Supplement Firms Hope for China Boom

1 Talking Point 6 Week in 60 Seconds 7 M&A Week in China 8 Telecoms 9 China and the World 11 Rail and Infrastructure 12 Banking and Finance 13 Shipping 14 China Consumer 19 September 2014 15 Society and Culture Issue 253 18 And Finally www.weekinchina.com 19 The Back Page Ma takes Manhattan m o c . n i e t s p e a t i n e b . w w w

Jack Ma’s Alibaba makes its debut – at last – in a gigantic New York IPO

Brought to you by Week in China Talking Point 19 September 2014

Going gaga over Alibaba Alibaba IPO excites investors, but just how big it can grow?

“It’s going well”: Alibaba will be as valuable as Samsung when Jack Ma rings the opening bell in New York

hat do Midland Railway and light how fleeting global hegemony How gigantic is the deal? WIBM have in common? The can be. Should the greenshoe be exercised, answer is they were the largest com - Few now remember the railway Alibaba’s flotation will raise $25 bil - panies by market capitalisation in firm, which lost its independence lion and rank as the world’s largest, the UK and the US when each coun - after the First World War thanks to beating Agricultural Bank of China’s try reached the apex of its eco - the Railways Act. IBM may still be a $22.1 billion debut in 2010. When nomic dominance in 1914 and 1967 colossus, but it no longer ranks in founder Jack Ma rings the opening respectively. the top 20 global companies in mar - bell, Alibaba’s market cap will be Both firms were emblematic of ket cap terms. $177.5 billion, similar in size to Sam - their era. Midland Railway was the In fact, when the New York Stock sung Electronics. However, the stock biggest coal hauler in the country Exchange opens later today, IBM is price is expected to be much higher that had ushered in the industrial also likely to be eclipsed by Alibaba, by closing on its first day, fuelled by revolution. IBM was the leading the company now best symbolising newspaper hype and insistent de - hardware manufacturer at the China’s ascendance on the world mand from investors. Enthusiasm P h o t

o dawn of the computer age when stage. The e-commerce giant priced for the deal has been overwhelm -

S o u r American consumers were the envy its IPO in New York last night at $68 ing, notwithstanding the fact that c e :

R e of the world. per share to the thunderous ap - many investors have placed inflated u t e r s But the two examples also high - plause of global investors. orders to try to get some kind of al - 1 In the future, finance will help new growth flourish.

There are grounds for cautious optimism in the real economy — but creating sustainable growth always needs careful encouragement.

New income streams should be built on opportunities that have longevity and new solutions prepared for technology that will continue to evolve.

In this era of transparency, HSBC is working with clients to help create conditions in which businesses can flourish.

By connecting the developed and the developing world, we can help you protect and cultivate real growth — and so create that success that lasts.

There’s more on the future of finance at www.hsbcnet.com/growth

HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc who is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, The Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC, and HSBC Bank USA, NA.

Issued by HSBC Holdings plc. AC22067 Week in China Talking Point 19 September 2014

location. The frustrated purchasing power of unallocated institutions, combined with the mass of retail in - vestors who were unable to get into the IPO at all, could easily push the stock up into the stratosphere over the coming few days. Should Alibaba trade up 10%, it will overtake IBM (market capitali - sation of $191 billion) and Facebook ($193 billion) to become the world’s fourth largest tech stock behind Apple ($601 billion), Google ($396 billion) and Microsoft ($385 billion). Should it trade up 20%, it will pass HSBC ($206 billion) and China’s largest bank, ICBC, on $209 billion. What’s in there? Alibaba has a trove of consumer spending data At this point, it would also rank as China’s third largest company be - Within a year, it was one of the three for virtual storefronts). hind PetroChina and China Mobile. largest companies in the world, Alibaba had 279 million active with a market capitalisation of $366 buyers at the end of June. However, How is it likely to perform? billion. Today the Japanese firm’s during roadshow presentations, its What happens to Alibaba after the shares trade at a fraction of their management pointed out that on - initial fanfare dies down depends IPO price. line shopping still accounts for just on what investors believe about its 8% of Chinese consumption (and prospects for growth. Shareholders A century of upside? that consumption, in turn, is only are unlikely to reap the same upside Jack Ma has no such qualms about 36% of GDP compared to 70% in as investors in rivals Tencent and Alibaba’s future. In the company’s the US, suggesting a lot of room for Baidu, which both listed a decade pre-roadshow filing, he wrote a let - growth). American research firm ago when they were less than five ter to prospective investors ex - IHS even predicts this month that years old. Tencent has risen 150-fold plaining how the company is only at consumer spending will lift the since its June 2004 IPO, for example. the beginning of a 102-year journey, Chinese economy above the US by Alibaba is now 15 years old, so can that will span three separate cen - 2024. we expect similar growth? There are turies from its inception in 1999. The second pillar of Alibaba’s numerous jumbo IPOs of compa - Alibaba is not a mature business, business strategy, finance, feeds nies with relatively mature business its management says. Rather, its dig - from the first, but is at a much ear - models which have still done well ital ecosystem will disrupt and lier stage of development. Alibaba’s for investors. The most famous is transform all that it touches to the payment system Alipay is not di - Visa, which listed in March 2008 benefit of its Chinese customers rectly included in the IPO vehicle. and still ranks as the largest IPO on and, increasingly, its global ones too. But investors will be entitled to record by a US firm. It rose 28% on A few years ago, Alibaba identi - 37.5% of the profits of the group’s fi - its first day of trading and has quin - fied three pillar industries. In many nancial services holding company, tupled since then. respects it has only made inroads SMFSC (Small and Micro Financial Yet for every Visa there is an NTT into the first one – e-commerce. Services Company), which contains DoCoMo. When it listed in 1998, the Alibaba has an 80% share of the Alipay, alongside other financial as - Japanese mobile operator was also domestic e-commerce market sets such as Alibaba’s pioneering the world’s largest IPO, with in - through its two main websites money market fund, Yu’E Bao (see vestors riding a wave of enthusiasm Taobao (where consumers can buy WiC225). P h o t

o for telecom and tech firms. NTT Do - from a host of online sellers, and As WiC has written extensively

S o u r CoMo seemed to symbolise the be - where Alibaba generates revenues in the past, Alibaba is battling Ten - c e :

