1 Talking Point 5 The Week in 60 Seconds 6 Energy and Resources Week in China 7 Internet and Tech 8 Economy 10 China Consumer 11 Media 12 Auto Industry 14 Banking and Finance 4 March 2011 15 Society and Culture Issue 97 19 And Finally www.weekinchina.com 20 The Back Page

Gaddafi’s latest shock m o c . n i e t s p e a t i n e b . w w w

y b g u in Surprise as Beijing votes for sanctions in unanimous vote by UN Security Council o k y n o a t B s t l t h a e g b k u o r o l a r G M B C d B n S a H Week in China Talking Point 4 March 2011

Beijing’s bold vote Why China broke with foreign policy tradition at the UN last weekend

Gaddafi: he must have realised he was in serious trouble when Beijing joined unanimous Security Council vote

he last time Tobruk and Beng- That’s because they have be- lutions too. As China-watchers are Thazi hit world headlines was in come the focal point of opposition keenly aware, this marked a major the 1940s when the Libyan cities re- to Libyan dictator Muammar break with the country’s foreign peatedly changed hands in the Gaddafi, in the two-week-old revolt policy traditions. Desert War. First the Italian army against his rule. Gaddafi’s military surrendered them to the British. response to the crisis has seen him Why was it so significant? Then they fell to Rommel’s Panzers, condemned by America and Eu- For the past 30 years or so a funda- before being recaptured from the rope, and the UN Security Council mental principle has underpinned Germans by Montgomery’s Allied voted unanimously last Saturday China’s dealings with other coun- forces. As Winston Churchill made for sanctions against his regime, tries. Partly because of its own sen- clear in his history of the Second including an arms embargo and a sitivities related to Taiwan, China has World War, the two locations had freeze of his overseas assets. And refused to support UN resolutions critical strategic importance in the for the first time, the UN referred that it regards as interfering in the North African campaign. a case of state violence to the In- domestic affairs of sovereign states. Now they are back in the global ternational Criminal Court. A similar approach has guided its Photo Source: Reuters spotlight – and like Churchill, But what made the decision all foreign policy principles in general. China’s leaders have quickly dis- the more noteworthy: rather than WiC has discussed this approach at covered they are strategically im- abstaining (as was expected), the length and some of its consequences portant too. Chinese voted in favour of the reso- in Africa (see issue 91). 1 Week in China Talking Point 4 March 2011

The principle was forged by Deng Xiaoping around 1978 (and ran counter to Chairman Mao’s ap- proach – he, after all, liked to disrupt the domestic affairs of foreign lands with revolutions). But for Deng, and all his successors, the new approach fitted well with China’s narrative on its own “peaceful rise” onto the in- ternational stage. Hence the signifi- cance of Saturday’s vote: by raising its hand in favour of the measures against Gaddafi , the non-interfer- ence doctrine was breached. Indeed, bloggers in China were quick to point out this was a big deal. A writer with the pseudonym Flying Horse wrote of his own shock on his weibo (a local Twitter-like service): he wittily said he’d envisaged that China would vote with other Secu- rity Council members on these types of issues “only when mankind faced the invasion of aliens!” Another blogger, with the moniker Citizen Xu Fan, pointed to the TV footage from the UN in New York, noting the body language of China’s ambassador, who seemed to raise his hand in “a very reluctant and heavy manner” – the weight of history appeared al- most palpably on his shoulders.

So the decision was a surprise? Yes, and state media was very careful in covering it. For example, the Shanghai Daily managed to run an entire story on the resolution vote without mentioning China or how it voted. None of the newspaper edito- rials seemed keen to comment di- rectly on China’s apparent about-face on sovereign non-intervention either. In fact, Beijing has backed the UN on sanctions before (those that re- late to nuclear proliferation) – but to the point where China has wa- tered-down measures to ensure they don’t violate the sovereignty of Iran and North Korea. On no occa- sion has its vote – like that on Satur- day – been tantamount to a call for regime change. 2 Week in China Talking Point 4 March 2011

The bit of Libya that China cares about most? China’s buys 10% of Libya’s oil output...

Indeed – historically – Beijing mented (its own ambassador to the one of the first to begin evacuating hasn’t thought human rights viola- UN endorsed the sanctions), mak- its citizens. tions justified interfering in another ing Beijing’s decision slightly less Once again the Chinese were state’s internal affairs: witness uncomfortable. shown to be adept at crisis man- China using its veto to block action agement (some of its nationals in against Zimbabwe, Myanmar and What’s at stake, business-wise? Libya had posted messages like Sudan. Why the policy shift now? A lot. According to Reuters, China is “Motherland, please save us” on Back to the blogs for one interpreta- working on 50 multi-million dollar the web, adding to the patriotic tion: “China has finally cast an affir- projects in Libya. These include $10 mood) and for the first time, Bei- mative vote, making so many people billion worth of rail lines being jing sent a navy vessel to take part rejoice,” wrote Tong Zongjin. “But I built by China Communication in the civilian rescue. With char- think the meaning may be over-ex- Construction and China Railway tered ships and aircraft, more than aggerated. The vote is more based on Construction Corp; a $4 billion irri- 20,000 Chinese citizens had been consideration of practical interests, gation project undertaken by China evacuated by last Sunday. It was all and this time China basically felt Civil Engineering Construction; something of a contrast, thought that when a wall is about to collapse, plus millions of dollars worth of the UK media, to its own govern- everybody should give it a push.” housing projects, mobile phone ment’s shambolic response to res- That’s to say, the leaders in Bei- networks and the like. cuing its nationals. (The Guardian jing may have concluded that Then there’s the oil. China buys described a “haphazard rescue Gaddafi’s days are numbered – and 10% of Libya’s oil exports, reports mission” and reported that Prime therefore its own economic inter- Foreign Policy, and CNPC, China’s Minister David Cameron had made ests would be better served by vot- biggest oil firm, is active in Libya an “unequivocal apology for the ing at the UN in a way that didn’t too, exploring for oil off its north- failings that left British citizens alienate it from a successor govern- west coast. stranded in Libya”.) ment. (Whether this was the right Thousands of Chinese nationals calculation remains in the balance – are associated with these projects. Signs of a new foreign policy era? six days after the vote the BBC was Xinhua reported that more than Not so, according to a Chinese for- reporting that a “military stale- 36,000 Chinese were working in eign ministry spokesman, who in- mate” between Gaddafi and the Libya when the unrest began sisted that the non-interference Photo Source: Reuters rebels looked increasingly likely.) (they’re employed at 75 different principle remains “one of the pillars Perhaps it helped too, the Wall firms). So when it got violent – of China’s foreign policy”. Street Journal argues, that Libya’s CNPC says its own sites were at- Of course, with its thirst for nat- government appears so frag- tacked, for instance – China was ural resources, China has often 3 Week in China Talking Point 4 March 2011

