1 Talking Point 6 Week in 60 Seconds 7 Property Week in China 8 Aviation 9 Chinese Models 11 Economy 13 Chinese Character 19 October 2012 15 Society and Culture Issue 168 19 And Finally www.weekinchina.com 20 The Back Page What we learned in the debate m o c . n i e t s p e a t i n e b . w w w

As Obama and Romney vie to appear toughest on China, Huawei and other

Chinese firms cry foul at US treatment Brought to you by Week in China Talking Point 19 October 2012

Phoney claims? Why Huawei, ZTE and Sany are livid over their treatment in the US

Not welcome: a new intelligence report from Washington says Huawei and ZTE pose a security threat to the US

merican presidents past, pres - first employed Lincoln’s aphorism ers are “strongly encouraged to seek Aent and (perhaps) even future last year in an open letter to the US other vendors for their projects”. have all been drawn into the divi - government requesting an investi - This reflects longstanding Ameri - sive China debate in the last month. gation into any concerns that Wash - can concerns that information trav - This week saw Barack Obama bat - ington might have about its elling through Chinese-made tling it out with contender Mitt operations. The hope was that a for - networks could be snooped on, or Romney to talk toughest on trade mal review would clear the air. But even that crucial infrastructure politics and China. Romney in par - the report’s findings – announced could be disrupted or turned off ticular has been making headlines this month – only look like stoking through pre-installed “kill switches”. with his repeated promises (four in up further acrimony. We have covered such suspicions be - the most recent presidential debate fore (see WiC96), as well as their role alone) to label China “a currency What were the recommendations? in derailing Huawei’s efforts to win manipulator” on his first day in of - They came from the House of Rep - new contracts or acquire businesses fice, should he be elected. resentatives’ Intelligence Commit - in the United States. But the belief But last week it was more the tee, after an 11-month probe into was that a formal review would lay spirit of long-gone Abraham Lin - Huawei and its Chinese peer, ZTE. the ground for a more productive re - coln that Chinese executives were The conclusions were pretty lationship with US regulators. If so, it hoping to invoke, particularly his damning stuff: that the two firms was a forlorn hope. observation that “character is like a “cannot be trusted to be free of for - P h o t

o tree and reputation like its shadow”. eign state influence and thus pose a So the Chinese firms are disap -

S o u r Huawei, now the largest global in - security threat to the United States pointed? c e :

R e formation and communications and to our systems” and that US net - Very. They claim to have made u t e r s technology provider by revenues, work providers and system develop - strenuous efforts to reassure the 1 Week in China Talking Point 19 October 2012

American authorities that their sus - picions are misconceived, with ZTE insisting that it set an “unprece - dented standard” for cooperation between a Chinese company and a Congressional inquiry. Huawei has also said that it cooperated in an open and transparent manner. But the investigators weren’t im - pressed by their efforts. “Neither company was willing to provide sufficient evidence to ameliorate the Committee’s concerns,” the re - port concluded. “Neither company was forthcoming with detailed in - formation about its formal rela - tionships or regulatory interaction with Chinese authorities. Neither company provided specific details Best Overall Renminbi Products and about the precise role of each com - Services Provider pany’s Chinese Communist Party Committee.” Huawei has come in for criticism in the past about its opaque owner - ship structure, which some allege is designed to obscure its residual ties to the Chinese military. In June we alluded to the rumours once again, after a story on the company seemed to lead to a local magazine’s entire print run being pulled from Best Bookrunner of Offshore Best Offshore news stands in China (WiC155). But Renminbi Bonds Renminbi Bond House Stan Abrams, an IP lawyer and au - thor of the China Hearsay blog, tends to agree that the two firms – at least from a Chinese perspective – probably did provide an unprece - dented amount of information to the Committee. Yet this effort was doomed to failure, he says, by the gulf in worldview between the Chi - nese firms and the members of the Committee. “There was simply no Dim Sum Bond House Best Dim Sum of the Year Bond House way the two sides were ever going to come together,” Abrams suggests.

And both sides see the purpose of the investigation differently too? For the Committee, the final decision was based firmly on security fears.

As it explained during the hearing, HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc, authorised and regulated by the Financial Services Authority, The Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC, and the investigation was “not political HSBC Bank USA, NA. 12-043 jousting or trade protectionism mas - 2 Week in China Talking Point 19 October 2012

querading as national security”. American regulators also argue that their anxiety is more than jus - tified, following a rising incidence of cyber espionage apparently from Chinese sources. But the Chinese are deeply un - convinced. An immediate gripe is that no hard evidence of security breaches was made available in the public sections of the report, al - though its authors alluded to mate - rial in an annex to its findings, which was classified. I’ve got a binder full of Chinese rhetoric This lack of transparency chimes with complaints made by network and transmitted data out - tion and obstruct Chinese ICT com - other Chinese interests, including side of the country. But it insists panies from entering the US mar - Sany Group, about the blocking of that the laptop was infected via a ket,” Huawei said in a statement to a purchase of an Oregon wind shared WiFi network, and that the the press. farm near a US naval facility at the beaconing wasn’t prompted by Huawei overtook Ericsson as the beginning of October. But the Chi - Huawei software. leading global supplier of telecoms nese claim that no evidence was equipment for the first half of this given on why the purchase consti - And the Chinese also say they are year, with $16 billion in revenues. It tuted a security threat. In an unex - being singled out? is also regarded by many as a new pected twist, they are now suing Yes, their second objection is that breed of Chinese challenger that de - Obama and his Treasury Secretary there is little logic in only targeting velops its own technologies, rather Tim Geithner for violating the US Huawei and ZTE when the rest of the than manufacturing or assembling constitution. industry also relies on Made in them for overseas firms. One of Sany’s founders Xiang China components too. In August CNET News talked Wenbo complained to media of the “Virtually all of the telecom in - about Huawei as a “patent ma - US action: “They are petty frastructure equipment now sold in chine” which deserved credit for scoundrels who can’t be reasoned the US and throughout the world breakthroughs in networking stan - with. The US treats China like a contains components made, in dards that let mobile carriers sup - hostile country. Whatever we do is whole or in part, in China. That in - port multiple communications on a deemed as endangering American cludes the equipment manufac - single network. The Economist national security.” tured and sold by every Western magazine took a similar line, noting CNET News, a tech industry jour - vendor in the United States, much that Huawei had won contracts in nal based in the United States, also of which is made by Chinese joint half of the rollouts of Europe’s 4G noted that the final report on ZTE venture partners and suppliers,” networks, as well as having pio - and Huawei didn’t specify instances ZTE countered last week. neered the ‘dongle’ technology that of data theft, although lawmakers Hence the view that – if Huawei allows laptops to connect wirelessly had raised red flags about ZTE and ZTE are to be genuinely re - to the web. equipment enabled with “back - garded as national security threats This adds to the Chinese sense doors” for sneaking into networks because of their Chinese origins – that US firms are running scared of undetected. Committee chairman other vendors should also be sub - the competition. Chinese newspa - Mike Rogers also told reporters ject to the same level of scrutiny. pers including the National Busi - about “numerous examples” of ness Daily have even alleged – citing “beaconing” in which routers turn So why do the Chinese firms think unattributed sources – that Cisco on independently and start to trans - they are being blocked in the US? Systems has been a guiding force P h o t

o mit data. Huawei has acknowledged They see it as a clear case of com - behind the Committee’s findings.

