1 Talking Point 6 Week in 60 Seconds 7 Property Week in China 8 Auto Industry 9 Energy and Resources 10 Environment 11 Banking and Finance 13 Economy 15 Media 31 October 2014 16 Society and Culture Issue 258 21 And Finally www.weekinchina.com 22 The Back Page Tech duo’s China charm offensive m o c . n i e t s p e a t i n e b . w w w

Facebook’s Zuckerberg and Apple’s Cook were in Beijing last

week looking to curry favour Brought to you by Week in China Talking Point 31 October 2014

Time to buy a second home? Why the bosses of Apple and Facebook are such frequent visitors to Beijing

“Me again”: Apple boss Cook said the company plans a major China expansion

n Walter Isaacson’s 656-page bi - that followed it was Jobs who was is at a meeting about one of Apple’s Iography of Steve Jobs, China is kicked out of the company. Chinese suppliers. “This is really mentioned just once by the Apple So if China had a special place in bad,” he says. “Someone should be in founder. And it was from a long Jobs’ psyche, perhaps it was in the China driving this.” Thirty minutes time ago. In 1985 the company was darker recesses where he perhaps later Cook stares at an operations granted the right to sell computers associated it with losing the firm executive still sitting at the meeting to China. To commemorate the mo - that he loved and being cast out into table. “Why are you still here?” he ment, Jobs was invited to a cere - the corporate wilderness. Maybe asks, prompting the individual to mony in Beijing’s Great Hall of the that’s why he could never bring him - head straight to the airport. The in - People. Rather than go himself, he self to visit the country too. cident speaks volumes about Cook’s suggested sending his great rival, His successor Tim Cook is a dif - priorities, and where China has John Sculley. ferent proposition entirely, having ranked from virtually his first day at “I’m going to launch a coup while already travelled there five times the Cupertino-based firm. John is in China,” Jobs confided to a since taking the helm at Apple. In - Last week Cook was in China once fellow executive. But word got back deed, when Cook is introduced in more, dealing personally with fresh P h o t

o to Sculley, who was warned that Isaacson’s book, the man Jobs hired challenges that Apple is facing in

S o u r “Steve’s plotting to get rid of you”. from Compaq is immediately talk - the country. But he wasn’t the only c e :

R e Sculley, then the CEO, cancelled the ing about China. Just two para - American tech titan in Beijing. In a u t e r s

Beijing trip, and in the dramatic days graphs after his first mention, Cook reflection of how the giants of Sili - 1

Week in China Talking Point 31 October 2014

con Valley are turning their charm offensives towards the Chinese market, Facebook’s founder and boss Mark Zuckerberg was already in town when Cook touched down in the capital. And if anything, the younger man managed to upstage Cook in charming the Chinese.

How so? At an event at Tsinghua University, Zuckerberg said: “I love Chinese cul - ture very much. China is a great country.” Not especially remarkable, you Zuckerberg spoke entirely in Chinese during the half hour session might think, as international busi - ness bosses are often keen to ex - century martial artist Huo Yuanjia again. (Indeed, you can only really press their admiration in equally (who is famed among Chinese for grasp President Xi Jinping’s sloga - glowing terms for this increasingly vanquishing ‘arrogant’ foreign neering about the Chinese Dream important market. pugilists). and his call for national rejuvena - But what stood out about these So what was the reaction to this tion in this context.) platitudes was that they were deliv - unanticipated verbal feat? The As - So if you tell China it’s great – and ered in Chinese. Indeed, Zuckerberg sociated Press noted that “Zucker - in Chinese – it’s likely to produce spoke in Mandarin for the entire 30- berg’s Chinese pronunciation was nods of approval – especially so minute Tsinghua session. Although far from fluent. Some native speak - when an American business icon is the questions were scripted, the ers called it a ‘challenge’ to under - doing the telling. At the opposite move still stunned his audience, stand. But he was able to maintain extreme from humiliation, the Chi - impressing the local and interna - intelligible conversation for half nese were deeply flattered last week tional media. and hour and the students re - by the efforts of Facebook’s founder. Zuckerberg was known to be sponded with warm cheers for his studying Mandarin, as he’d men - efforts and laughter at his humour.” So a positive reaction? tioned that he was learning the no - As an exercise in wooing public In the main, with former Google toriously tough language in order opinion, it was pretty smart. Many China boss and prominent blogger to communicate better with his Chinese are impressed and touched Lee Kaifu also impressed that wife’s in-laws (Priscilla Chan’s when foreigners try to engage in Zuckerberg had heard of Huo Yuan - grandmother speaks no English). their language. That goes double jia. “His progress in Chinese learning During the Q&A at Tsinghua, he ac - when it is someone as prominent is so fast!” Lee commended. knowledged that it was a hard task and influential as Zuckerberg. Mak - Other netizens praised Zucker - but that “he liked challenges”. Gen - ing the effort to speak Mandarin berg as “China’s good son-in-law”. erally he did well at the event, ex - also indicates the speaker is some - One even wrote: “I want to cry cluding a few linguistic slip ups, like one who wants to treat China as an out of happiness.” saying that Facebook boasts eleven equal. The Chinese are fairly sensi - Of course, not all the comments mobile users instead of 1 billion. tive on this front. For example, were quite so positive (one said Perhaps playing to his under - schoolbooks still dwell on the hun - Zuckerberg’s pronunciation made graduate audience, the billionaire dred years after the Opium Wars as him want to laugh; another that also said his favourite Chinese if it were ‘recent’ history – treating subtitles were required) and there foods were the inexpensive Beijing it as a scar that still needs redress. was occasional wit, too. “Who is this hutong snacks sold by street ven - During that Century of Humilia - man? We have never heard of this P h o t

o dors. He mentioned his travels tions China was weak and its global Facebook,” was one contribution, in

S o u r around the country (he’s been there standing low. Today’s national rhet - reference to the fact that China is c e :

R e four times) and expressed his ad - oric declares stridently that China one of the few places where Face - u t e r s

miration for the early twentieth will never be treated as inferior book is unavailable. Notably, few ne - 3 Week in China Talking Point 31 October 2014

tizens felt that Zuckerberg’s Chinese speech would change this state of Planet China affairs too. Strange but true stories from the new China But Doug Young, who writes a China business blog, speculates that TAKE HER AWAY Facebook could make its debut in - A meat scare earlier this year wasn’t helpful for KFC’s side China via a partnership with sales in China. So news from Sichuan that a customer has chosen to spend Tsinghua – noting that the univer - an entire week at one of its restaurants might have KFC shareholders sity already has a number of suc - hopeful that a corner has been turned. cessful tech ventures. Young But not so fast, points out Western China Metropolis Daily. The 26 year- reckons that Zuckerberg’s latest trip old female isn’t eating much chicken, and is using the 24-hour restaurant in only underscores his determination Chengdu North Railway Station more as a place to camp out. She took up residence earlier this month, with miffed staff describing her as to get into China within the next uncommunicative and prone to sleeping on the table at night. two years and one questioner at the Police have been called but say they cannot take her away as she Tsinghua gathering did ask about hasn’t done anything illegal. In the meantime netizens have been Facebook’s strategy for launching speculating about her state of health – she alternates between laughter and there. But Zuckerberg dodged the tears – and are worried that she isn’t suitably attired for the approaching question, saying: “We are already in winter. Reporters repeatedly questioned her, finally getting an answer to China. We are helping Chinese com - why the girl was behaving so strangely. Apparently, she’d just been dumped panies to increase their overseas by her boyfriend. KFC must be hoping her tale won’t see other spurned clients via advertisements on Face - girlfriends indulging in copycat behaviour at other of its restaurants. book. We want to help other places in the world connect to China.” sonal data of some Chinese users Here he revealed that the com - On a different note Zuckerberg on servers in mainland China, says pany’s Beijing shops were “the told Tsinghua’s students of his ad - Reuters, “marking the first time the world’s busiest retail stores”. Its four miration for local tech firms, tech giant is storing user data on shops in the capital serve 250,000 among them Tencent and its Chinese soil”. customers a week, he said, and their WeChat service. Indeed, with Face - The size and growth of the Chi - success is prompting an expansion book shut out of the Chinese mar - nese smartphone market means of Apple’s local retail effort. Cook ket for so long, homegrown social Apple’s relationship with the au - pledged that store numbers in media networks have already built thorities in Beijing is commercially Greater China (which includes Hong up huge scale and user loyalty. This crucial too. Accordingly, the main Kong and Taiwan) would rise from suggests to WiC that Zuckerberg item on Cook’s itinerary last week 15 to 40 in the next two years. knows that – even if Facebook were was a meeting with Vice Premier He also told Sina the company to become more easily available – it Ma Kei, when he even exchanged would make other “unspecified” in - is by no means certain it could rob his usual dress-down garb for a suit vestments in China and predicted: WeChat and Weibo of their domi - and tie. What was said is unknown, “In the future, China will become nant positions. but Xinhua summarised the meet - Apple’s biggest revenue contributor. ing as an exchange of views over It’s just a matter of time.” And why was Cook in Beijing? how best to protect user data. That’s pretty astounding when Unlike Facebook, Apple already has Whether Cook’s visit has less - you consider Apple virtually ig - a massive business in China (its ened Chinese suspicions about US nored the China market for the first third largest after the US and Eu - tech firms is unlikely. Perhaps it’s decade of this century (see WiC88). rope). But it has faced a media back - telling that CCTV kept up the heat lash in the wake of Edward Snow - on Apple last week, running a seg - Will Apple have it all its own way? den’s revelations about ment in which it derided the huge Readers may recall that WiC ran a state-backed snooping (for more profits made on sales of the iPhone short item a few weeks ago about see WiC198). State broadcaster to Chinese consumers (it calculated how a Chinese business head had CCTV even claimed that location- that Apple enjoys a 70% margin, motivated his team to hit sales tar - tracking functionality on the with the phones costing just gets by offering them each an ‘Apple iPhone is a “national security con - Rmb1,227 to make). 6’ (as the latest iPhone is often re - cern”. To soothe ruffled feathers Still, Cook was on-message with ferred to in China). Apple has started to keep the per - another local media source, Sina. But after they had worked hard 4 Week in China Talking Point 31 October 2014