R e ginning of the digital era and the from ads) and Tmall (more of a plat - cent and latterly Baidu for control u t e r s

stock made a promising start. form for merchants, who pay fees of Chinese consumers’ mobile wal - 3 Week in China Talking Point 19 September 2014

let. Jack Ma and Tencent founder Ma Huateng are now arch enemies, Planet China although the Tencent boss must be Strange but true stories from the new China regretting the day he turned down Ma’s invitation to invest in Taobao FIELD SONGS. when it first launched in 2003. Ac - Advocates of Buddhism have always promoted the cording to NetEase Finance, he was benefits it can bring to an individual through the sense of harmony it offered 15%, but held out, hoping bestows. However, according to the China Fuzhou News Network, it could for 50%. also radically improve agricultural yields. It cites the example of an Tencent has since become a for - experiment that has been underway for the last three seasons in Liangshan midable competitor to Alibaba village in Fujian. The local farmers have been playing the Buddhist using the phenomenal success of its Thanksgiving Song and other of the religion’s zen-like hymns to their rice WeChat messaging infrastructure to crops (via speakers that look like lotus leafs, no less). The music players build up a user base of 438 million are all solar-powered and automatically loop 30 Buddhists songs 24 hours a day. To test its impact a quarter of Liangshan’s 27 hectares of paddy people. It hopes they will start to have used the music, while the others have not. The villagers have found use its own online payment system that the yield on those with the Buddhist mantras playing have been 15% to pay for everything from petrol to higher. Chinese agricultural experts said this might be because the music restaurant bills. was deterring insects and mice. Liu Jianfu, associate professor of the Some of the headlines that Department of Biological Engineering and Technology with Huaqiao greeted the launch of Apple Pay at University, goes further saying musical sound waves can promote the beginning of this week further increases in plant growth by affecting their organs’ cell division. He even underscore the ambitions of global proclaims the system as “a new agricultural technology.” But Apple Daily tech companies in the financial say many of his compatriots are dismissive of the claims: “Internet users services sector. In one editorial, the thought that the news was nonsense, even reminiscent of the Great Leap Financial Times wondered whether Forward when officials exaggerated yields, claiming 50,000 kg per mu (i.e. this was an “iPod moment for cash about 666 square metres)”. and credit cards”. Alibaba’s third pillar, data mining And outside China? people calling Alibaba China’s Ama - is, potentially its trump card. While For many Chinese companies, their zon,” writes Sohu Finance. “But this Baidu collects search data and Ten - hallmark of success comes from go - time there are a growing number of cent collects social networking stats, ing global. Alibaba has not really Wall Street investors realising that Alibaba controls a valuable trove of spent too much energy overseas yet, this title is not accurate.” In fact, transaction and credit information although it has made a number of many have given up trying to apply yielded by its e-commerce domi - smaller acquisitions. This is likely a simile to Ma’s creation. nance. So far, it has been able to use to change. In this respect, Sohu Finance the transaction profiles to build up As Jack Ma put it in his recent in - thinks that Alibaba will herald a a picture of customer preferences vestor letter: “In the past decade, we coming of age in China’s tech in - and also leverage its credit data to measured ourselves by how much dustry and raise awareness too in assist its nascent financial services we changed China. In the future, we the West that Chinese firms are fos - ambitions. But it will have far wider will be judged by how much tering unique and indigenous busi - potential as the digital world infil - progress we bring to the world.” ness models. With its sophisticated trates other areas such as health Sohu Finance says one upshot of approach, Alibaba may also achieve and education. the IPO is the way it is shaping new a wider reputational milestone, re - In a sign of things to come, perceptions of China’s internet shaping the way China is seen in the China’s National Bureau of Statistics firms. It notes that past listings world, and reducing the perception has also started to use data from 11 tended to reinforce the view on Wall that its main advantages are tech companies including Alibaba Street that China’s online giants cheaper labour and unfair subsi - to improve the agency’s oft-derided were copycats of business models dies. figures. During phase one of the born in Silicon Valley. Thus Baidu On the other hand, a less wel - trial, which began earlier this year, was referred to as China’s Google, come perception that some in - the bureau began using online in - Renren as China’s Facebook and vestors might glean is that buying formation to help compile the na - Sina Weibo as China’s Twitter. China stocks continues to come tional Consumer Price Index. “Of course, there are still many loaded with corporate governance 4 Week in China Talking Point 19 September 2014

risk. In a list of five risks facing new valid reason for electing to list in shareholders, NetEase Finance says New York. It relates to Yahoo, which a key one is the absolute power Ma is selling down its Alibaba stake in and his 29 partners have over deci - the IPO. Had the deal been done lo - sionmaking and their control of the cally in renminbi Yahoo would have board. One day some of these in - had problems getting its cash out of vestors might even rue the limited China because of the country’s cap - rights Alibaba’s VIE structure gives ital controls. That also helps to ex - foreign investors too (for more on plain why Ma’s choices came down this see our related Talking Point in to Hong Kong or New York: he issue 237). needed the IPO to be priced in a cur - rency that is freely convertible. Oh yes, so why didn’t it list domes - Of course, that also means that tically? the customer base which powers Some wonder why Alibaba didn’t almost all of the company’s profits list in Shanghai – where enthusiasm have had no chance to invest for buying into the IPO would have themselves. been intense. Most Chinese can’t invest here Alibaba may be promising a pot But Doug Young, who writes the of gold to its new shareholders, but Young China Biz blog, says that this best companies to overseas list - there will be very few Chinese na - was never a realistic option since Al - ings, China’s securities regulator tionals among them. Only a small ibaba is incorporated outside China began discussing plans more than minority of China-domiciled in - (a common practice among Chinese five years ago for an international vestors have a US trading account venture-backed tech firms). board in Shanghai where overseas- and Chinese retail investors that “Such overseas incorporation has based firms could list and make can purchase American stocks have not only barred internet giants like their shares available to local in - been deterred by the need to place Tencent and Baidu from listing in vestors. But that plan has been re - an IPO order of at least $1 million for China, but has also locked out other peatedly been put on hold due to the stock. major names like China Mobile and the anaemic performance of As China.com writes, “They have Lenovo, which are also technically China’s domestic stock markets, lost one of the best investment op - incorporated outside China for his - which also resulted in a freeze on portunities in the capital markets, torical reasons,” he notes. new IPOs last year and for most of ‘selflessly and generously’ present - Young continues: “Realising it the first half of 2014.” ing it to American and Western in - was losing some of the nation’s WiC also suggests there’s another vestors.” n

The Simpsons – now in Mandarin

“Woo hoo! Now we can reveal Springfield is actually in Guangdong.” That was how The Simpsons ’ executive producer greeted news that the hit US show will air for the first time in China. The long-running hit starring the doughnut and beer obsessed Homer Simpson and his irreverent son Bart will be streamed online in China by Sohu Video, reports Variety. The latest season (there are 26 in total, in case you wondered) will be shown with subtitles in Mandarin, in a deal done with the show’s maker Fox. “The introduction of The Simpsons , a household name in the US, will further enrich I l l u our users’ choice of the best American content when they come to our s t r a t i o platform. This deal once again demonstrated our commitment in bringing the n : w

w best experience to our users and tireless efforts to enhance our competitive w . b e edge in the industry,” said Charles Zhang, Sohu’s boss. The timing of the n i t a e p deal will strike some as noteworthy, given Beijing has recently banned some s t e i n

. US shows from airing on online video streaming platforms (see WiC235). c o m

5 Week in China The Week in 60 Seconds 19 September 2014

Xi arrives in India The major news items from China this week were...

Xi Jinping has begun his first official visit to India. 1Xi kicked-off his three-day visit in the western state of Gujarat, where he attended a banquet hosted by In - dian Prime Minister Narendra Modi (the reception co - incided with Modi’s 64th birthday). Xi travelled to New Delhi on Thursday, and held talks with Modi on trade, infrastructure and border disputes between the two countries.