S o u r a similar case in the past from a lap - mercial skulduggery. “We have to The allegation sounds unlikely, al - c e :

R e top belonging to one of its employ - suspect that the only purpose of though there is a history of bad u t e r s ees, which connected to a customer such a report is to impede competi - blood between the two companies, 3 Week in China Talking Point 19 October 2012

after Cisco sued Huawei for using stolen source code in its routers and switches. Huawei admitted to using Planet China some of the code (although it Strange but true stories from the new China claimed it came via a third-party) and Cisco dropped the lawsuit after NOT A FAN. Famed wildlife filmmaker David Attenborough would wince at it was removed. But senior execu - some of the goings-on at Chinese zoos (in WiC166 we described an tives at the American firm have con - ‘animal Olympics’ in Shanghai). And he would definitely be shocked by a tinued to chide Huawei in the press, recently exposed practice at Beijing Wildlife Zoo. A journalist from the includng comments from company Beijing Evening News reports that staff at the zoo have been profiting from a peacock which will spread its tail to order. Tourists were told that the staff boss John Chambers that the Chi - could get it to display its plumage “whenever we want”. If a family wanted a nese don’t always “play by the photograph with the bird’s feathers fully fanned out, it would cost Rmb20. rules” on IP protection and com - The reporter was suspicious that the zookeepers had been able to train a puter security. peacock to plume to order – and became even more so when he saw a Cisco’s relations with ZTE aren’t member of staff disappear behind the bird, and heard a ‘pop’ sound. too rosy at the moment either, after On closer examination it became clear that an artificial, electric tail had the termination of a sales partner - been attached to the bird. Whenever a customer paid for a photo, a button ship this month following revela - was pressed to open the tail. After the snap was taken, it was deactivated. tions that ZTE was selling Further evidence that – for a price – anything can be faked in China... Cisco-branded networking equip - ment in Iran. supplier to the country’s new ‘super growth markets, not least the de - So it’s only in America that Huawei pipe’ project for email, phone calls mand for new 4G networks at home is running into problems? and data. “The government is going in China. CBN was reporting last This was the implication in much to be choosing carefully in the con - week that both Huawei and ZTE saw of the Chinese media’s coverage. struction of this network and it has their overseas revenues peak as a Both companies also maintain that invoked the national security ex - percentage of total sales four years there is little hesitancy from hun - ception for the building of this net - ago, although that trend might be dreds of buyers in almost all of the work,” a prime ministerial reversed with the emerging oppor - 150 other markets in which they spokesman told reporters. “I’ll leave tunities to support new 4G net - sell equipment. it to you if you think that Huawei works in other markets. Here, the In fact, that’s not quite true. The should be a part of [the] Canadian Securities Daily also expects Indian government has expressed government security system.” Huawei to have an edge, especially reservations, while Huawei has There were signs that something as it is supporting the launch of struggled to penetrate markets like similar could be on the agenda in China Mobile’s new TD-LTE network Japan and South Korea. In March the UK too, after an announcement standard in a hundred Chinese this year the Australian govern - that Huawei’s relationship with BT cities next year. ment also barred Huawei from bid - could also be reviewed, including its Another approach – especially ding for contracts on its national role as supplier to BT’s new fibre where suspicion about Chinese net - broadband network, on advice from broadband network. This would be working gear is greatest – is to focus its own security agency that there particularly damaging. Huawei has on other products. Huawei has been was “credible evidence” that the trumpeted its working arrange - doing this already in the United Chinese provider was connected to ments in Britain, where the security States by selling mobile phones, the People’s Liberation Army, ac - services have signed off on a vetting which did not fall within the remit cording to The Australian newspa - procedure said to ensure that only of the security review. per. The current risk is that the secure products are used in the na - “We’re not talking about hand - reputational blowback from the US tional telecom infrastructure. If this sets,” Congressman Rogers told the Committee’s findings will prompt falls through, it would be a public press conference in the aftermath other security agencies to look relations disaster. of the Committee’s report, “only again at Huawei’s products. those devices that involve the pro - Just a day after the report came So how might the Chinese firms re - cessing of data on a large scale.” out this month, Canada also spoke spond? Currently Huawei and ZTE have out on Huawei’s bid to serve as a One option is to refocus on other about 7% of the US mobile phone 4 Week in China Talking Point 19 October 2012

handset market between them, up Chinese regulators might also similar annoyance online. from 4% a year ago, according to choose to fight fire with fire, mak - “Is America only secure when Strategy Analytics. Much of that is ing it much harder for American Chinese companies make hats and for lower-tier phones, although networking firms to win new con - socks, and not high-tech products?” Huawei wants to win more of the tracts in China. asked one netizen, as plenty of oth - smartphone segment and launched This was the harder line pro - ers called for a tit-for-tat shunning the Ascend P1 this year to generally posed in an editorial in the Global of American brands. favourable reviews. Times last week, with a suggestion But similar to some of the unease But the challenge is how to build that other countries needed to un - at plans for an anti-Japanese boy - a loyal following among consumers, derstand that “if Chinese compa - cott in August (see WiC161), others especially now that – if Americans nies encounter harassment there, queried whether this would turn have even heard of Huawei – the as - they should expect companies from out to be disruptive. sociation could be a negative one. these countries to meet the same Unlike Huawei’s limited presence Analysts say too that US carriers treatment in China”. in the United States, American might now have second thoughts Other newspapers made similar products made by the likes of Apple about supporting Chinese handsets, points, saying that there had to be are already deeply integrated into due to the Committee’s recommen - more reciprocity in how network everyday Chinese lives, one netizen dations. Other business areas also providers are treated and that it warned. And others simply ques - could become harder to pursue. For would never have been possible for tioned whether the fighting talk instance, Huawei’s push into prod - foreign firms to win so many new was an overreaction. “We were just ucts for data centres and videocon - contracts in China if its own regula - boycotting Japanese goods, now ferencing would seem more tors had shown similar prejudices. we’re boycotting American ones?” problematic given the backdrop of Tea Leaf Nation, a blog that tracks was the weary riposte from another snooping allegations. China’s social media, reported on a online contributor. n

Confused in Canton

The Canton Fair has always been viewed as a good gauge of China’s economic health. But as with the broader economy itself, this year the picture remains unclear. That is to say, key media seem to have drawn different conclusions as to whether the event – at which foreign buyers place orders with Chinese exporters – is going well. For example, the China Daily thought not. It reckoned that attendances had dwindled, headlining its article “Grim global outlook dampens Canton Fair”. A spokesperson for the fair told the newspaper that exhibitors were “not optimistic” and the oversupply of Chinese exporters,” it proclaimed. The newspaper’s interpreters was a sign of fewer foreign buyers reporter spoke to the sales manager of Ningbo Dabu showing up. The spokesperson attributed the Welding Technology who claimed sales were downbeat mood to “flagging external demand, rising “getting better”. And unlike the gloomier China Daily, trade frictions and the rising value of the yuan”. All in The New York Times saw signs of a turnaround: all, the state-run newspaper took the line that activity “With a few exceptions, exporters of products as at the Canton Fair was sluggish and that was bad varied as hammers, electric fans and gaudy wall news for exports. I decorations for nightclubs said that demand from l l u s t r a The New York Times took a different – altogether emerging markets and the United States was t i o n : more bullish – tack. “Buyers from around the world beginning to recover.” w w w

. thronged the cavernous halls of the Canton Fair at its

b Given such contradictory reports, it’s difficult to e n i t a opening day on Monday as a new and somewhat say what lessons we should draw. Only time will e p s t e more optimistic mood seemed to take hold among tell… i n . c o m

5 Week in China The Week in 60 Seconds 19 October 2012

It’s stabilising, says Wen The major news items from China this week were...