to make the sales, the boss handed said that it isn’t flattering when a aomi’s boss Lei Jun for dinner in Bei - out apples with a number 6 painted firm like Xiaomi opts for aestheti - jing last week, indicating that he on them. The team was infuriated, cally similar designs, but more akin thinks he could learn a thing or two but the anecdote does at least speak to “theft”. from the local tycoon. (Cook, on the to the allure that Apple smart - Xiaomi has grabbed a 14% mar - other hand, chewed the cud with Al - phones still have in China. ket share in China partly through ibaba’s Jack Ma – the Chinese e-com - Despite this, it looks unlikely that the look of its devices, but also merce tycoon later told the Wall Apple will take a dominant share of through its lower prices (its smart - Street Journal that some sort of the Chinese smartphone market. In phones cost about a third of the “marriage” may occur incorporat - the second quarter it wasn’t even in iPhone). It has also built up a loyal ing Alipay and Apple Pay.) the top five, with number one posi - following by inviting Xiaomi own - One thing’s certain: as China’s tion finally grabbed by the local ers to offer advice about improving tech sector continues to grow in player Xiaomi (for our first mention the phone’s operating system. Each strength, flights between San Fran - of this firm – all the way back in Au - Friday it updates the OS based on cisco and Beijing look set to get gust 2011 – see WiC119). feedback, creating a sense of com - fuller. Crawford Del Prete even sees A Wall Street Journal headline munity and generating creative the early signs of a shifting balance this week confirmed the firm’s as - ideas from its customers. of power between the two strong - cendancy: “Hottest smartphone in In contrast, Apple’s iOS has never holds. Chief researcher at research China: it’s not Apple, it’s not Sam - been tailored to the Chinese market. body IDC, Del Prete told Want China sung.” In fact, it’s Xiaomi. But if China does become its biggest Times: “The scramble to visit China The Chinese start-up seems to revenue source, might the firm have underscores the rush of those hi- have exasperated a few people at to take a leaf out Xiaomi’s book and tech heavyweights to express their Apple with its spectacular rise to make more of an effort to entertain goodwill towards the nation, an un - the top, including the Californian the demands of local consumers? likely phenomenon during the era firm’s design guru Jony Ive, who has In fact, Zuckerberg invited Xi - of Steve Jobs.” n

Boom times ahead?

When someone refers to a boomer, most of us would understand it to be a shortening of the term used for the demographic that grew up after the war and is now retiring (the ‘baby-boomers’). But if you are a naval-type you might infer that the speaker is talking about submarines capable of carrying nuclear missiles. This was the context in which the Wall Street Journal reported extensively about China’s new Hainan-based ‘boomers’ this week. enhances the country’s capacity to enforce its territorial Out at sea, they have massive potential impact. The claims and thwart US intervention”. It adds that China US Office of Naval Intelligence estimates the boomers has been keenly briefing other nations on missions it could strike at Hawaii from East Asia and at the has undertaken with subs to Sri Lanka and the Persian continental US from the mid-Pacific, for instance. Gulf (they left Hainan in December and returned in “This is a trump card that makes our motherland February). This was a deliberate decision to make its I l proud and our adversaries terrified,” China’s navy chief, l capabilities more widely known, says vice admiral u s t r a Admiral Wu Shengli wrote in a Party magazine. “It is a t Robert Thomas, the commander of the US Seventh i o n : w strategic force symbolising great-power status and Fleet. “They were very clear with respect to messaging w w . b supporting national security.”

e to say that, ‘We’re a professional navy, we’re a n i t a e The Wall Street Journal reckons the expanding fleet professional submarine force, and we’re global. We’re p s t e

i “not only bolsters China’s nuclear arsenal but also n no longer just a coastal-water submarine force.’” . c o m

5 Week in China The Week in 60 Seconds 31 October 2014

Growth of 7% in 2015? The major news items from China this week were...

Song Guoqing, an academic member of the People’s 1Bank of China monetary advisory committee, has stated that China’s economic growth will slow to 7.2% in the cur - rent quarter, and estimates 7.3% growth for 2015. Worse, Fan Jianping, chief economist at a state research institute, predicts only 7% growth in 2015, barring any stronger-than- expected stimulus measures. This would represent the slowest full-year growth since 1990, said Bloomberg.

China has pledged Rmb2 billion ($327 million) in aid 2to Afghanistan, which has been seeking new sources of foreign help amid a US troop drawdown and increas - Afghanistan’s President Ashraf Ghani visits Beijing ing worries about regional instability. The offer of aid followed a meeting this week between China’s leaders lion active users. Separately, Jack Ma said this week that and newly elected Afghan President Ashraf Ghani, said Alibaba is interested in partnering with iPhone maker China’s Ministry of Foreign Affairs. Apple in payments.

After voicing his opinion last Friday that Hong Kong’s Three banks threw Agile a lifeline this week. The 3chief executive CY Leung’s leadership had been poor 5banks have given the property developer an extra 12 and that he should contemplate resigning from his post, months to pay back part of a lending facility that was James Tien, a Hong Kong lawmaker and also head of the coming due in December, according to a stock exchange pro-business Liberal Party, was dismissed from the filing. The Guangzhou-based developer borrowed $475 CPPCC, a prestigious Chinese government advisory million from the three banks earlier this year but has panel, as punishment for his disloyalty. since run into financial trouble. Earlier this month, Agile announced that its chairman Chen Zhuolin had been It was reported that e-commerce giant Alibaba was placed under house arrest. 4in talks for an alliance to revive China Mobile’s Fe - tion messaging service. Though it remains to be seen Hong Kong Exchanges and Clearing said that there what’s going to come out of it, such a powerful tie-up 6remains no set timetable for starting the so-called could take direct aim at the current stranglehold on the Shanghai-Hong Kong Stock Connect, a scheme to allow market held by Tencent’s hugely popular mobile mes - global investors freer access to mainland shares. Under saging app WeChat, which now has more than 400 mil - the programme mainland investors will also be able to buy Hong Kong-listed companies too. The Hong Kong bourse operator said the link was technically ready for operation, but was still awaiting “relevant approvals”, the Financial Times reported.

China’s top trainmakers, CNR and CSR Corp, are set to 8merge. China Securities Journal said Beijing wanted the two competitors to combine in order to better com - P h o t

o pete globally with the likes of Siemens and Bombardier.