China’s anti-corruption campaign has gone global, as 2Beijing seeks to enlist the help of Western countries in pursuing officials who flee overseas. Beijing-based Set for Hong Kong IPO: Dalian Wanda’s Wang Jianlin British, US, Canadian and Australian diplomats say they are all under pressure to assist with what Beijing calls Dalian Wanda Commercial Properties, part of the “Fox Hunt 2014”, the Financial Times has reported. The 4conglomerate controlled by billionaire Wang Jianlin, authorities have reportedly asked to interview the wife, filed a listing application with the Hong Kong Stock Ex - mistress and child of Cao Jianliao, the detained former change on Tuesday for an initial public offering that vice-mayor of Guangzhou, even though all three have could raise up to $6 billion. At that size, the IPO could be moved to New Zealand and at least one has become a the biggest offering in Hong Kong since Swiss metals New Zealand citizen. trader Glencore International raised $10 billion in a Hong Kong-London listing in May 2011. According to the To improve air quality, China will restrict the use of preliminary prospectus, the property firm made Rmb87 3coal with ash content higher than 16% and sulphur billion ($14 billion) of revenue last year, and Rmb25 bil - content above 1% in the main population centres from lion of net profit. January 1, 2015. The move, aimed at helping lift the smog that envelops so many cities, is likely to hurt Australian China’s largest car rental company CAR Inc is set to producers, who typically export coal with ash content 5raise $467 million in a Hong Kong flotation as retail above 20%. Australia exports around 50 million tonnes investors flocked to the deal. Formerly known as China of thermal coal each year to China and the ban is ex - Auto Rental, the company is backed by private equity pected to reduce exports by 40%, which could cost the firm Warburg Pincus and Hertz, the US car rental outfit. industry $1.5 billion. Investors seem bullish on the prospects for China’s car rental market, which is forecast to surge to Rmb65 bil - lion in sales by 2018, nearly double 2013 levels.

As part of its anti-monopoly efforts, the National Re - 8form and Development Commission has questioned Toyota officials on pricing policies for spare parts in its Lexus division. BMW, Volkswagen’s Audi and Mercedes- Benz have already announced price cuts on auto spare parts in China in an effort to appease regulators, who P h o t

o have alleged anti-competitive behaviour. Lexus re -

S o u r sponded quickly by saying that the prices of about c e :

R e 15,000 parts will be reduced by an average 26% from u t e r s Saying it with flowers: Xi and his host Modi next month. n 6 Week in China M&A 19 September 2014

Holiday spending Fosun steps up its bid for Club Med, making a higher offer

osun’s chairman Guo Buying Club Med can add FGuangchang has never extra value to Fosun’s do - hidden his admiration for mestic businesses too. A Warren Buffett. Copying five-star hotel with a strong the Berkshire Hathaway global brand is an attractive model, Guo has invested in calling card when dealing stable financial assets, with local officials in China helping Fosun expand into (see WiC196). They see lux - China’s largest privately- ury hotel construction as a run conglomerate. But boost to city GDP, bringing while local media often dub economic benefits like him China’s equivalent to tourist spending and pro - the Sage of Omaha, Guo de - viding jobs. With the lure of murs, telling CNBC last year new Club Med hotels, Fosun that he sees himself more may be calculating that it as “Buffett’s apprentice”. But why is Guo so obsessed with can drive hard bargains with city If so, Guo appears to have forgot - taking over a lossmaking hotel mayors, getting cheaper land and ten a golden rule from his master. brand, especially as it means a ma - other subsidies as welcome gifts. Buffett rarely gets into bidding wars, jor deviation from his Buffett-esque Club Med management has sim - preferring friendly acquisitions. philosophy in the process? ilar ideas. Its China head Olivier Last Friday, Fosun made an One reason is that – despite the Horps told the Hong Kong Eco - eleventh-hour counterbid for Club takeover battle – Club Med’s valua - nomic Times this week that it ex - Med in an escalating battle for the tion remains relatively cheap (the pects China to overtake the US next French firm that began more than a holiday chain was worth €2.1 billion year as Club Med’s second biggest year ago. Fosun has offered €22 for in 2007). The Hong Kong Economic market (by room nights). It already each Club Med share, valuing the Journal notes that Club Med now runs three resorts in the country but holiday group at €839 million ($1.1 operates 66 resorts globally, which plans to add three more by 2016. billion). The last-minute offer tops equates to €12 million per resort be - At a gathering in Macau last week the €21-per-share proposal tabled in fore debt. “A luxury apartment in Chinese Vice Premier Wang Yang July by Italian investor Andrea Hong Kong is easily pricier than told tourism ministers from APEC Bonomi. Fosun and its partners ini - that,” the newspaper suggests. Furt - that the central government sees tially offered €17 a share. ther, the newspaper believes that tourism as a “sunrise industry”. French private equity firm Ar - hotels and ‘travel experience’ fall Wang promised that China will con - dian, Club Med’s management and into one of the rare industry cate - tinue to promote it as a key eco - U-Tour, a Chinese online travel gories that aren’t likely to be re - nomic driver, which means improv - agent, were part of Fosun’s original placed by the internet (versus shop - ing visa policies and more direct bidding consortium. However, un - ping malls, for example, which are flights to Chinese destinations. der the latest buyout plan, Fosun’s competing with e-commerce). Guo’s plans could, of course, be participation will rise significantly, “Club Med fits perfectly into Fo - foiled if his rival Bonomi comes taking on more of Ardian’s stake in sun’s acquisition strategy of com - back with a better offer. P h o t

o buying Club Med. The Chinese firm bining China’s growth momentum The Italian must do so within a

S o u r is now the single largest share - (Chinese tourists) with global re - month of Fosun’s revised bid, which c e :

R e holder in the resort operator with sources (a renowned resort opera - suggests he has until early October u t e r s an 18% stake. tor),” the newspaper concludes. to make his decision. n 7 Week in China Telecoms 19 September 2014