Both Mitt Romney and President Barack Obama 1turned up their anti-China rhetoric in the second de - bate on Tuesday night. Romney, who repeated that he would brand China a currency manipulator on his first day in office, also said that misguided policies during Obama’s first term had drained American jobs, turning China into “the largest manufacturer in the world”. Obama then accused Romney of investing in companies that moved jobs to China, when he ran the private equity firm Bain Capital.

Premier Wen Jiabao said he is confident of achiev - 2ing China’s yearly growth target of 7.5%, even though the country has encountered difficulties this Gave Tokyo a miss: Zhou Xiaochuan year. “China’s economic growth has started to stabilise, and the country has witnessed positive changes with China’s central-bank governor Zhou Xiaochuan the economy running well in the third quarter,” Wen 4pulled out of the annual meeting of the Interna - suggested on Monday. tional Monetary Fund in Tokyo at the last minute, as Bei - jing ramped up its protest over a continuing territorial Hostile M&A activity from Sinopec in the gas sector dispute with Japan. Zhou’s cancellation follows a previ - 3has quietly flamed out. The state-owned energy giant ously announced decision by a number of China’s top announced that it’s dropping an unsolicited bid for bankers to cancel planned appearances at the IMF meet - piped gas distributor China Gas that it launched last De - ing, in protest at Japan’s stance over islands called the cember. Sinopec said this is because it could not fulfill Senkakus in Japan and the Diaoyus in China. Zhou’s - the regulatory requirements, although analysts say re - deputy did attend meanwhile, claiming China’s currency sistance from China Gas was also a factor. Nevertheless, was at an “equilibrium’ level. the two companies signed a strategic cooperation agree - ment that will allow Sinopec to sell natural gas directly The Wall Street Journal calculated this week that $225 to Chinese homes. 5billion of capital has left China over the past year. The newspaper’s analysis is worrying, indicating huge capi - tal flight from the country ahead of the once-in-a-decade leadership transition. Some of the outflow may be the re - sult of corrupt officials moving wealth offshore.

ZTE will report a loss of as much as Rmb1.8 billion 6($279.2 million) for the first 9 months of this year, a drop of 260% compared with the same period last year. ZTE said its results during the period were mainly hurt by its withdrawal from the Iranian market. US authori - ties have been investigating the company over the sale P h o t

o of computer equipment to Iran, which could be used to

S o u r monitor landline, mobile and internet communications. c e :

R e ZTE’s stock price dropped 16% in Hong Kong on the u t e r s The oil major dropped its hostile bid for China Gas news, the largest daily decline since July 16. n 6 Week in China Property 19 October 2012

The Texan test Will Guiyang be China’s next real estate disaster?

ort Worth avoided the worst of dream also makes some of China’s Fthe US housing bubble. Prices largest developers look like pygmies. went down a little after the financial China Vanke, one of the titans of the crisis broke but they had never got real estate industry, has sold 8 mil - completely out of control in the lion square metres of property so far Guiyang: build and they will come Texan city in the first place. “Forth this year. Worth and Tarrant County didn’t One such project would be im - ment in Guizhou is trying to come experience what the rest of the pressive on its own. But Guiyang ap - up with ideas for filling the thou - country did,” an estate agent told pears to be awash with giant devel - sands of empty apartments. In Sep - local newspaper Star-Telegram this opments. Future Ark will cover tember it introduced new rules that summer. “Sales were down, but not another 9.3 million square metres, granted anyone that bought a prop - like the rest of the country.” and is just one of 13 projects of a mil - erty in the city a local hukou or res - Despite being 18,000 kilometres lion square metres or more. Once idence permit. This incentive ap - away (and, culturally, a lot more dis - completed, they will be able to plies not only to residential homes tant than that) Fort Worth’s twin house more than a million people. but also to commercial space, re - town of Guiyang in southwest China So, the obvious question: will a ports CBN, meaning that out-of- might want to take some notice. million people buy into the dream? town purchasers will receive the That’s because it looks like a city That looks unlikely. Although the same municipal benefits as locals in in need of lessons in avoiding market has picked up as the year has healthcare and education. housing market excess, as it con - progressed, sales volumes have usu - Quite how Guiyang’s developers tinues a property binge on an ex - ally been dependent on developers – or the government planners who traordinary scale. lowering prices. Guiyang’s unsold must have signed off on the con - The fact that Guiyang is the capi - housing inventory was already 34.9 struction binge – ever expected to tal of one of China’s poorest million square metres as of Sep - fill all the new projects is left un - provinces, Guizhou, has not stopped tember and if the buying stays at said in the Chinese media. But new developers embarking on a number the pace of the first half of the year, incentives for buyers will go of spectacularly large projects. it will take four years to clear the against Beijing’s efforts to cool the The largest is Huaguoyuan, current backlog. property market down. Guiyang which has a total construction area So it’s no wonder that people might find itself repeating the ex - of 18.3 million square metres, re - are starting to compare Guiyang perience of cities like Zhuhai, ports International Finance News. with Erdos, the city in Inner Mon - which tried to boost sales in the To put this single development into golia now famous as a ghost town summer by removing controls in - perspective, only a few years ago, a of unoccupied housing. “The re - troduced last year. But the local housing project larger than bound in Guiyang’s property mar - government was soon slapped back 200,000 square metres in Guiyang ket in the first half of the year was into line, with the rules re-applied was considered a monster. The the result of housing developers within a couple of hours. Does Huaguoyuan project will also be ca - trading prices for sales volume,” Guiyang have many other options? pable of housing 10% of Guiyang’s financial commentator Wu Qilun Perhaps its best hope is the embar - P h o t o current population (or about two told International Finance News. rassment factor: that the authori -

S o u r c thirds of the citizens of Fort Worth, “This rally will not last. Guiyang’s ties in Beijing give it some leeway e :

I m

a should they fancy hanging their property market’s status quo is se - to avoid hundreds of foreign jour - g i n e

C ten-gallon hats somewhere new). rious oversupply.” nalists turning up to write about h i n a Huaguoyuan’s 18.3 million square In response, the local govern - another vast ghost town. n 7 Week in China Aviation 19 October 2012