been willing to invest in states that the US and Europe have categorised as authoritarian or corrupt. Critics Planet China claim that guaranteed access to oil Strange but true stories from the new China or ores trumps other concerns. But perhaps that guarantee will FLUSH WITH CASH. Chinese public lavatories are among the most be looked on a little differently now. unpleasant in the world, a fact that WiC may have mentioned before. But a The Libyan revolt has already led to new shopping mall in Chongqing has got internet users talking with the economic losses for 27 Chinese unveiling of a loo that is super clean – but not exactly public. According to firms, reports Xinhua, with facilities Xinhua, the Xingguang 68 luxury mall has a locked toilet that requires a swipe card for entry. But in order to use the VIP facilities, guests must ransacked or damaged. spend over Rmb5,000 (and on one item, no less). Mall executives reckon it This has led some to debate the is a first for the Chinese retail environment, although netizens have labelled merits of the erstwhile ‘no- it “the toilet you cannot afford to use”. In an online poll, 89% expressed strings-attached’ approach. Cui strong dissatisfaction with the whole idea, finding it discriminatory. For Shoujun of Renmin University Chinese leaders – worried by the increasing gap between rich and poor – told Reuters that many of China’s the luxury loo may not be a welcome development, unless they happen to energy projects in Africa were be out shopping in Chongqing, of course (for more on the theme of income based on bilateral ties between inequality see page 16). two authoritarian regimes rather than rational business contracts in which political risks were fac- with autocrats has suddenly be- ship more engaged with its global tored into the equation. come more tangible, thanks to the responsibilities. Beijing has gener- “This sort of relationship is very economic fallout from Libya. ally been cautious about entering vulnerable to their domestic up- More widely, Beijing’s response such a debate but with so much heavals,” Cui said, and added: “This to the Libyan crisis points to a more commercial skin in the game, is a risk that can take away all your changing international backdrop, that will probably have to change. potential gains, and knock down in which it is increasingly difficult Sailing frigates into the Mediter- overnight all you have built over for the Chinese to expand their eco- ranean, and organising airlifts, also the years – through a new govern- nomic interests without taking on highlights the limits of staying ment decree or simply a change of more of an active role politically. aloof. The days of China keeping its government.” Indeed, other countries have ‘head down’ are over, the Financial Put simply, the price of dealing been calling for a Chinese leader- Times agreed this week. n

Slowing growth

It’s official: China’s population has reached 1.34 billion. The National Bureau of Statistics this week revealed the updated data, pointing out that over the past year the population had increased by 6.3 million – at the low end of demographer forecasts. The Shanghai Daily termed it “a modest jump for a massive population” and mentioned that it was leading some experts to suggest a relaxation in the generation-old one-child policy. The Associated Press quoting Cai Yong at the University of Carolina, also warmed to the theme, saying that the

Illustration: www.benitaepstein.com population is now growing mainly because people are living longer. Cai also says more births are needed to cope with a growing elderly demographic – around 450 million Chinese will be over 60 by 2050. Unless China’s birth rate increases its ranking as the world’s most China reveals new population statistic populous nation will be ceded to India in 2025.

4 Week in China The Week in 60 Seconds 4 March 2011

A lot to talk about The major news items from China this week were...

The first of China’s two major annual meetings got 1under way this week. The Chinese People’s Political Consultative Conference’s will discuss the country’s latest five year plan. It’s due to be followed by (the more important) meeting of the National People’s Congress (the country’s parliament) at the weekend. Social issues like affordable housing are rumoured to be high on the agenda.

The dominoes haven’t stopped falling in China’s 2high-speed railway corruption scandal. A week after disgraced minister of railways Liu Zhijun was sacked (re- portedly for taking $122 million in bribes), the ministry’s Train wreck: railway probe sees yet another arrest deputy chief engineer Zhang Shuguang followed him out the door. Cirrus was the largest maker of piston-powered aircraft Like his former boss, Zhang faces a graft investiga- in the world last year – and should the deal meet gov- tion. Given he is a senior engineer, it will also raise ques- ernment approval, it would be an unusual case of a Chi- tions about whether quality was sacrified for personal nese firm manufacturing in the US. gain in procurement procedures. Sino-US mineral rivalry heated up this week as Shanghai is upping its minimum wage a further 14% 5Hillary Clinton, US secretary of state, told a Senate 3starting this April (to $195 a month), as competition committee that the US is “in competition with China”. intensifies for migrant workers. Some analysts are even She cited rivalry on a liquefied natural gas deal in predicting minimum wages could double over the next Papua New Guinea, saying the Chinese wanted to five years, as labour shortages get worse. (The standard “elbow” Exxon Mobil out of the $15 billion project. in many provinces is currently around $150 a month). Bright Food is at it again. This time, the state-owned A subsidiary of state-owned Aviation Industry Corp 6food maker is making a bid for French yoghurt 4of China announced its acquisition of Duluth Min- brand, Yoplait. WiC highlighted its repeated failures to nesota-based airplane maker Cirrus Industries this week. acquire major overseas food assets in WiC93 (Talking Point, ‘They suck us like vampires”). According to the Financial Times, Bright Food is once again the highest bidder, but it will need more than just the approval of private-equity firm PAI, selling its 50% stake. The farmers’ cooperative that owns the other half of the company, Sodiaal, as well as the French govern- ment, are likely to influence the deal’s outcome.

Taiwan and China’s economic embrace just got tighter. The island’s Ministry of Economic Affairs has

Photo Source: Reuters 7 released new rules allowing Chinese investment in sev- eral industries, including its tightly guarded LCD TV and microchip sectors. However, shareholdings will be Fourth time lucky? Bright Food’s bids for Yoplait capped at 10%. n 5 Week in China Energy and Resources 4 March 2011

All hands to the pump... Double dip back on the agenda, as oil price surges?

he National Geographic doc- inflation. Not too much, says Tumentary Aftermath: World Deng Yusong, an economist at Without Oil predicts a bleak fu- the Development Research Cen- ture for the day we finally run tre, who told Hexun.com that out of liquid fossil fuels: power the weighting of oil in China's cuts, famine, martial law and the consumer price index was too like. Of course, that’s still far off, small to push the inflation but the ongoing unrest in the gauge up signficantly (Reuters Middle East is now having a estimates that prices for fuel, in- more immediate impact on oil cluding oil, account for just 1% of prices. US gasoline prices are up the CPI basket). 25¢ a gallon, for instance, and But others say this overlooks Spain is even reducing speed lim- the impact of the oil price on the its to encourage more economi- cost of food, with increases in cal consumption. farming expenses, as well as the What about the impact in transportation costs of agricul- China? About a tenth of Libya’s tural commodities. Food’s own oil goes to the Chinese (about weighting in the CPI basket was 150,000 barrels a day last year) and Next stop, $220 a barrel? reduced last month, but it still ac- the uprising has already seen Libyan counts for close to a third of the production fall by half. Saudi Ara- though China has tried to prepare in calculation. bia eased wider anxiety last week by other ways, steadily building up its How might the government re- promising to supply the shortfall. oil holdings from 16.3 billion barrels spond? HSBC China economist Qu But analysts have also predicted in 2008 to 20.35 billion barrels at Hongbin warns that oil at $150 a bar- that even if just Libya and Algeria the beginning of last year. That’s rel could add 2.5% to headline infla- were to cease production, oil could largely due to a buying spree by tion. But he also thinks that China is hit $220 per barrel. Fears of further China’s state-owned giants CNOOC, better placed than many of its coun- cuts to supply propelled oil futures Sinopec and PetroChina. terparts to withstand an oil shock. (for Brent Crude) to $120 a barrel last But China’s dependence on oil “China’s government has deep pock- week, the highest since oil peaked imports is also growing. Domestic ets to pay subsidies to offset higher at $147 in July 2008. production has been more or less oil prices,” Qu says. That makes it instructive to take a stable (around 4 million barrels per Longer term, of course, the in- look at how China fared during the day) but the country consumed 10.2 creases in oil price reinforce Wen Ji- last major oil spike: within a few million barrels a day in November abao’s call for a new focus on a months exports were down and mil- last year (way up on the 7 million higher quality of GDP growth (see lions of factory workers were laid off recorded in 2008). page 8). Further support: Gavyn because of recession in the US and That shouldn’t come as any sur- Davies, writing on FT.com last week, Europe. But GDP still grew more prise: just take a single datapoint as highlighted that the higher energy than 9% in the year after – thanks to an example –there are over 30 mil- intensity of emerging economies Photo Source: Reuters liberal bank loans and an unprece- lion more cars on the road today means that a $20 per barrel price in- dented $586 billion stimulus plan. than there were in 2008. crease costs them about 1.1% of GDP, A similar stimulus effort would One immediate question is what compared with 0.8% for the devel- be unlikely this time around, al- higher oil prices mean for Chinese oped world. n 6 Week in China Internet and Tech 4 March 2011

