Academy of Social Sciences passed

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tion under control. Ec o n o m i c a l l y, Iraq has long been in a sh a m b les as a result of the sanctions suffere d for more than a decade after the Gulf War . The war waged by the United States has dealt another blo w to the country’ s economy. Ma n y essential infras t ru c t u r e and health care facilities have been destroyed in the bomb- ings. The Iraqis, who are living a hard life in the ruins of war , are eager to res t o r e peace and pros p e r ity in their country at an early dat e . However , the linger ing chaos has made rec o n s t r uction a trying endeavor . Though not as prominent curren t l y, the co n f lict between major power s over the Iraq issue has yet to be res o l ve d . Befor e the war , the United States went out of its way to solic- it the UN’s support for its military action against Iraq. However , the wor ld body did not give a green light as it failed to persu a d e other wor ld power s. Unlike the Gulf War in 1991, the United States has been politically is o l a ted in the Iraq war starting from 2003. Mo re o ver , its so-called alliance of the willing is only nominal as Britain is virtu a l - SYMBOLIC GESTURE?: Saddam Hussein protests as he is sentenced to death by ly the only country that has fol l o wed the hanging by a Iraqi court on November 5 U.S . foo t s t e ps in Iraq. Other major power s sequences of leaving Iraq, a shameful use Iraq as a model to promote democrac y in su c h as Russia, France and Germa n y pr ospect that is comparable to the Viet Nam the “Grea ter Middle East.” The self-pro- refused to send any troops. Italy and Spain War . However , as the Iraqi Govern m e n t claimed “liberato r s” have trig ger ed the indig- ha ve started to pull out of Iraq. If U.S . st ru g gles to stop the violence, U.S . troo p s na tion of the Iraqis for their slaughter of civi l - ef for ts to rec o n s t r uct Iraq prove futile, the will find it difficult to stay in Iraq for long. ians, rape and killing of young women and UN and other wor ld power s will end up In October, Bush summoned high-ran k - abuse of the Quran. Mahmud al- ha ving to play a grea ter rol e . ing officials including Vice President Dick Mashhadani, Speaker of the Iraqi Parl i a m e n t , Among the many conflicts and uncerta i n - Ch e n e y and then Defense Secret a r y Rumsfel d has called the U.S . occupation “but ch e r ’ s ties haunting post-war Iraq, the most insidious to meet and discuss a possible cha n g e in the wor k” and demanded that it should withdraw is its partition. Iraq has a population of abo u t ad m i n i s t r ati o n ’ s policy towar d Iraq. “Our goa l fr om Iraq. All these indicate that as the con- 23 million, most of whom are fol l o wer s of in Iraq is clear and uncha n g ing: Our goal is flict between the United States and Iraq esca- Islam. Shiites make up 53.5 percent of the vi c t o r y,” Bush said in his wee k l y radio addre s s la tes, U.S . troops will become the target of Muslims while the rest are Sunnis. The s e on October 21. “Wha t is cha n g ing are the tac- even more att a c ks in the future. Muslims, together with the Kur ds, who tics we use to achi e ve that goa l . ” Four major factions—the Sunnis, account for about 21.6 percent of the total Will the cha n g e of tactics take the United Shiites, Kur ds and the remnants of Sadda m ’ s po p u l a tion, constitute the major political St a tes out of the mess? Will it bring peace regime and the Baath Part y — d o m i n at e d for ces in Iraq. Saddam maintained the unity and stability to Iraq? The answer is, No. po s t - w ar Iraq. However , during the ensuing of the country with his high-handed rul e . The res h u f fle , the influence of Saddam and Baath ne w U.S. - b a c ked Iraqi Gover nment, howev- Daunting challenges su p p o rt e r s dras t i c a l l y decli n e d , leavi n g er , feat u r es a composite struc t u r e under whi c h When analyzing the state of affai r s in Sunnis, Shiites and Kur ds vying for a domi- po wer is divided among these differe n t Ir aq shortl y after the war , we suggested that nant position. The chaos in Iraq is largel y the groups. The struc t u r e is more complex than in the vol a tile Iraqi situation hinged on fou r result of their constant fig h t i n g , especially Le banon, whe r e power is divided among the major areas of conflict and one potential se c t a r ian violence. However , all the three var ious sects, and in Cyprus, whe r e power is risk—the escalating national confli c t for ces are opposed to the U.S . occupation. In di vided among the differ ent rac e s . be t w een the United States and Iraq, the con- ad dition to these, Iraq has been infil t r ated by From a geopolitical persp e c t i ve, the flict between var ious factions in Iraq, the an t i - U. S . elements, including anti-U.S . United States is unwilling to see a stron g political and economic conflicts arising from for ces with ext r eme national and rel i gi o u s Ir aq, still less a strong Iran. The domino rec o n s t r uction, the conflict between the sentiments and outfits with links to the Al ef fect that Iraq ’ s partition will have on the United States and other major wor ld power s Qaeda. Their influence on the situation in Kur dish unrest in Iran serves U.S . geo p o l i t - on the Iraq issue and the risk of a split Iraq . Ir aq cannot be underes t i m at e d . ical interests in the Middle East. In order to The conflicts and the risk continue today in Ir aqi rec o n s t r uction is plagued by a wi t h d r aw from Iraq, the United States is var ying degrees. As a result, Iraq is unlikel y myr iad of prob lems. Challenges exist on li ke l y to split the country, a practice that to be rid of the violence and cha o s . both political and economic fron t s . colonists often res o r ted to in the past. The r e is no denying the fact that the Pol i t i c a l l y, the United States wants to set up Ho wever , a partitioned Iraq, or a virtu a l l y United States is mired in a strate gic morass in a pro- U. S . regime in Iraq in a bid to exp o r t pa r titioned one, a loose political fed e r ati o n , Ir aq. While its casualty list kee ps growi n g its values and ideology to the country. So th a t is, will become a potential detriment to with each passing day, it has been unable to far , the goal has not been fulfilled with the political stabi l i t y , making the Middle East a put the Iraqi situation under control, let alone Ir aqi Gover nment battling to put the situa- mo r e complicated and vol a tile regio n . ■

BEIJING REVIEW NOVEMBER 23, 2006 11 THIRST FOR WATER: A child in New York tries to cool herself down at a fountain on August 1. Some attribute the extreme weather worldwide to the effect of global warming

wou l d , in turn, usher in ever grea ter envi - ronmental disasters. Floods and drou g h t s would make some 200 million people homeless, and it would cost all coun- tr ies as muc h as $6.98 trillion to deal with. St e r n sugges t s th a t global warm i n g could shrink the global economy by 20 percent, but tak- ing action now would cost just 1 per- cent of global gros s domestic prod u c t . The economist calls for sustainable development and ur ged industrial countries to try to cut their consumption of non-re n ewable energy re s o u rces that emit large amounts of greenhouse gases when bur nt, such as oil and coal, and at the same time increa s e Coping With input in envi r onmental protection. He also suggests the input of devel o p e d co u n t r ies should be more than underde vel - oped countries to make up for the envi ro n - mental pollution caused by their carbon Climate Change di o xide discha r ges over the yea r s. The Stern Repo r t coincides with the UN The problem of climate change has co n fe r ence on cli m a te cha n g e held in Na i r obi, Ken ya, November 6-17. global impacts, so that all countries, Thousands of exp e r ts and officials from all over the wor ld gath e r ed to discuss the effec t both developed and developing, need to of global cli m a te cha n g e and the urgen t co u n t e rm e a s u r es people need to take. make joint efforts to address it As the Kyoto Protocol, whi c h aimed to limit greenhouse gas emissions, will exp i r e By ZAN JIFANG The repo r t was written by British econo- in 2012, the confer ence also discussed how mist Nicholas Stern, for mer chief economist to further reduce emissions in the post- lobal war ming is not a fresh issue, but of the Wor ld Bank, after a year of inves t i g a- Kyoto era. But the consultations are still at pe r h a ps not every b o d y is ver y cle a r tion and res e a r ch, and is considered the most a stage of technical discussion and about the size of its impact on the au t h o ri t at i ve ever on this prob lem. exch a n g es of differ ent standpoints and Ea r th. A recent repo r t released by the The 700-page study said that, if the gov- vi ew s . Br itish Gover nment shows that the er nments of all countries did not take effec - Under the Kyoto Protocol, adopted in Gaggravating greenhouse effect will gravel y ti ve measures to res t r ain the gree n h o u s e 1997, 35 industrial countries and the EU as da m a ge the wor ld economy, brin g ing about a ef fect in the coming 10 yea r s, then, in the a body are committed to reduce emissions disaster equal to that of the two wor ld war s or ne xt century, the global air temperatu r e by 5.2 percent compared to the 1990 level the economic recession of the 1930s. would increase by five degrees, whi c h du r ing the period 2008 to 2012.

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But more and more evidence is emerg- es t a blishing an adapt a tion fund to help Bo Xilai and EU Trade Commissioner ing to show that a reduction of five perce n t de veloping countries to cope with cli m at e Peter Mandelson rec e n t l y agreed to set up is far from enough. Scientists estimate that a cha n g e. a task for ce on “sustainable trade” to help 60 to 80 perce n t The y hold that, as cli m a te cha n g e is build joint trade strate gies on cli m at e cut in gree n - in ev i t a ble , how to adapt should be placed cha n g e, including conditions for trad i n g house gases by on the agenda to protect the future of the e nv i ronmental tech n o l ogies betwe e n the middle of human rac e . China and Europ e . this century Chinese cli m a te exp e r t Gao Mandelson also attended a seminar in will be Guangsheng said that to adapt to cli - Beijing on trade and cli m a te cha n g e on needed to ma te cha n g e is to take measures to No vember 10. The seminar focused on st ab i l i z e the reduce the disasters it brings, such as the cha l l e n g es of balancing China’s con- a t m o s - heightening dyk es and improvi n g ti n ued economic growth with the impera- ph e r e. dro u g h t - r esistant crop types. ti ve of addr essing the envi r onmental cost Su Wei, deputy head of the of rapid development domestically and Chinese delegation to the Nairobi con- gl o b a l l y. fere n c e , said the effect of cli m at e He said that the developed worl d , emit- cha n g e was worl dw i d e , and so coping ting 80 percent of all the historic prod u c t i o n with it needed joint effor ts of both of greenhouse gasses, had a special res p o n - de veloped and developing coun- sibility to lead the way. tri e s . At the China-EU Summit in Beijing in Su said that the Chinese 2005, China and Europe issued a joint decla - Go ver nment was willing to ration on cli m a te cha n g e. Mandelson noted st r engthen cooperation with th a t Europe stood rea d y to share exp e rt i s e Af r ican countries in deal- and exp e r ience with China on clean coal, ing with the probl e m s . ren e wable energy, energy effic i e n c y and car- D eveloped coun- bon sequestration. tr ies should shoulder China is a signato r y to the Kyot o major res p o n s i b i l i t y Pr otocol. As a developing country, it is not COMMON CONCERN: EU Trade for the negat ive under any of its res t r ictions. But, it has Commissioner Peter Mandelson ef fects of cli m at e also taken measures to reduce its gree n - addresses a seminar in one of Beijing’s cha n g e. The y needed to take measures firs t house gas emission, cutting carbon diox- think tank on climate change on to reduce greenhouse gas emissions, whi l e ide emissions by 12 to 17 percent since November 10. Mandelson and his ha ving an obli g ation to help devel o p i n g 1996. ■ Chinese counterpart agreed to build joint c o u n t ries in their trade strategies on climate change cap a bility construc - tion so they could Up to 2004, the greenhouse gas emis- pa rt i c i p a te pro p e rly sions of major industrial countries wer e in global cooperati o n reduced by 3.3 percent on aver age, based on for coping with cli - the 1990 level, but the discha r ges by the m ate ch a n ge, said United States, the largest producer of gree n - Su . houses gases in the worl d , has risen by 15.8 He added that pe r cent. U.S . president George W. Bush China was one of the refused to ratify the Kyoto Protocol in 2001, bi g gest suffere r s of sa ying that it could damage U.S . economic cli m a te cha n g e and de velopment. the country wa s U.S . cli m a te negot i at o r s at the Nairob i ac t i vel y engaged in co n fe r ence said the American stand would not re l evant consulta- cha n g e within the term of President Bush. tions and nego t i a- An a l ysts are concerned that the tions with other sig- Am e r ican refusal will direc t l y affect rel e - nat o r ies to the UN vant interna tional cooperation aimed to cut F r a m e w o r k do wn greenhouse emissions to hold back C o nvention on the global war ming tendency. Cl i m a te Change on At the opening cerem o n y of the Nairob i the principle of co n fe re n c e , Ken yan Envi r onment Minister “common but differ - Ki vutha Kibwana called on all countries to en t i a ted res p o n s i b i l i - ta k e practical actions on cli m a te cha n g e. ty .” Global war ming threa tens the poores t A c t u a l ly China people in the worl d , and it would parti c u l a r - has alrea d y carrie d ly affect the process of Afric a ’ s poorest to out cooperation with rea l i z e their social development goals, he the EU in addre s s i n g sa i d . cli m a te cha n g e. As a Mo r e and more exp e r ts believed the fi rst step, Chinese de veloped countries have to agree on Co m m e r ce Minister

BEIJING REVIEW NOVEMBER 23, 2006 13 WORLD Toward an Influential Partnership Russian prime mi n i s t e r ’ s visit co n s u m m a t e s yearlong China- Russia gala By YAN WEI

or China and Russia, 2006 is a year of special historic signific a n c e , as it ma r ks the 10th annivers a r y of the es t a blishment of the Sino-Russian st r ate gic partn e r ship of cooperati o n Fand the fifth annivers a r y of the signing of their landmark Trea ty of Good Ne i g h b o r liness and Frie n d l y Cooperati o n . Apa r t from these commemorati ve occasions, ho wever , Chinese see the success of the Yea r of Russia in China as raising the bilate ra l rel a tionship to a historical high point. “U n veiled by Russian Pres i d e n t Vladimir Putin and closed by Russian Prim e Minster Mikhail Frad k ov [together with their RUSSIA IN CHINA: Chinese Premier Wen Jiabao and his visiting Russian counterpart Chinese counterpa r ts], this short Year of Mikhail Fradkov attend the Russian National Exhibition in Beijing on November 10 Russia will have long-term implications for the rel at i o n s h i p , ” said Chen Yuro n g , Direc t o r had developed rapi d l y with mutual trust rea c h- st a ged . “The Year of Russia has rec e i ved of the Division of East European, Russian ing unprecedented heights; cooperation in var - wi d e s p r ead attention in the two countrie s and Central Asian Studies at the China ious fields has benefited both nations and con- and throughout the worl d , as it helped to Institute of Interna tional Studies. tri b uted to wor ld peace and stabi l i t y . co n s o l i d a te the fou n d a tion of Sino-Russian As consensus between the two countrie s At the same time, the two sides fr iendship, build a new platfo r m for prag- has expanded through the series of bilate ra l exp r essed their res o l v e to further prom o t e ma tic cooperation and substantiate the events, the two countries have cemented the mut u a l l y beneficial cooperation in all fie l d s st r ate gic partn e r ship of cooperati o n , ” the st r ate gic partn e r ship and are poised to exer t a and further upgrade the strate gic partn e rs h i p . new s p a per said in an editorial. grea ter influence on their region and the Chen Yur ong believes rel a tions betwee n In this special yea r , exch a n g es betwee n wor ld at large, Chinese exp e r ts say. China and Russia are now stron g er than China and Russia at var ious levels wer e th e y have ever been. She gave parti c u l a r ext re m e l y frequent, the news p a per noted. Showcasing today’s Russia cr edit to the Year of Russia, saying it helped Hi g h - l e vel exch a n g es hit a rec o r d high with Frad k ov was in Beijing November 9-10 pr omote acros s - t h e - b o a r d bilate r al coopera- the two countries’ presidents meeting fou r for the 11th regular bilate r al prime ministeri- tion in diver se fields, from culture and arts times. Senior officials, such as top legis l a - al meeting with his counterpa r t Wen Jiaba o ; to trade and bus i n e s s . to r s and prime ministers, as well as many Pr esident Hu Jintao and top legis l a tor Wu She stressed that the Chinese people mi n i s t e r s and regional heads, also met on Ba n g guo also rec e i ved him sepa r ate l y. had an opportunity to fam i l i a ri z e them- ma n y occasions. The two heads of gover nment rea ch e d se l v es with the lifestyle and economy of In addition, the Year of Russia trig gere d consensus on a wide ran g e of issues inclu d i n g co n t e m p o ra r y Russia—far differ ent from of f “Russian-chic” in China. While giving the pr omoting cooperation in oil, natu r al gas and wha t they had learned from favor ite Sovi e t Chinese a better picture of Russia’s time-hon- nuc lear energy projects, increasing mut u a l no vels in the past. In this sense, the even t or ed history, brilliant culture and recent devel - in vestment, dealing with trade prob lems, pur- had enhanced mutual underst a n d i n g . opments, it imbued the gen e r al public with the suing medium- and long-term cooperation in Ac c o r ding to the official news p ap e r peaceful concept that China-Russia frie n d s h i p science and techn o l o gy, establishing culture Peo p l e ’ s Daily, some 200 exhibitions, con- will last for ever , the news p a per said. ce n t e r s in each other’s country and collabo r at- ce r ts, trade fai r s and other events coveri n g It also noted that, within the fram e wor k ing on envi r onmental prot e c t i o n . ar eas such as politics, economy, culture, sci- of the Year of Russia, the two countries held In a joint press statement, they affirm e d ence and techn o l o gy, education, military a number of events promoting pragm at i c th a t their strate gic partn e r ship of cooperati o n af fai r s and regional cooperation wer e co o p e r ation such as a Sino-Russian bus i -