In for the long haul Why China Southern’s losing money flying its new A380 jets

hen Orville Wright first took Wto the air in 1903, his inaugu - ral flight travelled a triumphant 120 feet. On that December morning, as the aviation industry was born, could the inventor have envisaged that one day an aircraft would be built with a wingspan more than double the distance he flew? That aircraft is the A380 and its wings measure 262 feet from tip to The A380: a big plane and currently a big problem for China Southern tip. In fact everything about this plane is big: its cabin space is 49% them. Two of its A380s fly between estimated to lose money. larger than the next biggest aircraft the homebase of Guangzhou and That begs the obvious question: type. In full economy class config - Beijing, while the other plies the why hasn’t China Southern been us - uration it is capable of transport - Hong Kong-Beijing route. ing its A380s for longer flights too? ing 853 passengers but even in a China Business reports that oper - The answer is simple: thus far it has - more standardised set-up, its ating these short haul flights with n’t got permission to fly them in - maker, Airbus, claims that it uses A380s doesn’t make sense, as they ternationally. Shanghai Daily reck - 2.9 litres of fuel per passenger per require more take-offs and landings ons this was partly because the 100 kilometres, a little over half the – the most fuel-intensive periods. To government wanted the airline to current average. minimise fuel burn (which consti - demonstrate it could safely handle That all sounds good, except to tutes 40% of China Southern’s costs), the new planes before allowing one of the A380’s Chinese cus - a plane needs to be up in the air for them to venture abroad. tomers. Last October, China South - the maximum number of hours. There’s also sibling rivalry: Air ern Airlines took delivery of three Flying on three to four hour trips China is said to have lobbied to keep of the planes, and spent tens of mil - also keeps the aircraft’s utilisation its rival from flying the A380 on in - lions of renminbi advertising their rate lower, spending too much of its ternational flights out of Beijing. arrival, as well as the benefits of fly - day on the tarmac earning nothing. However, China Business reckons ing on this larger, quieter jet. Indeed, the A380 was never de - that a deal has been brokered and But when the airline released its signed with routes like Beijing to China Southern could announce the first-half results recently it soon be - Guangzhou in mind. An aviation launch of a Beijing-Paris route im - came clear that the new planes had expert told China Business that us - minently, possibly co-run with Air been anything but a boon. In fact, ing the aircraft type in this fash - China. China Southern is also said management had to concede that ion “is unprecedented in the to be close to flying another A380 the A380s had lost China Southern world” and that airlines like Emi - long distance between Guangzhou Rmb100 million ($16 million) in the rates are using them far more prof - and Los Angeles. period. How so? Well, the problem is itably for long haul. Longer haul routes will be vital P h o t o that the A380 is specifically de - To make matters worse, the routes to turning round China Southern’s

S o u r c signed to fly long-haul and it is over the A380 is now flying on are com - A380 fortunes. And the airline needs e :

I m

a these distances that its touted fuel petitive ones with lower fares, mean - to find a solution quickly – it will g i n e

C advantages kick-in. But that’s not ing that every time fewer than 328 take delivery of two more A380s by h i n a how China Southern has been using passengers are on board the flight is January. n 8 Week in China Chinese Model 19 October 2012

Computing power How Lenovo grew to be the world’s number one PC manufacturer

hen Yang Yuanqing’s bonus Wwas $3 million greater this year than last, he didn’t splurge the difference on a villa in Italy or a cel - lar full of French wine. Instead, the chairman and chief executive at computer maker Lenovo shared the additional payout with company employees, dividing it among al - most 10,000 lower-level staff. From receptionists to factory workers, they all got Rmb2,000, or $314, apiece. Now they have another reason to celebrate: Lenovo has officially topped the global PC rankings, pass - ing long-time leader Hewlett-Packard to become the world’s top computer seller. Not bad for a company that was founded by 11 engineering boffins in No ordinary boss: Yang Yuanqing shared his bonus with his workers 1984 as a means to supplement their meagre academic stipends. sidered far-fetched just seven years maintained – it was relatively weak Newly released data from re - ago, when it first stepped onto the compared to rivals like HP and Acer search group Gartner shows that global stage with its landmark pur - in the consumer segment. That Lenovo sold 15.7% of the world’s PCs chase of IBM’s ailing personal com - meant that the recession left Lenovo in the third quarter, passing HP, puter division. Some suggested that especially vulnerable, as companies which clocked in at 15.5%. Gartner it was biting off more than it could cut back aggressively on new spend - says Lenovo has made significant chew. But i n announcing the deal, ing on PCs but few consumers knew market share gains over the past two Lenovo executives spoke excitedly anything about the new arrival from years because “in addition to ac - about creating the first truly global China. As demand dropped in the quiring other vendors, it has also Chinese company. Bill Amelio, a vet - wake of the credit crunch, Lenovo taken an aggressive position on pric - eran at Dell, was appointed as boss, was left dangerously exposed, lack - ing, especially in the professional sending a message to staff and cus - ing the brand presence that it had market.” Back home, the Chinese tomers alike of the new determina - established at home. Liu Chuanzhi, press struck a celebratory tone. “The tion to internationalise. The com - one of the company’s co-founders, news carries significant symbolism: pany even relocated its agreed: “Once we left China, we were Lenovo will soon become the undis - headquarters from Beijing to North good for nothing… We were just a puted leader in the PC industry. And Carolina and switched its official Chinese company,” he admitted to its success proves that Chinese en - language from Chinese to English. the Financial Times in 2010. terprises can win in global markets,” But sluggish demand in the US In fact, sales fell by almost 9% to P h o t

o wrote Jiefang Daily. and Europe hit Lenovo hard. Even $14.9 billion in 2009 compared with

S o u r though IBM was traditionally strong the same period the previous year. c e :

R e What’s the big deal? in corporate sales – a strength that The company reported $226 million u t e r s Lenovo’s feat would have been con - Lenovo inherited and has since in annual losses, blaming integra - 9 Week in China Chinese Model 19 October 2012

tion issues with its new global busi - ness. The acquisition went from a success story about a Chinese com - pany swallowing up one of the world’s leading brands to a caution - ary tale about trying to expand too far and too quickly. Lenovo replaced Amelio with Yang, and Liu was called back in as chairman.

Liu to the rescue? With Liu back at the helm, Lenovo returned to its roots. His timing was good: the Chinese government had earmarked some of the Rmb4 tril - lion stimulus to subsidise sales of computers in rural areas. Lenovo marched its sales force out into the more rural Chinese provinces, in - Home advantage: China accounts for 39% of Lenovo’s revenues troducing more than a dozen entry- level models priced below Lenovo has also invested heavily era of the personal computer is over. Rmb3,500 ($560) to cater to the mar - in brand building, an area in which “PCs are set to embark on a long-term ket. Today, China accounts for 39% many Chinese firms have struggled decline that will ultimately see them of Lenovo’s total revenue. to excel. It hired David Roman, for - go the same way as record players But it hadn’t given up on the US merly an executive at HP and Ap - and VCRs as they get replaced by and European markets. Instead ple, to become chief marketing offi - more nimble mobile devices. Over Lenovo started to undercut larger ri - cer. US consumers got to know the the shorter term, Lenovo will also vals like Dell and HP with lower brand better thanks to ads run dur - have to show it has the power to stay prices, in an effort to grab market ing hit shows like Glee and NFL at the top before it can claim true share. games. bragging rights as the world’s biggest Profitability has suffered – oper - PC seller,” reckons Doug Young, who ating margins were approximately But what does the future hold? writes a business blog. 2.3% – much lower than the industry The risk is that Lenovo has risen to Lenovo’s chairman Liu knows average of 3.7% in the June quarter the top of an industry that is no that too. “If Lenovo only sticks to the this year, says Hong Kong Economic longer as attractive as it once was, PC it is no different from courting Journal. But Lenovo’s inventory with shrinking margins and ever- death… it will hit a ceiling at some turnover is the best of the three com - shorter product cycles. PC makers point. The ‘PC-plus’ strategy [which panies, at about 2.25 times, more also have to compete with the incorporates other product lines like than double that of HP and Dell. glitzier growth of newer product mobile and internet devices] is The company has also extended lines, like the rise of tablets and what’s going to help Lenovo expand its reach to emerging markets like smartphones. into what is still a borderless terri - Brazil, Mexico and Turkey. Last “PCs are going through a severe tory,” Liu told 21CN Business Herald. month Lenovo announced the ac - slump… the hard question of what That also explains why Lenovo quisition of CCE, a Brazilian con - the ‘it’ product is for PCs remains has been stepping up the develop - sumer electronics company. Al - unanswered,” says Jay Chou, IDC ment of smartphones, tablets and though the deal is a small one, with senior research analyst. internet-ready televisions to widen a value of about $150 million, it is IDC’s Worldwide Quarterly PC its product offerings. This year it un - expected to give Lenovo a stronger Tracker also suggests that PC ship - veiled its first internet-connected foothold in one of the fastest-grow - ments shrank by 8.6% in the most television, the K91 Smart TV, which P h o t