Launch problems The iPhone 6 is not on sale in China

n 2011, a 17 year-old student from ators, which have been counting on IChina wanted an Apple device so the popular gadget to further spur much that he decided to sell one of sales for 4G services. Investors were his kidneys to raise money to buy similarly disappointed. All three one. He made enough to purchase China telco operators saw their In Japan, but not China an iPhone and an iPad. The some - shares drop on the Hong Kong what sinister case was remem - Stock Exchange. gigabyte gold version of the larger bered again this month when Apple “Apple had promised China’s iPhone 6-Plus for over $4,700, for unveiled its new iPhone 6. With its three major carriers [China Mobile, instance, which is almost five times larger screen, the phone is actually China Unicom, and China Telecom] as much as the retail price. “bigger than a kidney”, wags joked. the new phones would be launched Other unscrupulous merchants Would Apple-mania once again in China at the same time as else - have been offering to help desperate merit the exchange of bodily or - where. The carriers, have spent hun - customers find the new phone, even gans? dreds of millions of yuan on adver - claiming that they have access to News of the smartphone, along tising,” says Xiang Ligang from pink and yellow models “only avail - with the supersized iPhone 6-Plus, CCtimes, a telecoms portal, adding able for purchase in Macau”. has already crashed the servers of that Apple’s reputation will “suffer The so-called “Macau version” Apple’s online store. (Apple got a among the carriers”. costs Rmb1,000 ($160) more than record 4 million global orders for Still, the delay shouldn’t dent en - the standard one, which starts at the phone in the 24 hours after it thusiasm for the new phones around Rmb4,400, and Guangzhou became available, double the de - among Chinese consumers. In the Daily says that 168 customers have mand for the iPhone 5 the day it was past, Apple seems to have used de - already paid deposits. launched.) layed releases to build up buzz in “We can’t buy the iPhone 6 on the But Chinese Apple fans were fur - China. And large-screen phones, or mainland now… but I can buy one ther disappointed when they found phablets, are already very popular, from this shop, and it’s pink! I just that the devices, which went on sale especially among players of mobile hope it’s not fake,” one customer in nine locations including Hong games. Nearly 40% of smartphones said. Kong, Japan, the US and the UK this sold in China now have screens of The South China Morning Post week, won’t be immediately avail - five inches or larger, according to has reported that the offer is, of able in China. Canalys, a research firm. course, fraudulent and there is no Apple needed to obtain the net - “The iPhone 6-Plus will kill all the such thing as a special Macau ver - work access licence from the au - big-screen Android devices to be - sion of the phone. Elsewhere, the en - thorities before selling the iPhones come the new must-have for rich trepreneurialism is more legitimate. in China, says 21CN Business Herald. people,” Wang Guanxiong, a tech Rather than selling their vital or - Somehow this application failed marketing expert declares. gans, teenagers in Hong Kong have and the date of refiling for the li - Customers who can’t wait to get been making money by lining up cence has not been determined. As a their hands on the new smartphone outside Apple stores in the city. Ac - result, the exact date that the new have turned to online stores prom - cording to China News Service, grey smartphones will go on sale in ising to deliver them from Hong market sellers have been paying the P h o t

o China remains uncertain, an indus - Kong, but at a premium price. This youngsters as much as $200 a day to

S o u r try insider told the newspaper. week Guangzhou Daily reported queue up to buy phones (Apple is c e :

R e Needless to say, the delay is frus - that a reseller in the Mongkok dis - imposing a limit of two phones per u t e r s trating for the country’s telco oper - trict of the city was selling the 128- customer). n 8 Week in China China and the World 19 September 2014

From Russia with love China stands to benefit from Putin’s clash with the West

n January 2013 the first episode Iof The Americans aired on televi - sion in the US. Created by former CIA agent Joe Weisberg, the drama features two KGB officers posing as an American couple in the Wash - ington suburbs. Their mission is to protect Mother Russia and under - mine American capitalism. Back in 1982 – when the show’s action begins – the Cold War was very much a hot topic. When Weis - berg first had the idea for the series studio bosses seem to have viewed it Signing up: Putin wants more gas deals with his “Chinese friends” as more of a period piece. But by the time the second season ended in There is a danger of over-egging eign partners, but of course, for our May this year, the subject matter the historical comparisons. No for - Chinese friends there are no restric - seemed more timely. Vladimir mal treaties are involved on this oc - tions.” Putin’s incursion into the Crimea casion; whereas back in 1950 Stalin There isn’t much need for decod - (which he annexed in March) and and Mao signed a military alliance ing there: Putin could hardly be the violence in eastern Ukraine have pledging to defend the other. making his desire to work with Xi stirred memories of a more con - Instead Putin’s priority is to push Jinping’s government more obvious. frontational past among NATO for closer economic ties with China, Dmitri Trenin, director of the members . especially as he weighs the impact Carnegie Moscow Centre, reviewed When the Cold War began, of Western sanctions and looks east the changing geopolitical world in Moscow welcomed a new ally that for a counterweight to cushion the the China Daily last week. Washington feared could alter the blow to the Russian economy. “The apparently long-term rup - balance of power: Mao Zedong’s red A key part of this plan is to sell ture of Russian relations with the China. more Russian gas to China, shifting West offers an opportunity to the In a 1950 speech Richard Nixon its reliance away from the European Chinese leadership to enhance its warned congressmen that five years market (see WiC239). Earlier this already close relationship with the earlier the Soviet orbit had encom - month, the Russians broke ground Kremlin,” he wrote, “and thus turn passed 180 million people. With on the Power of Siberia pipeline that the global balance in its favour – not Mao’s victory, the grouping had is set to export 4 trillion cubic me - unlike former US president Richard soared to 800 million. tres of gas to China over 30 years. At Nixon and former secretary of state In demographic terms, the future the ceremony Putin referred to “our Henry Kissinger who reached out to president said, the “odds are five to key partner China” and a few days Chairman Mao Zedong in 1972. three against us”. later he offered Chinese firms a “The Russians, angry with Wash - As concerns grow about an ap - stake in the Vankor oil and gas fields ington, are now more amenable to P h o t

o parently expansionist Russia today, in Eastern Siberia. giving China wider access to their

S o u r will history repeat itself as Moscow As he told the media at the time: energy riches and their advanced c e :

R e tries to forge a new axis with Bei - “We generally take a very careful ap - military technology. The Western u t e r s

jing? proach to the approval of our for - sanctions pushing Russia out of the 9 Week in China China and the World 19 September 2014

international financial system are also making Moscow more ready and willing to back the Chinese yuan against the US dollar.” The Russians look keen to point to any evidence of cooperation with the Chinese, mindful of the poten - tial impact it might have on the cal - culations of politicians and busi - ness leaders in the US and Europe. Of course, it helps if the two sides can find common interests and one example this month is civil avia - tion, where both countries resent the dominance of Airbus and Boe - ing. Hence the Russian media re - ports about a new deal with Beijing to develop a long-range wide-body aircraft together. The plan, which was announced by the Russian deputy prime minister responsible Keri Russell: plays a Soviet spy in Cold War drama The Americans for the defence ministry, is to up - grade a version of the Ilyushin II- opportunities thrown up by Rus - of caution in moving closer to 96. But the new jet will be made sia’s cold-shouldering in Europe Moscow. “For the booming develop - with the help of China’s aspiring and North America. Moscow’s tit- ment of Sino-Russian relations, we aerospace giant COMAC. The project, for-tat decision to ban imports of need to have a sober evaluation. said to be starting out with commit - American and EU agricultural prod - China and Russia are friends on ments of $8 billion in investment, ucts has Chinese farmers and food strategic cooperation and mutual plans to make the new aircraft in processing firms excited. Mudan - support, but China and Russia are China, with a potential release date jiang Daily says that China Baorong not allies like Japan and the US. in 2023. Corporation has already set up a Sino-Russian trade should be en - Perhaps the deal suggests that new logistics centre on the Sino- couraged to grow more based on the Chinese have given up on the Russian border to export more food market factors than political factors. idea of a fully homegrown jet, and to its northern neighbour. It adds It must be noted that no matter how will rely on more proven Russian that Dili Group has plans for some - good Sino-Russian relations are, the aerospace technology instead. If so, thing similar in a new cross-border bilateral trade relations have many the Chinese press haven’t discussed trade zone that is also being estab - uncertainties.” it. Probably they are at bit of a loss lished. The newspaper – often a tub- about what to make of this latest an - “Considerable volumes of con - thumper against the West in cases nouncement. After all, COMAC un - tracts” were signed with Russian in which it feels that Chinese in - veiled its own plans to build the parties at a trade fair in Hei - terests have been slighted – was C919, a Chinese-designed competi - longjiang province in July for the unusually circumspect in its as - tor to Airbus and Boeing’s wide- export of frozen and preserved sessment of the current situation. body jets, in 2008. Last December foods, with a focus on fruits and One of its concerns is that selling we reported that the launch date vegetables, the newspaper reports. fruit and vegetables to “help Rus - for the new aircraft looked like being Heihe city in Heilongjiang has sia” might be perceived wrongly in delayed (see WiC220) and that the also said that work is underway on a the West. Indeed it warns that any first customer for the C919 – 60,000-square metre fruit and veg - new efforts that China makes that Chengdu Airlines – isn’t likely to get etable logistics park to facilitate seem to show it siding with the P h o t