14 BEIJING REVIEW NOVEMBER 23, 2006 WORLD ness summit for um, a series of prom o t i o n a l log u e . Revi e wing progress in bilate r al rel a - Their ways of handling interna tional affai r s ac t i vities on Russia’s fed e r al districts, the tions over this year in an intervi e w with hi n g ed on the maintenance of wor ld peace and Russian National Exhibition and the China- Beijing Revi e w, she undersc o r ed this positive the establishment of a new interna tional orde r , Russia Investment Promotion Week. The tre n d , in addition to the soaring trade vol u m e . she said. bi l at e r al trade volume totaled $24.64 billion In ret r ospect, she also hailed Russia’s Xu Tao, a res e a r ch fel l o w at the China in the fir st nine months of this yea r , up 18.8 Far East oil pipeline project. Construc t i o n Institutes of Contemporar y Internat i o n a l pe r cent from the same period of last yea r , of the proj e c t ’ s fir st stage was kicked off last Re l a tions, said that, ever since the disinte- and should rea c h a rec o r d $36 billion by the Apr il, putting an end to yea r s of wran g l i n g gration of the Soviet Union, Central Asian end of the yea r , Peo p l e ’ s Daily sa i d . be t w een Russia, China and Japan. She said na tions had pursued a mul t i l at e r al and bal- the pipeline, whose destination is set near anced strate gy in their cooperation with for - Trading powers the Chinese borde r , was bound to open up eign countries and sought partn e r ships with Chen pointed out that economic and br ight prospects for further energy coopera- var ious countries on the economic fron t . tr ade cooperation was high on the agenda of tion between the two countrie s . Though att ra c t i ve to the countries in Central the visiting Russian prem i e r . Apa r t from the Asia, the “Grea ter Central Asia” strate gy of tr ade promotion programs held durin g Shaping a new order the United States was not in their best inter- Frad k ov’ s visit, 17 documents wer e signed With rel a tions between China and ests as it aimed to tighten the excl u s i ve to promote cooperation on trad e , nucl e a r Russia making such grea t strides, exp e rt s Am e r ican grip on the region, said Xu. po wer , education and some other fie l d s . ar e eager to exp l o r e their rel e vance in a He observed that Russia’s influence over Under one of these, China will signifi- wider context. Chen said the upgrading of the region was unparal l e l e d . China’s rapi d ca n t l y increase the import of electricity from the strate gic partn e r ship could exer t a posi- economic development and state - c o n t ro l l e d Russia. The agreement between the State ti ve influence on the surrounding regio n . refo r ms during its transition to a market Gr id Corpo r ation of China and Russia’s elec- She believed it would enhance peace and ec o n o m y had also been widely rec og n i ze d . tr icity monopoly Unified Energy Systems economic development in Central Asia. Ch i n a ’ s positive role was essential to Central commits the latter to supply up to 60 billion She noted that, as important members Asian countries while they wer e making ki l o watt - h o u r s to China per yea r , with 4.3 of the Shanghai Cooperati o n painstaking effor ts to reh ab i l i t a te their billion kwh tran s fe r red in the initial Or gan i z a tion, China and Russia played a economies, Xu said. Moreo ver , China could st a ge, according to Russian media cr ucial role in combating terror - se r ve as their gate way to the Pac i f ic Rim, an repo rt s . ism, sepa r atism and ext re m i s m ad van t a ge even more valued by these coun- It was also announced that and safegu a r ding security in tr ies than specific cooperati ve projects with Ru s s i a ’ s main oil and gas exp l o - China. Given these advan t a ges, Xu said, ration company, Rosneft, wou l d China and Russia should continue to boost its exp o r ts of oil to China enhance mutual trust and collabo r ati o n by up to 65 percent next yea r , so as to jointly boost their influ e n c e . with the aim of even t u a l l y Zheng Yu, a res e a r ch fel l o w at becoming the country’ s larges t the Institute of Russian, East for eign partner in the energy Eu r opean and Central Asian studies fie l d . The Russian State - at the Chinese Academy of Social owned fir m will increa s e Sciences, pointed out that China- exp o r ts of crude oil and oil Russia strate gic cooperation had pr oducts to China to 20 million un d e r gone dram a tic cha n g es since tons next yea r , from an exp e c t - the beginning of the 21st century, ed 12 million tons this yea r , and especially since 2004. Fir st of announced its pres i d e n t , all, their cooperation had become Se r gey Bogd a n ch i k ov, travel - mo r e balanced globally, regio n a l l y JOIN HANDS, MOVE FORWARD: Under this catchphrase, ing with Frad k ov. and bilate ra l l y. Unlike in the 1990s Ho wever , the two sides a series of events have been staged during the Year of Russia in China, such as the Russian Culture Carnival held in Beijing when the two countries focused on ha ve not yet signed a con- in October co o p e r ation on global and regio n a l tr act, Bogd a n ch i k ov adde d . issues, China and Russia wer e more He made the rem a r ks at a news confere n c e the region in collabo r ation with Central Asian pr agm a tic about bilate r al strate gic coopera- on November 10 after the inauguration of co u n t r ies. At the same time, the rapi d l y tion. the company’ s repre s e n t at i ve office in expanding economic cooperation betwee n Also, the partn e r ship had effec t i vel y Be i j i n g , a move that he believes highlighted China and Russia would provide fresh impe- cha n g ed the regio n ’ s strate gic landscape with Ch i n a ’ s importance in its global exp a n s i o n tus to economic development in Central Asia. its practical implications. In addition, the Yea r st r ate gy. Chen further pointed out that the China- of Russia and the Year of China to be held next In another development, Chinese and Russia partn e r ship had become an increa s i n g - year in Russia wer e indicati ve of the fact that Russian fir ms rea c hed agreements on 10 pro- ly important factor in shaping the new political the two countries wer e intensifying effor ts to jects involving a total Chinese investment of or der in the worl d . She said the two countrie s bolster the social and cultural fou n d a tions for $1 billion in Russia during the Sino-Russian sh a r ed similar views on major internat i o n a l lo n g - t e r m strate gic cooperati o n . In vestment Promotion Week and the Thi r d issues and visions on interna tional rel at i o n s . Chen said she wanted to see the goo d China-Russia Confer ence on Inves t m e n t For exa m p l e , both advoc a ted a just and rea - momentum exhibited in bilate r al rel at i o n s Pr omotion held in Beijing on November 9. so n a ble new political order in the internat i o n - ca r ried for wa r d during the Year of China, Chen said bilate r al economic and trad e al commun i t y , stood for safegu a r ding worl d on whi c h she pinned high hopes. “It is co o p e r ation had deepened and broadened as peace and resolving crises by peaceful means, expected to show to the Russians a mul t i - the business communities and regions in the and respected the diver sity of the worl d ’ s civi - faceted China and dispel their misperce p- tw o countries continue to strengthen dia- li z a tions and var ious modes of devel o p m e n t . ti o n s , ” she said. ■

BEIJING REVIEW NOVEMBER 23, 2006 15 VIEWPOINT Managing a One Trillion Dollar Forex Nest Egg As China’s for eign exch a n g e (for ex) res e r ves exceeded $1 trillion in early Novem b e r , muc h deba te exists about the po s s i b le impacts of this ballooning wealth on China’s economy and how to prop e r ly manage it. In two sepa r ate arti c les carrie d in Peo p l e ’ s Daily Online, Zhong Wei , a prof essor at the Financial Research Center in Beijing Normal Univers i t y , and Zhao Xijun, Vice President of the School of Finance of Renmin owned enterpr ises; to push for wa r d the Un i ver sity of China, contrib ute their ideas. refo r m of state - o wned financial institutions; to bring a group of high-caliber Chinese sci- elements wor king in concert with it: for ex entists from over seas and to make up for the res e r ves spent on imports over five- s i x sh o rt a ge of social security funds. Just How Big months, for ex res e r ves spent on payment of sh o rt - t e r m ext e r nal debt, for ex res e r ves spent Linking agencies to promote Will China’s Forex on medium- and long-term ext e r nal debt , efficiency pro f its that have been made by for eign enter- The new management system should pr ises but have not been remitted outside es t a blish the fram e wor k for decision-mak- Reserves Get? China, the size of direct investment by ing policies and day- t o - d a y managem e n t By ZHONG WEI Chinese enterpr ises in over seas markets and institutions. Curren t l y the Peo p l e ’ s Bank of the size of investment in the securities mar- China is res p o n s i b le for the management of hi n a ’ s for ex res e r ves exceeded $100 ket. for ex res e r ves in accordance with the law. billion for the fir st time at the end of The second consideration is the size of The State Administration of Fore i g n 1996 and maintained steady growth in sa f ety of China’s for ex res e r ves, and the Ex ch a n g e (SAFE) is authoriz ed to conduct the fol l o wing five yea r s. From 2001 to th i r d is the dynamic size of slight growth in day - t o - d a y management. Obvi o u s l y, such a Cpr esent, the country’ s strong economic growt h simplistic mechanism will be insuffic i e n t the balance of interna tional payments. has promoted an increase of these res e r ves. In Taking into account the rapid growth of for the management of such a huge amount 2003, the annual increase amounted to $136.8 Ch i n a ’ s GDP and its huge for eign trade vol - of res e r ves. billion. In 2004, the annual growth rea ch e d um e , the modest size of res e r ves will also In - d e pth discussions are still to be con- $206.7 billion. This year will be the third con- in c re a s e . A gen e ra l l y accepted dyn a m i c ducted on this issue. Considering the coor- se c u t i ve year that for ex res e r ves have grown growth rate would be 2-3 percent of GDP, di n a tion of the benefits of multiple institu- by more than $200 billion. whi c h means that in the tions invol v ed in defin - In accordance with the current tren d , the ne xt three to five yea r s, the The massive forex ing the modest size of total amount of for ex res e r ves is expected to amount of res e r ves wou l d res e r ves and the amount exceed $1,500 billion in the second quarter of in c r ease by between $50 reserves imply a of surplus res e r ves , 2008 and $2,000 billion by the end of 2010. and $60 billion each yea r . strong external China needs to establi s h If the peak of res e r ve growth wer e for e- The remaining amount of a tran s - d ep a rt m e n t se e a ble , then there would be no need to for ex res e r ves could be payment capacity. agen c y to for mul a te the wor ry about the size and management of in c luded in surpl u s But the challenges po l i c y on for ex res e r ve for ex res e r ves. However , the plain fact is res e r ves. If this wer e done, ma n a gement. The coun- th a t it is still hard to determine how grea t the current dyn a m i c to the country’s tr y also needs to manage Ch i n a ’ s for ex res e r ves may be in the next be n ch m a r k size of for ex ability to guard modest res e r ves and sur- th r ee to five yea r s. res e r ves would not exc e e d plus res e r ves sepa r ate l y. As a developing country, China needs to $800 billion. The res t against financial Since the modest size of set up a new management system for for ex would be regar ded as sur- crisis are a bigger res e r ves still functions, res e r ves. This fram e wor k should encom- plus res e r ves. China could maintain its pass some important considerations. The new fram e wor k concern cu r rent managem e n t should also make use of model and SAFE could New management su r plus res e r ves in divers i f ied cha n n e l s maintain its authorit y . As surplus res e r ves The new management system should fr om a strate gic persp e c t i ve. The focus is ar e not direc t l y invol v ed in the fin a n c i a l dyn a m i c a l l y define the modest size of cu r ren t l y on five differ ent areas: to obtain ma r ket and surplus investment is made only Ch i n a ’ s for ex res e r ves, thus determining an the bulk of strate gic res o u r ces important for as part of specific strate gies, another depa r t- app ro p ri a te level of surplus. The r e are at least sustaining national economic devel o p m e n t , ment needs to take the lead in operation. th r ee fac t o r s that have to be taken into con- pa rt i c u l a r ly energy res o u r ces and fer rou s Based on intern ational ex p e ri e n c e, si d e r ation for this. The fir st is the benchm a r k and nonfer rous metals; to increase inves t - mo n e y supply is divided into two cate - si z e of res e r ves. Curren t l y there are severa l ment in the technical ren o vation of state - gor ies: high liquidity and aver age liquidi-

16 BEIJING REVIEW NOVEMBER 23, 2006 VIEWPOINT

GROWTH CONCERN: Swelling foreign cu r ren c y on China’s for ex market, and exchange reserves give a strong impetus su p e r scale for ex res e r ves will certa i n l y add to China’s development, but their pre s s u r es to the app re c i a tion of the ren m i n - massive size is posing a challenge to bi. The marked rise in China’s for ex the government’s regulatory power res e r ves indicates the supply of for eign cur- ren c y exceeds the market demand. and difficulties have also multiplied for the Responsive measures op e r ation of the monetary policy. In order to dispel the impact inflicted by increased for ex Fir st, to further advance the refo r m of res e r ves on money supply, the central bank the management of for ex res e r ves, the crux has to withdraw cash from circu l a tion to off- of the matter lies in how to open the capi t a l set impacts on the monetary policy. account steadily and orde r ly. In compliance Besides, a marked increase in for ex with its specific national conditions, China res e r ves res t r icts the use of other regu l at o r y should fir st ease the control on outflo w cap- po l i c y measures. When China’s economy is ital and proceed to relax the control on sl i g h t l y over h e a ted at present, the central in fl o w capital. Moreo ver , on the tactics of bank has adopted a common macro- r egu l a - in t r oducing for eign direct investment, it is t y. The Pe o p l e ’s Bank of China and to r y measure for interest rate growth, but the essential to readjust its policy on att ra c t i n g Mi n i s t r y of Finance are res p o n s i b le for the gover nment is ext re m e l y cautious with ca pital from over seas so as to upgrade both ma n a gement of these two cate gor ies, and regar d to an interest rate increa s e , whi c h quality and effic i e n c y of the for eign direc t us u a l l y the Ministry of Finance is in constitutes a major factor for the pres s u r e on in vestment, and reduce the amount of cha r ge of policym a k i n g . Either for modest app re c i a tion of the renminbi. So swel l i n g incoming over seas capital in a bid to allevi - res e r ves or surplus res e r ves, China needs for ex res e r ves have also inhibited the central ate the pres s u r e on for ex res e r ves. to introduce market - o r iented private sec- bank from raising the interest rate to regu - Se c o n d , China should improve the situ- to r s so as to improve the perfor mance of la te the economy. ation with China’s ext e r nal trade by cutting ma n a gement. Ne w cha l l e n g es are also manifested in hu g e trade surplus step by step and continu- the ensuing four aspects apa r t from the ou s l y optimize trade reven ue and exp e n d i - impacts to exer t on the independence of tu r e struc t u r e. Meanwhi l e , the exp o r ts of Investing in Ch i n a ’ s monetary policy. polluting and energy- i n e f ficient prod u c t s Excess liquidity lashing macro- e c o n o - should be res t r icted to crea te more favor able my. A marked increa s e conditions for innova- Foreign Share in China’s for ex tion and steer the opti- res e r ves gives rise to the The control of forex mi z a tion of the exp o r t Options pro b lem rel a ting to the reserves is not the mix. Fin a l l y, China By ZHAO XIJUN excess liquidity of the renminbi. To date , it has eventual objective, should optimize the use hi n a ’ s for ex res e r ves, ran k ed firs t become a major contra- and the settlement of res e r ve assets. At gl o b a l l y, have played an immense diction in the country’ s pr esent, how to use role in increasing the nati o n ’ s com- banking operation, a of the issue with for ex res e r ves effec t i ve- pre h e n s i ve strength and fueling its th o r ny issue for fin a n - increased forex ly and effic i e n t l y is a Crapid economic growth. I believe that huge cial decision-making ma tter of urgen c y with for ex res e r ves can bring us opportunities in dep a r tments. reserves lies in the a sophisticated servi c e five aspects: fir st, upgrading China’s pay- Ag gravating the removal of payment cap ab i l i t y . Substantial ment capacity and balance of income and imbalance of the eco- discussions can be held expenses to a grea t extent; second, great l y nomic struc t u r e. The imbalance on how to use for ex in c r easing the strength to stabi l i z e the dr astic increase in for ex res e r ves for the selec- exch a n g e rate of the renminbi; third, pro- res e r ves comes against declining domestic ti ve purchase of mate r ial products, to viding a solid basis for pushing for wa r d the demand and the inefficient impetus of con- in c r ease imports with the aim of red u c i n g opening of China’s capital account and the sumption to economic growth. This is dearly tr ade surplus and easing pres s u r e on fr ee conver tibility of the renminbi; fou rt h , paid for by exp o r ts of res o u rc e s - t u r ned pri- exch a n g e settlement, and to use part of the lifting the capacity of China’s economy to ma r y products and at the high expense of res e r ves to buy hi-tech products or strate gic resist risks, including that of resisting the both res o u r ces and envi r onment. res o u r ces. risks from ext e r nal impacts and flu c t u at i o n s Gi ving rise to China’s financial ris k After the entry of for eign-funded firm s of domestic and over seas economies and, and opportunity costs. Owing to a rel at i ve- into China, for ex res e r ves can also be used to fifth, strengthening China’s influence in the ly big prop o r tion of U.S . dollars in China’s in vest in their share options to beef up the in t e rn a tional monetary market. for ex res e r ves, the deval u a tion of the dollar regu l a tion of some industries critical to the and a drop in the yield of U.S . bonds will na tional economic securit y . Moreo ver , the Impacts on China’s economy reduce the value of China’s for ex res e r ve use of for ex res e r ves on the populariz a tion of China has grad u a l l y lost its indepe n - assets as well as their earnings. Meanwhi l e , ed u c a tion, medical and social security net- dence with the implementation of its mone- la r ge quantities of for ex res e r ves will also wor ks, envi r onmental protection service and ta r y policy as its own curren c y has increa s - br ing fai r ly high opportunity costs. other rel a ted public utilities can also be taken in g l y been based on the U.S . dollar and the Imposing a pres s u r e on the app re c i a - into account. Wha t should be undersc o re d exc e s s i ve growth in for ex res e r ves has adde d tion of the ren m i n b i . In c r eased for ex pa rt i c u l a r ly once again is high attention that both difficulties and complexity in the exec u - res e r ves are surel y accompanied with a should be att a c hed to the legit i m a c y and pos- tion of the monetary policy. Moreo ver , costs st e a d y rise in the app re c i a tion of the nati ve si b le risks in the use of for ex res e r ves . ■

BEIJING REVIEW NOVEMBER 23, 2006 17 NATION

consensus that crea tion of the proper legal env i r onment is vital to the cha r ity cause. Charity law lags “T he lack of app ro p ri a te policies and regu l a tions has been a bottleneck for China’s cha r ity devel o p m e n t , ” said Wang Keyi n g , a UNDERPINNING member of the Chinese Peo p l e ’ s Pol i t i c a l Co n s u l t at i ve Confer ence (CPPCC). The existing regu l a tions in China can be counted on two hands, including the Red Cr oss Law of the Peo p l e ’ s Repu b lic of CHARITY WORK China (1993) and the Public Wel fa r e Do n a tions Law (1999). No specific regu l a - The Chinese Government and tions exist to cover functional distribu t i o n among gover nment sectors. people from all walks of life are “E v en the existing cha ri t a ble regu l at i o n s ar e too gen e r al, lacking the operati o n a l en d e a voring to pave the way for the details; what ’ s more, these regu l a tions aren ’ t rea l l y compati b le with other laws in China,” progress of charity in China said Xu Huozhou, Deputy Director of the Red Cross Society of Guangdong Provi n c e . By TANG YUANKAI No w Chen’s “paper for love” project encom- Le gis l at i ve proposals to foster a passes over 400 gover nment offices, enter- smoother cha ri t a ble donation channel have as t ep a per can provide the wrap- pr ises and institutions that all turn over their been put for wa r d since last year by many ping for a lot of good wor ks. In was t ep a per for re- u s e . in f luential fig u r es including Wang Keyi n g , east China’s Hangzhou City, Though the project has progressed wel l , Shi Yongxin, the head abbot of Shaolin th r ee entrepre n e u r s co-fou n d e d the three fou n d e r s have begun to have prob - Temple and Yang Lan, a wel l - k n o wn TV a “paper for love” project to hire lems: with the increasing volume of bus i n e s s pr esenter and studio manager . Wla i d - o f f wor ker s and people with intellectual and funds, rum o r s have spread that “they are “One bottleneck is the function of the di s a bilities to recy c le was t ep ap e r , or sell it seeking private prof its under the name of cha r ity organ i z a tions and fou n d at i o n s , ” said and use the money to pay for the fam i l y ser- cha r ity”. The three men turned to some gov- Gu Shengzu, Vic e - P r esident of the All-China vice expenses of widowed elders. er nment bodies for help, but got no res p o n s e . Fed e r ation of Industry & Commerce . By the One of the three entrepre n e u r s, Chen The fact is that there are no specific laws end of 2005, the number of regis t e r ed unoffi- Boqin, head of the city’s fir st car dry cle a n i n g and regu l a tions in China as yet coveri n g cial organ i z a tions had rea ch e d se r vice company, had read a news p ap e r cha r ity organ i z a tions and their activi t i e s . 315,000, including 168,000 social repo r t about sever al pupils who had paid the This lack of legal support groups and 999 fou n d a tions. Of ed u c a tion expenses of economically disad- bo t h e r s those peo- th e s e , there are only a few hun- van t a ged students by collecting was t ep ap e r ple full of love dr ed non-prof it cha r ity organ i - and bottles. “I could and care, and za tions, handling a mere 10 per- do that, too,” th e y have cent of publi c C h e n rea c hed a do n at i o n s . th o u g h t .