o ing large PC markets. Previously recent quarter compared to last is now available for sale in China.

S o u r Brazil had been the only major mar - year, the biggest contraction in the Perhaps it biggest challenge: tak - c e :

R e ket where Lenovo’s market share industry’s history. ing on both Apple and Samsung in u t e r s was still hovering below 5%. Some have even declared that the smartphones and tablets… n 10 Week in China Economy 19 October 2012

Crowded out Is it time to break-up Golden Week in the wake of October’s holiday chaos?

Travel advisory: do not visit the Great Wall during the October Golden Week

hierry Gillier, the founder of the average Chinese tourists spend ing about the massive strain on trans - Tfashion house Zadig & Voltaire, Rmb236,000 ($37,742) per trip in port and tourist facilities. has a rather unconventional way of France much of it on luxury goods. The reason the congestion was promoting his new boutique hotel That’s at least five times more than particularly bad this time? In part, in Paris. In what now looks like a American visitors, according to because of the unprecedented major faux pas, Gillier assured the Brandchannel, an online resource. length of this year’s early-October discerning readership at Women’s Holidaying abroad for the Chi - holiday (eight consecutive work-free Wear Daily last month that his new nese is a relatively recent luxury but days instead of the usual seven). hotel, which is due to open in 2012, members of the new middle class This was caused by the compression would be an exclusive place. He now look eager to explore the far of two public holidays into one: the went on: "We are going to select corners of the world. HSBC esti - Mid-Autumn Festival, which falls on guests. It won't be open to Chinese mates that by 2015 more than 120 a variable date in September ac - tourists, for example." million people in China will travel cording to the lunar calendar, and Instead Gillier wanted to attract overseas annually, up from 60 mil - the National Day holiday, which be - sophisticated guests looking for lion last year. gan on October 1. “quiet hotels with a certain privacy”. This tendency to travel outside That wasn’t the only factor in the Gillier has since apologised, with China looks like being encouraged by mass migration. The central govern - Women’s Wear Daily changing his some of the frustrations of domestic ment decided to abolish motorway reference to “Chinese tourists” to travel. Indeed for those who just did tolls for cars during the holiday pe - “busloads of tourists”. But his com - so during the Golden Week national riod. It was the first time in a decade ments had already hit a nerve, es - holiday – which ended on October 7 – that the expressways had been toll- pecially on Chinese social media the conclusion is clear: travel any - free and many families were keen to P h o t

o sites, with many calling him “racist” where but within China. take advantage to get away.

S o u r and “discriminatory”. If he returns The national break unleashed a In fact, the Ministry of Transport c e :

R e to his original plan, Gillier’s fashion deluge of tourists, and the media was said that there were 38.2% more ve - u t e r s house could pay a hefty price. On soon flooded with articles complain - hicle journeys on toll roads during 11 Week in China Economy 19 October 2012

this year’s Golden Week holiday Beijing attracted 182,000 visitors a sparked debate about whether than in the same period last year. day during the holidays, its high - China’s mandatory Golden Week State news agency Xinhua believes est daily attendance ever. Police holiday system still makes sense. that the waiving of tolls played a big said at least 900,000 people had There are only two long holidays in part in the gridlock (see WiC167 for visited Hangzhou’s West Lake the country every year – the Spring our article on Beijing’s traffic chaos (which UNESCO calls: “an idealised Festival (in January or February) during the holiday). fusion between humans and na - and National Day holiday (in Octo - The Wall Street Journal reports ture”) in a single day, almost 20% ber). Part of the economic logic for - that almost half the Chinese pop - up from last year. Golden Weeks was to drive con - ulation left their homes to visit And who said travel is supposed sumption, as people spent on tourist sites, up 40% from 2011. to broaden the mind? “We saw ab - hotels and tourist hotspots. Evi - And with so many people travel - solutely nothing but people’s dently it has succeeded, but per - ling at the same time the results heads,” Guo Zhijun of Henan haps too well with neither the were anything but a relaxing excu - province told the China Daily after transportation infrastructure nor sion. “Congested, overflowing, visiting the Forbidden City. “We the resorts themselves seeming dirty and just not all that much wanted our 11 year-old son to learn able to cope. CBN reckons one solu - fun,” was the verdict of Sanxiang something from the trip, but we tion would be for the government City News from Hunan. only ended up exhausted.” to restore the Golden Week holiday The newspaper also describes the The most chaotic scenes took in May (eliminated in 2009) – submersion of Hunan province’s place in Mount Huashan in Shaanxi tourism volumes might then be scenic spots under a tidal wave of province, says Shenzhen Daily. spread between the two weeks. travelling public. Dadong Mountain Known as “the most precipitous One netizen noted that the cur - district in Xiangtan received almost mountain under heaven”, the huge rent situation was a lose-lose: if you 30,000 visitors on the third day of influx of tourists forced the cable went somewhere in China you just the holiday. For the statistically in - car service out of action as the num - got angry and were ripped off by clined, that was a year-on-year in - bers trying to clamber aboard sur - hoteliers and others in the tourist in - crease of 2,341% (a stat visitors passed its maximum capacity. Over dustry; if you stayed at home, on the doubtless pondered as they queued 10,000 people were left stranded other hand, you felt a chump for up for Dadong’s toilets). on the mountain overnight. wasting the week-long holiday and Similarly, the Forbidden City in The madness of mass travel has were berated by your family. n

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12 Week in China Chinese Character 19 October 2012

Censor and sensibility Delight in China as Nobel prize goes to local author Mo Yan