Launch problems Groupon in gaffe as it enters China market

f you were about to launch a busi- ment from the members and sends Iness in China, would you air a TV out a voucher (a “groupon”) in re- ad that makes a jibe about Tibet? In turn, taking a small commission on all likelihood, probably not. the transaction. But Groupon, the US-based com- Chinese internet users have Regrets that fish curry: Hutton pany that helps group buyers get proved receptive to the idea of discounts, decided that it would group-buying. In 2010, the number but saw it more as a tool to attract give it a go, spending millions on a of domestically run group-buying younger, affluent users to its portal, commercial broadcast during this sites climbed from none to 2,162, as a complementary product to its year’s NFL Super Bowl. In it, actor and analysts estimate that the sec- other offerings. Timothy Hutton mused that the tor will surpass Rmb16.5 billion That probably explains why “people of Tibet are in trouble”, be- ($2.5 billion) in sales this year, says Taobao, which already controls over fore going on to make a crass joke portal Tuan800.com. 70% of China’s e-commerce mar- about them still whipping up an Groupon says that GaoPeng.com ket, is also tweaking its approach amazing fish curry. will offer discounts at shops in to group-buying. China’s largest The ad certainly triggered a stir in China via daily emails. The service, online shopping site (see WiC94) China, with many slamming it as a which is only available in Beijing has an existing group-buying site bad business move. “Groupon is go- and Shanghai at the moment, will called Juhuasuan. ing to pay for it,” warned one Sina likely expand to other first tier However, it has focused previ- Weibo blogger. cities like Tianjin, Guangzhou and ously on offering products that can The timing of the commercial Shenzhen soon, says Southern Me- be shipped anywhere in China (for was truly baffling. This week tropolis Daily. example, a sweater). Now it seems to Groupon partnered with Tencent, Will Groupon succeed in a mar- be having a rethink, going more for China’s largest provider of instant- ket where so many American in- Groupon’s more local model. It an- messaging services, to start a Chi- ternet companies have failed? In- nounced last week that it will now nese group-buying site called dustry insiders are sceptical. Many offer more targeted services on its GaoPeng. “The collaboration com- say Groupon is in for a culture site (like a restaurant deal to the first bines Groupon’s global group-buy- shock in China. In its home mar- 20 Shanghai residents who respond ing experience with Tencent’s in- ket, Groupon keeps up to half the to the offer). depth knowledge of Chinese online value of the discount coupons sold, Unlike Groupon, Juhuasuan lets communities,” was the spin. Pity but that margin is significantly merchants submit their promo- Tencent didn’t have right of veto lower in China. tional offers free of charge (it earns over that Super Bowl ad (which has “They will have to say goodbye revenue from premium services for been panned as unfunny by many to the 50% margins they are used to merchants such as keyword adver- Americans too). in the US – here, margins at the tising, says the Wall Street Journal.) WiC first reported China’s ap- strong companies are maybe about If that strategy sounds familiar, petite for collective buying back in 10%, and for many smaller firms that’s because Taobao used the same issue 83. The way it works is that they are in the single digits,” says commission-free model to overtake group-buying sites partner with lo- Ding Yongxin, head of the group- eBay’s Chinese site, leading the US cal businesses in major cities to of- buying site of Sohu, China’s sec- internet giant to pull out of China in fer discounted items like movie tick- ond-largest online news portal. 2006. Groupon is going to have to ets to yoga lessons. Once a certain Ding also told the Financial Times flex some serious muscle to beat number of people sign up for the that Sohu did not need the group- China’s e-commerce giant on its deal or service, the site collects pay- buying operation to make money, home turf. n 7 Week in China Economy 4 March 2011

For my next trick Wen lowers GDP targets

t was during one of his ‘fireside investment and an economy often Ichats’ that Franklin Roosevelt geared towards exports. Together, first introduced his American lis- they’ve made China into the second teners to the New Deal in May 1933. biggest economy globally. China’s prime minister may have In his online chat, Wen admitted had something similar in mind this that changing China’s growth pat- week – albeit using the internet terns won’t be easy, particularly as rather than the radio to communi- local officials will need a lot of con- Mr 7%: what Wen wants cate a new philosophy of his own. vincing. Wen Jiabao has conducted a cou- “We need to make every local gov- the flak (he leaves office next year). ple of online chats before, but his ernment know that the key impe- But there is also little reason to ques- comments this year returned to the tus of economic growth lies in sci- tion Wen’s commitment to a more sus- heart of China’s economic model, entific and technological progress tainable rate of development. The ques- making them especially worthy of and in boosting domestic con- tion is more – as Wen himself admits – note. Some of the sentiment re- sumption,” he warned. whether local officials can be primed to turned to familiar themes: that the Wen added that the central gov- aim for more quality over quantity. country should “no longer sacrifice ernment will adopt new perform- Century Weekly magazine, for one, is the environment for the sake of ance evaluation measures for local sceptical that they can be weaned off rapid growth and reckless roll-outs”, governments, that tilt incentives their GDP steroids, noting that detailed as well as warnings against indus- away from judging their success by blueprints have already been submitted trial overcapacity and excessive re- GDP figures alone. The new crite- by provincial and municipal govern- source consumption. rion, he says, will assess the local ments for investment over the coming But the underlying premise – bureaucrat more in terms of five years, and few offer evidence of ditching the philosophy of growth “whether the public are happy or much attention to the new thinking. for growth’s sake – seemed more not… but not by how many high- “Among 26 provinces, municipali- pronounced. rise buildings and projects he has ties and autonomous regions that held And that led Wen to revise down- been involved in.” legislative meetings in January, about wards the country’s growth targets. Setting aside quite how Wen 10 have drafted ambitious plans to Over the past five years China has plans to measure his fellow citizens’ double their respective economic out- seen GDP rise around 10% per an- happiness, will his plans for a 7% put by 2015, or an equivalent of around num. Over the next five, Wen says, theshold gain traction? Or like his 15% annual GDP growth,” chides Cen- the leadership wants to see a more repeated calls for house prices to tury Weekly. ‘sustainable’ growth rate of 7%. fall, will they amount to little? Even Wen’s hometown of Tianjin The timing of Wen’s announce- Of course, as China’s GDP climbs seems addicted to the growth fast track. ment is no accident. Tomorrow, each year it becomes much more The municipality grew GDP 17.4% last China’s parliament, the National difficult to maintain the heady an- year and is on Century Weekly’s list of People’s Congress (NPC) begins its nual growth of the last two those setting a double digit growth tar- annual session, and this year it will decades. The law of large numbers get for the next five years (i.e. far in ex- approve the latest Five Year Plan. says growth rates must eventually cess of Wen’s 7% figure). The message is that the plan’s latest slow of their own accord. Wen HSBC’s China research team agrees it Photo Source: Reuters iteration will tweak the nation’s doesn’t want to see the leadership will be a challenge: “We remain confi- growth model – one that for the past committed to targets that it knows dent that Chinese GDP will overshoot three decades has focused on rapid it can no longer reach, even if he target again in the coming five years. We industrialisation, huge government may not be around himself to take expect growth to remain at 8-9%.” n 8 Week in China Economy 4 March 2011