S o u r The two state-owned firms have fiercely undercut each c e :

R e other on price while trying to sell trains abroad. Both u t e r s No longer welcome on the CPPCC: James Tien stocks were suspended in Hong Kong this week. n 6 Week in China Property 31 October 2014

Feud or feudal? A land dispute in Fuyou leads to armed clashes and deaths

“ ll the land under heaven is the farmers’ rights will China be able to Aemperor’s and we are all his increase its food production and, servants” goes a classical Chinese somewhat counter-intuitively, poem in the Book of Songs . speed up its rate of urbanisation too. But the people of Fuyou, a vil - Indeed, earlier this month the lage in the southwest province of government expanded a pilot Yunnan, were not prepared to be scheme which allows farmers to re - so obedient when they saw a threat ceive an income from land leased to to what they perceive as land of larger, more efficient agricultural their own. corporations. On October 14, the villagers took In August the State Council also up arms against a group of men ap - initiated a major land audit to try parently intent on building a logis - to prevent local governments from tics centre on land ‘grabbed’ by the selling off their arable land illegally. state. Fuyou villagers: this is our land Land sales garnered Rmb3.91 trillion Eight people died in the clashes in 2013 compared with Rmb2.67 tril - and 18 more were injured – the shields with police insignia and us - lion in 2012, the Global Times said, deadliest land dispute in recent ing knives and tear gas,” Century quoting Ministry of Finance data. memory. Weekly quoted a Fuyou resident as The government also said last So what happened? saying. week it was working on a law to al - Well, the government in Kun - The villagers have accused the lo - low people to sue local governments ming, 25 kilometres away, says a cal government of trying to strong- if they fail to uphold proper land group of Fuyou residents launched arm them into giving up their land, transfer agreements. an attack on the construction site as well as short-changing them on “Courts should order authorities and kidnapped four of the building compensation. According to media to follow contracts or give compen - workers. reports they were offered sation for the breaches if they are When the construction crew tried Rmb43,000 ($7,000) each for the confirmed to have violated a con - to get their colleagues back they 1,787 mu (roughly 295 acres) of farm - tract,” Xinhua reports. were attacked with Molotov cock - land wanted for the logistics centre. Fuyou’s Party chief has been ar - tails. But there was no room for negotia - rested in the aftermath of the Later it is claimed that the four tion. “The government said if we clashes in the village on allegations hostages were doused with petrol don’t agree to the amount they of - of “taking bribes” and sixteen other and set alight. It appears these four fer there will be no money in the local officials have been sacked or workers died. future,” another villager told the suspended. No further explanation Some media outlets have reported Beijing Times. has been offered. But as the Global an alternate version of events, sug - Land grabs of this kind have been Times pointed out in July, “gover - gesting that the villagers did battle criticised by China’s leaders, who are nance by tyrants is most easily with hired goons or auxiliary police. aware of the threat they present to found in interest-intensive villages” “Those on the other side of the social stability, as well as food secu - (presumably, meaning places in

P clash really aren’t workers like the rity (as a consequence of the loss of which money can be made). “The h o t o

S government said. They were hired arable fields). leaders conspire with grass-roots of - o u r c e to come here, all wearing black uni - Premier Li Keqiang in particular ficials to grab resources for them - :

C F P forms, black steel helmets, holding has stressed that only by improving selves,” it added. n 7 Week in China Auto Industry 31 October 2014

Changing lanes Austerity drive slows Aston Martin dealers down

he last time that auto distrib - Automobile Dealers Association’s Tutor Pang Da made headlines Luo Lei. was in 2011 when it put in a $131 Another car dealer agreed that million bid for the ailing carmaker the higher end of the market is fac - Saab. It called off the deal after a ing tougher times than most. “You A brand with royal connections Swedish court declared Saab bank - probably won’t believe this, but of rupt. Saab’s assets were later all the luxury car labels I distribute, supplier for a recall of more than bought out of bankruptcy by the least profitable is Lamborgh - 17,000 of its cars around the world. China-backed energy firm Na - ini,” he told Time Weekly, predict - "Aston Martin's latest recall tional Electric Vehicle Sweden (a ing that luxury labels like Aston again passed the buck for poor shortage of cash then stopped Martin and Lamborghini will quality of products, but this time NEVS from making cars, although downsize in China soon. 'Made in China' is just the scape - it won creditor protection in Swe - In March this year Ferrari termi - goat of the glorious carmaker," den in August so it could seek new nated sales agreements with sev - thundered Xinhua, in a report funds). eral of its dealers in China, says Bei - headlined, "Aston Martin plays In September Pang Da was back jing Business Today, which also 'Made in China' blame game". in the news, after it announced reckons that the Italian car brand is Pang Da got its start in car re - that it has disposed of its stakes in trying to slim down its commercial tailing by selling Subaru cars, a six underperforming sales compa - operations further because of slow - mid-tier Japanese brand. It only ac - nies. Among them, five are dealer - ing sales. quired the distribution rights to ships for Aston Martin in Shen - China Auto News notes that sev - Aston Martin in 2011, and com - zhen, Guangzhou, Ordos, Shenyang eral dealers for Porsche, which cites mentators have wondered whether and Xi’an. China as its second largest market the two companies are a good fit. Pang Da said as of the end of Au - after the US, are also complaining “The sale is likely related to Pang gust, the five units have run up bal - about the slowdown. Da’s strategic adjustment, as it has ance sheet losses of Rmb21.6 mil - Still, industry insiders say some always based its business model on lion ($3.5 million). Pang Da will sell of Aston Martin’s problems are of more medium-tier car brands. Al - the dealerships to a Guangxi- its own making. One reason that though it is also engaged in sales of based trading firm for about Porsche has done better than many some luxury brands, it is lacking Rmb80 million, the company said of its peers is because its Cayenne in relevant experience,” Luo told in a regulatory statement. model has tapped into the popu - Time Weekly. Luxury carmakers have been hit larity of sports utility vehicles Relatively late to the China mar - hard by the government’s anti-graft (Porsche sells more Cayennes in ket – it entered in 2008 compared and anti-extravagance drives, with China than anywhere else in the with Porsche in 2001 – Aston Mar - businessmen trading in their world). Aston Martin has stuck to tin has high hopes for sales there, flashier sports car for more low-key making sports cars, despite an - forecasting that China will become vehicles in an effort to keep a lower nouncing a plan for its first four- its third largest market after the profile, said Time Weekly. door sedan back in 2009. It remains US and the UK, and contributing “After all, Aston Martin is an ul - to be seen when this model will be 20% of its revenues by the end of tra-luxury sports car brand. So introduced in China. this year. At the moment, China dealers selling this brand might Earlier this year, the company makes up just 5% of Aston Martin’s want to change their strategy” ran into flak in the local media, too, sales globally, NetEase Auto has re - was the verdict from the China after appearing to blame a Chinese ported. n 8 Week in China Energy and Resources 31 October 2014

Fracking off? Fault lines in Shell and CNPC’s shale gas project

hina may have the world’s Sparks in Oklahoma, which doesn’t outlets that there have been no dis - Clargest reserves of shale gas, but lie close to a fault line. The Novem - cussions regarding a scaling back can it follow the American and ber 2011 quake caused two deaths of the project in Sichuan, which the Canadian example in extracting and flattened 14 houses. Sichuan is two agreed to work on in 2012. It them? Although still at an early about eight times more densely also said that whatever Shell de - stage of its shale development plan, populated than Oklahoma. cides, there will be no impact on the government has set ambitious Other fracking-related environ - CNPC’s overall activities in Sichuan. targets, with output supposed to mental concerns include ground - Company officials told CBN that reach 6.5 billion cubic metres of gas water contamination and the re - CNPC plans to invest Rmb13 billion by 2015, rising to between 60 and lease of methane. But in China’s ($2.12 billion) in 2014 and the first 100 billion billion cubic metres by case, environmentalists say water half of 2015. This should increase 2020. However, doubts have been shortages are another major issue. shale output from 200 million cubic growing about the chances of hitting Each fracking well requires 25 mil - metres in 2014 to two billion cubic those targets, following reports that lion litres of fresh water for the hy - metres in 2015. Royal Dutch Shell is planning to scale draulic process, which involves CNPC also said it is in discussions back its investments in the country. shooting pressurised liquid into with other international partners Last month, Shell CFO Simon the ground to separate the gas interested in the country’s shale gas Henry told Bloomberg that progress from the rock in which it is con - resources, and the state giant has in Sichuan “has been slower and tained. But as US think tank the signed a cooperation agreement more difficult than we might have World Resources Institute has with ConocoPhilips. Among these hoped, partly for geological reasons, stated, over 60% of China’s re - potential projects, the Shell joint partly due to the challenges operat - serves are in areas with high water venture is CNPC’s smallest, with a ing in a highly populated agricultural stress or arid conditions – “a wor - projected output of 100 million cu - region.” rying fact given the country’s ex - bic metres of gas in 2015. His comments have spurred de - isting environmental concerns.” On the plus side, analysts say the bate in the media about the merits But what is likely to have both - economics of Chinese fracking have of China’s shale gas revolution. Two ered Shell most is the financial bur - been improving. Drilling costs have key environmental concerns top den of fracking in China. According come down and drilling cycles have the agenda. Potentially the most se - to CBN, Shell’s Sichuan project has fallen from 120 days to 70. rious relates to earthquakes, as cost twice that of a similar project in China’s largest shale gas project is about 21% of China’s 36.8 trillion cu - the US. Moreover, the recent decline the 2.1 trillion cubic metre Fuling bic metres of shale gas lies in in crude oil prices has raised ques - field in Sichuan, operated by Sichuan, one of the most earthquake tions on whether shale gas is indeed Sinopec. It hopes to reduce invest - prone regions. Memories are still the more economical alternative to ment costs to Rmb50 million per fresh of the devastating 2008 quake, more traditional fossil fuels. well over the next three years com - which killed almost 70,000 people, China’s shale reserves sit deeper pared to Rmb83 million currently with recent scientific papers sug - (2,000 to 3,000 metres below and Rmb100 million in 2012. gesting that it may have been caused ground compared to 1,000 metres Sinopec is selling the gas to local by human activity, particularly a in the US) and are generally less sat - chemical firms but anticipates build-up of water at Zipingpu Dam, urated (90 metres thickness com - larger profits once it finishes build - P h o t