Basking in the public’s delight: novelist Mo Yan (right) has won the world’s top literary honour

t was perhaps a sign of his roots: (or 1,292 square feet), Mo concluded. sen to give up their Chinese nation - IMo Yan, the farmer’s son turned The Nobel committee gave Mo ality by the time that they received Nobel literature laureate, was soon the award for what it said was the their honour. announcing plans to invest his author’s large and lively style that Not this time, though, and Li Nobel prize money in buying land – simultaneously engaged and sub - Changchun, the Party’s head of or rather an apartment in Beijing, verted the state in which he lives. propaganda, was soon writing to the urban equivalent. Certainly, Mo shows a worldliness congratulate the Chinese Writer’s The 57 year-old novelist, known that keeps him in step with most of Association, of which Mo is vice for being as crafty in his work as he his compatriots, admitting to writ - chairman. is prolific, then added that high ing forewords to weak novels in the “Li said Mo’s victory reflects the prices meant he wasn’t sure what he past “for two sacks of rice”. prosperity and progress of Chinese could buy in the capital city with his Now, of course, he has more literature, as well as the increasing Rmb7.5 million ($1.2 million) cash bountiful resources. And Mo’s prize national strength and influence of windfall. is also a boon for the Communist China,” Xinhua reported. Still, he seemed more than ready Party, which at last has a Chinese But others say that what makes to consider his options. Questioned Nobel winner that it can actually Mo different is that he has chosen by a Xinhua journalist, Mo (whose boast about. to stay within the system but with - real name is Guan Moye,) said: “I’m Two previous winners – Gao out being fooled by it, and that he getting ready to buy a house in Bei - Xingjian (born in China but of has always been ready to raise a crit - jing, a big house. But then I’ve been French nationality when he won the ical voice. P h o t o warned I won’t be able to get any - literature prize in 2000) and Liu Xi - The accolade is a little ironic,

S o u r c thing that big. A house is more than aobo (winner of the Peace prize in given that his pen name suggests e :

I m

a Rmb50,000 per square metre.” So 2010) – are persona non grata in the opposite. Born on 7 February, g i n e

C the Rmb7.5 million would buy a China. Other more acceptable vic - 1955, in the village of Gaomi in Shan - h i n a

dwelling of just 120 square metres tors were born in China but had cho - dong, Mo gave himself the pen 13 Week in China Chinese Character 19 October 2012

name “Don’t Speak,” or “mo yan” torical fresco” of a family in 20th early in life. It was a reminder, he century China, as the Nobel com - said, not to open his mouth too mittee put it. Darkly humorous, Life much in public. His parents had and Death are Wearing Me Out then warned him he was prone to out - portrayed the violence of life in the spokeness, not a smart trait when early years of the People’s Republic, people around him were falling while Sandalwood Death , to come prey to political infighting, as one out next year in English, is a story of campaign raged after another dur - human cruelty in the waning years ing the Cultural Revolution. of the Qing Dynasty. In 1967, aged just twelve, Mo left Mo has said his books are deeply school to work as a farmer, later be - influenced by William Faulkner and came a factory worker and then Gabriel Garcia Marquez, although joined the army in 1976. he says he discovered them late in He began to write in 1981 and his life, aged 29. output since then has been prolific, Not known for his modesty, Mo as if the bottled energy of his ‘Don’t told Granta: “If I had read their Speak’ youth has been channelled works sooner I would have already into the written word instead. accomplished a masterpiece like One of his more recent novels, Mo Yan: transcending politics? they did.” Life and Death are Wearing Me Out , The Nobel committee lauded Mo is 490,000 characters long. But Mo actually I believe these limitations for work that mixed “fantasy and re - wrote it in just 43 days. That works or censorship are great for litera - ality, historical and social perspec - out at 11,000 characters a day, which ture creation.” tives”. It also said: “Mo Yan has cre - Mo still writes by hand. (He does so The Transparent Carrot , which ated a world reminiscent in its because he knows his daughter will came out in 1986, was Mo’s first suc - complexity of those in the writings be able to sell his manuscripts for a cess. Soon after, he published a of William Faulkner and Gabriel fortune in the future.) novel telling five interlocking sto - García Márquez, at the same time Mo’s style is punchy, colourful ries called Hong Gaoliang . Seven finding a departure point in old Chi - and dramatic – “melodramatic, years later that would come out in nese literature and in oral tradition.” sometimes,” says the Hong Kong au - English as Red Sorghum , the title In his home village of Gaomi Mo thor and scholar Leung Ping-kwan, that was to make his name. gave a news conference after his vic - in an interview with WiC this week. “The book consists of five stories tory, dismissing the criticism of In them violence is widespread that unfold and interweave in those that say he has failed to show and people cheat and murder their Gaomi in several turbulent decades solidarity with other writers who way through life. Mo’s plots are also in the 20th century, with depictions fell foul of the system. marked by a magical, or hallucina - of bandit culture, the Japanese oc - Notoriously, last year he joined tory realism, a tool, he has said, for cupation and the harsh conditions other writers in honouring Mao Ze - getting round some of the censor - endured by poor farm workers,” the dong’s theory that literature must ship rules. Nobel’s Stockholm jury wrote. serve politics, by copying out Mao’s In an interview with Granta mag - Made into a film by Zhang Yi - 1942 poem Yan’an Talks on Litera - azine earlier this year, Mo said: mou, Red Sorghum impressed audi - ture and Art. The treatise is said to “Many approaches to literature ences in a number of countries. Al - have underpinned restrictions on have political bearings, for exam - though some said that Zhang’s film literary expression in China for ple in our real life there might be was better than Mo’s book, Mo was decades. some sharp or sensitive issues that now a well-known writer – at home But Mo had little time for detrac - they do not wish to touch upon. At and abroad. Since then more novels tors. “The award is a victory for lit - such a juncture a writer can inject have been published. The Garlic Bal - erature instead of political correct - P h o t o their own imagination to isolate lads (1988) and The Republic of Wine ness, because my writings transcend

S o u r c them from the real world or maybe (1992) both took aim at contempo - politics… I am writing in a China un - e :

I m

a they can exaggerate the situation – rary Chinese society (and were tem - der Communist Party leaders. How - g i n e

C making sure it is bold, vivid and has porarily banned). Next came Big ever, my works cannot be restricted h i n a the signature of our real world. So, Breasts and Wide Hips , a “broad his - by political parties,” he insisted. n 14 Week in China Society and Culture 19 October 2012

Chinese cinema’s new ‘it’ girl Which film won the box office battle during the Golden Week bonanza?

aichi is an ancient martial art Tthat is characterised by slow, flowing movement. And it’s sud - denly very much in vogue as a source of inspiration for several martial arts epics. Keanu Reeves, for instance, is directing a film called Man of Taichi . And more recently, Taichi 0 – the first of a trilogy di - rected by Stephen Fung – topped the box office during the Golden Week holiday period in early Octo - ber. That’s significant, as it’s one of the most competitive (as well as lu - crative) times of the year for Chi - nese cinema. Taichi 0 , thanks in part to higher average ticket prices at IMAX the - atres, even edged out Chinese-Hol - lywood co-production Looper (see WiC166) in total weekend revenues, taking in Rmb110 million ($17.6 mil - lion). Coming in third, was actress Fan Bingbing’s romantic thriller Double Exposure . Double Exposure also outper - formed Dangerous Liaisons , which stars two of China’s biggest names in cinema Zhang Ziyi and Cecilia Cheung. However, their combined star power was not enough to save the latest remake of the 18th cen - tury French literary classic. Despite its generous budget – the film cost Rmb100 million to make and mar - A star is born: Angelababy is enjoying huge box office success ket – Dangerous Liaisons barely nosed into the week’s top five dur - the film [ Dangerous Liaisons ] is just office figures. “The intention has al - ing the Golden Week, taking only not any good. In this case, the box ways been to promote the film to Rmb50 million at the box office. office figure is actually a true reflec - an international audience so the fact P h o t o Fan’s Double Exposure , which cost tion of how well-made the film is.” that we broke Rmb50 million in the