CHARITY FOR STUDENTS: The Shanghai Charity Foundation provides charity study aid for 80 poor students from minority ethnic grou p s

18 BEIJING REVIEW NOVEMBER 23, 2006 NATION

Cu r ren t l y, China’s legal cha r ity organ i - plained Wang Jianlin, Board Chairman and after he decided to provide financial aid for za tions have to register with either some Pr esident of the Dalian Wanda Group, a win- 1,000 poor students to help them finish col- gover nment depa r tments or organs autho- ner in the China Charity Awar ds of 2005. He le ge. “The aid money is not a prob lem. The riz ed by the gover nment. “Gover nment still said the existing business income tax provi - pro b lem is we have to pay more to find the eli- pl a ys the leading role in cha ri t y , and this sional regu l a tions allowed tax exemption if gib le 1,000 students. We once got duped, as ha m p e r s the establishment and admittance the donation is within 3 percent of the annu- some of the ‘poor kids’ rec e i ving our aid of cha ri t a ble organ i z a tions, and also res u l t s al income tax; the individual income tax reg- tu r ned out to be the chi l d r en of local offic i a l s . ” in unclear functional distrib ution and low ul a tions allow exemptions on indivi d u a l For sure this is the last thing that philan- ef fic i e n c y,” said Yang Lan. do n a tions within 30 percent of the tax pay- th r opists want to see. But such things do “I t ’ s more difficult for private fou n d a - ment. “The more you donate , the more tax occur from time to time; as a result, more tions to register with gover nment bodies, you pay,” complained Wang Jianlin. than half of the philanthropists on the 2006 whi c h discourages the role of private If cha r ity is an important component of China Philanthrop y List said they didn’t trus t wea l t h , ” said news p a per columnist Ji Gang. the social wel fa r e underta k i n g , then rea l i s t i - ce r tain cha r ity organ i z a tions and wou l d “P u b lic and private fou n d a tions have to ca l l y it should be tax-free . Though rec e n t rather carry out their own direct philanthrop y. ha ve a minimum of 8 million yuan or 2 mil- gover nment policy allows companies to “T wo things have been overl o o k ed here: lion yuan in capital to regis t e r . This thres h - ma k e donations to certain cha r ity orga- ph i l a n t h ro p i s t ’ s rights and the cred i t old is too high and is not good for the devel - ni z a tions that enjoy tax-free statu s , of cha r ity organ i z a tions. To some opment of fou n d a tions in China.” these organ i z a tions number no de gree , they are the two stick- But exp e r ts remain optimistic, insisting, mo r e than 20. ing points that have ham- “e ver ything will be fine”. The y know the “M a n y donors didn’t app l y pe r ed the current devel o p - Chinese Gover nment has been trying to for tax-free trea tment because ment of cha r ity in China,” for ge a favor able envi r onment and a long- th e y don’t know such a policy said Chen Xiaozhu, a te r m and efficient system for cha r ity devel - exists or they give up app ly i n g Master of Sociology in opment. In September 2004, China made due to the complex proc e - Be i j i n g . the development of cha r ity an importa n t du re s , ” said Wang Zhenyao , P h i l a n t h ro p i s t ’s pa r t of the social security system; in March Di r ector of the rights include the 2005, the Repo r t on the Wor k of the Disaster Relief right to know and the Go ver nment said it would support cha ri t y , Dep a r tment of right to interven e . whi c h marked the fir st app e a r ance of the the Ministry of “T he donor is enti- cha r ity concept in such an important repo rt . Ci vil Affai r s. He tled to know whe r e At the end of 2005, the Ministry of Civi l once donate d the money is goi n g Af fai r s issued a Guide to China’s Charit y 500 yuan to the and how it is used, as De velopment (2006-10). China Charit y well as the right of A promotional law for this purpose is list- Fed e r ation and ma k e suggestions on ed in the legis l a tion agenda of the Standing could rec laim the ho w to handle the Committee of the National Peo p l e ’ s Congres s . 50 yuan tax GENEROUS CARMAKER: Li Shufu, do n at i o n , ” she said. The Civil Affai r s Ministry is wor king with the under the regu l a - Chairman of Geely Automobile Holding Co., But unfort u n at e l y, St a te Council and consulting a wide ran g e of tions. But he had a privately run carmaker in China, the accounts of many exp e r ts and scho l a r s on its draf t i n g . to go through 10 occupies fifth place on the 2006 China cha r ity organ i z at i o n s di f fer ent bure a u - Philanthropy List with a total donation ar e not made publi c . of 233 million yuan Tax-free treatment cr atic proc e d u re s “T his will leads to No more than 100,000 out of China’s sp r ead over two poor functioning in regis t e r ed 10 million enterpr ises have made months to get the money back. “The aver - fin a n c e , and, with an imperfect supervi s i o n do n a tions. “Tha t means about 99 percent of age person may take longer than me. Our system, corruption easily occurs. Fin a l l y, the companies never make any donati o n s , ” cha r ity donation system does have big pu b lic distrust is bred .” said Xu Yon gg u a n g , Vic e - C h a i r man of the de fe c t s , ” said Wan g . The company whe r e Chen’s husband China Charity Fed e r ation, during a for um of But he said the upcoming prom o t i o n a l Fan Wei wor ks has, for yea r s, given dona- the China Charity Confer ence last yea r . He la w for China’s cha r ity development wou l d tions to the China Fou n d a tion For Povert y also revealed statistics showing that private simplify the app l i c a tion of tax-free statu s . Al l ev i a tion. “We choose the China do n a tions amounted to a mere 1.7 billion Ho wever , some exp e r ts wor ry that com- Fou n d a tion For Pover ty Allevi a tion because yuan, with a per capita donation of a little panies may use cha r ity donations as a the organ i z a tion has a definite object and mo r e than 1 yuan. means of dodging tax. st a n d a r d prac t i c e ,” said Fan . But, perso n a l l y, many entrepre n e u r s “T he current corpo r ate and perso n a l “W e need to run the fou n d a tion like run - and individuals are positive about making income tax regu l a tions don’t encourage ning a company, thus we can utilize funds do n a tions. “We carve out our caree r s, and them to make cha ri t a ble donations, but the mo r e effic i e n t l y,” said He Daofen g , the we know the importance of giving back to upcoming promotional law will bring some fou n d at i o n ’ s deputy direc t o r . so c i e t y ,” is a common ref r ain. The rea s o n cha n ge s , ” said Li Liguo, Vice Minister of “A company aims at gen e r ating maxim for the high enthusiasm but low rate of the Ministry of Civil Affai rs . pro f its at minimum cost, while a fou n d at i o n do n a tions, according to Chen Xinnian, an has to collect money and make full use of it. exp e r t with the National Development and More transparency We design projects to raise money and Re fo r m Commission, lies with system Li Shufu, Chairman of Geely Aut o m o b i l e spend money, whe r e to spend and how to pro b lems, such as tax. Holding Co., a private ly - o wned carma k er in spend it. At the same time, each project will “I t ’ s not that the enterpr ises or indivi d u - China occupying fifth place on the 2006 un d e r go independent accounting, so that the als don’t want to make donations, but that the China Philanthrop y List with a total donati o n donor will have a clear picture of how the results may not be good for them,” com- of 233 million yuan, faced some headache s mo n e y is being used.” ■

BEIJING REVIEW NOVEMBER 23, 2006 19 HEARTFELT: On a backpacking trip to the central Province of Anhui, “Carry One More Kilogram” founder Yu Zhihai (third from right) plays with local children ONE MAN’S ODYSSEY A young philanthropist packs up his bag and sets out to make a difference

By LI LI res i g n e d , deciding to fol l o w his heart and Apa r t from a part-time job as a bran d i n g the will to set his dream in motion. He consultant at a Shenzhen-based IT company u Zhihai had a dream. Sitting in ne ver looked back. to pay the bills, Yu now devotes all his spare his office at a Beijing-based The 33-yea r -old had soon set up “Carry time to his philanthropic pursuits. He is wel l In t e r net company, the bus i n e s s One More Kilogram”, an organ i z a tion to awar e that he needs help and admits that by d evelopment exe c u t ive became in t r oduce backp a c ker s to load up their being a one-man show he can only stret c h in c re a s i n g l y frus t r ated with his pa c ks with gifts they could drop off with himself so far . Yli f e. He wanted to make a differ ence by ne e d y rur al dwel l e r s, on their holiday or “On my own I can only help hundred s helping others and the lure of gilt edged wee k end treks around China. This is social of people at most,” said Yu. “But the success co rp o r ate living no longer had any app e a l . wel fa r e at its most innovati ve, and some- of a well functioning operation can benefit In August 2006 Yu took the plunge and thing never befor e attempted in China. tens of thousands of people.”

20 BEIJING REVIEW NOVEMBER 23, 2006 NATION

Inspired beginnings Although he got a degree in inform at i o n his backp a c k. The book written by Davi d The inspiration for “Carry One More en gi n e e r ing from a ren o wned univer sity in Bo r nstein is about creat i ve individuals who Ki l o gram” came from a cha t with a frie n d Guangzhou and enjoyed a 10-year career in question the status quo, exploit new oppor- in Apr il 2004. The frie n d , an avid back- the telecom and Internet industry, he tunities, refuse to give up and try to rem a k e pa c ker like Yu himself, rel a ted a travel i n g be l i e ves his solitary exp e r ience of growi n g the wor ld for the better. exp e r ience of a trip to the remote country- up has lead to his unusual career path. “T he essential differ ence between a reg- side of China’s southwes t e r n Yun n a n “T he CEO of Apple Computer, Steve ular enterpr ise and a social enterpr ise is that Pr ovi n c e . Yu’ s friend was moved by the Jobs, said in a speech that the dots of your life the for mer pursues the maximization of commitment of three vol u n t a r y teache r s in will somehow connect in your future,” Yu economic prof it while the latter pursues the rur al prim a r y schools he passed on his hike. sa i d . “In ret r ospect, I think that makes sense.” ma x i m i z a tion of social wel fa r e,” said Yu. The young women, all from Yun n a n ’ s capi - Yu Zhihai’s rewar ding traveling exp e r i- Co m p a r ed with traditional NGOs payi n g tal city of Kun m i n g , are wor king in an iso- ences rea s s e r ted his belief in his cha ri t a ble scant attention to business operation, social la ted village called Yub e n g , abo ve 3,000 ca u s e . Last Novem b e r , he traveled to Yub e n g en t e rp r ises see prof it making as one of their me t e r s in altitude, whe r e mountains cut off in Yunnan and spent four days with students tw o core tasks. the tran s p o rt a tion to the outside wor ld and fr om a local prim a r y school. Four months Yu believes that the traditional NGO even blo c k cell phone rec e ption. lat e r , he rec e i ved a surpr ise birth d a y gif t app ro a c h isn’t suitable for “Carry One “N e xt time you travel to that area , mailed by one of the scho o l ’ s teache r s. It is a Mo r e Kilogram . ” Fir st, he has learned that please take some gifts for the teache r s and composition titled My Drea m s wr itten by a to register an NGO with the gover nment is students, like candies or books,” he told Yu. bo y in the class. A sentence reads, “My not easy in China. According to the curren t Yu, who was then a vol u n t a r y teacher for dr eam is to live in Guangzhou one day so that NGO administration regu l a tions, an NGO the chi l d r en of migrant wor ker s in a Beijing- I can play with brother Yu during the wee k - needs to find a gover nmental agen c y as its based non-gover nmental organ i z a tion, wan t - en d s . ” Yu said he was touched beyond word s . su p e rv i s o r , whi c h Yu sees as a bottleneck ed to do more to help those in need. The gift is an example of why he places req u i r ement for “Carry One More In August 2004, Yu crea ted a website for so muc h emphasis on commun i c at i o n Ki l o gram . ” Second, Yu finds the NGOs’ “C a r ry One More Kilogram”, www.1 k g. c n . be t w een travel e r s and chi l d r en. Smile, he method of raising money through enlisting At the end of 2005, he regis t e r ed “Carry One tells backp a c ker s on his webs i t e , it will financial support from interna tional organ i - Mo r e Kilogram” as a patented brand and al ways bring you closer to chi l d re n . za tions incompati b le with his organ i z at i o n . expects to register the ven t u r e as a company This has been shared by many of Carry For any project, inves t o r s need to see exa c t - by the end of this yea r . One More Kilogram vol u n t e e r s. Bo Luo, a ly wha t effect their money has had, said Yu. 27 - ye a r -old business development exec u - “Our effect is to make people underst a n d Public welfare tourism ti ve of an IT company in Beijing, calls her- the concept of cha n g e.” “At fir st, I thought wha t people in the self a senior volunteer as her invol ve m e n t The bus i n e s s - m a n a gem e n t - s a vvy you n g ba ck wa r d regions most needed is donati o n s , st a r ted during the organ i z at i o n ’ s infan c y in man is confident about the survi val of his whether it is money or mate r ial goo d s , ” said 2004. She said the passion of the backp a c k- cha r ity as a social entrepr eneur in a country Yu. “But it was not long befor e I found the er s and the chi l d re n ’ s sense of novelty hold whe r e rapid development of NGOs is con- root of their pover ty is a lack of ideas and the key to the success of Yu’ s idea. si d e r ed a new phenomenon. Yu said future in fo rm at i o n . ” “C h i l d r en are always att r acted to new pro fi t a ble channels for his pros p e c t i ve com- Yu targets chi l d r en as the focus grou p things and a one-hour talk can leave an pa n y is to plan and implement market i n g since he regar ds chi l d r en as the most pro- im p r int for life,” said the for mer high scho o l st r ate gies for partn e r ship companies in the found benefic i a r ies of such a cause. He said te a ch e r . “This initiati ve suits travel e r s’ since name of “Carry One More Kilogram . ” He chi l d r en have the stron g est desire to learn it is impossible for most of them to stay and plans to start from companies whose prod - ne w things and they are the hope for future. become vol u n t a r y teache r s out there.” ucts are direc t l y linked with backp a ck i n g . Yu On the “Carry One More Kilogram ” is also discussing a business deal with webs i t e , he designed a three - s t e p app ro a c h Social entrepreneur Shanghai Airlines, whi c h has agreed to send for backp a c ker s: Fir st, giving away 1 kg of “Fi r st of all, my cause is grea t fun for I mat e r ial on Yu’ s social wel fa r e organ i z at i o n gifts for underpr ivi l e ged chi l d r en met along am doing something nobody has trie d to its customers. the way; second, talking and playing with the be fo r e. Innovation is my motivati o n , ” said “T o make a prof it is not easy [for ‘Carry chi l d r en; and third, sharing travel o gues with Yu sitting among a group of enthusiastic One More Kilogram’], but I bet you that my fel l o w backp a c ker s via the webs i t e ’ s foru m . students from Renmin Univer sity of China business model will take off in less than two “I think the fac e - t o - f ace commun i c at i o n in Beijing, all pros p e c t i ve vol u n t e e r s eager yea rs . ” of city travel e r s with country chi l d r en can to listen to Yu’ s organ i z a tion blu ep ri n t . He now has over 300 avid vol u n t e e rs , br oaden their minds, nurt u r e their confi- Instead of regis t e r ing “Carry One More all fas c i n a ted by the new concept of pursu - dence and imagin a tion. However prim i t i ve Ki l o gram” as an NGO, Yu is determined to ing social wel fa r e. Zhang Xiaoyan g , 23, is the living envi r onment around them, they ma k e it a new breed of social enterpr ise in att r acted to “Carry One More Kilogram” by ar e entitled to know that their life has other China. In the past three months, rea d i n g the three key concepts she summarize d : possibilities and that they can choose anoth- mat e r ial on social entrepre n e u r ship and social enterpri s e , innovation and public ser- er lifes t y l e ,” said Yu. social innovation and visiting social enter- vi c e . She said she used to parti c i p a te in old- Yu said his own childhood was not pr ises crea ted by likeminded people throu g h - fashioned cha r ities by donating money and hap p y. He was taken away from his village out China have become part of Yu’ s life. clothing back in college, but grad u a l l y lost and his parents when he was three and grew “It is a pity that there is not muc h mate - in t e r est as she didn’t know who rec e i ved the up in Guangzhou, the business hub 200 km rial on social entrepre n e u r ship in Chinese do n at i o n s . fr om his hometown. Living in a stran g e and the books exer ting the most influ e n c e “Wh a t we are doing now is planting a env i r onment without parental care, Yu said ar e Banker to the Poor and How to Change seed of hope into the hearts of chi l d re n , ” the sense of loneliness made him sensitive the Worl d ,” said Yu, producing the Chinese said Zhang. It’s proof enough that cha ri t y and introver ted throughout his chi l d h o o d . ver sion of How to Change the Wor ld from sees the immediate need, not the cause. ■

BEIJING REVIEW NOVEMBER 23, 2006 21 FIRSTHAND LEADERSHIP: Junior Achievement China founding Chairman Paul C. Chou interacts with students at East China University of Politics and Law during a lecture on leadership FOR JUNIOR’S ACHIEVEMENT Inspiring young people to succeed can be a lifelong calling

By LI LI Whe r eas most members of the fou r - ness and financial education to young people. gen e r ation immigrant fam i l y are living on After a long prepa r ato r y stage of localizing or n in Tai w an but emigrating to the the U.S . East Coast, the influence of the the curriculums and pilot projects in differe n t United States when he was a baby, lo n g - re m e m b e r ed fam i l y education rem a i n s un i ver sities, JA China has been operati n g Paul C. Chou grew up fan t a s i z i n g vi vid in the minds of Chou and his sibli n g s . ac t i vel y in Beijing, Shanghai and Hong over images of Beijing. Chou’s par- “I am ver y Chinese,” said the 56-yea r- o l d Kong since 2001. With over 4,000 vol u n - ents, who wer e both born in Beijing successful scientist-turne d - e n t r epre n e u r te e r s, it expects to offer courses for 100,000 Bbut went to Tai w an in 1949, told their six who started as an engineer in the Bell students this yea r . chi l d r en about the good old days of eati n g Systems Labo r ato r y and later founded two Ov er the yea r s, Chou’s commitment to Tanghulu, a traditional snack of crys t a l l i n e so f t wa r e companies in the United State s . en t r epre n e u r ial training has been widely su ga r- c o a ted haws on a stick, watch i n g Gr owing up with dreams of China, doing ec hoed in China, a country thirsting for an Peking Opera, visiting temple fai r s durin g something for his ancient homeland was abundant supply of quality manager s to Sp r ing Fes t i val and shopping at the century- al ways Chou’s passion. Yet he did not dis- mat c h its headlong economic growth. old Dong’an Market in the heart of the city. co ver the perfect combination of his drea m After the fam i l y settled in the United State s and passion until 1993 when he was admit- Seeing others succeed for a decade, the parents still diligen t l y ted to the board of Junior Achi e vement (JA) Heading JA in China is now Chou’s taught the chi l d r en to speak Chinese in the In t e rn a tional. In the same yea r , Chou fou n d - full-time job without pay. He spends rou g h - belief that the fam i l y would some day move ed the Chinese bran c h of this non-prof it orga- ly half his time in the United States, whe r e ba c k to Beijing. ni z a tion (NPO) devoted to offer ing free bus i - he also engages in fundraising for JA China.

22 BEIJING REVIEW NOVEMBER 23, 2006 NATION

His wife and daughter have also wor ked as cre a te wealth for society,” argues Chou. “I JA China, are not allowed to publi c ly rai s e vol u n t e e r s for JA China. be l i e ve migrant school students might some mo n e y in China. As k ed how muc h time he devotes to da y crea te the biggest company in China.” Another big cha l l e n g e faced by JA in vol v ement in the JA China programs, he In visualizing ways to expand JA’s oper- China is human capital: How to att r act the replies that he hasn’t calculated and only ation in China, Chou is determined to best talents to staff JA and make them counts how many more yea r s he can contin- design an efficient business model using the be l i e ve in a viable career in a NPO. ue to contrib ute to the wor k. “Seeing other kn ow l e d g e it teaches. While partn e ri n g people succeed makes me happ y and I am sc hools to rea c h out to students, JA’s pro- Meeting the gap pa s s i o n a te about making an impact on our grams largel y rel y on res o u r ces from the In a country that underwent three decades so c i e t y ,” he says . business wor ld for corpo r ate sponsorsh i p as a central l y planned economy, from the “F or 5,000 yea r s of Chinese history, and vol u n t e e r s as teache r s and lecturers . 1950s to the late 1970s, entrepre n e u r ship is a doing cha r ity has been boiled down to one Chou said he was lucky to make a lot of co n c e pt that was long played down if not total- thing: to provide food on the table by crea t- fr iends in his business career by exerc i s i n g ly fors a k en. In rea wak ening youth to the trad i - ing jobs for people,” said Chou in standard his leadership. Among these are Boeing tion of entrepre n e u r ship, JA China devot e s and old-fashioned Mandarin. The essence China President David Wan g , CEO of itself to teaching participants of all ages wha t of traditional Chinese culture matc hes per- Mi c r osoft Grea ter China Tim o t h y Chen and it takes to become entrepre n e u r s and then giv- fec t l y with JA’s mission in crea ting a Cummins East Asia President John Watk i n s , ing something back to society. The three key he a l t h y economic cycl e . who allot some of their val u a ble time to vol - qualities that JA China is targeting are cha ra c - In Chou’s wor ds: “We teach young peo- unteer as lecturer s or competition judges for te r , creat i vity and leadership. ple to balance the individual search for wel l - JA China. Meanwhi l e , their companies have “I find that Chinese students are just as being with care for the community and soci- become major corpo r ate sponsors and cre at i ve as their peers in the United State s et y .” JA China teaches a business and eco- im p o r tant sources of vol u n t e e r s. But, for and Europ e ,” said Chou. Echoing this asser- nomics-based curriculum for students from Chou, their most important contrib ution is tion is the tremendous perfor mance of one ki n d e r gar ten to univers i t y . In a regu l a r their endorsement, and the credibility and team sent by JA China to the 2006 Global co u r se for univer sity students called Global enhanced repu t a tion they give to JA. Business Challenge, a youth competition Business Ethics, students are educated on So far , no Chinese company has become a in volving simul a ted management of an the need to consider their responsibilities to co rp o r ate sponsor. This, Chou believes, is part- im a gin a r y company, whi c h placed second the community and global society as a ly because JA is a fai r ly new thing to home- out of 556 teams from 24 countrie s . whole in making business decisions. grown manager s and corpo r ate social res p o n s i - Ho wever , Chou still thinks China lags The most oft-heard comment from par- bility is also a rel at i vel y new concept to corpo - far behind Wes t e r n countries in providing a ticipants of JA courses in China is: “I wish I rate China. However , he believes Chinese ta i l o r ed curriculum on entrepre n e u r ship for could have learnt it earli e r .” companies do have the heart to do something students. Chou said that, when he was Jin Jun is a third- y ear student from the for society and JA China will take a more you n g , there wer e hundreds of NPOs in the Sc hool of Interna tional Business of a Beijing aggres s i ve app ro a c h in raising public awar e- United States providing students with trai n - un i vers i t y . Introduced by students of higher ness on corpo r ate social responsibility and ing in leadership and entrepre n e u r ship. He grades, she got to know about JA courses and en c o u r aging Chinese business to support you t h thinks he benefited a lot from such course s . has taken two campus programs, Career Go ed u c at i o n . In the landscape of China, JA is still a pio- and Global Business Ethics. According to Besides cha n g es in the social envi ro n - ne e r ing NPO in this regar d. he r , she has learned so muc h from these that ment, he believes the Chinese Govern m e n t “It is my dream to see 50 yea r s from she could not have got from any textbook or could help the growth of non-prof it organ i z a - no w when a Chinese company call a you n g in the conventional cla s s r oom. Her vision in tions by passing a law to gover n non-gover n- em p l o yee to set up a company with $100 ca r eer planning and achi e ving success in mental organ i z a tions. According to curren t million right away, she or he can stand up mul t i n a tional companies has been broa d e n e d la ws and regu l a tions, interna tional NPOs, like and just say ‘yes, sir’,” said Chou. ■ by the personal exp e r iences, fai l u r es or suc- cesses, of the JA vol u n t e e r s. She would like to pass on her exp e r ience as a JA vol u n t e e r once she landed a job at a leading company. Besides tran s l a ting core curric u l u m designed by JA Interna tional in the United St a tes, JA China also designs programs parti c - ul a r ly targeted at China’s needs. Since 2003, Subscribe to Beijing Review’s print version JA has started a project of organizing bus i n e s s vol u n t e e r s to teach JA programs in schools for online! Enter www.bjreview.com.cn and then chi l d r en of migrant wor ker s in Beijing and click “Online Subscription”. You will enjoy home Shanghai. China now has 120 million rura l wor ker s in its cities and these are mostly wor k- delivery of Beijing Review for the whole year! ing without any for m of social security and ha ve to pay a higher entrance fee when send- Technology Provider for Online ing their chi l d r en to local public schools. The migrant schools on the outskirts of Subscription: www.cncard.com. big cities have a ver y basic curriculum and no res o u r ces to provide knowl e d g e on eco- The Leading E-commerce technology nomics and business from a global persp e c - ti ve. “Ever y student, whether with advan - provider in China! ta ges or disadvan t a ges, has the potential to