The hot issues at the NPC Newspaper survey asks what Chinese parliament should discuss

hat are likely to be the hot is - Wsues on the minds of dele - gates at the National People’s Congress, which starts tomorrow and lasts till March 14? China Eco - nomic Weekly (CEW) and China News Service (CNS) ran an online survey to see what members of the public think should be top of the agenda at China’s parliament. The survey came up with key themes facing China’s political leaders:

Inflation . Probably the major 1issue at this year’s NPC, reckons CEW. Price stability, particularly food costs, also effects “social sta - bility” and is of paramount concern for the Party. In his recent online Delegates will assemble here... chat, Premier Wen Jiabao even claimed to “pay great attention to veins”. At the NPC the need for ‘af - harder to find jobs suitable to their [food] prices every day”. fordable housing’ is likely to be one qualifications; on the other that of the most discusssed topics. coastal factories can no longer find Income distribution . The grow - enough labour. 2ing gap between rich and poor Healthcare reform . It’s been a is another threat to social stability, 4year since Beijing announced Household registration reform . says CNS. Internet users have been sweeping reforms aimed at improv - 7WiC has talked a lot about the talking about reforms in personal ing the (dreadful) healthcare sys - hukou or household registration income tax in hope of a fiscal sys - tem, including more spending on system, which gives urban locals tem that redistributes China’s expanding coverage and lowering but not migrants access to basic wealth more fairly. Again, Wen prescription costs. There’s no quick services like schools. CEW says Wen mentioned this in his online chat fix. New pilot schemes to create has talked about reform but will the saying “let us distribute the cake in ‘model public hospitals’ will be a NPC act on it? As reported in last a fair way”. possible talking point at the NPC. week’s issue, the capital city of Bei - jing is not keen, wanting to get rid Property prices . Another hot po - Education reform . CEW reckons of many migrants, rather than give 3tato, says CEW. The government 5that the public is worried by tu - them a local hukou . wants to get prices down, and has ition fees becoming more expen - repeatedly announced measures sive, and standards of teaching at Corruption . In the headlines P h o t o aiming to do so. But prices have re - universities falling. again after the detention of the

S 8 o u r c mained stubbornly high. Wen former railways minister. But ex - e :

I m

a roused debate ahead of the NPC by Employment . A paradox here, pect some talk about stamping it g i n e

C saying property developers needed admits CNS. On the one hand, out and warning Party officials h 6 i n a to “have morality running in their there’s news that graduates find it from temptation. n 9 Week in China China Consumer 4 March 2011

The politics of water Why a brand of Tibetan mineral water outsells the competition

he Repulse Bay, a luxury resi- have struck a chord with health ger bottling factory in Damxung, a Tdential project on the southern conscious Chinese. grassy plateau, to collect further shores of Hong Kong Island, was More importantly, the bottler glacial runoff. designed with a large hole through knows how to make its water seem With success, of course, comes its centre. The intention is to facil- more prestigious. Last year the com- competition. Several other water bot- itate a symbolic flow of water from pany struck a deal with Air China to tlers are now keen to compete in the a nearby beach through the struc- serve 5,100 bottles to passengers in high-end segment. Kulun Mountains ture. In feng shui terms, water first and business class cabins, and it Natural Mineral Water promises its brings money. is also the official drink at many own water, sourced from Qinghai One company in Tibet has been high-profile political events, includ- province, helps boost energy. particularly successful in turning ing this week’s National People’s Guangzhou Xinchen Water is pro- water flow into a lucrative business. Congress and CPPCC. Delegates at- moting its 9,000 Years Dagu Glacier Located in Damxung, about Spring Water (clever that, a bigger three hours from Lhasa, 5,100 number than 5,100 metres) can Mineral Water is now China’s only be better because of the age of largest mineral water producer. its Sichuan source. Its name comes from the altitude “The capacity of China’s pre- of the glacier that feeds its fac- mium drinking water market tory, 5,100 metres (16,700 feet) will surpass Rmb10 billion in the above sea level. next five years with an expan- 5,100 is also the only Chinese sion rate of 80% each year,” Xiao water bottler competing in the Mingchao, deputy general man- high-end segment against for- ager of Sinomonitor, a Beijing- eign labels like Evian and Per- based market research firm, told rier. At Rmb10 ($1.5) a bottle, it’s ‘It’s from a glacier – it’s classier’ the China Daily. priced three times higher than do- If Tibet does becomes a mineral mestic competitors and only tending these meetings are often water exporting giant, it owes a debt slightly lower than that of the for- photographed taking sips from bot- of gratitude to the Qinghai Tibet Rail- eign brands. But the high price tles with 5,100 labels. No doubt, such way. Before the opening of the new doesn’t seem to have deterred con- product placement was made possi- line, similar exports were commer- sumers. The bottler now produces ble by the fact that the powerful cially unfeasible because of the high more than 300,000 tonnes of bot- Central Party School (see WiC33) is a transportation costs. Yu Yiping, tled water a year, compared with major shareholder of the bottler. chairman of Tibet Glacier Water, the only 50,000 tonnes in 2008. 5,100 also plays on the patriotic parent company of 5,100, admits it So how does 5,100 manage to heartstrings, making the case that has been the single biggest benefi- pass as a high-end product? For a buying its water bolsters economic ciary of the new railway. start, it has been marketed cleverly development in Tibet. There’s some The railway has been kind else- as the purest, most nutritious bev- truth to that: 5,100 is now the au- where too. The company recently erage on earth (water derived from tonomous region’s fastest-growing signed an exclusive deal with the a 70 million-year-old glacier, the export, and almost all of the com- Ministry of Railways to supply water