S o u r c much less produce, delivered But a spokesperson for Huaxia, Chinese box office is already con - e :

I m

a Rmb80 million in ticket sales. which produced Dangerous Liaisons , sidered a victory,” the spokesperson g i n e

C One netizen wrote on weibo : “I told Southern Metropolis Daily that said. “The film will soon be released h i n a don’t know how else to say it but it wasn’t disappointed by the box in South Korea, Japan and even Eu - 15 Week in China Society and Culture 19 October 2012

rope and North America. Overseas markets will account for a big chunk of the total takings so we are not worried.” Still, analysts say the reason for the movie’s less-than-desirable out - come is because Zhang’s box office appeal has faded over the years. Dangerous Liaisons is her first big feature film since 2009. It certainly didn’t help that her co-star Cheung has been labelled “box-office poi - son” by the local media, after a string of duds, such as last year’s re - leases Treasure Hunt , Legendary Amazons and Speed Angels . On the other hand, critics say the plot of Double Exposure – a modern- day love story with a bit of suspense – appeals more to younger audi - ences than Zhang and Cheung’s movie, which is themed around aristocrats and lavish society balls that’s set in the 1930s. As Beijing She’s smiling, but Zhang Ziyi’s film Dangerous Liaisons has disappointed Evening News suggested, “Even if you put Fan Bingbing in Dangerous her career trajectory seems to be landmark with the memorable line: Liaisons the outcome is not going to heading in the opposite direction to “I’ve seen a big wall before.” be different. The film is a lost cause.” Cecilia Cheung’s, with the 23 year- In fact, Spoelstra was evidently Indeed, that could explain why old Shanghainese now being con - intent on displaying a good deal Taichi 0 has done so well at the box sidered as box office ‘gold’ and en - more cultural sensitivity during his office. While from a very familiar joying leading lady status. team’s visit to China. In large part genre (one critic says it is “no differ - that’s because the NBA knows it ent from your average kung-fu must do a better job of engaging flick”), it is fun to watch. It’s also of - with its Chinese fans. fers new takes on kung-fu film tra - In recent years the basketball ditions – adapting 3D technology , as Bouncing back league has been guaranteed a lot of well as the Victorian ‘punk’ aesthetic NBA goes on charm offensive attention in China, primarily thanks seen in Hollywood’s Sherlock to Yao Ming, the Shanghainese bas - Holmes movies. “ e don’t want to sit around in ketball sensation who played for the “If we don’t innovate, we’ll for - Wour hotel room ordering Houston Rockets. However, with ever be watching the same thing American room service,” Erik Spoel - Yao’s retirement last year it lost a over and over again. It becomes stra, coach of the Miami Heat basket - key ambassador in China. Keeping meaningless,” opines Fung, the di - ball team, told media last week. “We Chinese fans interested looks like rector. want to try some Chinese culture.” being a challenge too. A Xinhua sur - The plot is based (very) loosely on What that might entail intrigues vey two years ago suggested that the story of Yang Luchan, the inven - WiC: a group of six foot eight men only 15% of NBA fans in China fall tor of Taichi. Also adding to its ap - practicing calligraphy, perhaps? into the ‘diehard’ category – defined peal, it stars Yang Ying, better known Anyway, it’s a major step forward as supporting a specific team and as Angelababy (see WiC29). The from an earlier era when Washing - buying its merchandise. A further P h o t

o model-turned-actress has become ton Bullets forward Elvin Hayes re - 35% were classified as watching only

S o u r something of a fixture on China’s fused to even leave the team bus the big games, with no team loyalty. c e :

R e big screens, starring in 14 major during a visit to the Great Wall. Most worrying of all, the remaining u t e r s films over the last two years. In fact, Hayes dismissed the ancient 50% declared themselves as Yao fans 16 Week in China Society and Culture 19 October 2012

A slamdunk: American-born NBA star Jeremy Lin has proven popular in China

and only watched games in which Heat, the current NBA champions, fixture. The decision to bring the he played. and the Los Angeles Clippers were in champions underlines how seri - To make matters worse, another China last week for high-profile pre- ously the China market is being top Chinese star Yi Jianlian recently season games. The first match was taken, it reckoned. departed the NBA too (see WiC166). in Beijing last Thursday, with both Xinmin Evening News reported Hence for the first time in 11 years, teams fielding their star players. The that the Miami Heat were treating the league is without a single main - Heat won 94-80 in a hard-fought the trip with particular impor - land Chinese player. game that saw Miami’s LeBron tance, sending an entourage of Of course, last season Jeremy Lin James score 20 points, while the nearly 70 people, not just players spiked interest across China, Clipper’s Blake Griffin netted 19. In and cheerleaders but senior club prompted both by his ethnicity fact, local media were impressed executives too. The Heat has re - and almost overnight success out that both teams staged a competi - cently launched a Chinese lan - on the court (he scored more tive match, rather than the more guage website and said it was ne - points in his first five games than typical ‘exhibition’ performance gotiating deals with two local any debutant since 1976). But Lin’s that was expected. The Information companies during the visit. The a more complicated proposition Times commented that the high Heat’s marketing director told the for a Chinese audience than Yao – number of blocks and fouls showed newspaper that the mission was he was born in the US to Taiwanese both sides were trying to win. “to bring Chinese brands to Mi - immigrant parents. The rematch, played in Shanghai ami”. Thus while the period of ‘Lin- on Sunday, saw the Clippers come In another sign of the NBA’s in - sanity’ offered a welcome boost to back to win 99-89 and tie the series. tent, it was announced during the television audiences, it was not And encouragingly for the NBA, trip that the world’s first NBA Centre lost on league executives that both games attracted nearly 18,000 is to be located in Tianjin. Due for CCTV – China’s leading state broad - fans, with standard tickets tripling completion in 2015, this 12,000- caster – cut the number of games it in price online and VIP tickets square metre facility will include a broadcast last season to two per changing hands for more than training and fitness area, a chil - week (from four). The decision Rmb10,000. dren’s entertainment zone, and P h o t

o largely reflected Yao’s retirement It is the sixth time that the NBA shopping and dining facilities. The

S o u r from the sport. has held pre-season China matches, goal, said NBA China CEO David c e :

R e And so a new charm offensive is but Peninsula Morning, a newspa - Shoemaker, is to “offer the fans an u t e r s underway. That’s why the Miami per, noted it was the first “all star” excellent opportunity to enjoy and 17 Week in China Society and Culture 19 October 2012

experience the NBA”. After 20 years developing Chi - nese interest in the NBA, the league shows no signs of giving up…