BEIJING REVIEW NOVEMBER 23, 2006 23 NATION No Quickstep for Hip Hop in China Since the hip hop seed was brought to China a couple of years ago, the plant has grown a little, but is still weak and also shows some unique Chinese cha r a c t e r i s t i c s

By JING XIAOLEI do n ’ t get down to the core of the mus i c .” Am e r icans. The r e are four fundamental “Hip hop is considered a fashion and elements in hip hop: hip hop dance, graf fi- ast month in Shanghai, the Americ a n cool stuff here, so some young guys just use ti, DJ and MC. rap icon Jay- Z ’ s debut concert in it as a tool to hook up with girl s , ” said Hao Chinese hip hop is a rel at i vel y new phe- China was canceled by the Ministry Yu, an indie hip hop MC (microphone con- nomenon. In the 1990s, the gen r e fir st sprea d of Culture, who claimed this was in tr oller) from Heilongjiang Provi n c e . The to Japan, the Repu b lic of Kor ea, Tai w an and the interests of protecting local hip media dubbed him as China’s fir st post grad - Hong Kon g . In 1997, the Kor ean hip hop Lhop fans from his nasty lyri c s . ua te majoring in hip hop music when he group H.O.T hit China like a bomb and hip But interes t i n g l y, under the hip hop cate - en t e r ed the China Academy of Arts in 2005. hop began to gain huge popularity among gor y of Baidu Tie ba, an Internet for um pro- The term hip hop refe r s both to a mus i - mainland teenager s. The success of the vided by Baidu.com, China’s largest search cal and cultural gen r e or movement devel - me gastar Eminem further enhanced the tren d . en g ine company, there are many postings oping pred o m i n a n t l y among urban Afric a n su c h as, “I am looking for a hip hop Bleak local scene boy f ri e n d , please leave your QQ [a domestic Cu r ren t l y, fore i g n e r s dominate hip hop instant messenger] number here if you are music in China and the domestic scene in t e r ested”, or “I want to make friends with seems rather bleak. hip hoppers who are between 18 and 25”. “I ’ ve talked to people in the rec o r d bus i - Sa d der is this posting: “I just brok e up ness and many music fans; few are interes t - with my girl f r iend because she likes those ed in hip hop mus i c , muc h less than those who dress in hip hop style, whi c h I’m not who like roc k music and electronic mus i c ,” quite into,” said Li Xiaoyan g , 19, a Beijing said Hu Pan. su b w ay wor ker and hip hop DJ amate u r . Domestic hip hop music for ms a ver y It seems that these days, hip hop is a weak element in the over all pop and roc k growing trend among Chinese youth. Tak e a music industry. The r e are no more than 30 walk in down t o wn Beijing, you ’ ll come domestic hip hop singer s and bands who ac r oss “Eminems” from time to time: urban ha ve released albums, including those in kids wea r ing loose trou s e r s, colorful T-s h i rt s , Tai w an and Hong Kon g , according to a list headbands, necklaces and metal chains with compiled by editors of the www.y h o o d .net, a mo n s t r ous images. In malls, video shops, Chinese website dedicated to street culture. ba r s and radio stations, songs by groups like Co r res p o n d i n g l y, the domestic hip hop Eminem and Black Eyed Peas are freq u e n t l y rec o r d business is thin and weak. Domestic pl a yed . In ever y univers i t y , one can easily hip hop rec o r ds are seldom found on the CD find a hip hop dancing class and the nati o n a l sh e l v es of small audio and video shops. co l l e ge hip hop dancing competition has Ac c o r ding to Hao Yu, mainland hip hop been held for the past four yea rs . rec o r ds totaled no more than 20 over the But don’t jump to the hasty conclu s i o n past 10 yea r s. th a t this means the hip hop craz e has put Dr agon Ton g u e , the fir st and only main- do wn deep roots here in China. In fact, “most land hip hop music label at present, has only of the self-proc laimed hip hop fans are super- pr oduced one album since its establi s h m e n t fic i a l , ” insists music critic Hu Pan. “I don’t DANCE TO THE MUSIC: A middle school at the start of 2004. mean that they are fak e fans, but wha t they student performs hip hop dancing in Finding the local audience is as diffic u l t li k e about hip hop music is all surfac e . The y Xining, Qinghai Province as locating domestic hip hop CDs. “I listen to

2424 BEIJING REVIEW NOVEMBER 23, 2006 HIP HOP CRAZE: In this file photo, the S.O.L., winner of the first Beijing Hip Hop Dancing Competition, performs during the contest’s finale some hip hop mus i c , mostly by for eign singer s and I barel y know an ything about domestic hip hop mus i c ,” said Chen Jizheng, 29, a female employee at an adver tising company in Beijing. The same sit- ua tion is encountered by Lou Min, who hosts a hip hop program on the Hangzhou-based online radio station EBC 5, whi c h is claimed to be the mainland’s best net radio. “I wanted to do a program feat u ri n g domestic hip hop mus i c , but later I gave up the plan. To be honest, domestic hip hop music doesn’t sound gen uine to me,” he said. It seems that the China’s earth is not yet a good bree d i n g ground for this type of mus i c . “Hip hop music in China is encoun- te r ing big obstacles, and this comes from a complicated combina- tion of historical and cultural differe n c e s , ” said the critic Hu Pan . He explained: “We have differ ent ideology, social values and way of life from our counterpa r ts across the ocean. Many Chinese hip ho p p e r s just touch the surface of this mus i c , in for m and content. You can’t expect it to be blossoming in China befor e we have a pro- found understanding of this mus i c .” The core of hip hop, according to Hao Yu, lies in its social crit - icism. The music origi n a ted from the gras s r oots among bla c k men in America using the music to vent their anger and discontent. “Of the four elements of the hip hop culture in China, hip hop dancing de velops muc h faster than hip hop mus i c , graf fiti or DJ, partl y because dancing has little political content,” he exp l a i n e d . Another reason for the slow development of Chinese hip hop is th a t the Chinese language itself is not as suitable for rapping as English, as the two languages bare no res e m b lance to each other in pro nu n c i a tion. What ’ s more, hip hop music has the strong sense of rh ythm and beat, whi c h is not a feat u r e in Chinese music traditions. “But the language differ ence is not so important, as wha t makes good hip hop music is not rhythm or beat, but wha t the singer is try- ing to exp r ess as well as their att i t u d e ,” said Hu Pan . Vulgar language concern Domestic hip hop, compared with over seas counterpa r ts, is rel - ati vel y clean and healthy. “The mainland’s few wel l - k n o wn hip hop groups, including CMCB, Yin Tsang, Kungfu and Dragon Ton g u e , though distinctive from each other, do have something in common: no vulgar language; no content rel a ted to sex, drugs or violence; and no mocker y of state politics or even mainstream culture,” said Qi Youyi, music editor at the Beijing-based publi c a tion Lifes t y l e . The healthy hip hop scene in the mainland owes muc h to the st r ict exa m i n a tion and app r oval rules by the Ministry of Culture. In

BEIJING REVIEW NOVEMBER 23, 2006 NATION

2004, the State banned albums by a Tai wa n sung in the official language, Mandarin . With looser res t r ictions and control over rapper MC HotDog because the lyr ics con- The rest is rapped out in dialects, mostly in the Internet, these rap songs cover a wide tained many nasty wor ds. This past Jul y, a Ca n t o n e s e , Shanghai dialect and the one ran g e of subjects, including sensitive topics ne w mainland hip hop group Wujisheng fel l th a t prevails in northeast China. All the lis- li k e prostitution, corrupt police and prom o t - victim to public criticism as their hit song te n e r s can understand the northeast China ing national patr iotism by mocking Japa n . Can U Feel Me invol v es a few curse wor ds. dialect rapp i n g , whi c h is similar to Hao Yu is one of the underground rap- “I don’t think it’s a big deal to have curs- Ma n d a r in; but people in north China can pe r s. He made his fir st hit, The College ing in hip hop songs. But I do hate it whe n ba re l y understand the south China dialects. Common Room, in 2004 when he was still some Chinese rapp e r s pretend to be angry and “I have no idea wha t this song is all a student at Harbin Engin e e r ing Univers i t y use such wor ds without any real emotional about—I can’t even rec og n i z e a single word ! ” in Heilongjiang Provi n c e . in vol v ement. That ’ s rid i c u l o u s , ” said Chen a netizen complained in a posting to whi c h a “I rec o r ded this song in my dorm with a Ji z h e n g , the adver tising company employee . Shanghai-dialect rap song was att a c hed on the computer and an 8-yuan mike on a day Hip hop music is critical, aggres s i ve, In t e r net for um of www.y h o o d. n e t . when all my roomies wer e out for cla s s e s , sometimes even radical in natu r e, whi c h to Ra pping in dialect gives a special fla vor le a ving me a quiet envi r onment for rec o r d- some extent goes against Chinese cultural to a song, and even makes it sound more in g ,” he recalls. tr aditions, in whi c h people are taught to be in t e r esting and humorous. “It makes the Just like Hao Yu, most of the poorly hu m b le and tolerant. Thus, the nasty lan- domestic hip hop scene more divers i fi e d ,” equipped rapp e r s produce their songs with gu a ge in songs is considered to be some- said Hao Yu. “But the bad thing about this is the help of a computer, che a p mikes and thing to be condemned. th a t some hip hoppers are getting excl u s i ve; some sound-editing softwar e, such as “R e gar ding the issue of vulgar language, th e y for m differ ent factions and think their CoolEdit, Fruitloops and Hip Hop eJay. we Chinese need some time,” said rap singer dialect is the best language for rapp i n g .” After the songs are prod u c e d , they upload Hao Yu. “We are alrea d y becoming more tol- them onto the Internet for sharin g . er ant about this. Five yea r s back, such bad Active on Internet The College Common Room, whi c h la n g u a ge would in no way be allowed in “In fact, China’s best hip hoppers are made an att a c k on sever al improper behavi o r s songs, but today, more people begin to say, co n vened on the Interne t , ” said Qi You y i , in common rooms, such as eating loudly and ‘w ell, I think I’m ok with that’ . ” the Lifestyle music editor, “The r e, in the talking on a mobile phone without concern for Hao thinks vulgar language is not nec- fr ee wor ld crea ted by the Internet, a grou p other people, became so popular on the es s a r y to hip hop mus i c . People don’t curse of talented you n g s t e r s are writing songs In t e r net that it gen e r ated a saying that, “one for the sake of cursi n g , but only when they mo r e crit i c a l l y and incisivel y.” do e s n ’ t qualify as a college student without feel the need, a totally impulsive rea c t i o n . On www.r apyy .com, the best website of he a r ing The College Common Room”. So there should be no need to make a fuss Ch i n a ’ s underground hip hop, num e r ous rap The Internet buzz about the hit gave about this issue. ar tists and their creat i ve songs can be fou n d . Hao Yu a chance to enter the rec o r d bus i - What ’ s unique about the domestic hip Most of the singer s are amate u r s, some of ness. “One day, Univer sal Records came to hop music is that it includes so many whom may have compiled only one or two me and offer ed a contract. But we didn’t dialects. China has 56 nationalities and over songs; however , a few have crea ted more agree on the terms as I didn’t want to be 80 dialects. Most of the hip hop music is than 10 songs. res t r icted by the contrac t , ” recalls Hao Yu. Another emerging underground rapp e r is Pu Tao from Dalian, Liaoning Provi n c e , who wrote a rap song Over seas Scum dur- ing his two- y ear over seas study in New Zealand to crit i c i z e the degen e r ate behavi o r of Chinese students in New Zealand, such as gam bl i n g , cohabi t a tion and joining crim - inal gangs. This song won unexp e c t e d ac c laim on the Interne t . Pu Tao wrote a series of rap songs after he ret u r ned home in 2004. His music fea - tu r es fast rapp i n g , sharp and intense lyri c s (e a c h of his songs contains more than a thousand wor ds with a few songs rea ch i n g tw o thousand). At the end of 2005, he released his debut album under a Beijing cu l t u r al commun i c a tion company. “Good and bad songs are intermi n g l e d on the Interne t , ” said Hao Yu, “because hip hop is not like roc k music; the threshold is muc h lower . Anyone who has a computer and a mike can be a MC, no matter whe t h e r he ’ s talented or not.” “In China, a country that’ s been serio u s for such a long time, hip hop music pro- vides our young people with a new enter- tainment channel and I think this is the RAP ON INTERNET: Hao Yu, an indie rap MC from Heilongjiang Province, produces his bi g gest contrib ution it makes , ” said mus i c songs using a computer and a cheap mike in his university dorm editor Qi You y i . ■

26 BEIJING REVIEW NOVEMBER 23, 2006 HOTEL INFORMATION

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lecting heating fees from employees. In recent yea r s, however , he has been on the ver ge of a nervous brea k d o wn when the heat- ing season is about to start. In the past the col- lection of heating fees was not a probl e m since most employees lived in the housing of Warm and Fuzzy their da n we i , whi c h paid the whole bill. But recent yea r s have witnessed a dra- Ch i n a ’ s latest round of heating reforms ma tic cha n g e in the landscape . Many em p l o yees, after landing a job elsewhe r e, still could make its citizenry happier through li ve in the apa r tment they purchased from their employer s. This group of people finds a fairness and focusing on the poor pe r f ect excuse to delay or deny the paym e n t of heating fees since the integrati ve design of By FENG JIANHUA The 1990s witnessed the implementa- the heating networ k makes it impossible to tion of stockholding refo r ms in the majorit y swi t c h off the heating in one apa r tment with- ea t coming from the rad i a tor could of state - o wned enterpr ises (SOEs) and the out affecting the whole bui l d i n g . Jiang’s da n - be gin to cause a warm e r , fuzzier co m m e rc i a l i z a tion of housing. Along with wei has to pay the heating fees for form e r feeling among China’s citizen r y this tren d , payment of heating subsidies for em p l o yees that no longer have their payro l l and gover nment leaders this winter. SOE employees was shifted from the gov- in the res e a r ch institute. Then he has to ask The temperatu r e won ’ t differ , but er nment to their companies. Yet the heati n g for the prepaid money back, house by house, Hthe way it is paid for could get a lot fai re r bills of civil servants and employees of whi c h is quite a headache . under new re fo rms the Chinese social wel fa r e institutions are still paid by Ov er 80 percent of residential housing in Go ver nment is spearheading this winter. the govern m e n t . China has become private l y own e d , whi c h Kn o wn as the last fort r ess of China’s Me a n wh i l e , due to the engin e e r ing limi- ju s t i f ies some da n we i in refusing to continue planned economy, the heating sche m e , ta tions of the heating system, residents have their payment for employees’ heati n g . On the whi c h has lasted for five decades, not only been unable to control the run o f f of steam, other hand, some companies have no fin a n - imposes financial bur dens on the gover n- whi c h incurs huge energy was t e . When it cial ability to shoulder the bur den of provi d - ment, but also meets with increasing ques- gets too hot, people have to open windows to ing free heating for their employees. The s e tioning over its fai rn e s s . companies just don’t pay the bill. The key measure of this refo r m Tak e Beijing for exa m p l e . Stati s t i c s is to put the current cover t gover n- fr om 2005 show that the paym e n t ment subsidies for heating into a rate of heating services was lower pe r sonal account of the employee s , than 30 percent, involving an arrea r - who will pay for their heating from age of 20 billion yuan. this account. Under the new An interesting phenomenon is ar ran g ement, heating will for the th a t some companies that cannot fir st time become a commodity. af for d the heating have to mortg age But the avai l a bility of heati n g their products. So as ever y heati n g to disadvan t a ged groups holds the season draws to the end, the war e- key to success of the whole refo rm , houses of heating provider compa- said Qiu Baoxi n g , Vice Minister of nies are piled with mercha n d i s e . Co n s t ru c t i o n . Some heating companies even have to open a store to sell these prod u c t s Direct motivation to offset some of their losses. He a ting in winter is only avai l - BUT T ONED UP: Due to lack of funding, a countryside The low payment rate of heat- able in the coldest 15 provinces and pr i m a r y school in northeastern Liaoning Province is forc e d ing fees has undermined norma l municipalities in north China, whi c h to provide only intermittent heating in the cla s s ro o m s op e r ation of heating companies. A us u a l l y lasts for five months from he a ting crisis struc k the chi l l i e s t mi d - N o vember to mid-March of the next let it cool off. Heating is left on in offic e no rt h e a s t e r n three provinces in 2002 whe n yea r . In the 1950s, boiler heating started to be buildings and schools after wor k and durin g then Premier Zhu Rongji had to allocate wi d e l y adopted in Chinese cities. At this wee k ends and holidays, whi c h leads to a 300 million yuan from the cabinet emer- st a ge, urban residents bought coal to provi d e hu g e waste of energy. For exa m p l e , in north - gen c y fund to finance heating in the north - he a ting for their own housing and da n we i , or er n China, 40 days or 30 percent of the 125 east. Zhu immediate l y rallied the Ministry wor k units, deliver ed subsidies to their da ys of the heating season are holidays . of Finance and the Ministry of Construc t i o n em p l o yees. This marked the beginning of a Vice Minister Qiu once announced such to wor k out a heating refo r m draft towar d social wel fa r e-based heating system. a calculation: China’s residential heati n g abolishing the wel fa r e-based heati n g It was not until the late 1970s that China consumes 130 million tons of coal ever y sch e m e . This move was the fir st step down st a r ted to adopt central heating systems in yea r , accounting for 10 percent of total ener- the heating refo r m path . urban areas. At that time, housing was not a gy consumption. The fir st official document on heati n g commodity and urban residents lived in Collection of heating fees is another refo r m was released in 2003, whi c h select- housing provided by their da n we i an d th o r ny issue caused by the tradition that heat- ed 12 cities for pilot refo r ms. In 2005, eight en j o yed free heati n g . Actually, the nati o n a l ing is part of govern m e n t ’ s social wel fa r e. gover nment ministries jointly launched a tre a s u r y paid for the heating bills for almost Ji a n g , the administrati ve head of a Beijing- ne w refo r m document, whi c h req u i r ed all all urban citizens. based res e a r ch institute, is in cha r ge of col- cities to complete the mecha n i z at i o n - o ri e n t -