o north of Chengdu. pared to 500 metres). This makes ing an LNG plant close by. The com -

S o u r Research in the US has also linked the gas more expensive to extract. pany is targeting output of 4.8 bil - c e :

R e fracking to earthquake activity, fol - Last week, Shell’s joint venture lion cubic metres by 2016 rising to u t e r s lowing a tremor at a town called partner, CNPC told domestic media 10 billion by 2017. n 9 Week in China Environment 31 October 2014

Turning off the tap Guangdong’s new deal with Hong Kong comes at an awkward time

ater was once Hong Kong’s ing session that followed the an - Wpriciest import, owing to a nouncement. GDI’s market value chronic lack of it. The import bill stands at HK$60 billion ($7.73 bil - peaked in 1929 when the territory lion), or 12 times its 2013 net profit. suffered its worst drought – with Its market capitalisation is 10 times only 90 millimetres of rain falling higher than in 2000. between January and April. The colo - But the new agreement comes at nial government resorted to ship - a sensitive time. For more than a ping water from Shanghai and even month, pro-democracy protesters Japan, while the Royal Air Force ex - have been occupying some of Hong perimented – in vain – at seeding Kong’s busiest roads. One of the rain clouds by dispersing chemicals causes of these demonstrations, ac - above reservoirs. Hong Kong needs China’s water cording to local newspaper Singtao Rationing measures were also im - Daily, is the fraying relations be - posed. Each person was permitted last week it would renew its contract tween Hong Kong and the mainland just two 18-litre buckets from public with GDI. But under the new pro - (see WiC244). standpipes. The queues were hor - posals, the territory will pay a total That may mean that GDI’s new rendous. According to government of HK$13.4 billion ($1.7 billion) over deal runs into a local resistance, records, more than 70,000 people, the next three years for water that since it needs the approval of Hong or 7% of the population, left Hong GDI pumps from the Dongjiang, or Kong legislators. Singtao Daily notes Kong that year. East River. That translates into an that pro-democracy lawmakers, al - Water security wasn’t improved annual price rise of about 6.6% beit only a minority, might resort to until 1963 when the territory signed through 2017, meaning that the wa - filibustering tactics to delay or even its first water supply arrangement ter will be about 20% more expen - derail the agreement. with the Guangdong authorities. sive by the end of the period. GDI will find out later this The price was largely symbolic (it The price hike is inevitable, the month if the proposal will receive equated to about HK$1 for each South China Morning Post admits, all the requisite approvals. But as 1,000 gallons). Many Hong Kong because of rising costs and a Oriental Daily points out, the water people were impressed by the main - stronger Chinese currency. The wa - supply arrangement has come to land’s generosity, and with the water ter scheme also accounts for more carry a symbolic meaning too, em - problem solved, the territory’s era than half of GDI’s revenue – having phasising yet again how Hong of industrialisation and urbanisa - become part of its portfolio in Kong depends on the mainland for tion began in earnest. 2000 after the default of GITIC, its very survival. Guangdong still supplies 80% of the investment vehicle then used “Whether one likes it or not, both Hong Kong’s fresh water. But once a (and it turns out, abused) by the are in the same boat and drink from reason for amity, the arrangement Guangdong government. Given the same river. Peaceful coexistence has recently become a source of ten - that painful lesson, GDI’s manage - and seeking a win-win situation is sion. Why so? The firm that now ment has long stressed that it is the only way out for Hong Kong, and pipes the water – controlled by a obliged to improve returns and re - the only future for the territory,” the state firm that’s listed in Hong Kong ward its investors. pro-Beijing newspaper argues. – wants to make higher profits. Certainly, shareholders cheered The not-so-subtle subtext? It’s The company in question is GDI’s new improved deal with the time for the pro-democracy activists Guangdong Investment (or GDI). Hong Kong authorities and its share to end their five-week occupation of The Hong Kong government said price rose more than 5% in the trad - some of Hong Kong’s key roads… n 10 Week in China Banking and Finance 31 October 2014

The big match Even banks can’t resist the temptations of peer-to-peer lending

eading through a credit card Rstatement can be a harrowing experience for over-borrowed con - sumers. For Renaud Laplanche, the Silicon Valley entrepreneur, it prompted a business idea. Looking at his own mail years ago, Laplanche saw that his credit card interest rate was listed at 17%. His savings ac - count, meanwhile, earned just 0.5%. The discrepancy inspired La - planche to launch a platform that matched savers (punished by low interest rates) with borrowers (suf - fering from costly credit) via an on - Hongling Capital showcases its peer-to-peer wares line auction process. The result was Lending Club, now lion) by the year-end, up from downpayments required for mort - a leader among the so-called peer- Rmb5.6 billion last year. gages, for instance. In comparison, to-peer (P2P) lending platforms. Early movers like CreditEase Lending Club, which is still loss - Lending Club and its rival Prosper started as far back as 2006 (the same making, focuses on borrowers with have 98% of the American P2P mar - year Laplanche founded Lending sound credit profiles. It has refused ket combined, issuing $2.4 billion of Club) but the sector really got going to get into subprime lending. loans last year, up from $870 mil - in 2009, when monetary tightening Not too surprisingly 74 platforms lion in 2012. by the central bank deprived many went under last year in China and at Indeed, it has proven such a suc - small and medium-sized private en - least 60 more have gone bust year- cess that last month Lending Club terprises of conventional credit. to-date. said it planned to go public on the Meanwhile, a combination of paltry In April rumours were rife that New York Stock Exchange under the saving rates, poor stock market per - CreditEase, which has 13% of its ticker “LC”, (known in financial cir - formance and curbs on homebuy - Rmb50 billion in assets invested in rcles as the shortform for ‘letter of ing has been bringing more retail real estate, was in trouble because credit’). punters into the frame. Simply put, one of its debtors had fled (see Most of the promising dotcom the returns can be enticing: Wang - WiC234). It managed to survive that ideas from America normally daizhijia data suggests that last year confidence crisis, however, claiming spawn clones in China, of course. about 87% of P2P investors received that jealous rivals were feeding false For P2P it’s no different, although yields higher than 18%. allegations to the media. But now this kind of lending is already Such exceptional returns are another P2P operator is in crisis much bigger business in China linked to the fact that many Chi - mode. Worse still, the collateral at than it is in the US. Industry data nese P2P operators are providing a stake is not bricks-and- mortar, but provider Wangdaizhijia (literally risky product. The Financial Times merely paper. “home of internet loans”) suggests reports that several P2P platforms In August Hongling Capital, a P h o t

o there were about 1,400 such micro- run by brand-name internet firms Shenzhen-based lending platform,

S o u r financing firms in operation by have been partnering with real es - told police that it had fallen victim c e :

R e early 2014 and that loans are poised tate developers to finance home - to a “fraudulent borrower”. Five pa - u t e r s to reach Rmb100 billion ($16.3 bil - buyers unable to meet the 30% permaking firms raised up to 11 Week in China Banking and Finance 31 October 2014