Photo Source: CFP company claims, which then per- pany’s workers are Tibetans. on the country’s high-speed trains. colates underground for eight Local investment continues; Analysts reckon that will meet more years, before being tapped for its last year 5,100 spent Rmb500 mil- than half of 5,100’s annual sales tar- mineral richness). That seems to lion ($76 million) to set up a big- get, says 21CN Business Herald. n 10 Week in China Media 4 March 2011

Hu is right about cadmium? Spat between state media and nation’s most famed journalist

egendary Japanese filmmaker The magazine puts its detractors LAkira Kurosawa would have into two categories. First: “[those been rather impressed by the con- who] argued there was no news in flicting points of view. His pioneer- the finding… Contamination is so ing 1950 film Rashomon depicted a widespread, they said, that any re- murder from four different per- medial effort would be futile. So spectives – leaving the audience in why bother?” And next, those that some doubt on what really took claimed exaggerated reporting, place. The Chinese news media can “that soil pollution is not as serious sometimes be just as skillful in pre- as some claim.” senting its readers with rival ‘truths’. Instead, it insisted that the me- When we wrote last week about dia was obliged to sound the alarm reports of cadmium-contaminated on soil pollution, as the greatest rice, it was a fairly straightforward threat to food safety. “The authori- food safety story. But soon it was also ties should not… hide the truth or highlighting another important fact play down the problem for fear of of life in China: the often-stark dif- public panic,” it warned. ferences between ‘official’ media sto- Brave words, perhaps, for maga- ries and those from private outlets. Hu Shuli: “Fancy a fight?” zine still dependent on state ap- After the original story broke, sev- proval to stay in business. eral other newspapers quickly fol- the past year highlighting how heavy But Hu Shuli, the editor, has built lowed up with similar reports and metals (like cadmium) are affecting a career on testing the limits of the calls for action to be taken. But not water supplies. But neither seems censor’s patience, once telling an in- everyone was quite as enthusiastic – willing to go beyond the individual terviewer that “if it’s not absolutely particularly the state-run outlets. cases to present the contamination forbidden, we do it.” “Experts say [the] study should as more of a national issue. That editorial policy has made be taken with grain of salt,” wrote So is it a major problem, or an is- both Century Weekly and Caijing (the China Daily, going on stress that sue limited to a few areas? magazine she helmed previously) agricultural experts had said the Century Weekly, the magazine more successful than most. A string contamination was confined to par- that first broke the story, thinks it of scoops during Hu’s time at Cai- ticular regions and there was “no knows the answer. “It’s wrong to jing pulled in readers, including nu- call for panic”. shrug off reports of heavy metals in merous reports on cases of corrup- State-run Xinhua took a similar China’s rice,” railed an editorial, tion, coverage of the cover up of the line, even getting the author of the “and right to address the core SARS epidemic and the role of original study to weigh in. “In fact, causes of tainted soil.” Instead, it shoddy construction in the 2008 urban people need not worry,” said painted the state media’s response Sichuan earthquake. Nanjing Agricultural University as a form of damage control, point- Her editorial’s conclusion on the Professor Pan Genxing, “because ing out how “right on cue” sup- cadmium question is typically di- the rice we eat is from various ar- portive experts have denied that rect too: “In a sense, the official Photo Source: China Imagine eas.” (Rural people living close to any problem exists. “Meanwhile, mindset is polluted, and the gov- the polluted areas had much more both central government agencies ernment system needs a clean-up as reason to be concerned, Pan added). and local governments in charge of much as the farm soil laced with In fact Xinhua and the China Daily areas with heavy metal pollution heavy metals needs to be decon- have both run a series of stories over remained silent.” taminated.” n 11 Week in China Auto Industry 4 March 2011

China goes to Motown Chang’an Auto may have the biggest ambitions among local carmakers

otown and New Motor City the China Association of Automo- Mmay be almost 7,500 miles bile Manufacturers. That was the apart, and perhaps even more largest monthly total ever, al- distant in terms of their re- though the growth rate (in spective futures, but year-on-year terms) was down Chang’an Auto now has a on December last year. foot in both locations. Glass half-full or half- Which of the two will prove empty? Chang’an CEO Xu Li- the wiser investment? uping says there are plenty of As we have written previ- reasons to be cheerful, including ously in WiC, China wants to con- the continuing contribution of the solidate its expanding auto indus- BenBen: the cheapest car in China Rmb3,000 government subsidy for try around eight state-owned fuel-efficient vehicles, as well as the carmakers. Chang’an is part of a ‘big But it stands out from its peers wider economic growth now mak- four’ tier (along with SAIC, FAW, and for two main reasons. Although it ing car ownership a new reality for Dongfeng) and has been given the aims to produce 2.5 million vehicles millions of potential drivers. green light to expand and acquire in 2011, according to Chinese media Chang’an is also well positioned across the country. Below these ‘na- reports, as many as 1.9 million of in a number of second and third tional champions’ there’s a ‘smaller these will be self-branded (rather tier cities for the next wave of de- four’ group of BAIC, Guangzhou, than foreign brands produced in mand, say commentators, and by Chery and China HDT, which will joint venture partnerships). That focusing on sales of Chinese likely grow via regional acquisitions. makes Chang’an the largest manu- brands is doing something that Other state-owned carmakers (of- facturer of ‘Chinese’ vehicles, pri- pleases policymakers. ten with their own local govern- marily compact cars like the Ben- Xu now says his focus is more on ment shareholders) will find the go- Ben Mini (lauded at launch as ‘the the longer term, with a target to ing tough against the preferred elite, cheapest car in China’ at only raise annual sales to 6 million units although manufacturers like Geely Rmb30,000, or $4,566). The com- a year by 2020 (well over double last and BYD – generally considered to pany is also known for its ‘bread year’s production). The goal is to be privately owned – are expected to vans’ (mian bao che in Chinese) – 7 move up the rankings of the top be nimble enough to compete. to 8 seater minivans, said to look four grouping. However, among all the state- like local ‘bun’-bread. In preparation Chang’an has an- owned car firms it is Chang’an that Consumption-tax rebates on nounced it will be investing heavily, has been grabbing most of the smaller vehicles announced in primarily in a ‘New Motor City’ in the headlines recently. That’s because March 2009, as well as subsidies for company’s home municipality of it’s announced its intention to in- rural car buyers and incentives of up Chongqing. Total spend on the new vest this year in both Detroit (in to Rmb18,000 to trade in older mod- site will exceed Rmb35 billion (yes, an R&D centre) and Yuzui in els all helped to lift sales in both seg- that’s $5.32 billion), with a production Chongqing (to build a massive new ments significantly. But most of goal of 800,000 vehicles and 1.5 mil- manufacturing facility). those incentives have now been lion engines annually set for 2015. A Chang’an got into the ‘big four’, withdrawn, and analysts will be further seven cooperation agree- following the last round of consoli- watching the monthly sales figures ments have been signed with local dation in 2009 when it was given closely in early 2010. January’s num- governments for more production the automotive assets operated by bers are now out, with total vehicle elsewhere; Harbin in Heilongjiang is aerospace giant AVIC (see WiC42). sales up 13.8% to 1.89 million, says slated for 1 million vehicles in annual 12 Week in China Auto Industry 4 March 2011