28 BEIJING REVIEW NOVEMBER 23, 2006 NATION

of fer s residents control over the run o f f of the steam, whi c h will stimul a te energy sav- ing and scientific management of the heat- ing market . Towar d this end, the Ministry of Co n s t r uction has set an agenda for gover n- ment office buildings to finish the red e s i g n of the heating system in line with a run o ff - based cha r ging scheme befor e the heati n g season of 2008. When talking about the heating refo rm , Vice Minister Qiu said the chr onic difficulty in collecting heating fees has been substantially im p r oved in cities with pilot refo r ms. For exa m p l e , in Shenyang City, Liaoning Pr ovi n c e , the payment rate of heating fees has MISSION CONTROL: Workers at a heating company in Shenyang in northeast China climbed from 30 percent to 70 percent after monitor figures to make sure the city’s heating system functions well the installment of household heating systems. Of ficials from the Ministry of ed refo r m in two yea r s. At the heati n g For most ordi n a r y citizens, the heati n g Co n s t r uction have stressed on many occa- refo r m confer ence at the end of August, the refo r m only repr esents a fai r er distribu t i o n sions that guaranteeing sufficient heating for Mi n i s t r y of Construction, whi c h is in over - of social wealth while for low- i n c o m e di s a d van t a ged groups is the key to the suc- all cha r ge of the refo r m, once again acceler- groups a war m winter hinges on the success cess of the heating refo r m. Yet national poli- ated the program, calling for it to be widely of the refo r m, especially for jobless low- cies to safegu a r d interests of the poor have ta c kled this winter. A national office spe- income families, who are the most disad- yet to come out. cializing in promoting the heating refo r m van t a ged group under the current sche m e . Ho wever , there are such measures in was founded at the confere n c e . “T he starting point and ultimate goal of pilot heating refo r m programs. For exa m - an y refo r m should be to uphold fai rn e s s , ” pl e , the Liaoning Provincial Govern m e n t Reforming the core said Lu Zhijian, a civil servant in Shaoyan g st i p u l a tes in refo r m policies that wor ker s of Ch i n a ’ s current heating system at its Co u n t y , Hunan Provi n c e . “The heati n g companies with poor perfor mances could co r e regar ds heating service as part of wel - refo r m would not be a successful one if only get heating subsidies with their salarie s . far e provided by the gover nment. Yet in the he a ting subsidy goes into a perso n a l La i d - o f f wor ker s could enjoy full subsidy, eyes of many people, the heating system is account and the distrib ution of interes t s whi c h will come from a designated heati n g full of unfair fac t o r s. For one thing, those do e s n ’ t cha n g e.” gu a r antee fund in ever y city. According to en j o ying stable heating subsidies are only “T he prio r ity of the heating refo r m is to the regu l a tion of the provincial govern m e n t , em p l o yees of gover nment, social wel fa r e gu a r antee the interests of the low- i n c o m e this fund should be higher than 30 perce n t institutions and SOEs, while the accessibil- grou p , ” said Sun Fen g , Associate Prof essor of of the city’s total heating bud ge t . ity of this wel fa r e for employees of private So c i o l o gy at Tsinghua Univers i t y . “The re fo r e Ac c o r ding to statistics of the Liaoning companies, self-employed people and peo- in the process of for mul a ting policies, there is Pr ovincial Gover nment, by the end of ple without a stable job can not be guaran - a need to slant towar d their interes t s ” No vember 2005, the province has accumu- te e d . The exc e ptions include ill-perform i n g He a ting refo r m is a complicated social lat i vel y collected heating guarantee funds of companies unable to pay their employee s ’ pr ogram, whi c h invol v es wor k in differe n t 1.35 billion, with 100 million yuan to 120 he a ting bills and companies that simply aspects. Thus, Sun thinks the setting of a million yuan coming from the capital city of ig n o r e the wea k l y enfor ced policies and deadline this winter by the Ministry of Sh e n yan g . refuse to pay for wor ker s’ heati n g . Co n s t r uction is too tight. Instead, she “T he disadvan t a ged group is a vagu e Another unfair factor is the insuffic i e n t be l i e ves the heating refo r m, whi c h invol ve s co n c e pt, whi c h needs to be specified in the su b s i d y for the low-income group. In some the interests of each citizen, should be based pr ocess of heating refo rm , ” Sun said. regions with pilot projects, the govern m e n - on suggestions solicited from all walks of Dalian City in Liaoning defines the dis- tal heating subsidy cover s only 32 perce n t li f e. She doesn’t like the idea that the gov- ad van t a ged group entitled to heating subsi- of the low-income families entitled to the er nment officials control the refo r m pace. dies as the fol l o wing: urban residents livi n g mi n i m um living allowance provided by “Since the refo r m itself will have an on minimum living standard allowan c e , low- gover nment for poor families. Even inclu d - economic and social cost, if it ended up income households, unemployed widows or ing the subsidy from their employer s, these en l a r ging the unfai r ness, wha t is the mean- wi d o wer s who have to support a juven i l e , lo w-income families still have to pay nearly ing of this refo r m?” Sun said. and households with both husband and wife half of their heating bill, whi c h accounts for ret i r ing as laid-off wor kers . ne a r ly 10 percent of the fam i l y income. For Tricky reform Ye Tianquan, an official from Liaoning, lo w-income families whose members do Ac c o r ding to the announcement of the noted that the heating refo r m in Liaoning not have a stable job, they have to pay 79 Mi n i s t r y of Construction, the refo r med heat- has cover ed employees of govern m e n t , pe r cent of their heating servi c e , whi c h occu- ing cha r ging system will replace the flo o r social wel fa r e institutions, and vari o u s pies 13 percent of the fam i l y income. By ar ea-based cha r ging scheme with a run o ff - for ms of companies. co n t r ast, families with employees of gov- based cha r ging sche m e . A heating val v e and Still, Wang Wen t o n g , Deputy Direc t o r er nment, social wel fa r e institutions or meter will be installed in ever y household. of the Heating Administration Offic e , is SOEs, only pay 5 percent of their heati n g Under the new sche m e , the heating of a pl a gued with the refo rm ’ s imperfec t i o n s . bills, whi c h account for a mere 6 percent of household could be swi t c hed off when it “It is unrealistic to expect to solve all fam i l y income. stops payi n g . The val v e to be installed also pro b lems once and for all,” Wang said. ■

BEIJING REVIEW NOVEMBER 23, 2006 29 Inv estment Opp o r tunities & Job Inf o rm a t i o n

res u m e @ c hi n a j o b .c o m

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Prior teaching exp e r ience prefe r red mat h e m a tics, physics, che m i s t r y, business and ICT, compiling teachi n g 5. Avai l a ble soon mat e r ials, and testing students. In t e r ested individuals, please e-mail to chr is . n i e @ w ebi . c o m . c n with the Re q u i re m e n t s : att a c hments of a detailed res u m e , certi fi c a te copies, a passport copy and a 1. Candidates must be nati ve or nati ve-quality speaker s of English, with recent photo. We will contact you for an intervi e w as soon as we hear from over two yea r s’ teaching exp e r ience of any of the fol l o wing subjects: bus i - you. Check out our website: ht t p : / / w w w .w ebi . c o m . c n . ness, math e m a tics, physics, che m i s t r y and ICT. 2. Candidates app l ying for the vac a n c y should have team spirit, with goo d Professional Vacancies: in t e rp e r sonal skills and enthusiastic teaching abi l i t i e s . S. Muller & Sons is one of the major diamond manufa c t u re r s in 3. 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Business Management, Business, Economics, Accounting, Financing or Visto holds over 20 patents worl d wide rel a ting to the storage, access, tran s - rel a ted business backg round), and Career Management and Experie n t i a l la tion and synchro n i z a tion of data, and all techn o l o gies necessary for easy Ed u c a tion (for the abo ve two courses, the instruc t o r s should have either a and secure mobile data access. ma s t e r ’ s degree or a Ph.D. in the fields of Education, Psycho l o gy or rel at e d Visto Tianjin was established in October 2005 and serves as an R&D cen- ed u c a tional backg rou n d ) . ter in China. For more inform a tion, visit: www.visto.com. Please prepa r e the fol l o wing mate r ials if you are interested and for wa r d We are looking for a Tec hnical Trainer/Consultant to: all of them to us by fax, e-mail or post. The y are: Curric u l u m 1. Wor k clo s e l y with the U.S . and UK people, especially with engin e e ri n g Vit a e / R e s u m e , copy of diploma, copy of tran s c r ipt (if the instructor is teams; collect technical inform a tion about our products (archi t e c t u r e, prot o - la ter qualified to teach in China, an official tran s c r ipt is req u i r ed), copy col, design, process, etc.) and prepa r e technical training mate r ials in PPT of passport, and two rec o m m e n d a tion letters from rel a ted teaching indus- and/or Documents; tr y or documents whi c h demonstrate rel a ted teaching exp e ri e n c e . 2. Deliver training to Carbon Nanotube (CNT) engin e e r s including both E-mail: rh e a z h a n g @ s m i u s a . o r g ne w and existing employees (Dev & QA and PSG) for all engin e e r s in Add r ess: Suite 16C, Lian Fu Building, 2 Lianqian Xilu, Xiamen 361004, CN T ; Fujian Provi n c e , China. 3. 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Fore i g n e r s enjoy Chinese Chong Yang Fes t i val and brightness. The number nine is regar ded as yan g . The ninth day of the Eve r y year we have the Chong Yang Fes t i val, or Double Ninth Fes t i val, also ninth lunar month is a double yan g da y, hence the name “Chong Yan g called Old Men Fes t i val, on the ninth day of the ninth lunar month. Durin g Fes t i val” (Chong means “double” in Chinese). The ninth month also heral d s the fes t i val this year many fore i g n e r s, together with the Chinese, celebr ate d the app ro a c h of winter. It is a time when the living need war m clo t h i n g , and with var ious activities such as climbing mountains, app re c i a ting chry s a n t h e - filial Chinese sons and daughters extended this to make the fes t i val a time for mum flo wer s, drinking chry s a n t h e m um wine, and eating double-ninth cakes . pr oviding winter clothes for their ancestors. The Double Ninth Fes t i val, there- Fore i g n e r s who are wor king in China are increa s i n g l y exp e r iencing Chinese for e, also became an occasion to visit the graves of dead fam i l y members. li f e nowad a ys. The y have many more fes t i vals to celebr ate , such as Chris t m a s Clothes made of paper would then be bur nt as offer ings. Da y and Spring Fes t i val, enjoying two differ ent but joyful fes t i vals. The Double Ninth Fes t i val is also a time for fam i l y get - t o get h e r s. It is an Chinese Chong Yang Fes t i val introd u c t i o n : occasion to remember one’s ancestors, the sacrif ices they made and the hard- Ori g ins: The fes t i val dates back to the War ring States Per iod (475-221 ships they underwent. Often, fam i l y outings are organ i z ed during whi c h peo- B.C.). According to the yi n / ya n g di ch o t o m y that for ms a basis of the Chinese ple search to ren e w their app re c i a tion of natu r e and to rea f fir m their love and worl dv i e w, yi n repr esents the elements of darkness and yan g repr esents life co n c e r n for fam i l y members and close frie n d s . Tourism Information

well as a tranquil countryside. The fascinating islands in Johor are satisfactory places to harbor your heart Johor Tourism Promotion and the waters around the islands are A tourist delegation of Johor, Malaysia deep and clear—good for diving. went to Beijing The Endau Rompin National Park for a seven-day located on the border of Johor attracts tourism promo- many nature lovers. The prosperous tion activity from tropical rainforest is home to many rare October 11 to 17, animals, including the two-horned rhi- introducing the noceros. The rocks and hills around the unique charm of park are estimated to have a history of Johor to the over 25 million years. Chinese citizens. China is the fourth largest tourist Johor is the fifth country for Malaysia, hence the Johor largest state of Government attaches great Malaysia and is the importance to southernmost state the Chinese in Peninsular market. They Malaysia. It has hope their pro- eight large islands motional trip to with numerous China will bring smaller ones. On its western coast, Johor faces the more Chinese Malacca Strait. On its eastern coast, Johor borders the people to Johor South China Sea. for holidays to Johor possesses a great number of pear gardens, rub- experience the ber gardens, coconut gardens and oil palm gardens as true Malaysia.

Santorini From Greece Sa n t o r ini is a circular group of volcanic islands located in the Aegean Sea, about 200 km southeast from the mainland of Greece. It is the so u t h e r nmost member of the Cyclades group of islands, with an area of ap p r o ximately 73 km. Its spectacular natural beauty along with its emi- nent nightlife makes the island one of Europe’s top tourist hotspots. The island was the site of one of the largest volcanic eruptions of the last several thousand years when it erupted cataclysmically about 3,500 years ago. One popular theory holds that the eruption is the source of the legend of Atlantis. You can observe the breathtaking views of the volcano and neighboring islands and miles of dark sandy or pebbled beaches. Everywhere, you can see small domed churches and remnants of days gone by…. It has been said that the sunsets in Santorini are the best in the world. Santorini is home to a flourishing wine industry, based on the indige - nous grape variety.

Resort Development Ltd. Launches Project Recommendation Forum On October 26, 2006, the recommendation forum on the Cotai Strip (Macao) and Hengqin (Zhuhai) Convention Resort was opened in the Great Hall of the People in Beijing. The forum was hosted and sponsored by a listed transnational company called Resort Development Ltd. from the United States. The forum focused mainly on the development of Chinese tourism and some commercial strategic cooperation. A number of governmental top officials participated in the forum. It is reported that the Hengqin (Zhuhai) Convention Resort won high praise from Premier Wen Jiabao who noted that Hengqin Island is a valuable land and needs careful planning and development. Huang Huahua, Governor of Guangdong Province hosted the launching of the project. In the forum, the National Tourism Administration, tourism bureaus across the nation, and renowned domestic tourism ser- vice agencies reached consensus with Resort Development Ltd. in terms of developing the Chinese tourism market.

Photos are provided by local tourist bureaus. BUSINESS

gover nment has curbed bank loans, rea d - justed exp o r t tarif f reba tes, and res t r icted the es t a blishment of projects that consume high in vestment in the industry. This round of tarif f readjustment, inclu d - ing alumina and electrol ytic aluminum on Aluminum Blues No vember 1, invol v ed 168 commodities. The new temporar y tarif f rate stipulates: the temporar y import duty of 26 res o u r ce products including coal, refi n e d Is Good News? oil, and alumina is decreased to 0-3 perce n t fr om the orig inal 3-6 perce n t ; It ’ s a sign that China’s macroeconomic the import duty of certain key fac i l i - ties and spare parts, whi c h are conducive to controls are working te ch n o l o gical innovation and energy con- se r vation, is reduced to 0-3 percent from 1- By LAN XINZHEN to cut the alumina price from 4,900 yuan to 7 perce n t ; 3,800 yuan per ton because, at the end of the exp o r t duty of 110 kinds of ttention automaker s, plane manu- August, the gover nment cancelled the exp o r t res o u r ce products and those with high ener- fac t u re r s and anyone else who uses ta ri f f reba te for exp o r ted commodities who s e gy consumption and envi r onmental pollution alumina to turn a prof it: The pric e alumina content surpasses 50 perce n t . is rai s e d , including 44 mineral products (now of the metal in China began plum- So, from 4,900 yuan per ton on ta x ed at 10 percent), four energy prod u c t s meting from November 3. Se ptember 1 to a mere 2,400 yuan per ton (n o w taxed at 5 percent), 11 non-fer rous met- AWhy? no w, the alumina price declined more than als including cuprum, nickel and electroly t i c Because the Chinese Gover nment has 50 percent in just two months. al u m i n um (now taxed at 15 percent), 30 steel cha n g ed tarif f policies that had sustained a That ’ s good news for alumina-depe n - and iron product like pig iron and billet (now higher pric e . The gover nment reduced the dant manufa c t u re r s, but it’s also a signal that ta x ed at 10 percent) and the other 21 prod u c t s im p o r t duty on alumina (from 5.5 percent to the gover nment is swi t c hing its exp o r t li k e wooden floor boards and disposal cho p - 3 percent), and raised the exp o r t duty on elec- favor itism from industries like alumina to st i c ks (now taxed at 10 percent) tro l ytic aluminum (from 5 percent to 15 per- mo r e high-tech sectors. “T his round of tarif f adjustment is aimed cent) on November 1, essentially providing a at encouraging the import of res o u r ce prod u c t s su r plus of the metal in the Chinese market. From favorite to target and products that are conducive to techn o l o g- Tha t caused alumina prices to decli n e Four yea r s ago, alumina was the darli n g ical innovation and res t r ict the exp o r t of prod - pre c i p i t o u s l y. of Chinese manufa c t u ri n g — m a r ket demand ucts with high-energy consumption and pollu- On November 3, Aluminum Corp. of was high (for an expanding number of fac t o - ti o n , ” said Zhang Jintao, analyst with China China Ltd.—the worl d ’ s second largest alumi- ries) and prices wer e on the ris e . In t e rn a tional Capital Corp. Ltd. “It is helpful na producer—announced it would reduce the But by 2004, the aluminum industry to optimize the industrial struc t u r e.” pr ice of alumina from 2,950 to 2,400 yuan per was cha ra c t e ri z ed as one of over- i n ves t - Re c e n t l y, the Chinese Gover nment is ton. This announcement fol l o wed on the heels ment, putting unfavor able pres s u r e on the pa ying increasing attention to using eco- of other similar company announcements Chinese economy. The gover nment had no nomic control measures to guide economic (and gover nment announcements). choice but to speed up its effor t in adjusting de velopment, and is making progress in On September 1, the company announced the industrial struc t u r e. Accordi n g l y, the using macroeconomic control measures. If the same prob lem took place some 20 yea r s ago, the gover nment would prob a bly have so l v ed it through administrati ve orde r s. In the for mer planned economy, the fate of en t e rp r ises and economic trends wer e decided by administrati ve orde rs . The good news and the bad The res e a r ch depa r tment of China In t e rn a tional Capital Corp. believes the new 15 percent tarif f on electrol ytic aluminum will add to the exp o r t cost by about 2,000 yuan per ton in the whole industry. “T he exp o r t cost hike will lead to a de c r eased exp o r t quantity,” said Zhang Jintao. The reduced exp o r t will ultimate l y cause the struc t u r al adjustment of alu- mi n um manufa c t u re r s, whi c h had been flo u r ishing in the past few yea r s. Alrea d y, the present alumina and electrol ytic alu- mi n um supply has far surmounted the THINK HI-TECH PROFIT: The tariff rate readjustment shows the government’s suppor t domestic demand. for the development of the hi-tech industry But some say the res t ru c t u r ing isn’t a

32 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS

tax reba te for electric and hi-tech enterpri s e s , whi c h also showed the govern m e n t ’ s sup- po rt i ve attitude to those enterpri s e s . “T he Chinese Gover nment hopes that the hi-tech industry can be a new economic growth engine instead of depending on low- te ch n o l o gy, high pollution and high energy consumption enterpri s e s , ” said Zhang Yan s h e n g , a res e a r cher with Academy of Ma c r oeconomic Research under the NDRC. Ho wever , the market will ultimate l y de t e r mine the effect of the rea d j u s t e d ma c r oeconomic control policies. “E ve r y adjustment is just one link in te r ms of achi e ving the transition of eco- LIKE GOLD, BUT NOT: Exported aluminum is getting expensive. After a temporary nomic growt h , ” Zhang said. “It will take a tariff rate took effect, exported resource products like electrolytic aluminum will be heavily taxed while for this round of tarif f rate adjustment to take effec t . ” bad thing. exp o r t cost of domestic pig iron and billet so But one thing is for sure: The rea d j u s t - The tarif f increase of pig iron and billet th a t underde veloped fac t o r ies will have to ment of the tarif f rate in an effor t to res t ru c - will reduce the exp o r t quantity of raw steel ret re a t from the market. tu r e domestic industries is wor king as we can and will help eliminate poorly managed Other industries that are invol v ed in this see that the product price is cha n g ing (in line steel fac t o ri e s — wh i c h has been a gover n- ta ri f f rate readjustment will also suffer . with the intention of policy- m a ke r s), said ment goal for yea r s. Ho wever , for computer manufa c t u ri n g Pro f essor Zhu Kaihong of the Univer sity of The National Development and Refor m and electric semiconductor enterpr ises, the In t e rn a tional Business and Economics. Commission (NDRC) and other rel e van t ta ri f f rate readjustment is good news. The “At present, we should observe the func- dep a r tments had once set the goal to elimi- de c r ease of import tarif fs on the semicon- tion of policy and take stricter macroe c o - na te poorly managed iron and steel fac t o - ductor module and some other computer nomic control measures when necessary,” ries, but confronted difficulties res u l t i n g sp a r e parts will reduce the cost of computer Zhu said. “On the other hand, we need to fr om the exp o r t demand. This round of tar- ma nu fa c t u r ing in the domestic market. wait as it takes time for one policy to take if f rate readjustment will likel y hike the In Sept e m b e r , China increased the exp o r t ef fec t . ” ■