Rmb100 million via Hongling but investors who have lent to Hao’s ness Daily observes. key executives at the companies in companies. But the default has The trend also coincides with question had since gone missing. nevertheless raised questions newfound willingness from the fi - The papermakers are related com - about Hongling’s own risk man - nancial regulators to channel the panies controlled by a Shandong agement processes. “It is rare to idler pools of the country’s cash into businessman called Hao Yiyuan, see fundraising bigger than more structured financing. whom Hongling has been unable to Rmb10 million in P2P lending. A For instance, the People’s Bank of contact since August. single case as big as Rmb100 mil - China has just given the green light What happened? According to lion is unheard of,” Southern for a mortgage-backed securities Southern Weekend, the various pa - Weekend notes. market, which may attract invest - per firms have been issuing letters “Hongling has hired many exec - ment from various social securities of credit to each other. This created utives from state lenders. It is mov - funds (see WiC257). Pilot pro - the illusion that real trading was ing closer to conventional banking grammes have also been launched taking place and banks were happy and has been more aggressive on to allow savers to crowdfund proj - to extend short-term trade financ - bigger financing deals,” it adds. ects ranging from movie produc - ing (typically with a maturity of six But some of the state lenders are tions to residential property devel - months and at interest rates mar - now moving further into P2P fi - opment (see WiC255). ginally higher than conventional nancing themselves. Regulators have so far been turn - corporate lending). But when Hao China Merchants Bank (CMB) ing a relatively blind eye to P2P obtained a licence to establish a pa - launched its own P2P lending serv - lending activity, although reports per trading exchange in Guangzhou ice in September last year and a deal have suggested that the China in March 2013, the start-up costs brokered by CMB last month raised Banking Regulatory Commission were greater than his cashflows Rmb50 million in a single day, re - and the central bank will soon un - could cover. That’s when Hao ports National Business Daily. That veil more comprehensive regula - turned to Hongling’s lending plat - was achieved without any prior pre- tions for the sector. form for funds. marketing too. Nonetheless, the Economic Ob - “It is the biggest default so far in Bank of Suzhou said last month server expects the industry’s P2P lending, and a vivid example of that it is setting up a micro-financ - prospects to brighten after new reg - how bad loans from banks are be - ing division with Dianrong, a Shang - ulations come into effect, as stricter ing transferred to the internet,” hai-based P2P website. rules ought to push less competi - Southern Weekend suggests, re - Ping An Bank has set up its own tive lenders out of the market. porting that creditors have raided P2P lending unit too. Changes in the landscape may also the warehouses of Hao’s companies, “P2P lending helps banks to build prompt more interest from private seizing up to Rmb20 million of pa - a more complete business ecologi - equity firms in these internet fi - per products. cal system. It also meets the financ - nancing platforms, says the news - Trying to stem the reputational ing demands from their own paper, noting that more than 20 P2P bleeding, Hongling pledged last clients, the small and medium- lenders have already received pri - week to compensate about 4,500 sized enterprises,” National Busi - vate equity investment this year. n

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12 Week in China Economy 31 October 2014

Legal quagmire Can a one-party state have the rule of law if the Party is above the law?

he guilty group were put on dis - stitution and any other laws”. Tplay in front of a large crowd in More critical voices highlight the Changsha. They wore placards ambiguities that entrench Party rule around their necks giving their in the constitution, making it diffi - names and the crimes they had cult for the same organisation to be committed. Some had already had subordinate to it. One of the consti - their sentences announced, but oth - tution’s Four Basic Principles is that ers were still to face trial. the leadership of the Party is fun - But if the scenes in Hunan damental, and something that can province last month stoked memo - only be modified by the Party itself. ries of the public humiliations of The Global Times has no time for the Cultural Revolution, the state any suggestion of confusion, how - media didn’t dwell on them. ever, particularly those sown by Xinhua opted for a scholarly air, Western media: “By their analysis, mentioning that public sentencing the leadership of the CPC and the of this type was banned in 1988, and rule of law is contradictory. These that Chinese citizens dislike it be - misperceptions must be swept cause it is “against the rule of law”. Xi: put rule of law in spotlight away. Official documents and lead - “It’s curious that such ancient rit - ers’ speeches in recent years have uals are still performed today,” cau - be advanced across the country. repeatedly cast light on the combi - tioned China Youth Daily, a little A major problem in responding nation of the CPC’s leadership, the more bravely. to the theme are the cross-cultural position of the people as masters of “It has been 36 years since reform differences in how the term is un - the country and the rule of law. This and opening up in China, but this derstood. Disagreement begins with emphasises that the Party should serves as a negative example to the how the concept is translated be - lead legislation, ensure law enforce - rule of law,” the paper added. tween Chinese and English, with the ment and set an example by abiding It was left to Yang Bin, a judge, to Chinese use of yi fa zhi guo vari - by the law.” offer the most disapproving view of ously described as denoting “rule of But what if the Party fails to set events in Changsha. “My friends told law”, “rule by law” or “governing ac - an example? Rule of law in Western me that public trial is part of the cording to law”. theory implies that the power of po - country’s ‘glorious revolutionary What’s much clearer is the insis - litical leaders is constrained by laws tradition’, held once every year,” tence that the rule of law in China and regulations, Victor Mair, a pro - Yang wrote on his weibo account. can only be guaranteed under the fessor of Chinese language at the “Similar public trials aren’t uncom - Party’s leadership. Some nuance re - University of Pennsylvania, told the mon in other places too – it seems turns, however, when state media Wall Street Journal. In contrast, most that there is still a long way to go in discusses the constitution (China’s scholarly opinion outside China be - order to achieve rule of law…” “fundamental law” in Party-speak). lieves that “rule by law” is a more Coverage of the perp parade was “The Party should carry out its ac - appropriate interpretation of Bei - unfortunate in its timing, coincid - tivities within the framework of the jing’s approach, in which the legal ing with last week’s Fourth Plenum, Constitution and other laws,” an ed - system is seen by the Party prima - P h o t

o a gathering of the Chinese Commu - itorial in the Global Times insisted rily as a means to govern.

S o u r nist Party’s (CPC) Central Commit - last week, also reminding readers Much of this stems from Chinese c e :

R e tee, which headlined its agenda with that “no organisation or individual history, says Francis Fukuyama, in u t e r s how the ‘socialist rule of law’ could has the privilege to overstep the Con - his latest book Political Order and 13 Week in China Economy 31 October 2014

Political Decay . China is the only the CPC share a different purpose in and the word order here is no ex - world civilisation that has never de - advancing the rule of law in China,” ception,” notes Donald Clarke, a pro - veloped “true rule of law”, the Global Times explains. “Our goal fessor of law at George Washington Fukuyama suggests. Israel, the is to realise people’s happiness and University Law School and editor of Christian West, the Muslim world national prosperity through im - the Chinese Law Prof Blog. “As al - and India all have legal systems that proving socialist institutions. But ways, the Party comes first.” originated in religion, he says, with the West doesn’t truly care about the This sense of the Party’s primacy legal codes interpreted and imple - fate of 1.3 billion people. What they fits with the consensus from foreign mented by religious scholars and ju - care about are their own interests.” commentators on the Plenum’s core rists. That means that “the keepers Implanting foreign ideas in Chi - intent. The goal is to institutionalise of the law” were social groups sepa - nese soil is dangerous, the newspa - the legal process in a way that rate from the political authorities. per suggests: “An abrupt approach at strengthens the CPC’s control at the But in China it was different. “There the huge cost of social uncertainty central level – not just in prevent - was never transcendental religion, won’t be China’s choice to advance ing local apparatchiks from inter - and there was never a pretense that the rule of law. It must be able to fering with the courts, but also in law had a divine origin,” Fukuyama improve Chinese people’s liveli - setting the stage for whipping them believes. “Law was seen as a rational hoods. This is a request raised by into line on other policy pro - human instrument by which the our own people. Only the long-rul - nouncements, and also heightening state exercised its authority and ing CPC can be serious in taking this the chances of punishment for the maintained public order.” responsibility.” kind of illegal behaviour that so en - In Fukuyama’s view, China’s legal Of course, Xi’s administration rages public opinion. system has never limited or has already introduced some legal Few in the Chinese media would bounded the sovereign himself, reforms, most notably the abolition disagree with this interpretation, who was the ultimate source of the of the ‘re-education through labour’ with Xinhua even adding examples law. John Delury, a China historian programmes (also known as laojiao , of everyday situations in which or - at Yonsei University in South Korea, see WiC218) that formerly detained – dinary Chinese might understand has a similar view. He told the Wall without trial – drug users, prosti - the rule of law better too. Street Journal last week that the Chi - tutes and social nuisances. The In one case a local Party secretary nese have adopted various historical Plenum communiqué also said that lectures a reporter on the need to interpretations for their own legal the Supreme People’s Court is going be law-abiding. Then he jumps out system including the Legalist school to explore establishing courts and of his car to take charge of a demo - (which argued for clear rules, with prosecutors offices operating across lition project, deciding personally harsh punishment for offenders) regions. In June six pilot pro - which buildings to blow up. and the Confucians (who thought grammes were approved in which This man is “spouting off elo - that society was best governed by a the supervision of the local courts quently in his speeches about the virtuous elite). “But the notion that was switched to the provincial level. rule of law, but abusing power in the ruling elite should themselves The goal is to protect judges from how he takes his decisions,” the be restrained by laws has never been local pressure by removing the pow - state news agency warns. seriously considered,” Delury says. ers of funding and appointment The second example describes That means less recognition of from the county authorities. how a “grassroots” Party boss comes concepts commonly accepted by These proposals are part of Xi Jin - under pressure from someone who Western democracies, like the sepa - ping’s wider effort to “lock power in wants help in a court case. The offi - ration of powers (between the legis - a cage” by making the legal system cial refuses, telling the man that the lature, the executive and judiciary). more predictable and more ac - court is independent and that he And it also implies less of a role for countable to ordinary people. has no right to intervene. “But you the law as a genuinely independent But the Fourth Plenum’s com - own the city, how can the court not check on political authority. mitment to creating a more em - listen to you?” his petitioner de - This isn’t a concern to propo - powered judiciary also stipulates mands incredulously. nents of the “socialist rule of law”, the total loyalty expected of the “The cadre said that he felt a chill though, who see the Party as the judges to the Party, the state, the run down his spine,” Xinhua re - guarantor of the legal system – and people and the law. ports. “Although he respects the rule implicitly of China’s future too. “Nothing is accidental in the lan - of law, he knows that others don’t “It is obvious that the West and guage of the Party communiqué believe in it themselves.” n 14 Week in China Media 31 October 2014