o one before 2018. greater exports to Russia. Russians carries the risk that “the

S o u r Paradoxically, China’s media has Despite signs that trade ties are US would deeply hate us and Rus - c e :

R e been dedicating more serious dis - growing stronger with the Russians, sia would not necessarily appreci - u t e r s cussion to some of the lower-tech the Global Times called for as sense ate us”. n 10 Week in China Railway and Infrastructure 19 September 2014

Break-up or make-up? Beijing wants rail equipment duopoly to merge

hina’s best-known historical to be pleased to hear about the po - Cnovel The Romance of the Three tential consolidation, for instance. Kingdoms begins with a statement China Railway Corp (CRC), the oper - that might resonate with voters in ator of the national network (and it - Scotland this week: “The truism of self spun out of the rail ministry last this world is that anything long di - year), plans to spend Rmb150 billion vided will surely unite, and any - ($24 billion) on trains and mainte - thing long united will surely divide.” nance this year. It seems likely to The same insight applies to cor - lose one potential supplier. “Proba - porate mergers and acquisitions. Fast company: a CSR train bly CRC won’t be too happy to see Companies combine and compa - there is only one bidder for its mas - nies split. The case of AOL and The reversal of the trend has sur - sive contracts,” says CBN, adding Time Warner is one example. More prised many investors, not least be - that the rail operator places 75% of recently BHP Billiton has also an - cause CNR only went public in Hong the orders CNR and CSR get. nounced plans to divest parts of Kong in May. But according to Cen - CNR and CSR will also have dif - the company that it once rushed tury Weekly, policymakers think ferent views on how consolidation to acquire. that the dual-trainmaker plan has should proceed. Century Weekly On the flipside it seems that backfired – not necessarily in China, said both firms have submitted those long divided may be united but abroad . CNR and CSR have been merger plans to Sasac, the state as - once more in China’s rail industry. competing for overseas business, of - set regulator. Earlier this month Century Weekly ten hobbling the other with their “CSR wants CNR to delist from reported that the State Council had aggressive bidding tactics. A con - Shanghai and Hong Kong, then “basically decided” to merge back frontation in 2011 over a deal in merge its assets into CSR,” the mag - together the two biggest railway Turkey ended up with both firms azine reports. “CNR wants to set up a equipment makers CSR Corp and losing the contract to a South Ko - new parent company and keep the CNR Corp. The magazine reported rean rival. “Similar situations have two firms subsidiaries.” the deal is still in the preliminary also occurred elsewhere, including So expect uncertainty in the stages and the two firms have yet to in 2013 in Argentina, prompting the months ahead for the duopoly’s begin formal talks. But other do - former Ministry of Railways to crit - shareholders (the collective market mestic media quickly followed up icise the two openly,” Century value of the firms’ shares is about and confirmed the plan. Weekly noted. $22 billion). Most insiders seem to CNR was established in 2000 and The rivalry is threatening to de - think that the merger will proceed. CSR followed two years later. They rail China’s global ambitions to sell “If the State Council wants the rail - were both spun out of the powerful its bullet trains abroad. Chinese Pre - way merger to happen, it most cer - Ministry of Railways where they mier Li Keqiang has been one of the tainly will,” Forbes agrees. But the were a single entity. The intent be - biggest salesmen for made-in-China magazine notes that the plan could hind splitting them was to introduce equipment and technologies, sign - also be interpreted as a case in greater competition among state ing a slew of rail projects during his which Li’s self-declared drive for firms. The move followed the break - visits to Southeast Asia, Eastern Eu - greater market competition seems ing up of other monopolies, for ex - rope, Africa and Latin America. But to be hitting the buffers. P h o t

o ample in the telecoms sector (a before a new giant is created, the “The railway merger seems coun -

S o u r move that eventually produced the state firms in the train sector will terproductive and could send the c e :

R e rival firms China Mobile, China Uni - need to sort out their differences. wrong signal on the direction of re - u t e r s com and China Telecom). Another industry player isn’t likely form,” the magazine suggests. n 11 Week in China Banking and Finance 19 September 2014

Opening salvo SOE reforms off to slow start as Citic faces landmark lawsuit

f you can get off to a good start it have wider significance. The SFC Imeans you are half way to suc - says the case would “set a precedent cess, a Chinese proverb suggests. for future payout demands linked But if that’s the case, Beijing’s show - to trading on misleading informa - case effort for state-owned enter - tion”. That is especially important prises reform looks to have missed as class action suits are not allowed the starter’s whistle. in Hong Kong. The territory allows Last month Citic Pacific officially multiparty proceedings but losing changed its name to Citic Ltd. The parties must pay all or part of their renaming brought a successful con - opponents’ legal fees. A few in - clusion to the $37 billion backdoor vestors tried to take former boss listing of the Citic Group, China’s Yung to the Small Claims Tribunal biggest state conglomerate (see in this particular instance. But were WiC232). forced to give up after Yung applied The company began trading with Facing legal proceedings: Yung to transfer the case to a higher court, its newly minted brand on Septem - where legal costs are much higher. ber 1 in Hong Kong. Less than two holders were told that its directors Citic’s existing management will weeks later, however, Hong Kong’s were unaware of adverse material hope to close the chapter on the cur - Securities and Futures Commission changes in the financial or trading rent episode quickly and move on. (SFC) announced it had launched le - position of the group since 2007. The SFC meanwhile knows a victory gal proceedings against Citic and But the writ filed by the SFC, ac - will be a landmark event in its fight five of its former executives includ - cording to the South China Morn - to protect shareholders’ rights. Pol - ing Larry Yung, son of former Chi - ing Post, alleges that a senior exec - icymakers in Beijing may see that nese Vice President Rong Yiren. The utive had already warned the board as a positive outcome too: encour - objective is to compensate share - that the company’s currency hedge aging better SOE corporate gover - holders who suffered heavy losses was “out of control”. nance is is a key objective of Citic’s after a massive currency bet went On October 20, 2008, Citic Pacific ‘mixed ownership’ reforms, after all. sour in 2008. Citic and Yung could issued a profit warning and re - Speaking of a fresh start, also face criminal prosecution. ported $1.6 billion in losses from Sinopec’s reform efforts got off to The timing of the move may look currency trading. bumpy beginnings when it said on odd, given the state behemoth’s de - The SFC says investors bought Sunday that 25 investors will acquire cision to inject all its assets into a $245 million of Citic Pacific’s shares a 30% stake in its retail unit for $17.5 Hong Kong-listed vehicle consti - between the September circular and billion. The deal has been in the tutes a major commitment to the the October profit warning. The works for months (see WiC251) but city’s capital markets. But the SFC company’s value plunged 55% dur - investors seem unimpressed by the was merely taking its last chance to ing those six weeks, and the SFC is early details. That’s mostly because strike. “Hong Kong has a six-year now seeking to compensate about Sinopec’s new business partners are limit for civil actions,” David Webb, 4,500 investors for their losses. almost all Chinese firms and include a corporate governance activist, told Citic has said that it is taking legal several state-owned enterprises. Bloomberg. “I think basically the SFC advice. The potential compensation That left investors wondering if Bei - P h o t