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BEIJING REVIEW NOVEMBER 23, 2006 33 BUSINESS

ket, displays will exist in var ious form s . Mo re o ver , because of pricing and nati o n a l conditions, CRT TVs will occupy the market for a long period of time with irrepl a c e a ble Boob Tube Boobs? ad van t a ges by other kinds of displays . Jockeying for face time Ol d - s c hool TV manufacturers are slow In recent yea r s, TV display techn o l o gy has become fie rc e l y competitive, with fla t to catch on to the flat screen craze, but sc r een TVs, repr esented by LCD (liquid cr ystal display) and PDP (plasma display ma ybe they’re more tuned into the panel), encroa c hing upon traditional CRT color TV market share. market than competitors realize At large electric appliance stores in Be i j i n g , such as Suning and Gome, fla t scree n By TAN WEI will not disappear even in 20 yea r s!” said TVs, especially LCDs, are more and more Fan Wen q i a n g , Chairman of the China popular while CRT TVs are being phased out. an Zhijun never expected his inter- Trade Association of Color Kinescope. “C o m p a r ed with CRT TVs, LCD TVs vi e w to arouse such ire among lead- Still, for eign brands such as Sharp, ha ve larger and thinner screens and look er s in the domestic color TV market . So n y, Philips, Samsung and LG, also mo r e fas h i o n a ble ,” said Li Xue, a wom a n In talking with China Business News , de cl a r ed rec e n t l y that they have either selecting TVs at Suning. “Many of my Fan Zhijun, Managing Director of stopped or will stop production of CRT fr iends have exch a n g ed CRT TVs for LCD Fthe North China Area of Suning Corp., a color TVs by the end of this yea r . TVs and some of them have even bought ren o wned electric appliance ret a i l e r , said, “T he CRT color TVs being sold now small LCD TVs for differ ent rooms, such as “W e predict that CRT color TVs will exi t ar e inven t o r y befor e last March and by the the kitchen and bath ro o m . ” the market within one year and the Suning end of this yea r , CRT color TVs bran d e d But Li also has concerns about the new outlet newl y opened in Beijing will be the with Sony will all disappear in the Chinese te ch n o l o gy. fir st in China that refuses to sell CRT color ma r ket , ” said Kang Jian, Director of Publi c “It is said that the service life of LCD TV s . ” Re l a tions of Sony (China). TVs is only around three yea r s while their While CRT (cathode ray tube) color Some domestic color TV maker s also pr ices are sever al thousand yuan higher than TVs are used by most of Chinese families at in d i c a ted that although they are still prod u c - those of CRT TVs,” Li said. pr esent, CRT color TVs have lost their low- ing CRT TVs now, as production costs of fla t Ac c o r ding to Fan Wen q i a n g , LCD and cost advan t a ges, he said. sc r een TVs are further reduced and high def- PDP screens may be fine for the fir st three But Fan Zhijun’s assertions wer e inition TV channels are grad u a l l y popular- or four yea r s, but as time goes by, some in fl a m m at o r y to old-school color TV mak- ize d , they won ’ t un s t a ble substances in the screens will er s and their advoc at e s . ma nu fa c t u r e them in cause image brightness and contrast to “ C R T the near future. CRT de cl i n e . On aver age, a bulb for such TVs will not TVs—with low res o - de vices, whi c h costs about 2,000 yuan, quit from the lution, comparati vel y wor ks for 8,000-10,000 hours. If it wor ks 10 ma r ket within smaller screens and ho u r s a day, it will last about two yea rs . one year; they no digital display LCD and PDP TVs also consume twice c ap ab i l i t y — w i l l the amount of electricity as CRT TVs do. ha ve no hope in the But maintenance of CRT TVs only ma r ket, they say. costs sever al hundred at most for any need- But According to ed maintenance, and fragile parts such as Fan Wen q i a n g , judg- ci r cuit boards can easily be repl a c e d . ing from the devel o p - Mo re o ver , it is easy to find maintenance ment trend in China wor ker s to repair CRT TVs. and the global mar- In comparison, accessories for fla t sc r een TVs are exp e n s i ve. In gen e ra l , sc r eens account for over 60 percent of the total price of the TVs, but they are also the most fragil e . For the fore s e e a ble fu t u r e, fla t screen TVs will not be able to compete with CRT TVs in terms of maintenance prices. Results of a survey carried out by Sino Market Research Ltd. suggest Fan Wenqiang is right: It is too early to say CR T TVs will disapp e a r . According to its es t i m a tion, China will need 36.22 million color TVs in 2006, among whi c h 31.1 million, or 86 percent, will be CRT TVs, while the other 14 percent, or 5.1 million, PRETTY FOR NOW: A worker trial runs an LCD TV at the assembly. Some say LCD TVs don’t last as long as their CRT counterparts will be LCDs, PDPs and other modali-

34 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS

kinescopes and 60 million CRT TVs. Ne ver theless, all these brilliant achi e ve- ments will become history as techn o l o gy is up g rad e d . The Chinese CRT industry wor - ries it will meet the same fate . In recent yea r s, many Chinese color kinescope maker s have reduced their output. No vel Color Picture Tube Co. Ltd. clo s e d tw o of its four assemblies. Thomson Fos h a n CPTC Ltd. and Dongguan For tune Grou p wer e sold to an Indian company. Tho m s o n Foshan also has shut down one of its two as s e m b ly lines. Shenzhen Electronics Grou p Co. Ltd. (SEG) also plans to reduce its pro- duction capa c i t y . FAWNING OVER FLAT: LCD TVs, like the one pictured here, are giving CRT color TVs a Although it is commonly accepted by run for their market share in d u s t r y insiders that CRT TVs will not dis- ties. By 2010, China still will need about 30 In the same yea r , Changhong and Skywo rt h , appear within at least five yea r s because of million CRT TVs, ranking fir st among all whose CRT business occupies the leading their price advan t a ges, the impact of fla t kinds of displays. ma r ket shares, gen e r ated prof its of 245 mil- sc r een TVs is an indisputable fact. Among Ma Long, Deputy General Manager of lion yuan and 271 million yuan res p e c t i vel y, the once 50 color kinescope maker s in the the Purchasing Center of Gome Electric while their sales volumes wer e similar to the worl d , only 30 have survi ved and most of Appliance Group Co. Ltd., agrees with this muc h less-profi t a ble Hisense. them are in China, South Kor ea and da ta. Sales statistics from Gome indicate So most of color TV maker s are aiming Southeast Asia. th a t in large cities, CRT and LCD account to achi e ve the right balance between devel - SEG is exp l o r ing new business opportu - for 70 percent and 30 percent of the total oping fla t screen TVs and kee ping to their nities and mobile electronics is one. It starte d sales volume of color TVs, while in medi- ad van t a ges in CRT. mobile GPS production five yea r s ago and um - s i z ed cities, the prop o r tions are 85 per- Guo Dexuan, General Manager of has become the largest provider in Shenzhen. cent and 15 percent res p e c t i vel y. Furth e r , Changhong Marketing Co. China, said that In 2005, the auto navi g ation business of SEG China has a huge rur al market for CRT TVs. under the struc t u r e of Changhong’s color gen e r ated sales reven ue of more than 100 Wu Zukai, a member of the Chinese TV business, the matu r e CRT TVs are still million yuan. SEG also is pursuing other Ac a d e m y of Engin e e ri n g , said that there is a the major source of prof its, but Changhong el e c t r onics business in Shenzhen, pr ice differ ence between fla t screen TVs and Di g ital Flat Display Co. must be the future Guangzhou, Suzhou, Chengdu and Xi’an. CR T TVs that should under no circu m s t a n c e income source . He estimated that this yea r , But as a traditional color kinescope pro- be negl e c t e d , so it is impossible for fla t TVs net prof its of Changhong may rea c h 500 du c e r , why didn’t it opt to produce fla t to replace CRT TVs in recent yea r s. million yuan, of whi c h 400 million yuan sc r een TVs? come from the color TV business and CRT “I t ’ s not rea l i s t i c ,” said an SEG offic i a l , Flat profits TVs will contrib ute 95 percent to the profi t s who requested anonym i t y . According to As tren d y new items, fla t screen TVs gen e r ated by that bus i n e s s . this official, the investment threshold of fla t ar e both opportunities and cha l l e n g es that Fan holds that differ ent types of display di s p l a ys is muc h higher. It costs only 1 bil- TV maker s fac e . ha ve differ ent target audiences and these lion yuan to set up an assembly of color “I t ’ s wrong to allege that the CRT will di s p l a y techn o l o gies will be supplementary kinescopes while nearly 10 billion yuan is di s a ppear within one yea r , but we should to each other instead of substituting each needed for an assembly of LCDs or PDPs. also rea l i z e the trend that sales volume of ot h e r . Fu rt h e rm o r e, fla t screen TVs core techn o l o - the CRT is shrinking while that of LCDs is “Th e re fo r e for quite a long period of time, gy is in the hands of for eign companies. It is grad u a l l y increa s i n g ,” Ma said. competition among CRT, LCD, PDP and sa f er for SEG to play a supporting role and Ho wever , fla t TV maker s have yet to other types of display will exi s t , ” he said. the company may produce some supple- become suffic i e n t l y profi t a ble . Among mul t i - me n t a r y products, the official said. na tionals, only a few, such as Samsung, are. Kinescope concerns Un l i k e SEG, Irico Electronics Grou p Xiamen Over seas Chinese Electron i c It is color kinescope maker s who fee l Co r p., the largest Chinese color kinescope Co. Ltd. (XOCEC), one of the fir st Chinese the grea test pres s u r e from the potential ma ke r , has cooperated with Changhong to TV maker s to embrace fla t TVs, has seen its eventual extinction of CRT TVs. pr oduce PDPs. SVA (Group) Co. Ltd., a sales reven ue grow rapi d l y in the recent two If CRT TVs exit the market, CRT color la r ge shareholder of Novel Color Picture yea r s through both domestic and overs e a s kinescope maker s would be the fir st stric k- Tube Co. Ltd., has also cooperated with sales of fla t TVs, but it didn’t make muc h en. The y understand the situation better than NEC from Japan in PDP prod u c t i o n . mo n e y in this fie l d . In the fir st half of this an yone else. This is substantially differe n t Some other color kinescope maker s are yea r , XOCEC gen e r ated prof its of 44.57 fr om the strate gy of CRT TV makers . even focusing on advancing their kinescope million yuan, but color TV business only Yu Zhiqi, Chief Engineer of Novel te ch n o l o gy. Sheng Jianzhong, General co n t ri b uted 8 million yuan. Color Picture Tube Co. Ltd., points out that Ma n a ger of the No.1 Depa r tment of A repo r t by IT Time in China showed with more than two decades of continuo u s Nanjing Huafei Color Kinescope Co. Ltd., th a t Hisense, whi c h shifted to fla t screen TVs in vestment, China has become the larges t told Beijing Revi e w th a t the company has at the same time with XOCEC, rea l i z ed 100 CR T producer in the worl d , establi s h i n g pr oduced 21’’ super-slim color kinescopes million yuan of prof its in 2005. Of the total, complete industrial chains from CRT mate - and 32’’ 16:9 color kinescopes. The compa- CR T contrib uted 120 million yuan while the rials to color TV manufa c t u ri n g . Ever y yea r , ny plans to release another two new fla t screen TV business lost 20 million yuan. China can produce 60 million CRT kinescope products soon. ■

BEIJING REVIEW NOVEMBER 23, 2006 35 BUSINESS

By TAN WEI

t the 2008 Beijing Olympic Games, Yao Ming might look a little small- er than usual. Tha t will at least be the case for the estimated 1 million Beijing residents watc hing the AOl ympic Games on their mobile phones. As you can imagin e , that has vari o u s in d u s t r y player s salivati n g , at least whe n th ey ’ re not busy sifting through the implica- tions of a new mobile TV broa d c a s t i n g st a n d a r d that will impact how they air a cel- lular Olym p i c s . The State Administration of Radio Fil m and Tel e vision (SARFT) issued an industry st a n d a r d called the CMMB (China Mobile Multimedia Broadcasting) system on Se ptember 24, whi c h is colloquially known as the mobile phone TV standard. SARFT claimed that the transmission techn o l o gy— the key part of the standard—has been res o l ve d . StiMi techn o l o gy (Sate l l i t e Ter res t r ial Interac t i ve Multi-servi c e In f ra s t ru c t u r e) was adopted from Novem b e r 1 this yea r . The Selling Of Cell TV Industry figures out how to profit with the new Chinese mobile phone TV standard

The issuance of the SARFT standard att r acted wide attention from industry insid- ers . The partn e r s—also known as coopera- to r s—of the CMMB standard inclu d e China Telecom, China Unicom, broa d c a s t - ing institutions like China Central Tel e vision, China National Radio, China Radio Interna tional, Beijing All Media and Cu l t u r e Group, and others. These big names have, in effect, indicat- ed that the disputed mobile phone TV stan- da r d has fin a l l y been res o l v ed with the ac c e ptance of the CMMB standard. SARFT noted that StiMi tran s m i s s i o n te ch n o l o gy is the key component of CM M B . The CMMB standard system also NOT JUST ANY GAME: Soon, cell phone users won’t just in vol v es other att ri b utes touching on video be playing pong, or any other interactive game. They’ll be watching TV, and especially the Olympic Games in Beijing and audio, etc.

36 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS

Ac c o r ding to the blu ep r int for devel o p - plans in line with the standard so as to fol - Wang said the same thing should also ing mobile phone TV, by the end of 2006, lo w up with the market tren d . app l y to mobile phone TV. the country will complete the trial testing of Of course , there’ s no mobile TV with- The number of mul t i - s t a n d a r d chip solu- the ground data link and intercha n g e stati o n out the right chips, so the message is clear to tion provi d e r s won ’ t be many, and Wang Wei system—the infras t ru c t u r e. By the middl e chi p m a ke r s: Innovate ! es t i m a ted that by the end of 2007, only three of 2007, the ground data link and inter- “Although Siano spent only two yea r s or four manufa c t u re r s in the wor ld could pro- cha n g e will be constructed and put into in coming up with the mul t i - s t a n d a r d sili- vide such a chip solution. co m m e r cial use. By the fir st half of 2008, con of the mobile phone TV, it usually takes Apa r t from Siano, some emerging semi- the satellite system will be integrated into a company at least three to four yea r s for a conductor companies have also exp l o re d this networ k and will for m a nati o n w i d e co m p re h e n s i ve techn o l o gy packa ge,” noted res e a r ch and development of mobile phone ne t wo r k for for mal operation. If all goes to Wang Wei, Chief Repre s e n t at i ve of Siano TV chips. plan, mobile phone TV will be rea d y for the Mobile Silicon who is in cha r ge of the A number of interna tional chip solution 2008 Beijing Olympic Games. China market. pr ovi d e r s also stated that once the Chinese St a tistics provided by IMS Research, a Siano is a silicon solution provi d e r st a n d a r d is set up, they will set off to pro- ma r ket analysis company, show that the based in Israel and is also the fir st to provi d e vide mobile phone TV chips. Luis Pineda, Chinese mobile phone TV market could the silicon chip that supports multi mobile Vice President of Qualcomm, noted the expand to as muc h as 500 billion yuan by phone TV standards. Qualcomm chip solution for mul t i - s t a n d a r d 20 0 8 . “W e are app l ying for joining the mobile phone TV is scheduled to be put into But rel e vant organ i z a tions need to CMMB wor king grou p , ” Wang Wei said. the market in the fir st season of 2007. co o p e r ate for this to happen. SARFT should pr ovide the TV content for users, while tele- com operato r s and manufa c t u re r s must pro- vide necessary techn o l o gy. Li Guangzen g , a prof essor at Nanjing Un i ver sity of Posts & Tel e c o m mu n i c at i o n s , pointed out that judging by the devel o p m e n t tr end of media, the mutual integration of telecom and radio, film and televi s i o n in d u s t r ies is unavoi d a ble . The mutual integration will creat e , as the Chinese love to say, a win-win situati o n . The announcement of the new mobile phone TV standard offer s radio, film and TV industry insiders brand new opportu n i - ties. For instance, TV programs and rad i o st a tions can look for wa r d to an ext r a cha n - nel to broadcast their programs and bring in mo r e adver tisement revenu e . On the other ha n d , by cha r ging users who watc h mobile phone TV, telecommun i c a tions companies will expand their bus i n e s s e s . Wang Lian, Deputy Director of the Science & Tech n o l o gy Depa r tment of the SA R F T , agree d . “SARFT has advan t a ges in terms of channels, content and policy, whi l e te l e c o m mu n i c a tion companies enjoy rel a - CRASH COURSE: An Intel employee teaches potential customers how to use mobile ti vel y more capital and user network s , ” phones to watch TV programs Wang said. “The Chinese mobile phone TV st a n d a r d relies on independent innovation to “T he app l i c a tion proc e d u r e will be a bit Ho wever , many people hold the stan- enact a unified standard so as to boost the co m p l i c at e d . Our company plans to pro- da r d proposed by SARFT is just a rec o m - in t e gration of three networ ks—the TV net- duce the second-gen e r ation product to sup- me n d a tion—neither compulsory nor the wor k, radio networ k and telecom servi c e . po r t CMMB in 2007. We are wor king on a na tional standard. The unidentified natu r e Our objective is to crea te a compreh e n s i ve mul t i - s t a n d a r d support and are 80 perce n t of the standard will give rise to reo r gan i z a - mobile multi-media broadcasting network . ” su r e that we can support the CMMB stan- tion of the market . da r d next yea r .” Wang Lian adde d , “Most of the domes- Chips’ shot Ho wever , Wang Wei said, time is short. tic broadcasting and TV standards are rec - Be fo r e the SARFT standard was It is widely suspected the chip solution ommended instead of being compulsory to an n o u n c e d , some manufa c t u re r s had th a t supports multiple standards will se r vice provi d e r s. The standardi z at i o n al re a d y begun to try out mobile phone TV become the development trend for mobile Ad m i n i s t r ation of China has not planned to te ch n o l o gy. However , as the industry stan- phone TV and mobile digital TV. up g rade our standard to a national level. But da r d was not establi s h e d , all sides had been “J ust like the TV sets,” noted Wan g ma n y South Kor ean companies have state d cautious in investment. After SARFT Wei, “We buy TV sets regar dless of whi c h cle a r ly that as long as the industry standard announced the CMMB standard, many chi p st a n d a r ds it supports, because at pres e n t , of mobile phone TVs is set up, they will ma nu fa c t u re r s activel y set up prod u c t i o n ea c h TV set supports all TV standards . ” im m e d i at e l y fol l o w up.” ■

BEIJING REVIEW NOVEMBER 23, 2006 37 BUSINESS

2007. The ministry is to ca r ry out inves t i g ations and studies on detailed measures of the new mecha n i s m . Transitional guidelines will The Annals of Annuity be issued in the fir st quarte r ne xt yea r . At the same time, Beyond a name cha n g e , “annuity” is undergoing local social security fund ma n a gement centers should a major facelift in China not parti c i p a te in annui t y ma n a gement agai n . Providing for the aged To most company em p l o yees in China, a pen- sion is their only income so u r ce after ret i r ement, but this income is not hand- so m e . According to stati s - tics from the MLSS, in 2005, the aver age monthly pension for ret i r ees of com- panies in China was 698 yuan, accounting for only 45.5 percent of the 1,534 yuan of aver age monthly sa l a r y of employees on the jo b , or 58.2 percent of the 1,200 yuan of aver age mo n t h l y pension of ret i re e s fr om gover nment depa r t- ments and public institu- ti o n s . “At present, the basic pension has cover ed arou n d SENIOR IN NEED: Currently, many elderly Chinese don’t earn enough from pension packages 60 percent of basic salary to comfortably retire be fo r e ret i r ement, but it is far from enough to rel y on,” By TAN WEI ma n a gement centers wer e set up to operate said Chen Liang. “It is necessary to make a an n uity funds; some sectors, like the power full play of annuity in order to make ret i re e s nn uity is in transition in China, and in d u s t r y, adopted univer sal management of maintain their living standards . ” ho p e f u l l y it will benefit ret i r ees more an n uity on their own; and some annui t y Ho wever , many company manager s in the future. As an important compo- funds wer e even used to buy supplementary and employees are unacquainted with nent of the corpo r ate wel fa r e system, co m m e r cial pensions. an nu i t y . Results of a survey carried out by Aan n uity refe r s to vol u n t a r y supplementary “In accordance with the for mer operati o n the MLSS in September show that only 40 en d o wment besides the basic pension stipu- model, after collecting an annui t y , annui t y pe r cent of company manager s know abo u t la ted by law. Annuity funds come from both ma n a ger s, such as social security fund man- an n uity funds and one third of them haven ’ t companies and employee s . agement centers, are entitled to manage the rea l i z ed their responsibility of establi s h i n g In 2000, the State Council cha n g ed the mo n e y on their own , ” Ba said. According to on e . Many employees regar d annuity as name of “additional pension” into “annui t y .” him, scandals arising in recent yea r s have ext r a cha r ges by companies instead of their In 2004, Trial Measures for Annuity and sh o wn that the largest prob lem is that this su p p l e m e n t a r y pension investment. Some Trial Measures for Management of Annui t y sum of money is operated without trustees or human res o u r ce depa r tments also deem Funds wer e promu l g ate d , form a l l y establi s h - in vestment manager s, and therefo r e, it is like- th a t it’s better to provide housing funds or ing the principle of market - o r iented manage- ly to be embezzled or suffer losses. In Jul y bo n uses to employees rather than establi s h - ment and operation of annui t i e s . 2006, an annuity scandal in Shanghai was ing an annui t y , to satisfy their demands of Ac c o r ding to an estimate by Ba revealed in whi c h 3.2 billion yuan of annui t y buying houses and cars or chi l d re n ’ s educa- Sh u s o n g , Deputy Director of the Fin a n c i a l was embezzled by senior officials. It was the ti o n . Institute of the Development Research la r gest such case since China established the “By establishing an annuity and com- Center of the State Council, the amount of an n uity system. pleting the mul t i - l e vel social security system, an n uity funds collected befor e 2004 stands at On September 24, Chen Liang, Direc t o r we may set the target that pension cover s 80 about 100 billion yuan. of the Fund Regu l at o r y Depa r tment of the pe r cent of basic salary befor e ret i re m e n t , But befor e 2004, due to a lack of a uni- Mi n i s t r y of Labor and Social Securit y hence the living standards of company for m management mechanism, this amount (MLSS), decla r ed that the annuity funds col- em p l o yees would not fall too muc h after of annuity was managed in var ious for ms. In lected befor e 2004 must be incorpo r ated into ret i re m e n t , ” said Wang Yijia, Vice Pres i d e n t Shenzhen and Shanghai, social security fund a new management mechanism by the end of of China Life Asset Management Co. Ltd.