throughput, for instance, and R&D centre in Detroit announced last Jingdezhen in Jiangxi will be ex- month, the first from a Chinese au- pected to deliver a similar number. tomaker in the American city. The fo- The critics see three main clouds cus is on chassis technology for mid- on the horizon, says China Business and high-end cars to be independ- News. One is that Chang’an is trying ently developed by Chang’an, accord- to grow too fast, and may not be able ing to the Global Times. to digest so many new projects. The The third challenge: the expan- concern is that the carmaker is get- sion plans will all require huge ting bigger but not stronger. funding and it isn’t clear where the A second concern is that the com- financing will be found. No doubt pany has an uphill struggle to com- the state-owned banks will be ap- pete in the higher-end segments of proached, local governments in the market. That feeds through into Harbin and Jingdezhen will no lower profitability: in 2010 Chang’an doubt help too. The listed company reported net profits much lower in also raised Rmb3.5 billion in a share percentage terms than its peer Xu: wants to sell 6 million cars placement on the Shenzhen stock group. Part of the response will in- exchange in January. Then again, the volve a review of its joint venture discussed). Xu is also looking at fur- placement raised less than antici- arrangements with foreign partners, ther investment in Chang’an’s own pated. Chang’an spokesmen blamed (currently there are tie ups with brands, which he hopes will allow adverse market conditions. But per- Suzuki, Ford and Mazda, with a new him to close some of the pricing gap. haps investors needed a little more deal with Peugeot-Citroen still being Hence the $30 million spend on an convincing about the strategy... n

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

As a young man, Liu Qiangdong had an A case of E-xpansion? interest in politics. But after graduating in Since going online, 360buy has enjoyed 1996 with a sociology degree from Beijing’s average annual sales growth of more than prestigious Renmin University, he instead 300%. The company is now one of China’s decided to go into business instead by largest online retailers, with a focus on the opening a restaurant. This first venture was three ‘C’s: computers, communication a failure: within a year the restaurant shut devices, and consumer electronics. In 2010, down, leaving Liu in debt. sales on 360buy reached Rmb10.2 billion. The target for 2011 is much more ambitious, Second time lucky with an upper range of Rmb26 billion. In 1998, Liu set up Jingdong Corporation in Zhong Guan Cun, an area known for its Cash injection electronics markets. Liu’s presence started Liu’s success has attracted investors. In off small – he got a counter in a market and December last year, his firm completed a became a sales agent for magnetic-optical round of financing of $500 million from a products. Not everyone was supportive, group including US retailing giant Wal-Mart. including his girlfriend at the time, who Much of the money will be spent on improving wondered how a graduate from Renmin the firm’s warehousing and distribution University could live such a life. Her parents network. Liu has said that there is no need of looked down on entrepreneurship too. Liu: great mall of China further financing until 360buy lists, which he Liu was not to be put off and by 2003, hopes will happen in 2013. he had plans to open a chain of stores Photo Source: China Imagine across the country. But the SARS crisis then made traditional In his own words retailing unattractive, as shoppers were avoiding stores for fear Liu claims that he has no business idols. He also resists of infection. Liu took the opportunity to launch e-commerce site comparing his company with others: “Every company has a Jingdong Multimedia Network in 2004, which eventually different corporate culture and is formed in a different became 360buy Jindong Mall, his most famous storefront. environment. No-one needs to learn from others.”

13 Week in China Banking and Finance 4 March 2011

Spending abroad Confusion reigns on overseas investment scheme

ack in January, Wenzhou never got the full range of approvals Bseemed to be the lottery win- they needed from SAFE in Beijing. ner – given its status as the first 21CN Business Herald thinks that city in China to relax rules per- this could well be a factor, and that mitting individuals to invest di- the provincial authorities advanced Wenzhou has $150 billion to invest rectly abroad. further than they should have. Now The original offer, according to SAFE is pulling them back into line. 800,000 natives working abroad, the Wenzhou Foreign Trade and Eco- Still, no investments had even says the Financial Times. nomic Cooperation Bureau, was that been announced before the clamp- Local authorities saw two advan- citizens could now invest much down, which suggests that local in- tages in the pilot. First it might drain more overseas, up to a cap for indi- terest may have been limited from funds out of the city’s huge under- viduals of $3 million on a single deal the outset. One factor could be the ground banking system (see WiC63), or $200 million in total each year. ban on buying into financial enter- as well as reduce upward pressures There were some additional lim- prises (“what we are interested in is in the domestic asset classes that its to the Wenzhou scheme, like a precisely the field of finance”, one Wenzhou’s investors have sought to block on investing in overseas fi- local told 21CN). But more likely is dominate (e.g. property). Second, it nancial companies. But the news that Wenzhou’s wealthy just aren’t would allow bureaucrats to docu- seemed to open up much wider in- too keen on exposing their invest- ment better what the entrepreneurs vestment horizons, as well as give ment strategies to official scrutiny. were buying overseas. heart to those who believe that That makes sense too. One of the But other Chinese will not neces- China is moving more quickly than reasons that Wenzhou is said to sarily lament that Wenzhou’s anticipated towards a more liberal have been chosen for the pilot scheme has been slapped down – its stance on its capital account rules. scheme is the huge amount of pri- inhabitants have a reputation as the (Previously – on paper at least – in- vate capital that has accumulated in nation’s brashest, and they can grate dividuals have not been allowed to the city (estimated by various with compatriots. That was appar- send foreign currency overseas, al- sources at somewhere between ent in a second announcement to- though locals travelling abroad were Rmb800 billion and Rmb1 trillion – wards the end of last month from permitted to carry an equivalent of i.e. as much as $150 billion). And an- sniffy Shanghai, on a similar scheme $50,000 a trip.) ecdotal evidence says the locals have that it hopes to see approved in the So what happened next? Pretty already found ways to channel first half of the year, according to much nothing it seems: not a sin- plenty of this largesse overseas, usu- Shanghai Securities News. gle overseas deal hit the headlines in ally without ticking too many offi- This time round, the newspaper the weeks following the early Janu- cial boxes. reports, rather pointedly, city offi- ary announcement. And then a 21CN identifies different options, cials have been “communicating round of confusion, with the like borrowing the ID cards of rela- with the relevant authorities” on scheme apparently suspended, af- tives to accumulate overseas invest- getting approvals for the proposed ter objections from SAFE, the for- ment quotas. More complex, but bet- plan. The subtext: Wenzhou’s eign exchange regulator in Beijing. ter for moving larger sums, is bumpkins may have made good in That has got the domestic media transacting with offshore companies the past but Shanghai thinks of it- Photo Source: Shutterstock speculating on whether the propos- for delivery of foreign currency pay- self as the international financial als have been delayed, cancelled or ment in exchange for a renminbi centre of the future. That means it are just failing to spark investor in- swap back at home. Wenzhou has expects first dibs on any new over- terest. One potential explanation is various advantages here, with 500 seas investment arrangements as that Wenzhou’s administrators companies already offshore and and when they are announced. n 14 Week in China Society and Culture 4 March 2011