o ran out of time.” payment is manageable (the con - jing is serious about introducing

S o u r The case centres on a Citic Pacific glomerate reported last week it had more private sector capital into the c e :

R e regulatory announcement from $755 billion in total assets as of June). state giants. Sinopec’s stock fell u t e r s September 12, 2008 in which share - But the lawsuit’s outcome could nearly 10% this week. n 12 Week in China Shipping 19 September 2014

Money belt Can Xi build a maritime ‘Silk Road’?

ou know Chinese leaders could meeting with Xi in his capital Male Ybe getting serious about a pol - on Monday. icy idea when they commission a A multi-million dollar contract ‘model drama’ to propagate it. for a Chinese firm to upgrade Male’s Xi Jinping’s “21st Century Mar - international airport was also We want a new port over there itime Silk Road” is clearly one such signed during the visit, while Xin - proposal. hua reported that the Chinese Shinzo Abe to Sri Lanka just the On August 27 around 2,000 peo - might also finance the construction week before Xi, as well as the trip ple turned up for the opening night of a long-awaited bridge between from India’s newly-elected Prime of the splendidly titled Dream of the Male and the neighbouring island Minister Narendra Modi to Japan a Silk Road on the Sea in Beijing. of Hulhule. few days before that. The two-hour spectacle tells the Another major beneficiary of the In the past India has accused fictional tale of a Chinese sailor who Maritime Silk Road plan is Sri Lanka, China of trying to lay a “string of helps to establish ancient trade which Xi also visited this week. Sur - pearls” around the Indian Ocean – a routes across the Indian Ocean. prisingly his trip to Colombo was phrase implying the build-up of The troupe’s tour schedule over the first by any senior Chinese strategic coastal assets throughout the next few months suggests that leader since the two countries es - the region that could be militarised the show – which resembles the ‘red’ tablished diplomatic ties in 1951. by the Chinese navy. Some Indians ballets performed during the Cul - Colombo nevertheless regards the worry that by endorsing Xi’s Mar - tural Revolution – will be used to Chinese as a close ally after Beijing itime Silk Road their country will be woo overseas interest in Xi’s proj - helped the current government win tacitly giving Beijing the nod to fur - ect. He first mentioned it a year ago a 27-year war against the Tamil ther extend the “string of pearls”. at the ASEAN summit in Jakarta. Tigers in 2009 – largely by provid - “India has been invited to join Since then Xi and other top officials ing military hardware, as well as the Chinese proposal in what is have returned to the phrase, talking diplomatic support at the UN Secu - clearly a bid to unsettle it diplomat - about resurrecting old trading rity Council. ically ,” India’s former Minister for routes, and presenting them as new During his day-long trip to the Foreign Affairs Kanwal Sipal wrote opportunities for countries like island, Xi inaugurated the final- in the Indian Defence Review back Myanmar to Pakistan to profit from phase of a China-financed power in February. their littoral status. plant and agreed to cooperate on a Ports in Kyaukpyu in Myanmar, As more countries endorse the new port development, featuring Hambantota in Sri Lanka and plan, its centrepiece appears to in - an artificial island off Colombo. Gwadar in Pakistan were the pri - volve Chinese funding of projects Negotiations on a free trade mary causes for Indian concern over such as ports and free trade zones in agreement have also begun. maritime encirclement. under-developed economies along But the Maritime Silk Road has However, for now the Maritime the world’s shipping routes. also ruffled some diplomatic feath - Silk Road is a concept-in-progress. For countries like the Maldives, ers – specifically in Japan and India. It is too early to judge whether it is a this is a huge boon. “The Maldives Japan, which has proposed its benign effort to harness Chinese welcomes and supports the Silk own “diamond of security” in the prowess in helping other develop - P h o t

o Route proposal by China and is pre - Western Pacific and Indian Ocean, ing nations with major infrastruc -

S o u r pared to actively participate in rele - also feels it is being isolated by the ture projects, or whether the pro - c e :

R e vant cooperation,” Maldivian Presi - Silk Road plan. Hence, perhaps, the gramme may have more covert u t e r s dent Abdulla Yameen said after visit of Japanese Prime Minister goals. n 13 Week in China China Consumer 19 September 2014