38 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS

Ac c o r ding to Wan g , exp e r ience of other should focus on supervising qualified institu- co u n t r ies indicates that basic social insur- tions to operate annui t y .” an c e , annuity and commercial insurance are At the same time, the MLSS also rea f - the three pillars that help stabi l i z e the life of fir ms that social security funds are proh i b i t e d the aged . Among the 167 countries adopting fr om investment violation. The accumul at e d an n uity programs, more than one third of social security fund should be stric t l y man- them have annuity cover for one third of their aged . Befor e new regu l a tions are issued, no lab o re r s. In Britain, the United States and other investment is allowed . At present, qual- Ge rm a n y, the cover age rate is about 50 per- if ied institutions that are allowed to operate cent. In Denmark, France and Switzerl a n d , an annuity include commercial banks, secu- the cover age is nearly 100 percent. rities companies, trust investment companies, At present, there have been 42 million in s u r ance companies and fund managem e n t ret i r ees in China incorpo r ated into endow- co m p a n i e s . ment insurance system and ever y year there will be 3 million more people adde d . Wan g More ways of appreciation Yijia believes that annuity is important to a Sh e n yin and Wanguo Securities Co. Ltd. la r ger and larger group of ret i re e s . es t i m a tes that in the future, annuity will in c r ease 80 billion yuan ever y yea r . The Regulating operation aggregate annuity will surpass 500 billion St a tistics from the MLSS indicate that by yuan by 2010 and rea c h 1 trillion yuan in 10 the end of 2005, there had been 24,000 yea rs . Chinese companies establishing annui t y , Ho wever , app re c i a tion is another prob - in volving 9.24 million employees. The lem to be fac e d . aggregate of annuity funds had rea c hed 68 “R e t u r ns of trea s u r y bonds are less than billion yuan, 2.56 times the fig u r e in 2000 2 perce n t , ” said He Ping, Director of the and 37 percent higher than that in 2004. La bor Security Institute of the MLSS. Me a n wh i l e , the rapi d l y growing annui t y The capital market is another importa n t in China is faced with more and more serio u s in vestment destination of annui t y . Accordi n g cha l l e n g es in regu l a tion and operation. In to present laws and regu l a tions, the prop o r - 2004, the Trial Measures for Management of tion of annuity that can be invested in the An n uity Funds wer e issued, allowing for the st o c k market should not exceed 20 perce n t . fir st time annuity to be invested in, besides The ret u r n rate of the present bond market is banking deposits and trea s u r y bonds, “other about 2 percent and if the expected ret u r n rate financial products with good liquidity,” of an annuity plan is 5 percent, “it means that in c luding corpo r ate bonds, tran s fe r able the ret u r n rate in the stock market must sur- bonds, investment insurance products, secu- pass 10 percent, whi c h is impossible whe n rities investment funds. pe r fo r mance in the stock market was not rea - Fig u r es from the MLSS show that since so n a ble in the previous yea rs , ” said Tia n 1998, there have been over 16 billion yuan of Ca n r en, President of Harvest Fund embezzled social security funds being Ma n a gement Co. Ltd. rec a l l e d , but by the end of 2005, there wer e “W ith an imperfect capital market, the still 1 billion yuan of social security funds not Chinese Gover nment needs to exp l o r e ways ret u rn e d , most of whi c h wer e annuity funds. for social security funds to be invested in “O p e r ation of annuity invol v es fields like in d u s t r ies with high prof its, such as tran s - banking trust, securities and insurance and to po rt a tion, power and petroleum, or some avoid blank or overl a pped supervision, we la r ge infras t ru c t u r e proj e c t s , ” He Ping said. must strengthen functional supervi s i o n , ” said But res t r icted by exacting laws, this ideal Chen Liang. “The regu l at o r y depa rt m e n t is obvi o u s l y can’t be rea l i ze d . Wang Yij i a also believes that regu l a - to r y policies of annui t y in China should kee p to the principle of stric t res t r ictions, whi c h com- plies with present devel - opment of the capi t a l ma r ket and safegu a rd s se c u r ity of annui t y in ves t m e n t . ■

PENSION SEEKERS: Retirees get in line to receive their pension payments. Corporate welfare is undergoing reform in China

BEIJING REVIEW NOVEMBER 23, 2006 39 BUSINESS FINANCE

en t e r tainment tool, it has evol v ed into a co m p re h e n s i ve inform a tion termi n a l . ” Content Is Key for Digital TV So how will this dream be realized? Liu said it will req u i r e the collabo r ati o n of digital TV operato r s and other media One industry leader says content is or gan i z a tions. For instance, magazine con- tent could be inputted into a digital TV data - fundamental to making digital TV more base and prof its shared between the digit a l mainstream in China TV operator and the magazine on a “per- cli c k” basis. To magazines, digital TV can By SUNNIE WONG in vestment invol v ed sever al hundred mil- pr ovide higher rea d e r ship num b e r s with no lion yuan—a large sum of money by any- ad ditional cost while enric hing the content ur e, digital TV is a lot prettier than on e ’ s standards . ” for digital TV operato r s. Liu estimates that st a n d a r d cable because of its high- The presumption is that each installed as long as there are “benefit sharing” sys- quality images, but one industry household would even t u a l l y pay a fee of tems in place, many media organ i z at i o n s leader suggests the new medium’s 200 yuan per yea r . will be interested in such collabo r ation. enhanced content is wha t con- “It will be quite a while befor e we see any Tapping into big money Ssu m e r s will rea l l y be thrilled abo u t . ret u rn s , ” he said. “We can’t predict the future, “I don’t agree that content rules in the but we expect to stabi l i z e the reven ue gen e r - When studying the progress of digit a l tr aditional TV industry, because it is in the ated by digital TV after completing the net- TV in other provinces, Liu found that high- er a of digital TV that we will see content wor k. Looking back, establishing a stron g end digital TV subscrib e r s (IPTV sub- rea l l y rul i n g ,” said Liu Shabai, Vic e ne t wo r k was a ver y smart move. Digital TV sc ri b e r s) spend an aver age of 2,500 yuan Pr esident of Hunan TV and Broa d c a s t content can be compared to a large superma r - an nu a l l y, whi c h equates to 10 yea r s of cable In t e rm e d i a r y Co. Ltd. (TBI). ket whe r e you can buy anything you wan t . ” TV fees. For exa m p l e , there are more than In a competitive sector, underst a n d i n g In his view, traditional TV tends to posi- 300,000 household digital TV subscrib e r s in and implementing val u a ble content in the tion each channel specific a l l y. For exa m p l e , Hangzhou, among whi c h, 80,000 are high- midst of techn o l o gical innovation may Hunan TV positions itself as an enterta i n - end subscrib e r s. As a result, the reven ue from even t u a l l y give TBI and like-minded media ment channel. Digital TV, howev- those high-end subscrib e r s is app r oxi m at e l y companies wider prof it margins. er , enables limitless content. 200 million yuan per yea r . Given such a high “Content without limits” Fu rt h e r , traditional TV spending power in Hangzhou, Liu rec kon s is the key to profi t a bility in channels only prepa r e 24 the potential in the vas t l y populated Hunan the digital TV age, said ho u r s wor th of content Pr ovince is immense. Liu, having rea ch e d since they broadcast 24 But will consumers flo c k to digital TV this conclusion after ho u r s a day. Digit a l as quickl y as TBI predicts? to u r ing Hangzhou TV , however , inter- “It will take time,” said Liu, optimistic and Qingdao, both acts with the audi- yet cautious in his view. It will take time for di g ital TV revol u t i o n ence and therefo r e audiences to embrace digital TV, as once leading cities. must have divers i - was the case for cable TV. And while he fied content— ack n ow l e d g ed that there would be some A content-heavy mo r e trad i t i o n a l di f ficulties in getting audiences to move investment TV content and fr om free TV to paid digital, “content will To understand the content from other cha n g e every t h i n g .” im p o r tance of content to media sources. All Some people say that content rules on TBI, whi c h is handling the rol l - in fo rm a tion can be tr aditional television today, but Liu does not out of the company’ s digital TV in st o r ed in the limit- agree . In his opinion, most of the content on the provi n c e , understand this: the less data base for the 2,000-plus domestic channels tend to be co m p a n y began prepa r ing digital TV the viewer to che c k ver y similar. content a year ago even though an y time at home. But in the digital TV era, Liu said, con- nothing has been aired yet . In Liu’s word s , tent will trul y be king. The audience will pay “W e haven ’ t yet distrib - “W e provide wha t if the content att r acts them, he said. uted set-top boxes” for you want as wel l This is one important reason why TBI is di g ital TV, Liu said. as many things pr oducing content prior to the distribu t i o n “W e are ver y confid e n t “Digital TV is a you don’t exp e c t . ” of set-top boxes. “We won ’ t launch until the in the content that we revolution. TV is For Liu, digi- content is substantial and all platfo r ms are will provi d e .” tal TV will be in place,”said Liu. In terms of TBI’s no longer a mere mu l t i - f u n c t i o n a l , Once demand within Hunan Provi n c e in vestment in digital TV, entertainment tool, also essentially has been met, Liu wishes to promote digit a l it ’ s big. it has evolved into wor king as a com- TV content nati o n w i d e . TBI intends to “W hen we firs t pu t e r , news p ap e r ne got i a te with digital TV operato r s in each in vested in the digit a l a comprehensive and teleph o n e . pr ovince and region and collabo r ate with ne t wo r k setup, many information terminal.” “D i g ital TV is them. people found it hard to —Liu Shabai, a revol u t i o n , ” Liu “T he digital TV project shows grea t un d e r stand wha t we Vice President of TBI sa i d . “TV is no pr omise given the strength of Hunan TV,” wer e doing because the lo n g er a mere he said. ■

40 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS FINANCE

“If you understand how to integrate new media and traditional media, then it is possible for the group to move into a whole new arena.” —Li Ruigang, President of SMG

used to purchase most of the programs, but we curren t l y self-produce many of them. We also sell them to other TV stations and Do What Others Can’t over seas media companies. SMG cover s many areas. Wit h SMG isn’t trying to imitate anyone, and whi c h over seas media groups does SMG sh a r e similarities in terms of a profi t - th a t ’ s its secret for success cre a tion parad i g m ? It is hard to find any similar group in By SUNNIE WONG We also have broadband TV and the United States. As far as its over all size mobile phone TV. Mobile phone TV has is concerne d , SMG is certa i n l y not as large As a competitor of TBI, tw o modes: One is the browse mode, for as media giants over seas. However , SMG Shanghai Media Grou p whi c h we have app r oxi m at e l y 200,000 co ver s a muc h broader area. News Corp. , su b s c ri b e r s nati o n w i d e . The other is the for exa m p l e , has no chi l d re n ’ s program s , (SMG) also produces DMP (Distrib uted Memory Proc e s s i n g ) but SMG does; Viacom does not have any content, whi c h has alrea d y mo d e , whi c h has not yet been launche d . sp o r ts programs, but SMG does. Even be gun airin g . But the We have been trying ever ything in the new be fo r e the integration, we alrea d y had a media field over the past two yea rs . di vers i f ied selection of channels, coveri n g co m p a n y is focused on a lot a var iety of themes. mo r e that only it can do, Ho w can SMG operate effic i e n t l y ac c o r ding to SMG Pres i d e n t with so many differ ent types of media? Is SMG curren t l y planning to inte- We must be clear about our abi l i t i e s grate new media and traditional media? Li Ruigan g . and our direction. We also must give con- Du r ing the initial phase, we had a Li rec e n t l y talked about his si d e r ation to our specific strengths. We number of integration cases. For exa m p l e , ne w understanding of how to ha ve spared no effor t in the new media the publi c a tion of China Business News in t e grate new and trad i t i o n a l fie l d . Tak e IPTV as an exa m p l e . We have and also Haha Pictoria l ma gaz i n e , whi c h obtained an operating license and have is produced in conjunction with the chi l - media. es t a blished a platfo r m in collabo r ati o n dre n ’ s channel. This is the concept of inte- with China Telecom and China Netcom. gration between TV and print media. If Ho w is SMG progressing with its To some extent, we have become a virtu a l you understand how to integrate new ne w media bus i n e s s ? op e r ato r . Thus, we can do wha t others media and traditional media, then it is pos- Li Ruigan g : In terms of digital TV, we cannot. si b le for the group to move into a who l e ha ve launched pay TV and devel o p e d ne w aren a . ■ rel a ted content. We curren t l y have 16 pay Does this mean that SMG is not (Xinhua Fin a n c e ) TV channels nationwide and 30 pay TV in vol v ed in content prod u c t i o n ? channels in Shanghai. We are invol v ed in content prod u c t i o n . DISCLAIMER: The information contained herein In terms of IPTV (Internet Prot o c o l It is unrea s o n a ble for a good media com- is based on sources we believe to be reliable, but is TV), we have 70,000 subscrib e r s in Harbin pa n y to completely outsource content. One provided for informational purposes only, and no and 10,000 subscrib e r s in Shanghai, whe r e of the roles we play is content prod u c e r . representation is made that it is accurate or su b s c r iber num b e r s are estimated to rea c h The perce n t a ge of self-produced program s complete. This briefing should not be construed as legal, tax, investment, financial or other advice, and 60,000-80,000 by the end of this yea r . has increased in recent yea r s. Tak e enter- is not a recommendation, offer or solicitation to buy IPTV cha r ges 60 yuan per month. tainment programs as an exa m p l e . We or sell any securities whatsoever.

BEIJING REVIEW NOVEMBER 23, 2006 41 BUSINESS

issues such as these can appear trif ling and not Legal-Ease wor th bothering about. Yet, if it all goes horrib ly wr ong in China, who gives the green light to exit the in vestment? The investor or the licensing authorit y ? In China, the investor must obtain app r oval to clo s e a business if it is not perform i n g . This can be a prob - Doing Business in China lem if there are differ ing opinions on the natu r e of the operati o n ’ s woes. The ability to pull out is there- for e not in your hands. Should the govern m e n t de c r ee the business can be a going concern or its By CHRIS DEVONSHIRE-ELLIS clo s u r e perhaps faces unemployment issues or loss Land use rights of tax reven ues, obtaining permission to exit may not be easily fort h c o m i n g . Normal draft arti cl e s The r e has been an increase over the past few th e m s e l v es are somewha t ambivalent on the matt e r yea r s in the abuse and occasionally quite deliberate and far from specific . The way to deal with this is to mi s r epre s e n t a tion of the actual circumstances con- ha ve the arti c les of association wor ded (this is not in ce r ning land use rights to for eign inves t o r s. This is st a n d a r d drafts) in such a manner as to link the ter- es s e n t i a l l y a legal due diligence issue that is req u i re d mi n a tion clauses to production clauses. In this way, when acquiring land, and it is vital to carry out back- an economic trig ger is identified that can be pulled ground che c ks to confir m the status of the land in should the business under-p e r fo r m. This needs to be question. built into the arti c les of association prior to regis t r a- The r e are two types of land use rig h t s : tion with the authorities. If app r oved , the licensing ● Al l o c a ted rights, meaning someone else has au t h o r ity must fol l o w it’s own app r oval process for the title but permission to use for a specific purpo s e the behavior of the company if it decides to exit for is provided to you. These take the for m of an issued economic reasons. It neatl y puts the ability to exi t ce rt i fi c a te in your name. ba c k in the realms of measurable financial perfor - ● Gr anted rights, meaning you have title (own - mance and away from any ambiguity. er ship) of the land. When specific a l l y dealing with joint ven t u r es, in For obvious reasons, granted rights are more ad dition to an exit strate gy, details of any acquisition exp e n s i ve than allocated rights. Granted rights mean of shares, including prices to be offer ed for them, you can prof it from any increase in the value of the can also be inserted into the arti c les and contract if land if you develop it, whe r eas with allocated rig h t s ne got i a ted and agreed by both parties. this is not the case. A certi fi c a te is also issued de m o n s t r ating you have title. Role of the Labor Union ● Also important to note is the scope of use, Ag ain, standard clauses in the arti c les that may whi c h app e a r s on the certi fi c a te and identifies exa c t - This is the ly wha t the land is to be used for . For obvious rea s o n s appear innocuous, but if not dealt with and red ra f t - ed , these can lead to interfer ence at the highest level fifth in a again, this needs to be consistent with your bus i n e s s . in the way in whi c h you operate your business. Thi s series of Pro b lems occur as fol l ow s : is addi t i o n a l l y compounded by the fact that new reg- articles ● Gr anted rights wer e paid for , but allocate d rights provi d e d . We have even had prob lems with ul a tions are due to be issued to strengthen the rol e where we and responsibilities of the labor union. identify local gover nments negot i a ting a higher prem i u m , yet actually only handing over allocated rights. If All companies in China have the right to for m a some of the “g ras s r oots” labor union if there are at least 25 common wanting title to the land, you must specify gran t e d rights in all circumstances. em p l o yees (including for eign wor ker s). This struc - mistakes ● In valid scope of use. Agric u l t u r al land, espe- tu r e is part of a national union of wor ker s that has its made when ci a l l y in China, is at a premium, and permission to ul t i m a te power base firm l y within the Constitution, making an co n ver t it to commercial use has to be obtained at so this is a powerful organ i z a tion. investment st a te level. Yet many local gover nments themselves If a union is form e d , then the elected repre s e n - in China issue fraudulent certi fi c a tes, buying land che ap l y tat i ve has the right to attend company managem e n t fr om farm e r s, illegal l y cha n g ing the rights and then meetings. The company must fund the union to the selling it on as commercial usage to for eign inves t o rs . tune of 2 percent of all employees’ salaries each It is a common scam, and if you get caught—no mat- month (staff must also make a small contribu t i o n ) . ter how innocent you are— y ou stand to lose you r Funds should be used for wor ker s’ education, wel - in vestment. You must che c k with the land bur eau on far e and entertainment and may also be used to pro- all matt e r s of land use, scope of use and so on to ver - vide legal support to employees with grie van c e s ify wha t you are told is correct. against the company. ● Access rights. Some land can have issues with Ma n a gement interfer ence can be minimized by access rights, and details to provide for this must be res t r icting the union repre s e n t at i ve’ s access to the ha m m e r ed out as part of any agreement. po r tion of meetings only at whi c h staff and wor kers ’ rights are to be discussed, while bud g ets for the use Exit strategies of union funds can also be agreed upon and imple- With fore i g n - i n vested enterpr ises’ app l i c at i o n s , me n t e d . ■

Chris Devonshire-Ellis is the Senior Partner of Dezan Shira & Associates - www.dezshira.com

42 BEIJING REVIEW NOVEMBER 23, 2006

BUSINESS

was 0.2 perce n t a ge points higher than the rate a year ago. From Janu a r y to October, State of the Market demand deposits from corpo r ati o n s in c r eased 704.6 billion yuan, 601.5 billion Finance ea r lier perio d . Of this total, deposits from yuan more than the fig u r es in the same peri- Financial perfor mance remained sound households and non-financial institutions od last yea r . and stable in October, said the Peo p l e ’ s rea c hed 16.95 trillion yuan and 15.3 tril l i o n In October, transactions in the inter- Bank of China (PBC), the country’ s central yuan, increasing 14.5 percent and 15 perce n t , bank market amounted to 3.37 trillion yuan. ba n k . res p e c t i vel y, over the yea r- e a r lier perio d . Eve r y day, transactions stood at 187.3 bil- In October, the money supply increa s e Among the total renminbi deposits, sav- lion yuan, soaring 73.6 percent, or 79.4 bil- qu i c kened (see graph 1). During this month, ings deposits arrived at 15.8 trillion yuan, a lion yuan, compared with the same perio d a total of 72.3 billion yuan of cash was with- yea r- o n - y ear increase of 15.5 percent, 0.5 last yea r . dr awn from circu l a tion, 34.3 billion yuan pe rc e n t a ge points lower than the rate in the mo r e than that in the same period last yea r . pr evious month and the lowest since Apri l Price At the end of October, the outstanding 2005. In October, renminbi savings depo s i t s CPI In October, the consumer pric e in d e x (CPI) was 1.4 percent higher than that Graph 1: Money Supply, Oct. in the same period last yea r , said the trillion yuan % 40 Na tional Bureau of Statistics (NBS). The 33.27 CPI rose 1.4 percent in urban areas and 30 gained 1.3 percent in rur al areas year on yea r . On a monthly basis, the CPI inched up 0.1 percent from Sept e m b e r . From Janu a r y 20 17.1 16.3 14 to October, the CPI rose 1.3 percent com- 11.84 pa r ed with the same period last yea r . 10 By cate gor y, the price of food increa s e d 2.5 2.2 percent while that of non-food prod u c t s 0 went up 1 percent from a year ago. Prices of M2 M1 Mo consumer goods and services grew 1.4 per- Balance Growth

Graph 2: RMB Loans & Deposits, Oct. Graph 3: Food Price Changes, Oct. trillion yuan % % 5.9 40 6 33.27 3.7 30 3 2.6 2.6 1.2 20 17.1 16.3 0 11.84 Grain Oil Meat & Eggs Aquatic Vegetables 10 Meat Products Products -3 0 Loans Deposits Balance Growth -6 -5.7 Graph 4:CPI Changes, Oct. % renminbi and for eign curren c y loans among 6 all financial institutions stood at 23.39 tril - 4.6 lion yuan, up 14.4 percent compared with 4 the yea r- e a r lier period (see graph 2). 2 Among the total renminbi loans, those from 1.7 1.6 2 1.3 households and non-financial institutions 0.2 0.2 0.1 -1.3 in c r eased 19.1 percent and 14.4 perce n t , 0 res p e c t i vel y, year on yea r . In October, 17 billion yuan of ren m i n b i -2 loans wer e added to the balance, 9.4 billion yuan less than the fig u r e in the same perio d last yea r . Of them, newl y increased medi- um- and long-term loans stood at 83.8 bil- lion yuan, 31.9 billion yuan more than in dr opped 7.6 billion yuan, decreasing for the cent and 1.5 percent, res p e c t i vel y, year on the same period last yea r , while short- t e r m fir st time since June 2001. With active tran s - year (see graphs 3 and 4). loans and paper financing saw a decline of actions in the stock market, part of the sav- PPI In October, the producer price index 70.5 billion yuan. ings deposits wer e invested into the stock (PPI) for manufa c t u r ed goods increased 2.9 The month-end outstanding ren m i n b i ma r ket . pe r cent from a year ago, said the NBS. Of and for eign curren c y deposits of all fin a n c i a l The month-end renminbi deposits from the total, purchasing prices of raw mate ri a l s , institutions arrived at 34.21 trillion yuan in co rp o r ations regis t e r ed an increase of 15.6 fuels and power jumped 5.6 percent year on Oc t o b e r , gaining 16.3 percent over the yea r - pe r cent to 10.7 trillion yuan. The growt h yea r .