Who needs a script? After eight year hiatus maverick director Wong Kar-Wai returns

Collaborating again: Chinese star Zhang Ziyi says Wong’s films don’t work to conventional timetables

hen director Wong Kar-Wai kung fu known as Wing Chun – has for Wong Kar-Wai knows that it’s im- Wwas shooting 2046, critics taken eight years to develop and is possible to tell when he’s going to quipped that the film wouldn’t be still in production, though Wong be done,” Zhang remarked. finished until the year of its title, promises it will be finished in the Many of Wong’s films portray such was the delay in completing its first half of this year. lovelorn or lonely characters in filming. In fact, many thought it The film features Wong’s regular search of affection and understand- would never be finished. (It was, but collaborator Tony Leung in the lead ing (think In the Mood For Love and it took Wong five years to complete; role, along with Zhang Ziyi and Chungking Express). Born in Shang- and came so close to missing its slot Chang Chen. And as tends to be the hai, Wong moved to Hong Kong in the Cannes Film Festival in 2004 case with Wong, the project is with parents when he was 5, leaving that the competition’s schedule had shrouded in secrecy. So far, he has behind an older brother and sister. to be rearranged, for the first time.) revealed little about the plot, and The circumstances of the Cultural Perhaps the most revered of no one seems to have any idea of Revolution kept him from seeing Hong Kong’s directors, Wong’s work- the release date. them again for more than a decade. Photo Source: China Imagine ing style is as controversial as his Even the actors are at a loss. Zhang Many say that helps explain why his movies. His latest project The Ziyi told the Hong Kong press on films often focus on loss or emo- Grandmasters – a biopic about Ip Tuesday that filming is still ongoing tional distance. Man, the legendary Chinese martial- and she has no idea when Wong will It remains to be seen how Wong’s arts figure who taught the form of finish. “Everyone who has worked film making style – slow rhythm and 15 Week in China Society and Culture 4 March 2011

Somewhere around here Shi Yinyin blew it: Macau’s casinos

garish visual tone – is going to trans- revealed that large distributors in- took place in February last year, late into an all-action film. But lead- cluding the Weinstein Company, show Shi’s bride decked out in layers ing man Leung reassured the Shang- Fox Searchlight, Focus Features of sparkling jewels. The groom then hai Daily that it isn’t a problem; the and Sony Pictures Classics were all led a celebratory motorcade of super film is so fast-paced that he “almost interested in The Grandmaster but luxury cars through the local couldn’t hang in there”. that Wong ended up selling last streets, including Bentleys, Lam- “This is a genuine kung fu week to Annanpurna Productions, borghinis, Ferraris and Porsches. movie,” Leung said at a news con- which promised to make a “signif- The motorcade alone is reckoned to ference in Hong Kong last year. icant financial commitment to the have set him back around Rmb50 “There really will be many action movie and its marketing”. million, says Xinhua. scenes.” Needless to say, most thought the The other problem Wong now wedding a little over the top. faces is that the story of Ip Man “Rmb50 million – I have never even has become much better known, seen that much money in my life. with three similar biopics being Bad bet How many Rmb100 notes is that?” made in recent years. Hong Kong Tycoon loses fortune in wrote one netizen mockingly. An- director Wilson Yip’s Ip Man fran- Macau other more caustic observation: chise was a big hit with two re- “The parents must have made their leases in 2008 and 2010. Similarly, avish weddings are not only for fortune through bribery to throw a Herman Yau’s The Legend Is Born LBritish royalty, Chelsea Clinton wedding like that.” Photo Source: Shutterstock — an Ip Man prequel of sorts – was and the stars of Bollywood. Shi But a year on, it seems that lucky also released last year. Yinyin, the pampered son of a stars are no longer shining over the Still, distributors were anxious wealthy jeweller in Wuxi, Jiangsu, Shi family. In fact, the family is re- to snap up the film’s North Ameri- also knows how to put on a show. ported to have gone missing. Xin- can rights. The Hollywood Reporter Pictures of his wedding, which hua reported last week that Shi was 16 Week in China Society and Culture 4 March 2011

suspected to have lost the entire chance of recouping the debt. The ernment official so money is easy! family fortune and now his relatives family jewellery business filed for Too bad for his ancestors because have gone into hiding to evade the bankruptcy last October, with the lo- they have to watch while he destroys debt-collectors. cal court freezing the bank accounts everything they built.” The marriage, too, was short- of both the company and family On a final note, the speculation lived (less than a year, it seems). But members, as well seizing properties that Li was able to punt Rmb1.5 bil- Shi’s erstwhile father-in-law is also owned by them. lion in Macau will do little to as- on the lookout for the missing fam- It also seems Shi borrowed an ad- suage official concerns about the oc- ily. “The person who had caused this ditional Rmb80 million from his casionally catastrophic influence of has to bear the responsibilities,” he now ex-father-in-law (hence his ru- the enclave. Nor will it aid the cause told the Global Times. “The truth minations on the Shi family disap- of those in China who have been lob- will be revealed.” pearing act). bying to legalise gambling on the So what happened? As it turns Their downfall elicited little mainland itself. out, Shi might have had a gambling sympathy from internet commen- problem, and it has been reported tators. Shi, and many of his coun- that he has lost Rmb1.5 billion ($228 terparts, are commonly known as million) on the tables in Macau fu er dai, which can incorporate (which might explain why his family both the children of senior Party Beijing’s old hasn’t left a forwarding address – officials and China’s new million- new attraction those VIP junket operators can be aire class (oddly enough, often one very persistent people). and the same thing). World’s biggest museum There doesn’t look to be much WiC has written of similar fu er opened its doors this week dai types before, and especially their Keeping track frequently arrogant take on life’s he world’s biggest museum privileges. Take Li Qiming. Last Oc- Topened its doors to the public tober, Li, whose father was a senior this week, and you will probably not What was it that we said last month official in Baoding was driving while be too surprised to hear it’s in Beijing. about soon-to-depart US Ambassador Jon Huntsman, and his fine reputation drunk in October on a university The People’s Daily says the Na- with the Chinese? Just a couple of weeks campus in Hebei when his Volkswa- tional Museum of China covers on from our rather glowing farewell gen sedan struck two students. One 200,000 square metres and “dwarfs review, including approving comment of the victims subsequently died; any other museum in the world”. from the local media, Huntsman has been the other was seriously injured. Then again, it’s not a completely in much more combative form, condemning the “harassment and After the accident, Li did not stop new project. The museum had long intimidation” of reporters attempting to but was eventually detained by uni- existed on the eastern side of cover a series of proposed protests in versity guards. Undeterred, he Tiananmen Square. But ahead of the Chinese cities in recent days. warned them, “My father is Li 2008 Olympics the country’s lead- His presence close to a scuffle Gang!” It later became a popular ers deemed it a national embarrass- outside a McDonald’s in Beijing the week before last has also been raising catchphrase used to vent frustration ment: not big enough, poorly lit and Chinese ire, particularly online, although at corruption among Chinese offi- not housing enough of China’s his press office claims it was cials and their families (see WiC84). greatest treasures. coincidental. Filmed on the fringes of the The phrase, “fen fu” or to hate the Accordingly, a massive Rmb2.5 fracas, clad in dark glasses and a rich has also become more promi- billion renovation and construction leather bomber jacket replete with Stars-and-Stripes logo, he was also nent in recent months to capture programme was undertaken to recognised by passersby. One asked him the public’s resentment. bring it up to par with the world’s if he “wanted chaos” for the Chinese. Meanwhile, netizens continue to great museums – as well as reflect If he meant to be a surreptitious weigh in on the disappearance of the China’s rising international status. onlooker, Huntsman failed miserably. That ‘Wuxi Diamond Family’. The Ministry of Culture then sent has led to speculation (on US blogs, “As the old saying goes, wealth out a diktat to other museums