Needs a boost Supplement firms hope for China boom

ong before Shi Yuzhu made bil - South Korea’s Kim Soo-hyun from Llions selling online games, he My Love Who Came From the Stars . earned his first fortune flogging In an interview with Global En - health supplements. The founder trepreneur, Nature’s Bounty’s Xia and chairman of gaming firm Giant says the biggest challenge with Interactive, who is reportedly worth China’s supplement market is dis - $3.5 billion, founded Goldpartner, tribution. In markets like the US and still one of the leading supplement Europe, there are plenty of outlets Tang Wei: supplementing income makers in China, back in 1994. for people to buy dietary pills, in - Shi said he used to travel the cluding supermarkets, food and ularly as a habit, he says. In China country pushing his multivitamins health product stores, or pharma - clients more usually buy them as and other boosters under the Brain cies. In China, the choice is more re - gifts for friends and relatives. Platinum brand. In 2002, he sold stricted, primarily to pharmacies. Moreover, obtaining approvals part of his stake in the business for And worse, the pharmacy market is from the State Food and Drug Ad - Rmb700 million ($114 million), fragmented. Most large drug store ministration is a time-consuming which he later used to fund Giant chains are regional players and have process for the supplement firms. Interactive. limited reach nationally. “In China, it’s not that simple and it Not everyone is as successful as Relying on pharmacies may also takes over two years to get the regis - Shi. The dietary supplement busi - give people the wrong impression: trations and can cost up to $60,000. ness is a surprisingly small market, “Pharmacies are really not an ideal And all the testing has to be done on worth about $13.4 billion in 2013, place to sell dietary supplements your product to get the registration. says Euromonitor. To put that in right now. The pharmacies are the So that’s kept a lot of companies out perspective, America’s market is places to buy medicines. And I think of the market and kept domestic reckoned to be worth $37 billion. that’s one of the big education prob - companies from investing in the sec - That’s a challenge that has be - lems as to why Chinese people will tor because it is quite expensive,” come plain to American firm Na - typically see dietary supplements Crowther complained to China Ra - ture’s Bounty, which has US rev - more like a medicine and as some - dio International. enues of about $2 billion. The thing that can cure and treat dis - Still, for supplement makers, company, which is owned by private eases. And that’s not what they are there is bright spot in sales terms. equity giant Carlyle, has been oper - for,” says Jeff Crowther, executive Jing Daily has reported that sales of ating in China since 2008. But ac - director of the US-China Health supplements for children have been cording to Xia Junbo, the head of Na - Products Association. expanding rapidly. As income rises, ture’s Bounty China, its Chinese As a result, supplement firms like more Chinese are showing willing - revenues are Rmb400 million an - Brain Platinum and Amway rely on ness to spend larger amounts on nually (about $65 million). By com - direct sales forces to do most of the their children, and supplements parison, Amway, the largest player, selling, accounting for about 60% of sales are reaping a dividend. had sales of Rmb27.1 billion last year. supplements sales in China. Xiao “I think my investment is worth - To drum up interest in Nature’s says this business model is more while if my child is able to achieve Bounty’s offering of vitamins, slim - costly, which pushes up the price of his academic goals while maintain - ming aids, protein powders and well - the supplements. Perhaps that ex - ing good health. I think many par - P h o t

o ness pills, it has invested heavily in plains why supplements are viewed ents are of the same opinion,” one

S o u r advertising, hiring the actress Tang as luxury items by many Chinese parent told China Radio Interna - c e :

R e Wei – to promote its collagen-based consumers. In other markets, cus - tional of their decision to buy such u t e r s natural beauty tablet – as well as tomers take supplements more reg - supplements. n 14 Week in China Society and Culture 19 September 2014

That sinking feeling After a six year hiatus, director John Woo unveils new big budget film

n 2008, director John Woo un - Iveiled Red Cliff , a two-part epic about the Three Kingdoms Period (we reported on it in WiC’s first issue). It was widely rumoured that Woo split the film into two because he ran over budget (and needed a sequel to cover his costs) and be - cause he couldn’t bear editing down the original footage. But no matter, it turned out to be a smart commercial decision. The two-part Red Cliff franchise went on to make Rmb600 million (almost $100 mil - lion) in China alone. Almost six years – and 252 issues – later, WiC has another chance to write about Woo’s work. And once more he has decided to cut the pro - duction into two. The first instal - ment of period drama The Cross - ing will come out in December, with the second part due for re - lease next May. Like Red Cliff , Woo’s latest offer - ing has run over budget, says Mod - ern Life Daily, which is why he wants film fans to make two trips to the cinema. Based on a true story, The Cross - ing follows the lives of three cou - ples whose lives intersect aboard the Taiping, a steamer that sinks after a collision with a cargo ship in 1949. It features an A-list cast that includes Zhang Ziyi: stars in new Titanic -esque blockbuster The Crossing Zhang Ziyi, Takeshi Kaneshiro (who played Zhuge Liang in Red Cliff ) and of a soccer field to film the water and disaster, they finally find hap - South Korean actress Song Hye-kyo. scenes, an idea inspired by his visit piness,” says Woo. “But this is not a It is believed to have cost more than to the set of Lee Ang’s The Life of Pi , happy or sad story. It is a romantic Rmb400 million to make, a lofty which was filmed in a 6,750-tonne story of hope, and has a lot of ac -

P sum by Chinese film industry stan - water tank in Taiwan. tion, drama and humour.” h o t o

S dards. The studio built a replica of “This is an epic love story span - The steamer from Shanghai sank o u r c e the doomed Taiping steamer and ning 50 years of modern Chinese en route to Taiwan, killing more :

C F P Woo used a pool about half the size history. [Three couples] survive war than 1,500 passengers. It was ferry - 15 Week in China Society and Culture 19 September 2014

ing travellers from mainland China But Woo denies the comparison. to Taiwan as they sought to escape He says that while Titanic was the civil war between the Kuoming - mostly a love story, The Crossing Hong Kong’s tang and the Communist Party. “Be - goes beyond an onboard romance. cause it was so chaotic in [China] at His film is more akin to Gone With “London Eye” the time, my father was coming to The Wind , he says, because it is a Taiwan to see if it was possible to story about love during a turbulent Hongkongers have been move here (Taiwan),” the son of one period. watching a new attraction go up immigrant told the Taipei Times. Expect a tear-jerker. Woo told the in the city. Located on the The ship, which left the port the Beijing Daily that he had trouble famous harbour, the observation night before the Lunar New Year, controlling his own emotions dur - wheel is set to be Hong Kong’s was sailing at night with its lights ing the editing of the movie. “These equivalent of the London Eye out due to a curfew. It collided with love stories are very touching. I am and promises spectacular views. a cargo boat near the Zhoushan Ar - only just realising that I’m probably Construction has been rapid in chipelago, which is off the coast of better at capturing female romantic recent weeks and the Apple Daily thinks it could open next month. Zhejiang province. It sank quickly. sentiments than doing big action Designed to carry 580 people, about films,” says the director. three times that number had boarded. Many of the passengers – often from affluent families – may also have loaded large quantities of silver and gold below deck, unbal - Jump for joy? ancing the ship during the collision. Hurdler’s new bride gets “I saw the other ship sinking unflattering reception online quickly into the sea. I stood on a ladder on the side of our ship and o crushing was the sense of dis - dragged people up from the water Sappointment when hurdler Liu – I managed to pull about 10 up. Xiang dropped out of the Beijing Then I saw that the water had come Olympics in 2008 that Dayron Rob - up to my knees and I realised our les, a major rival, felt he should offer ship was sinking too. My mind was a few words of advice. blank; I thought I might die,” Yip Liu should find a girlfriend, the Lun-ming, a survivor of the Cuban hurdler suggested. “It’s time tragedy, told the South China for him to do it. Life is not all about Morning Post in 2002. tracks and hurdles.” As many as two million refugees Liu has just gone one better than like Yip moved to Taiwan in the Robles suggested, marrying the ac - same period, an island with a popu - tress-and-model Ge Tian. Last week lation of just 6 million before the he posted a weibo photo of himself migration from the mainland. and Ge leaning against a set of hur - Kuomingtang-affiliated histori - dles. “The thing [i.e. the hurdle] and ans have long compared the Taip - the girl I love most,” he wrote, with ing, which made multiple journeys his father later confirming that the to the island before its tragic end, to two had tied the knot. the Mayflower for its role in bring - News about the marriage soon ing immigrants to Taiwan. But oth - spread online, with most of the at - ers wonder if Woo had another ves - tention centred on Liu’s bride. It was sel in mind. IndieWire, a film blog, revealed that Ge had worked as a calls the project “John Woo’s Ti - cover girl for fashion magazines and tanic ”, for instance, while Tencent has also performed in television se - Entertainment reckons much of ries since graduating from Central the film could prove similar to the Academy of Drama in 2012. But James Cameron classic. most of the interest in Ge was about 16 Week in China Society and Culture 19 September 2014