The award goes to… Why ‘China’s Pulitzer’ isn’t regarded as a pinnacle of achievement

ince the Pulitzer Prize was first torial by the People’s Daily titled Sestablished in 1917 there have “Safe-guarding the lifeline of the been 63 occasions in which it hasn’t people’s Party”. And alongside that been awarded. A shortage of worthy riveting read, a TV award went to winners? No. In most cases there state broadcaster CCTV for its flaw - were too many good entries. Ac - less coverage of President Xi Jin - cording to the rules, if a competitor ping’s visit to Guizhou. in any category fails to get a major - At least the photojournalism ity of the votes from the judges, the gongs were awarded for pictures award may be withheld. that a few people might actually re - The only, and perhaps most con - member. Top prize went to Xinhua, troversial, exception to this rule for a photo featuring Xi in which happened in 1974. American writer the Chinese president is seen in - Thomas Pynchon’s war novel Grav - specting flood-stricken Wuhan, car - ity’s Rainbow won the fiction cate - Flawless or failure, says Tian rying his own umbrella and with his gory, with jurors picking it unani - trousers rolled up above his ankles. mously. But the prize board rejected less a recognition for journalistic The runner-up is a photo of the the selection as some of its mem - excellence than for grammatical disgraced Bo Xilai in handcuffs and bers thought the novel “obscene”. perfection. But surely the award- under escort by two tall police offi - Dubbed as ‘China’s Pulitzer’, the winning articles must be good cers (see WiC210). National News Awards have run enough to attract the attention of The two shots aren’t likely to since 1991, with nearly 300 prizes the nation’s budding reporters? On merit much of a murmur from the awarded annually to journalists. the contrary, journalism schools world’s top photographers. But as They too have criteria for disquali - don’t even use them as lecture ma - the Washington Post has noted, fying potential candidates. An en - terials. This was revealed last year they provide a calculated view of try is not eligible for the most pres - by a chief juror, who called for “how modern China wants to pres - tigious awards should judges find a changes to the rules, warning that ent itself”. single typo. And if there is more most of the accolades go to mono - That is, Bo has become a symbol than one grammatical error – even a tone pieces from state media. of the culture of corruption that Xi – redundant comma – an entry faces The remark put the ACJA into clearly a man of the people in an - disqualification. As a result, eight of the spotlight but it seems unper - kles-and-umbrella terms – is trying the top prizes for the 24th National turbed, and this year awarded an to eradicate. News Awards were left without a overwhelming majority of the 283 Further south in Hong Kong the winner when the results were an - prizes to state-controlled media winning photo got attention too, nounced recently. outlets (again). None of the more making a splash on social media. “We have to pick from hundreds market-oriented or outspoken me - There, it was doctored by pro- of millions of news items every dia sources such as Century democracy protesters, with Xi’s um - year. It is completely unacceptable Weekly, 21CN Business Herald or brella photoshopped into yellow to if an entry carries any flaw,” the Southern Weekend were included match the image that activists have P h o t o president of All-China Journalists for consideration. adopted as their icon since occupy -

S o u r c Association (ACJA) Tian Congming True to form, the four most pres - ing city streets in September. e :

I m

a told Guangming Daily. tigious “special prizes” were scooped “It’s a subtle twist on a subtle po - g i n e

C Tian was reacting to criticism up by media outlets reporting di - litical message,” the Washington h i n a that the National News Awards are rectly to the Party. One was an edi - Post reckons. n 15 Week in China Society and Culture 31 October 2014

Dramatic success New historical drama seeks to cast Chiang Kai-shek in better light

ctober 1, 1949 was one of the Olongest days in Chiang Kai- shek’s life. According to the People’s Daily, the Kuomintang leader spent it mulling whether to bomb Tiananmen Square from the air as Communist leader Mao Zedong de - clared the creation of the People’s Republic of China (PRC). Chiang decided against it. He cal - culated that even if he dive-bombed Mao into the dust, he wouldn’t win over the people, the People’s Daily suggests. The entire population would have resented him and he might even have destroyed the For - bidden City, it speculates. Chiang didn’t want to be condemned for generations as the man who deci - mated China’s history too. As Beijing’s relations with Taiwan have improved in recent years, a slightly more flattering portrayal of Chiang has slowly started to emerge in the mainland press. A lengthy and sympathetic biography by Yang Tianshi, a well-known historian at the Chinese Academy of Social Sci - ences, was a big seller. Chiang’s wartime villa – just outside Chongqing – has even been restored as a memorial of sorts. Photos and Jiang Ruijia: stars in the hit show All Quiet in Peking their accompanying captions paint him more as a patriot who stood Beijing and Tianjin satellite net - a social media website that allows firm against the Japanese, in what works in early October, while critics members to score films, books and looks like an effort to rehabilitate have suggested that the 53-episode TV series, offers a strong cast that some of his historical contribution. series will even appeal to Tai - includes Liu Ye, Chen Baoguo and But will the latest TV hit further wanese audiences. Liao Fan, as well as starlets Chen narrow the divide in cross-straits All Quiet in Peking differs from Lina and Jiang Ruijia. relations? All Quiet in Peking , which most other war dramas because the The Global Times says screen -

P is based on the battle between the stories are less driven by propa - writer Liu Heping took five years to h o t o

S KMT and Communist forces during ganda and more closely resemble research the story, much of that o u r c e the 1940s, has dominated ratings historical events. The show, which spent collecting historical material :

C F P since its premiere on the Henan, has rated as 9 out of 10 on Douban, including unpublished diaries from 16 Week in China Society and Culture 31 October 2014