Abortive society China leads world in abortions

lmost 1,500 every hour – that’s Ahow many abortions are being The sign says: “Birth control is a basic state policy of our country” performed in China, or over 13 mil - lion a year. It’s the highest figure in remarked. Only about 12% of young the abortions a year are carried out the world by far, according to new Chinese people said they “highly on women under 25, the majority of figures released by the State Family understood” how to use contracep - whom are not married, China Radio Planning Commission’s Science and tives, according to the study, which International quoted Wu as saying. Technology Research Institute. was released to coincide with World That means they are probably not Another finding, say officials Contraception Day. falling victim to family planning from the Science and Technology “Many young people face obsta - laws. That means other factors, like Research Institute, is that many peo - cles in getting information about social disapproval of unmarried ple still don’t know how to use con - contraception and other informa - motherhood, could be a major factor traceptives. That’s all the more tion,” another radio station, China in the high abortion rate. amazing in a country that has oper - National Radio, reported. Nor do general levels of education ated a one-child policy for over 30 “For example they are embar - seem to play the role that they do in years (where one might suppose rassed to discuss the subject or are some other countries. “University family planning campaigns would afraid they will be found out by their students make up a major group. be a priority, too). parents, school or friends, leading to Many young women born after 1990 But Wu Shangchun, a professor serious deficiencies in their basic re - haven’t matured yet and are igno - at the institute, explains that some productive knowledge,” it said. rant about the damage that can be of the ignorance can be blamed on To put China’s abortion rate into done to their bodies by abortion,” Chinese culture, where sex has tra - perspective: women in India (popu - China National Radio said. ditionally been an embarrassing lation 1.24 billion versus China’s 1.34 “Experts are calling on society, subject, to be avoided in discussion. billion) had about 6.5 million abor - schools and families to stress the im - That means parents, schools and tions in 2008, according to the portance of this issue, to think how other potential sources of reliable Times of India – about half the num - to spread knowledge and help young information simply fail to discuss ber in China (the figure has been rel - people assess the risks of ‘love’ and contraception with young people. atively stable since then, too). reduce the damage,” it continued. They respond by taking risks and And in the United States, with But one factor was conspicious pregnancies are the result. about a quarter of China’s popula - by its absence in the reports: elective “About half of people use no con - tion, there are 1.2 million abortions a abortion based on the child’s gen - traception and the remainder rely year. Even if you adjust for popula - der. Due to the one-child policy and on methods such as ‘the safe time’ tion differences, China’s abortion rate the traditional preference in China or ejaculating outside of the body,” is still well over double America’s. for sons, abortion is often used to Wu told China Radio International. Contributing significantly to avoid the delivery of a daughter. Ac - “An inability to use contraception China’s figures is the country’s cording to the 2010 census, the gen - P h o t

o scientifically and methodically is tough one-child policy, which leads der ratio for births is 118 to 100 in

S o u r the reason for its failure. For exam - to high rates of voluntary and forced favour of boys. That’s an anomaly c e :

R e ple only about 10% of people say abortions, experts agree. But – and that can only be explained by u t e r s they use condoms every time,” she this is important – over 6 million of China’s high abortion rate. n 18 Week in China And Finally 19 October 2012

On the watch Fresh scandal raises issue of press freedom

coop , Evelyn Waugh’s classic and tweeted: “I have never felt such ket regulator, the CSRC. It asserts Ssatire on British journalism, fea - anger and shame.” He lamented the that companies preparing to IPO tures a fictional newspaper called “hundred of thousands” of copies have faced extortion from a host of The Beast. Its proprietor is the dom - of the paper that were destroyed. newspapers, which threaten to run ineering Lord Copper, a man who Word of the incident soon went vi - negative stories unless they are paid doesn’t like to be contradicted. ral online, with the Fujian official off with advertising. One company When Lord Copper is right, his sub - earning the nickname ‘Uncle that recently listed on ChiNext in ordinates agree, ‘Definitely, Lord Watch’. More surprising was that Shenzhen told Century Weekly that Copper’. When he is wrong, they leading state media outlets also it had spent Rmb4 million buying concur, ‘Up to a point, Lord Copper’. waded in. The Global Times noted off influential newspapers. In China there is an equivalent of that the “Chinese media has been The problem is ongoing, says the Lord Copper, albeit it’s a somewhat suffering castration for many years” magazine: “A senior CSRC official less colourful character: the state’s but also felt that the treatment of said it was wrong for media outlets propaganda machine. Journalists the Yunnan City Times was “espe - to abuse their power at the expense are regularly given lists of subjects cially shameful”. of IPO candidates, but that his that are taboo. Criticism of senior The Global Times bemoaned that agency has been powerless to stop figures in government is usually off- “the personal interests of a handful the practice because extortion vic - limits. There was further evidence of officials constantly intervenes in tims refuse to talk.” of that last week when a gutsy article the media’s editorial process”. Somewhat like the phone-hack - appeared in the Yunnan City Times. The ‘Uncle Watch’ debacle has ing scandal in the UK – where de - It was about a senior official from portrayed the press as the victim of bates on press freedom are counter - Fujian province, asking how he an Orwellian system. Of course, the posed with clear cases of criminal could afford to don a Rmb50,000 reality is more complex. While the behaviour from some newspapers – ($7,996) diamond-encrusted Rado goal of press freedom is a worthy these stories also cast the Chinese watch, as well as wear a Rmb13,000 one, it also seems true that, when media in an ambivalent light. Hermès belt. But before the news - the nation’s newspapers are free to On the one hand, no one wants to paper could hit newsstands the offi - write what they like, they some - see newspapers pulped for expos - cial ordered the edition reprinted times abuse their power for gain. ing potential corruption. But nor do minus the offending story. This is the case made in a recent they want to see newspapers acting The newspaper’s boss Zhou article by Century Weekly, which corruptly themselves, as the CSRC Zhichen quickly took to his weibo, sources a report from the stockmar - claims is the case. n

An undervalued currency?

"The rate, the spot rate and future rate, determined by the market supply and demand, basically are very close to the equilibrium rate" * Yi Gang, vice governor of the People's Bank of China, speaks of the renminbi’s value at the annual meeting of the International Monetary Fund and World Bank in Tokyo. He spoke as a substitute for his boss, Zhou Xiaochuan who boycotted the event over political tensions with Japan. Yi added that the renminbi had appreciated more than 30% against the dollar since 2005. Yi Gang

19 Week in China The Back Page 19 October 2012

Photo of the Week In Numbers 25 The number of mentions of China or the Chinese during the presidential debate between President Obama and Mitt Romney on Tuesday. That was more than the combined mentions of social security, Afghanistan, the middle class and Medicare.

18%

P China Eastern’s decrease in international h o t o

passenger traffic in September from a S o u r

c month earlier. The company says traffic fell e :

R

e in part due to weakening demand for flights u t e r s to Japan amid a territorial dispute between

the two countries. On a grand scale: 900 tents on a beach in Qingdao form the shape of a Chinese dragon $186.4 billion The value of China’s exports in September, rising a solid 9.9% from a year ago, according to data from the General Where is it? Administration of Customs. This was much Some of the places referred to in this issue higher than the 2.7% rise in August. The September trade surplus expanded to $27.7 billion from $26.7 billion in August. Beijing

Shandong 668,000 The number of Communist Party members China and government officials punished for Shanghai violating rules over the last five years, Hangzhou according to official data. The official Hunan announcement comes at a sensitive time as China faces a once-in-a-decade Yunnan leadership transition and seeks to tackle Guangzhou Shenzhen Hong Kong worsening corruption.

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