Unknown a week ago, now a household name in China: actress Ge Tian with new hubby Liu Xiang

her looks, with immediate specula - as service people are not allowed to wondered. “Anyway, we can help tion that she has undergone plastic go abroad.” him take care of the child.” surgery (allegedly in South Korea). Still, that didn’t seem to stop There were other sympathetic After millions of ‘human flesh other speculation about Ge’s former voices about the newlyweds too. searches’ online, netizens were lovers or gossip that the nuptials “It’s so common for actresses to go soon uncovering less flattering im - were brought forward because she is under the knife. Is it so wrong to ages of the bride when she was pregnant. want to look pretty?” one weibo younger, prompting claims that Some of Liu’s fans fear that mar - user asked. “As long as the couple is she’d gone under the knife. riage will distract him from his ath - happily married, that’s most im - “She may look like Angelina letic career (the hurdler has been portant.” Liu’s friend, Olympic gym - Jolie but the difference is Jolie’s sidelined with an Achilles injury). nast Feng Zhe, also voiced his sup - features are all natural and hers Not so, said an official with the port: “Brother Xiang is married so are fake!” one netizen said. “She Sports Bureau, who told Sina Sports we should give him our blessings. doesn’t deserve Flying Man [Liu’s that Liu was back training a week But instead netizens are so critical nickname]. I just can’t accept it,” an - before the marriage took place. of his wife. I don’t think we are in other wrote. “If he wants to retire, why is he any position to make these irre - Ge’s mother refuted the surgery busy training himself?” the official sponsible judgements about some - rumours. “All the charges about my asked. Liu’s father also denied that one else’s spouse.” daughter have no basis,” she told the athlete would soon retire, al - Liu, meanwhile, hopes that neti - Sina. “Both my father and my hus - though his reasoning won’t have zens will give the couple a break: “I band’s father used to be servicemen, done much to calm the gossip about think love beats everything else.

P and now Ge Tian is also a service - Ge’s condition. Now I feel more of a man. I have to h o t o

S woman working at the Air Force - “Why do people think getting shoulder greater responsibilities to o u r c e League. It is impossible she went to married and giving birth to baby take care of my family. I hope every - :

C F P

South Korea to have plastic surgery will affect his training?” Liu senior one around me will be happy.” n 17 Week in China And Finally 19 September 2014

Pitch battle Football clubs furious at soccer field seizures

hen David Beckham visited cal streets were even paved with fu - WChina last year in his new nereal flowers. No more kick-offs at Lotus Hill role as ambassador for its national Fans say that the city already football league, he said that the Chi - lacked playing venues and that the a State Council meeting on acceler - nese must focus on promoting loss of the Lotus Hill fields makes it ating the development of China’s grass roots football instead of lav - even harder for teams to find places sports industries. So the Lotus Hill ishing money on foreign talent (his to play and practice. demolition looks embarrassingly own ambassadorial fee excepted, no The problem is that Lotus Hill timed, it says. The newspaper also doubt). sits on 50,000 square metres of believes that the central govern - That meant more youth football prime real estate. Yangcheng ment might rezone areas like Lotus academies and – above all – more Evening News estimates the land is Hill as ‘sports industry land’ as a football pitches to play on. worth as much as Rmb20 billion means to stop local governments Beckham’s advice seems to have ($3.2 billion). By contrast, teams from selling them to developers. fallen on deaf ears in Shenzhen. renting a pitch pay Rmb500 a ses - School sports fields are often at Rather than building more pitches, sion. risk too because land near schools is the authorities there have just Xinhua points out that football often high-value (parents want to closed down a popular playing pitches are under threat in most live nearby get priority status for venue called Lotus Hill. According major Chinese cities. For historical their children as students). Around to the Shenzhen Evening News 300 reasons sports facilities are often in the same time that the Lotus Hill amateur teams used the facility, central locations and near good closure was causing a hoopla online, which boasted six grass pitches. transport links. That makes the land another much-viewed photo doing However, when teams called up to they sit on very valuable and a huge the rounds on the internet showed book the pitches late last month, temptation for the local govern - one school in Zhejiang that had re - they were told the venue was no ments that need revenues from land located its 200-metre running track longer available as it was to be rede - sales, as well as the boost in local onto its roof. veloped into a residential-cum-com - economic activity from new con - Soon dubbed ‘the air playground’, mercial complex. struction projects. the unusual arrangement soon gen - News of the decision spread But Xinhua also suggests that the erated comments from netizens. quickly online. Footballers turned Lotus Hill closure runs counter to “Poor Chinese students,” said one. up at Lotus Hill with banners new government policies. On Sep - “Your playground has been robbed protesting against its closure and lo - tember 2 Premier Li Keqiang chaired by developers.” n

IMF boss speaks out on China’s role

“The under-representation of China and other emerging markets is just not right. Not right!”

* IMF boss Christine Lagarde tells the Financial Times that she considers it an anachronism that China P h doesn’t have a bigger say on multilateral issues but that reform plans have failed to be ratified by the US o t o

S Congress. She adds: “This is very frustrating. I spent a lot of time with members of Congress last year o u r c e trying to to show them how ridiculous it is to stand in the way of change. I will keep pushing.” Christine Lagarde :

C F P

18 Week in China The Back Page 19 September 2014

Photo of the Week In Numbers Rmb500 billion The amount injected into the country’s banks this week. Sina, a portal, reported that the People’s Bank of China started channelling the cash to China’s five biggest banks for a three-month period. But the credit expansion is said to stop short of broad-based stimulus that risks increasing dangers from bad loans.

P 1.10% h o t o

The decrease in the average price of new S o u r

c homes in 70 cities in August compared e :

e with a month ago. It is the fourth straight u t e r s month home prices have dropped in China.

The rate of decline is also faster than the Electric atmosphere: battery-powered Formula E cars race during a previous months. Home prices dropped Formula E Championship race in Beijing last weekend 0.89% month-on-month in July and 0.47% in June.

Heilongjiang 47% Where is it? The proportion of Chinese worth $1.5 Some of the places referred to in this issue billion or more who have said they want to move overseas in the next five years, according to a recent survey of 2,000 high- Beijing net worth individuals.

30 China The number of Rolls Royce cars that tycoon Shanghai Stephen Hung has purchased to ferry Zhejiang guests to his Macau gaming complex. His Louis XIII hotel is due to open in 2016. A Fuzhou penthouse suite will cost about $130,000 per night. Guangzhou Hong Kong

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