mainland China, Taiwan and the US. mas, more accurate historical fare The series tells the tale of the bat - is few and far between, so Beijing tle through the eyes of a Commu - Daily hopes that the success of All nist mole who is embedded in the Quiet in Peking will encourage more KMT. Mao and Chiang are men - producers to explore the genre. tioned frequently in the action, but But industry insiders say that they do not appear directly as char - may prove unlikely. That’s because acters at all. TV regulators introduced new rules “A drama with such a compli - in April that ban broadcasters from cated structure requires extreme at - airing the same series on more tention to detail, not just when it than two channels during prime comes to politics and history, but time (see WiC234). The media also in capturing the personalities watchdog explains the move is in - of all these characters. Liu has tended to boost viewing choices for proved himself up to the task, main - consumers. But producers say the taining a certain amount of creative new ban restricts the number of freedom while basing everything on buyers for a programme, which Sax, rather than foot, in mouth historical fact. This is something makes it more difficult for expen - that is very difficult for a screen - sive productions like All Quiet in for the Ministry of Foreign Affairs in writer,” Shi Hang, a culture critic, Peking to recoup their costs. Beijing, which quickly slapped the told the China Daily. “Under this business environ - artist down. Audiences seem to agree, saying ment, producers need to control “Kenny G’s musical works are that they are drawn to the engross - the cost of a drama production to widely popular in China, but China’s ing plot. “I turned around to take a Rmb1.2 million ($196,227) per position on the illegal Occupy Cen - phone call and already I couldn’t fol - episode. On the other hand, most tral activities in Hong Kong is very low the storyline,” one netizen said A-list actors charge about clear,” a spokeswoman told a news of the fast-paced and complicated Rmb600,000 an episode. So unless briefing, adding that foreign gov - story. they are willing to drop their salary, ernments and individuals shouldn’t Liu, who has also turned the TV there is no way for shows like All support the Occupy Central activi - screenplay into a novel, says his Quiet in Peking – which boast an A- ties in any form. hope is that Taiwanese audiences list cast – to be made,” warns Wang The American quickly ditched the will watch the drama too, as he feels Hailin, another TV screenwriter. offending photos on Twitter and re - that the story is objective in its por - assured the authorities of his inno - trayal of the KMT (whose members cence. largely decamped to Taiwan after “I am not supporting the demon - losing the civil war to Mao). strators as I don’t really know any - “My conception of history is fair. Limited sax thing about the situation and my And my audiences and readers are appeal impromptu visit to the site was just not stupid. My books sell well in Tai - part of an innocent walk around wan and are recommended by Jazz star lampooned over Hong Kong,” he explained. many celebrities and the media Hong Kong antics “I only wanted to share my wish there. If you’re fair, your books will for peace for Hong Kong and for all definitely be accepted,” he told the ho needs tear gas when of China as I feel close to and care Global Times, explaining that the WKenny G will turn up and about China very much.” only difference between the main - clear the streets for you? Kenny G is very big in China – land Chinese and Taiwanese ver - That was one of the jokes in cy - even the foreign mnistry has heard sions of the novel All Quiet in Peking berspace last week after the ‘smooth of him, it seems – and he played is that the book published in Taiwan jazz’ star was photographed flash - four concerts there in September. is in traditional Chinese characters ing victory signs and talking to But the international media had P h o t

o (as opposed to the simplified type demonstrators at Hong Kong’s pro- most of its fun picking up on a story

S o u r used in the mainland). democracy street protests (see from the New York Times in May, c e :

R e In a TV market usually domi - WiC256), which are now into their which described how the musician’s u t e r s nated by sit-coms and palace dra - fifth week. This struck a bum note 1989 hit Going Home is played to 17 Week in China Society and Culture 31 October 2014

customers in shopping centres the past and I respect your right to also scathing. “We didn’t leave when across China as a means to warn hold political views. But I absolutely the police used tear gas on us. Why them that the malls are about to do not agree,” Wong Jing told a would a single Kenny G tune shake shut for the day. group of celebrity colleagues via his our determination?” asked one “All I know is when they play this Sina Weibo account. “To avoid em - widely retweeted comment. song, it’s quitting time,” a Beijing barrassment, your contact details health club manager told the news - will be erased from my phone and paper. my computer. Have a happy life.” That prompted online joshing Back in mainland China, netizens that the saxophonist was working have sounded off about the rebel - Guardians of as a double agent in Hong Kong in lious stars too. grammar the hope that protesters would get “I’ve suddenly realised that Chow the message and start to disperse. Yun-fat is a traitor! We must ban Translation blamed for The musician – whose real name him!” a hot-tempered contributor flummoxing film audiences is Kenneth Gorelick – seemed non - implored. plussed by events, telling The At - “We shouldn’t allow any of the hortly after he left office, Amer - lantic magazine that he has no in - stars that support the demonstra - Sican President Jimmy Carter terest in politics. “I spend way more tions to do business in China,” a gave a speech to a college in Japan. time practicing the saxophone than calmer voice suggested. “Let them Trying a joke during the opening I do thinking about this. I don’t take know they are nothing without anecdote, he was pleasantly sur - myself that seriously. I practice very their Party ‘Mom’.” prised to hear uproarious laughter. hard, and I try to be the best saxo - But Kenny G also came in for When he later asked why it had phone player I can be,” he insisted. some caustic treatment for appear - been rewarded with such a positive That might be just as well as the ing to bend so quickly to Beijing’s response, the Japanese interpreter Hong Kong newspapers were re - will. responded: “I told the audience, porting last week that Chinese au - “So the saxophone player ‘President Carter told a funny story; thorities could blacklist entertain - changed his mind immediately af - everyone must laugh.’ ” ers who show support for the ter the Communist Party’s warn - If only translating the Hollywood Occupy movement. A number of ing?” laughed one netizen from the blockbuster Guardians of the Galaxy Cantopop stars from the city have mainland. “His character is as weak would lead to such a straightfor - expressed their sympathy, as have as his music.” ward outcome. That’s because critics well-known actors like Chow Yun- In Hong Kong the reception was say that the Chinese subtitles for the fat, Andy Lau and Tony Leung. These acts of treachery deserved flaming rebuke, as far as a com - mentary from Xinhua was con - cerned. “You have violated the prin - ciples of ‘one country, two systems’, challenged the authority of the cen - tral Party, ignored the Basic Law, and earned fistfuls of cash only then to turn and scold your motherland,” it finger-wagged. “Don’t think that you can eat our food and smash our pots at the same time.” Elsewhere, the Hong Kong media has been reporting rifts among its local stars over their responses to the unrest, with one film director pointedly turning his back on for - P h mer friends who have supported the o t o

S o Occupy protests. u r c e : “We have worked well together in Galaxy-saving girl: Zoe Saldana 18 Week in China Society and Culture 31 October 2014

film – which was released two weeks ago – were so poorly done that au - diences have been tearing their hair out. In fact, Disney-Marvel, the stu - dio behind Guardians , is now wor - ried that the bad translation could cost it at the box office. For those who haven’t seen it, Guardians tells the story of Peter Quill (played by Chris Pratt), who is joined by green-skinned assassin Gamora (Zoe Saldana), a wisecrack - ing raccoon called Rocket, a hu - manoid tree called Groot and the warrior Drax. The five misfits come together to… well, guard the galaxy. The film was a surprise success in Chris Pratt mulls some of his film’s translation issues the US, collecting $300 million in ticket sales. character insultingly labels Rocket trary changes to the names and In China the audience response as a “rodent” or “weasel”, the China character background? And besides, has been a tad more lukewarm. version translates it as “small rac - even if your English is not good, just The film took $68.2 million in its coon” which has a more endearing search for Terra on the internet and first two weeks – not a disaster, meaning in Chinese. you will find pictures of nothing but but falling well short of superhero In another scene, the assassin the Earth,” one fan lambasted. blockbusters like Captain America: Gamora says, “Your ship is filthy,” to “A good translator should stay as the Winter Soldier and X-men: which Quill responds: “She has no true to the film as possible. Ran - Days of Future Past . An unfamil - idea”. The translated version opts domly changing words will have a iar cast has been blamed – Pratt for: “Your ship stinks” and “No cul - direct impact on audience experi - and Saldana are hardly household ture is terrible”. ence. In many ways, it completely names in China – but most critics Aliens in the film call Earth destroys the integrity of the film,” say that the subpar subtitles are “Terra,” or Latin for Earth. But it be - Nanchang Daily concurred. the main reason. comes ‘blue planet’ in the Chinese It isn’t the first time Jia has got “They say the film is supposed to version. into trouble for poor translation. be funny but after watching it I still One weibo user who has earned a She also produced the subtitles for haven’t figured out what’s so funny reputation for uploading and subti - Pacific Rim , another Hollywood ex - about it,” one netizen complained tling video clips on social media port, in which she mistook “softer” on weibo. reckons he has spotted at least 80 for “sort of,” “pollution” for “popu - “I regret not working harder on translation mistakes in the Chinese lation,” and changed an “elbow my English because I didn’t under - subtitles. rocket” into a “pegasus meteor fist” stand anything about the film,” an - “Aside from a lot of mistransla - (yes, WiC doesn’t have a clue, either). other lamented. tions, the subtitles failed to show After the controversy over Critics say that part of Guardians’ the original feel of the film, such as Guardians , Jia seemed contrite, charm is that many of its punch - jokes, puns and homophones. We telling Tencent Entertainment: “I be - lines rely on cultural references and cannot help but doubt the profes - lieve there are experts on the inter - wordplay in English that even the sionalism of the translator,” the mi - net that are much more qualified best translators might find difficult croblogger says. than me. I just happen to stumble to handle. Fans of the original comic accuse upon this opportunity and I’m not “That’s in contrast to shiny com - the translator Jia Xiuyan of ruining claiming to be smarter than anyone. puter-generated explosions, which its film version. “Did she [Jia] ever I also admit there are inadequacies P h o t

o are easily understood by anyone consult with the director and the in my translation work.”