Photo Source: China Imagine mostly) that his presence at the rally may have been designed to raise his profile at does not pass three generations. But around the country, requiring that home in advance of his anticipated with a prodigal son it takes only one they ship many of their most prized presidential run. A case of political generation,” a netizen wrote on artefacts to the capital (the old mu- ambition trumping diplomatic caution, QQ.com. Another says: “Shi probably seum’s collection was heavily perhaps? got into his head that he’s some gov- skewed towards coins). 17 Week in China Society and Culture 4 March 2011

The newly reopened museum showcases 3,000 artefacts of Chi- nese culture in a state-of-the-art setting. If you are in Beijing, here’s the four must-see objects to look out for:

Si Mu Da Fang Ding Cooking vessel from Late Shang (1400-1100 BC). This huge Ding is the heaviest of the bronzes re- trieved so far. With the three char- acters Si Mu Wu inscribed on the body, the Ding was cast for King Zu- Geng or ZuJia of Shang to offer sac- Jin Lu Yuyi (or jade burial suit) rifice to his mother. Its forging The foremost example of burial would have required over 1,000kg suits worn by emperors and the of metal and demonstrates the senior elite in the Han Dynasty technical level of bronze casting in four corners. Its edges are decora- (206 BC ~ AD 220). Yuyi was a status the Shang Dynasty. tive engravings and its shoulders symbol. It belonged to Liu Sheng are ornamented with four dragons. (Prince Jing of Zhongshan) and is Also made from bronze. made of 2,498 pieces of jade, with

Tang Sai Cai Qi or Tang tricolour figurines A pottery figurine of a dancer and musicians riding a camel was un- earthed in 1957 in Xi'an, Shaanxi and dates from the Tang Dynasty (618-907 AD). With yellow, white and green as the basic glaze, it is fa- mous for vivid form and bright colour. Its association with the Silk more than 1kg of gold thread, and Road (the camel imagery) reflects took 100 craftsmen more than two Si Yang Fang Zun the cosmopolitan nature of years to complete. It caused an in- Late Shang Dynasty wine vessel, fea- China's trade links during the Tang ternational sensation when it was turing a sheep in relief on each of its Dynasty. discovered in 1968. n

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18 Week in China And Finally 4 March 2011

Profits in paradise Why China’s pumping cash into the Bahamas

he world’s investment commu- The deal might also give the Chi- Tnity now spends a lot more nese a lot more clout in a country time looking to see where China Inc just 50 miles off the coast of Florida. is putting its money to work. Oil One of the thousands of WikiLeaks wells, mines and farmland have cables reflects just such a fear in the been high on the agenda. More dari- US, that the Baha Mar project will ingly, a little cash has been put aside have a major impact on the Ba- Made by China: Baha Mar recently for Portuguese bonds and hamian economy and leave the Greek ports. [government] “indebted to Chinese It doesn’t help that non-cruise But the latest bankrolling widens interests for years to come.” ship visitors (the type needing a ho- the field further still. Last week Owners of the project will have tel room) peaked in 2005 – at 1.7 mil- ground was broken on the 1,000 acre 20 years to repay the bank – longer lion. Visitor numbers were down to Baha Mar resort in the Bahamas. than most commercial loans. around 1.4 million people in 2009. State-owned Export-Import Bank of But is it a sound investment? Chi- (2010 figures look slightly better but China is loaning $2.6 billion to fi- nese Ambassador to the Bahamas are still down on their peak). nance the mega-project, to construct Hu Dingxian seems to think so, call- Perhaps the hope is that more four hotels, a casino, water park, golf ing it a “golden baby… born at the Chinese tourists will make the trip to courses and convention centre over a right time, in the right place and the resort – a sentiment shared by four year period. with the right people.” hoteliers at destinations worldwide. That’s good news for the is- The Exim Bank is presumably Having state-owned financial back- landers, given their GDP was just hoping to get a healthy return too, ers may increase Baha Mar’s profile $8.9 billion last year. But other than although the deal also has detrac- at home too. But Exim will be more sun, sand and shell companies, tors, who are sceptical the project is focused on getting its payments on what’s in it for the Chinese? going to pay off. the loan. The project, originally con- True, there are construction con- For one, it’s adding an estimated ceived in 2005, has already had tracts, with much of the building 2,250 rooms to a total market of problems with some of its creditors, work to be done by the China State 15,212 – a 15% jump. And in an in- and the Bank of Nova Scotia report- Construction Engineering Com- dustry that relies heavily on tourism edly had to agree to convert the bulk pany. It could (temporarily at least) from the US – a cyclical business of an initial $200 million loan into provide employment for 7,000 Chi- that might dip in an event of a re- equity before the agreement could nese workers. turn to tougher economic times. be signed with Exim. n

Sacred cows?

“We want to make sure that we are running the business that is producing the milk [in] every step of the operation.”

* Andrew Ferrier, the head of New Zealand milk giant Fonterra, tells the Wall Street Journal it is building its second dairy farm in China and plans a third. He added “We feel a bit of an obligation to help the Chinese get back on their feet.” A recent survey found 70% of local consumers would not purchase milk powder produced in China, according to the Beijing Times. Andrew Ferrier

19 Week in China The Back Page 4 March 2011

Photo of the Week In Numbers $29.3 billion Trade between Iran and China last year. The Sino-Arabian Chamber of Commerce expects trade volumes to hit $50 billion by 2015. Iran is currently China’s third largest source of foreign oil.

92.1% The proportion of China’s economic growth

Photo Source: China Imagine last year that came from domestic demand, according to the National Bureau of Statistics. The balance came from exports.

23 The numbers of years you have to go back Carson Yeung celebrates Birmingham City winning the Carling Cup – the to find China experiencing a winter as cold as this one. From December to February, Hong Konger bought the English football club in late 2009 the average temperature across the country was a 4.7 degrees below zero.

Where is it? Heilongjiang 6% The depressingly small proportion of Some of the places referred to in this issue Chinese who claim to be happy, according to an online poll by government portal China.com.cn. A total of 1,350 people Beijing took part. Tianjin $1.15 million Henan China The amount paid for four Cultural Tibet Shanghai Revolution-era stamps at auction in Hong

Lhasa Chongqing Wenzhou Kong this week. The stamps display a handwritten message from Chairman Mao to Japanese workers. Japanese government objections meant they were Hong Kong never issued – Tokyo protested that it would incite revolution in Japan.

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