44 BEIJING REVIEW NOVEMBER 23, 2006 BUSINESS

Graph 5: PPI Changes, Oct. % 8 7.4 6.3 6

4

2.1 2 1.5 1.4 0.8 -1.8 0 Excavating Raw Processing Food Clothing Daily Durables Industries Material Industries Commodities -2 Industries

Pr oducer prices of capital goods regis - billion wor th of goods to Hong Kon g , 1.4 te r ed a growth rate of 3.8 percent over the times the fig u r es in the previous yea r . yea r- e a r lier perio d , while those of consumer In the tourism sector, there wer e goods inched up 0.6 percent compared with 313,900 Hong Kong tourists visiting Beijing the same period last year (see graph 5). in 2005 and at the same time, the number of In October, producer prices of crude oil Beijing tourists to Hong Kong kept double - went up 9.2 percent over a year ago. di g it growt h . Among ref ined oil products, prices of gas o - The symposium also aimed to prom o t e li n e , ker osene and diesel edged up 14.7 per- co o p e r ation between the two parties in the cent, 13.2 percent and 11.7 percent, res p e c - financial industry. ti vel y, year on yea r . Du r ing this month, producer prices of Heavy Oil raw coal climbed 2.7 percent from a yea r China produced 23.86 million tons of ago. Prices of smelting and pressing of fer - he a vy oil last yea r , repr esenting 13.2 perce n t rous metals saw a decline of 0.8 perce n t of the country’ s oil output, said Jia co m p a r ed with the same period last yea r , Chengzao, Member the China Academy of while those of smelting and pressing of non- Sciences. fer rous metals went up 27.1 percent year on He a vy oil, a catc hall term for oil shale, yea r . oil sand, natu r al asphalt and natu r al gas In October, purchasing prices of fuel hyd r ate , is becoming an increa s i n g l y impor- po wer , non-fer rous metal mate r ials and tant substitute for conventional energy chemical mate r ials grew 6.9 percent, 37.4 res o u r ces in China. Production is increa s i n g pe r cent and 3.4 percent, res p e c t i vel y, yea r and techn o l o gical advancement is helping to on yea r , while those of fer rous metal mate r i- reduce exp l o i t a tion costs. als slid 0.8 percent from a year ago. Ne w policies will be for mul a ted to In the fir st 10 months, the PPI went up en c o u r age the exp l o i t a tion of unconven t i o n - 2.9 percent compared with the same perio d al oil and gas res o u r ces to ease China’s last year and purchasing prices of raw mate - en e r gy shorta ges, said Ma Kai, Chairman of rials, fuels and power climbed 6.2 perce n t the National Development and Refor m over a year ago. Commission. Developing unconven t i o n a l oil and gas res o u r ces has been included into Beijing-HK Cooperation the country’ s 11th Five Year Plan (2006-10) The 10th Beijing-Hong Kong Economic as a necessary measure to meet a vora c i o u s Co o p e r ation Symposium was held on demand for energy. No vember 15-16 in Hong Kong to furth e r China boasts abundant heavy oil boost development of economic rel at i o n s res o u r ces and “has discover ed a total of 70 be t w een the two parti e s . he a vy oil fields in 12 basins after 50 yea r s Hong Kong has been the largest over - of exp l o r ati o n , ” said Zhao Xianliang, an seas investment source to Beijing. By the of ficial with the Ministry of Land and end of June 2006, 8,370 Hong Kon g - i n ves t - Re s o u r ces. ed enterpr ises had been established in Zheng Hu, Vice President of the China Beijing with the paid-in capital of $7.68 bil- Na tional Pet r oleum Corp., said that China lion. Meanwhi l e , Beijing has invested 63 has 19.8 billion tons of onshore heavy oil and en t e rp r ises in Hong Kong with the commit- asphalt res e r ves, whi c h account for 20 per- ment of $290 million. cent of the country’ s total petroleum res e r ves. Hong Kong is also the second larges t Me a n wh i l e , the country has 47 billion exp o r t destination of Beijing. In 2005, trad e tons of oil shale res e r ves, with 16 billion volume between Beijing and Hong Kon g tons exp l o i t a ble , and has 6 billion tons of stood at $4 billion, soaring 94.3 percent yea r oil sand res e r ves, with half of them on yea r . Of the total, Beijing exp o r ted $3.15 exp l o i t a ble . ■

BEIJING REVIEW NOVEMBER 23, 2006 45 FORUM

names are not permitted to be used as place na m e s . Is the Government Re ven ues from the auction will all be tu r ned over to financial depa r tments for place name management. The govern m e n t Entitled to Sell the Rights ac t u a l l y can rec e i ve no ext r a benefits from the prac t i c e . To Place Names? Lei Hui (hlj.rednet.cn): I think the prac - tice of paying for naming rights is accept a ble , as it is a typical example of “Par eto improve- uhan Municipal Civi l tend with regu l a r ly learning a new name me n t . ” A central theory in economics terms , Af fai r s Bureau has for their local park, for exa m p l e . “Pa r eto improvement” means a cha n g e that decided to expand cha n - Many benefits ma k es somebo d y better off and nobody nels to finance the man- wor se off. Who is to benefit from the naming agement of place Cao Yusheng (Director of Wuh a n right auction? Fir st is businesses invol ve d , as Wnames. In October, it announced that nam- Place Name Management Commission): th ey ’ ll become better known, thus gai n i n g Place names are public res o u r ces, but they ing rights of selected places in the central mo r e in economic ret u r ns; second is the gov- will always remain potential res o u r ces if China city are to go under the hammer and er nment, as the auction will surel y bring it a not tra n s fo rmed into tangi ble ones be sold to the highest bidde r . la r ge amount of revenu e . Will this prac t i c e th r ough such practice as companies pay- In accordance with newl y publi s h e d cause harm? In this equation the only party ing for the naming rights. When the gov- regu l a tions, the Wuhan local govern m e n t th a t is likel y to be subject to losses is the pub- er nment is paid by tran s fe r ring the naming will be paid by companies after they are li c , so let’s have a look whether the publi c rights, more investment in public fac i l i t i e s granted the right to name such public fac i l i - rights will be affec t e d . will be possible , to the benefit of the ties as streets, flyover s and squares, as wel l Be fo r e the new naming system is adopt- whole society. as residences and high-rise buildings. One ed , the naming rights did not belong to the When conducting the business, we’ ll be st i p u l a tion says that the list of places cov- pe o p l e , but to the local gover nment; with ver y careful. Not all place names are to be er ed must be facilities that are new or have the new system, the rights do not belong to au c t i o n e d . Names that are of historical and not been named. the public either, but to the buye r s. At no cu l t u r al significance to Wuhan and those Place naming can be carried out in two point will the basic function of place th a t local people identify as part of their ways. If only one company is interes t e d , the na m e s — s u c h as the indication of direc - li ves will not be invol ve d . Second, names to naming right may be granted through nego- tions—be cha n g ed whether it’s named by be used must be sound and Chinese. ti a tion between the company and the gov- the gover nment or companies. As for the For eign names are for b i d den. Only compa- er nment; if more than one is interested in hi s t o r ical and cultural significance of a nies with good repu t a tion will be consid- naming rights, that right is to be auctioned. place name, it must be admitted that the er ed and vet t e d . Besides, if a company offer s to finance roa d gover nment always pays more attention to Also, according to the Regu l a tions on co n s t r uction, the road is to be named after pe o p l e ’ s feelings in this regar d while com- the sponsor. Place Name Administration issued by Ac c o r ding to the regu l a tions, naming the State Council, people’s indivi d u a l can include the particular company’ s name or brand names, but people’s names, or those that may affect social stabi l i t y , are not pe rm i t t e d . The r e is also a time limit for naming rights, that is names will be used for 15-20 yea r s and then be auctioned agai n . The practice of paying for naming rights has alrea d y been carried out in nearly 20 cities around China like Qingdao, Shenzhen and Changchun. Some sociolo- gists believe this practice should be moder- ate l y encouraged , as it increases funds avai l - able for public facilities and adds to in vol v ed companies’ repu t a tion. Ne ver theless, opponents point out that when making the decision, local offic i a l s seemed to for get that the names of publi c places are also public assets, wh i ch belong to all of the people. The y argu e th a t the gover nment is entrusted by the people to manage these special publi c res o u r ces, so it actually does not have the right to auction the naming ri g h t s . Mo re o ver , when the naming rights for ce r tain places exp i r e, there would be a ne w name to replace it. Frequent ren a m - ing will trou b le those who have to con-

46 BEIJING REVIEW NOVEMBER 23, 2006 FORUM panies may not. This could be the only fla w Place naming right is an important part or not, but in how it is sold. As publi c in the new system. of urban res o u r ces. To auction the right is res o u r ces, place names are clo s e l y rel a ted to Ne ver theless, people’s feeling towar d based on market rules, if handled prop e r ly, pe o p l e ’ s every d a y life. The names come their city won ’ t be hurt, as not all the names it will bring benefits not only to urban con- into being thanks to the publi c ’ s rec og n i t i o n ar e to be auctioned, especially those that st r uction but also to the improvement of and become popular owing to its sprea d repr esent the history and cultural feat u r es of local people’s wel fa r e. Of course , standard- among the people. Hence, it depends on the Wuhan. And also not all companies are izing the process is important. pu b lic whether naming rights should be al l o wed to parti c i p a te exc e pt for those with sold or not. good repu t a tion. Unacceptable The administrati ve I cannot see any harm in adopting the Do n g f ang Yan po wer is not supposed (w w w .xinhuanet. com): Dear Readers, ne w naming system, so why are there so “Forum” is a column that to make the decision, To fully tap publi c ma n y critics? provides a space for varying as the right belongs to Chen Cai (hlj.red n e t . c n ) : The new res o u r ces is undoubtedly perspectives on contempo- the people’s con- naming system is crit i c i z ed as a “power- fo r - wonderful, but whi l e rary Chinese society. In each gress—the publi c ’ s mo n e y” deal. Wha t is this? Simply put it doing so, public interes t s issue, “Forum” will announce repre s e n t at i ve institu- means to trade power for huge benefits. In ar e not supposed to be the topic for an upcoming tions. The govern m e n t the case of naming right tran s fe r , if compa- im p a i re d . As far as the issue. We invite you to submit is not the owner of nies are able to gain the rights at a muc h ne w naming system is personal viewpoints (in either pu b lic res o u r ces, so if lo wer cost than they now have to pay, just co n c e rn e d , it is fea re d English or Chinese). it wants to make use of by bribing officials, and the funds all fal l th a t short- t e r m benefit s Upcoming Topic: Should pu b lic res o u r ces for into the pockets of the gover nment staff, ma y lead to the loss of government relief recipients pro f its, it must act in then it might be right to accuse the gover n- the publi c ’ s long-term be restricted from using ac c o r dance the me n t ’ s practice of being illegal. But in rea l - in t e r ests and behind the cellphones? Constitution and laws , it y , the right tran s fe r ring is a tran s p a re n t naming right issue is E-mail us at xqpan@cipg. to gether with the per- pr ocess and the gover nment is just perfor m- ac t u a l l y the confli c t org.cn mission from the peo- ing its obli g ations in regu l a ting the proc e s s . be t w een govern m e n t pl e ’ s congress. Please provide your name, Fu rt h e rm o r e, the local gover nment has also in t e r ests and public inter- My question is: Is ests. telephone number, zip code announced that reven ues will be turned over and address along with your the Wuhan local gov- In wha t aspects will to financial depa r tments as naming manage- comments. er nment entitled to ment fees. To some extent, the new naming pu b lic interests be hurt? adopt the new naming Pan Xiaoqiao system is an effec t i ve way to Most importa n t l y, to Editor: system? Is this system avoid power - em p o wer companies in en d o r sed by the peo- f o r- m o n e y place naming will affec t pl e ’ s congress? Is the tra d e , rath e r the symbolism and herit a ge of history and decision made on the basis of full discus- than the oppo- cu l t u r e in a city. Apa r t from this probl e m , sion among local people? si t e . people and businesses will need to freq u e n t - Cao Lin (www.h e bei.com.cn): So m e ly mention these new names, whi c h they be l i e ve that without auctioning names, ma y be unwilling to do. In other word s , full use is not being made of publi c to gether with the naming rights the gover n- res o u r ces. And if the auction can not only ment is also selling the freedom of locals as in c r ease financial reven ues but also help th e y are for ced to mention certain compa- to make the companies better known, why nies’ names ever y day. not do it? The prob lem is too muc h att e n - The r e does exist conflict between gov- tion is paid to economic benefits, whi l e er nment interests and public interests, as local people’s feelings are being over - the decisions rest in the hands of the gov- lo o ke d . The practice of “places to be er nment, and under the camoufla ge of named after the wea l t h y” will serio u s l y “p u b lic res o u r ces for society”, the publi c ’ s hu r t people’s feelings towar d their home sa y is stifle d . cities, making the city seem unfam i l i a r We are trying to build up a tran s p a re n t and unfrie n d l y. and people-oriented gover nment, whi c h is To urban residents, the city is not a sim- expected to put public interests fir st. Whi l e ple combination of buildings and signs, but handling public res o u r ces, the govern m e n t a series of names of brid g es, stree t s , must kee p it in mind that its obli g ation is to sq u a r es, etc. Ever y day, they see the names, of fer services rather than direc t l y perfor m- mention them and pass by or stay in the ing the decision-making right against peo- places bearing these familiar names. That ’ s pl e ’ s will. The gover nment should prac t i c e why in many cities the people are asked for its decision-making right after fully consult- names of public buildings. In this way, a ing the people and should always try to safe- kind of cultural aggl o m e r ate takes shape as gu a r d the publi c ’ s legit i m a te rights and the public is activel y invol v ed in the who l e in t e r ests. Moreo ver , the public should be pr ocess of place naming. granted the right to say “no” when it comes Naming right auctions, however , will to public res o u r ces. cut the invi s i b le cultural connection Yang Wenhao (www.p e o p l e. c o m . c n ) : be t w een the people and local place names, In my opinion, the key to the prob lem does whi c h is likel y to further wea k en their not lie in whether naming rights can be sold att a c hment to their home cities. ■

BEIJING REVIEW NOVEMBER 23, 2006 47 EXPAT’S EYE

By TOM CARTER time I laudably held my own. But six bare fists can infal l i b ly do more damage than er h a ps the single most rea s s u ri n g tw o. The tough guys ret re a ted into the night, fact about travel in the Peo p l e ’ s Keeping le a ving me brea thless and batt e re d . Rep u b lic of China is its rem a r k- The police arrived thereafter and took ably low crime rate . me to the Public Security Bureau to get a PThe Ministry of Public Security (MPS), st a tement. It was determined that the hotel the principal authority of domestic crim i n a l se c u r ity guards failed to serve their purpo s e , pro c e d u r es, earlier this year announced a 15 A Lid on and it was also found that the hotel did not pe r cent decline in violent crime (4.5 million fol l o w strict municipal protocol in copyi n g repo r ted cases for 2005), while common the three perpe t r ato r s’ identific a tion cards pro p e r ty infrin g ement incidents such as theft, be fo r e accommodating them, whi c h wou l d fr aud and robb e r y, whi c h account for 80 per- ha ve assisted the police in their inves t i g ati o n . cent of all cases, rose by only 1 perce n t . Crime This meant that it was my right under Cosmopolitan cities such as Chinese law to demand an immediate fin a n - Beijing and Shanghai, whi c h cial settlement from the hotel prop ri e t o r — an nu a l l y att r act tens of millions for my trou b les, you see—though it of over seas visitors on bus i n e s s ha rd l y made up for the bang up job or holiday, applaud themselves those inebri a ted gentlemen did for providing public order and rel - on me. ati vel y safe city streets whe r e one To be sure, the can walk at just about any hour in rel - a fo re m e n t i o n e d ati ve safet y . incident is an But all is not necessaril y is o l a ted one, quiet on the home front. In an with a grea t un ch a ra c t e ri s t i c a l l y candid ma j o r ity of pu b lic admission, the ex p at ri at e s MPS has repo r ted a pan- being lucky, demic of illicit drug traf - or not, to see fic king in China led by an so muc h action in c r easing number of for - du r ing their stay eign crime syndicate s , in China (“I was repo rt e d l y from the Afric a n over cha r ged!” seems regimes of Niger ia and to be the leading complaint). Li b e r ia and triads from With only one police offic e r ne i g h b o r ing Asian countrie s . ON THE RUN: for ever y thousand residents in a Mo re o ver , violent crime on the While crime is rising, po p u l a tion of 1.3 billion, and more so u t h e r n shore is notorio u s l y rampant in China is still safer than most than 40 percent of mainland prec i n c t s Gu a n g d o n g , making it the only province in ha ving fewer than five offic e r s, compound- Ch i n a ’ s mainland to arm police with guns. Not exa c t l y heralded as a top tourist desti- ed with a gen e r al lack of funding, res o u rc e s Nor is this to say that Wes t e rn e r s are na tion, the interior municipality of or state - o f - t h e - a r t techn o l o gy, China’s en t i re l y exempt from either being the victim Ch o n g q i n g , located on the rusty banks of police ought to be commended for main- of , or committing, more serious crimes. the Yangtz River , uncannily res e m b les a taining an impres s i vel y low national crim e I have found myself in sever al situati o n s la wless early- c e n t u r y port-of-call of mar- rate . while traveling ext e n s i vel y throu g h o u t itime merchants, hardened dock labo re r s Let there be no mistake: Xinhua News China. I fon d l y remember the street gan g and wate r f r ont brot h e l s . Age n c y has repo r ted that there wer e twice who confronted me in a darkened alley in An over night stay in a small hotel on the as many repo r ted criminal cases in 2005 Inner Mongolia, or facing off with a ou t s k i r ts of China’s largest, and hottest, city, than in 1990, and six times that of 1980. But pi ck p o c ket in crowded Qianmen hu t o n g in tu r ned into a midnight brawl after a polite co m p a r ed to hyp e r -violent icons of the wild Beijing with a baying crowd of onlooker s request on my part to ask three obvi o u s l y West such as Los Angeles and New Yor k, it taking grea t delight in watc hing a 196cm dr unk men loitering in the hallway to settle is no wonder that China is witnessing an wai g u o re n vi gi l a n t e . do wn, was met with a hostile res p o n s e . in c r easing number of fore i g n e r s residing in Then there was that time in Chongqing. A push on their part led to a not gen t l e its gleaming municipalities. China rem a i n s sh o ve on mine, sending one of the men fly- one of the stati s t i c a l l y safest countries to ing back into his two friends. The next few visit, and the rest of the wor ld would do wel l The author is an American currently backpacking ■ through all of China’s provinces. moments wer e a fer al blu r , and for a short to take notice.

EXPATS, WE NEED YOUR STORIES! If you’re an expat living in China and have a story or opinion about any aspect of life here, we are interested to hear it. We pay for published stories. Submissions may be edited. E-mail us at [email protected]

48 BEIJING REVIEW NOVEMBER 23, 2006