S o u r anywhere,” says Slate, an American producers? How much does she re - Industry figures have been call - c e :

R e online magazine. ally understand the comic book? ing for studios to invest more in hir - u t e r s For example, each time that a Who would dare to make such arbi - ing better translators. “The quality 19 Week in China Society and Culture 31 October 2014

of subtitles absolutely affects how a grant workers. This creates a busi - movie is received, especially if ness opportunity for Sichuan food you’re taking it to an international outside of its home base, with film festival,” Kenneth Ip Kin-hang, Sichuanese restaurants spreading chair of the Hong Kong Academy for across different parts of the country Performing Arts’ School of Film and to cater to these homesick workers. Television, told the South China There may be other commercial Morning Post. “Even now, to some reasons driving the recent ‘Sichuan distributors or people in the film in - wave’ too. Profit margins for its dustry, subtitles aren’t very impor - restaurants tend to be higher than tant – it’s just something that has to other cuisines because Sichuan food be done. Subtitles have never re - is protein-heavy and famous dishes ceived the attention they deserve.” like water-boiled fish and twice- cooked pork allow restaurants to charge more. The heavily-seasoned cooking Taste bud numbing cuisine methods sometimes render the Peppered across quality of the meat or fish less im - the country she even learned how to make it portant too. “The cauldrons of oil, from a local chef (see WiC245). chilli and spices help mask the Why Sichuan fare tops China’s Sichuanese food has been gaining freshness of the ingredients, favourite food rankings in popularity. In fact, a survey con - thereby reducing their costs. More - ducted by Tsinghua University over, the dried chillis make storage n a measure of how seriously showed that it had become the most and transportation a lot more con - ISichuan people take their cuisine popular cuisine in the country. Just venient and budget-friendly. That they decided it needed a museum. over half of the survey ranked it first, has also facilitated the growth of all To remind tourists that the followed by food from Hunan, Shan - the Sichuan restaurant chains province has more to offer than its dong and Guangdong. around the country,” Sina suggests. pandas, the capital opened the Why? Sina, a news portal, says Perhaps that explains why Can - Chengdu Sichuan Cuisine Museum that health experts think that spicy tonese cuisine, which originates in 2007. The venue cost Rmb100 foods boost production of feel-good from Guangdong province, trails million ($15 million) to build and hormones like serotonin, which Sichuanese in the rankings. Can - features more than 3,000 bronze, may help to ease tension and de - tonese cooking places a great deal pottery, porcelain and wood cookers pression. of emphasis on the freshness of the dating back for 2,000 years. “Sichuan food has become a big - ingredients and some of its most fa - “In China in general people tend ger part of the Chinese diet now than mous dishes like steamed fish or to be very obsessed with food, but in ever before. One of the reasons be - white-cut chicken (the chicken is Sichuan there is a sense they have hind this is that our lives are more first soaked in saltwater and then something marvellous here,” says stressful than ever before: unstable steamed) hardly use any spices. In - Fuchsia Dunlop, author of Shark’s job prospects, high property prices stead, the focus is on bringing out Fin and Sichuan Pepper: A Sweet- and poor air quality… Under these the natural flavour of the vegetables Sour Memoir of Eating in China . circumstances, Sichuan food has be - and meats. Sichuan food is renowned for its come our form of release, we are As a result, Cantonese cuisine can intense flavours – in particular a hoping that numbing our taste buds be less affordable for many poten - sensation called ma la (“numbing will help combat the stress of real - tial diners, especially for those out - spicy”) – thanks to the liberal use of ity,” it muses. side its home province. chilli peppers, Sichuan peppercorn, But 21CN Business Herald reckons “Because the freshness of the in - bean paste and garlic. Most West - that the sheer size of Sichuan is an - gredients is such an integral part of erners are familiar with versions of other reason for the popularity of its the cuisine, once it leaves the P h o t

o classic Sichuanese fare like kungpao cuisine. It boasts one of the highest province the price almost doubles.

S o u r chicken, which Angela Merkel, the populations in the country (80.5 mil - Cantonese food becomes a luxury c e :

R e German chancellor, claims to adore. lion) and a large number of for most people outside of Guang - u t e r s When she visited Chengdu in July, Sichuanese leave the province as mi - dong,” says 21CN. n 20 Week in China And Finally 31 October 2014

Naming rights Cctvnews.cn provokes controversy

hen veteran British journal - of first name that Chinese must be Wist Peregrine Worsthorne very careful in choosing. was introduced many decades ago Ranked high on its list: Dragon, to Dwight Eisenhower, the then US Lawyer and Surprise. “Avoid them if president asked him how to spell you want a call back from that seri - He who shall not be named his name. ous law firm in America,” it recom - Worsthorne did more than that, mended. of stranger nomenclature. The state- telling Eisenhower that the first It was also cautious about names backed Chinanews website claimed child born to immigrants from the that sound like food, saying that to have found people called Ele - Mayflower was also christened sweet things can be “very sugges - phant, Anyway, Cylinder, Chloro - Peregrine, which (by his reckoning) tive”. phyll and Eating, for instance. meant that the first American-born Candy, Lolly and Sugar are typi - Other articles on the same topic citizen had his name too. cally thought of as “non-smart girl were soon being forwarded among But the president wasn’t notably names or stripper names,” it added. internet users. Likewise foreign me - impressed, Worsthorne recalled in But its strongest censure was re - dia pounced on the story, giving it The Spectator magazine last week. served for names based on fictional broader coverage internationally. “Well, sonny, that name sure did - or religious figures: “Unique names But the Washington Post then dug a n’t catch on,” he told the budding like this aren’t amusing to English bit deeper and reported that the web reporter. speakers… if you call yourself Satan, story was too good to be true. In a Over in China there was discus - you might get a few foreigners correction to its original article, it sion about unusual nomenclature thinking you’re anti-Christian.” said that Cctvnews.cn, is in fact a last week too, particularly relating Good advice, certainly. “satirical news site”. to some poorly-chosen English Cctvnews.com also felt that opt - A CCTV insider also confirmed to names that have been catching on. ing to call yourself Dumbledore – WiC that the state broadcaster does - This emerged in an article titled the wizard that runs Hogwarts n’t operate the site. How this Chi - “Tips for Chinese choosing an Eng - School in the Harry Potter novels – nese internet domain got regis - lish name”, which was first pub - is a bad idea. tered is now perhaps the most lished by the English-language web - Safer choices include Elizabeth, intriguing unanswered question. site “Cctvnews.cn” and widely William and Catherine, the website But so far, CCTV has made no of - recirculated by state media. opined, although o ther media were ficial comment on the site or the The article warned of the types soon inspired to look for examples article. n

Everlasting struggle

“This is just the beginning. All these efforts have gained the support of the general public”

* Anti-graft tsar Wang Qishan notes his campaign against corruption will “never be concluded”, ac - cording to Xinhua. In fact, it is going cross-border. The Sydney Morning Herald reported last week that Australian police have agreed to assist with the extradition and seizure of assets of corrupt Chinese who flee to the Antipodes. A joint Sino-Australian operation is expected in the coming weeks. Wang Qishan

21 Week in China The Back Page 31 October 2014

Photo of the Week In Numbers 90 Number of minutes an Aeroflot flight had to circle Beijing’s airport on Saturday, being unable to land due to poor visibility resulting from air pollution. Saturday’s PM2.5 reading got as high as 400.

$232 billion Amount of semiconductor products China imported last year. The New York Times

P says this eclipses even the amount spent h o t o

importing petroleum. China is now beefing S o u r

c up its effort in the domestic chip industry e :

R

e because it is worried that heavy reliance on u t e r s foreign chips will render it vulnerable to foreign espionage. Drenched with style: models strut the catwalk at Beijing Fashion Week 7 Number of the world’s 10 biggest property developers by sales that are from China. Where is it? 440 Some of the places referred to in this issue Number of units of Dalian Wanda’s London residential development One Nine Elms that Shenyang will go on sale this week. Separately Wanda Beijing told the Financial Times that it wants to Shandong raise its current turnover from $30 billion to $100 billion by 2020 through overseas China property development. Sichuan Shanghai Chengdu Chongqing 29 The number of banks Xiaomi tapped to Guizhou borrow $1 billion on a three-year loan, its Guangdong first move to tap overseas funds for cash. Shenzhen Hong Kong

Hainan

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