1 Talking Point 6 Week in 60 Seconds 7 Banking and Finance Week in China 8 Economy 9 Auto Industry 11 Internet and Tech 13 Energy and Resources 14 Society and Culture 2 October 2015 17 And Finally Issue 298 18 The Back Page www.weekinchina.com

Red guest at the White House m o c . n i e t s p e a t i n e b . w w w

Xi visits Obama in Washington, but was his US trip overshadowed by the Pope’s?

Brought to you by Week in China Talking Point 2 October 2015

Pontiff pips president Xi Jinping plays second fiddle to Pope Francis on American tour

China’s president grabs his moment in the spotlight with tech executives in California last week

oth hold sway over more than Catholic: “We have the propaganda The Pope’s trip to the US was Ba billion people. And both got department and you have the evan - rare – it was only the tenth Papal the top job after closed-door elec - gelicals. We have the organisation visit. Even rarer was a speech in tions that remain well nigh impos - department and you have the Col - Congress, as well as another on the sible for outsiders to figure out. lege of Cardinals. What’s the differ - White House lawn (delivered in They are, of course, Xi Jinping and ence, then?” English, and ending with the crowd- Pope Francis. Adding to the sense of mystery pleasing line “God Bless America”). Some of the similarities in the or - surrounding the two organisations Inevitably this raises the ques - ganisations that the two men lead was a new one last week. tion: was Xi Jinping’s own visit – have been mentioned before. How had both these powerful made in the very same week – over - As Richard McGregor notes in his men scheduled official visits to shadowed? book The Party , the Vatican “is the America in the same week? Did the only organisation of comparable di - Chinese know that their President He came, he saw… P h o t o mensions to the Chinese Commu - would be going head-to-head with Before arriving in the US, Xi did

S o u r c nist Party” with “a similar addiction the Supreme Pontiff for media air - something rare too. He had an in - e :

I m

a to ritual and secrecy.” time? And if so, why did Beijing’s terview with a Western media out - g i n e

C McGregor even quotes one Chi - diplomats agree to the arrange - let, giving written responses to h i n a nese source as telling a senior ment? questions from the Wall Street Jour - 1

Week in China Talking Point 2 October 2015

nal. Perhaps the most notable phrase he used was that “all roads lead to Rome”. Wittingly or not, the metaphor foreshadowed a week in which the Fiat-driving Francis would grab most of the attention. Chinese media did its best to sound unconcerned. As Wujie News commented: “Considering the Pope’s influence in the Western world, especially his identity as a spiritual leader beyond politics, any state leader visiting the United States at the same time would be robbed of the limelight.” The American media noticed it too. The New York Times ran a car - toon showing Obama holding out his hand to Xi, only to turn and focus his attention on Pope Francis instead. Jon Stewart’s replacement at the Daily Show , Trevor Noah, told Thanks for dropping by: Xi visited the White House last Friday the same newspaper that a comic segment of his programme had pact of Xi’s visit. Its editorial page Chinese side, the likes of Alibaba’s been designed to reflect this reality. described the trip as “nothing but a Jack Ma and Tencent’s Pony Ma “We’re commenting on the fact that success” although it did concede turned up; and from the US were everyone is only covering the Pope. that “Chinese media have sounded heavyweights such as Apple’s Tim Everyone’s going mad over the more upbeat about the visit” than Cook, Amazon’s Jeff Bezos and Face - Pope. What I found interesting is their American counterparts. book’s Mark Zuckerberg (who even the fact that the Chinese president Xinhua, meanwhile, cited Xi’s wore a suit and tie). is there, and no one’s talking about personal verdict that the trip had All told, those present repre - it.” been “fruitful” and it listed 49 sented companies with a combined MediaMiser, a monitoring com - “achievements” that had been made market value estimated at $2.5 tril - pany, calculated that between Sep - during the week. lion. tember 20 and 27, the Pope was Some of these were substantive, A photo of Xi with the tech lead - mentioned more than 21 times others might strike WiC readers as a ers went viral online and did a little more frequently on US television little desperate, such as the news to reinforce the Chinese leader’s than Xi, and nearly five times as that 2016 had been “designated as enormous sway. A common view often in American print media. China-US Tourism Year”. among Chinese netizens: only Xi Xi even faced competition from could have got this many of the his own wife for media coverage. Not so sleepy in Seattle world’s tech bosses to gather in the One of the more memorable parts It was widely pointed out that Xi same room. of their visit was a speech Peng spent more of his time on Ameri - At another business-focused Liyuan gave at the United Nations can soil in Seattle than he did in the event in Seattle, Xi sought to ram in pretty fluent English (for more nation’s capital, Washington. Ar - home his key messages that eco - see page 16). guably this part of his trip had the nomic reforms would be ongoing The China Daily dutifully highest impact, especially in regard and that China would continue to recorded that this was the “first to its photo opportunities. be an engine of global growth. time in the People’s Republic of Xi convened a conference about As Wujie News reported: P h o t

o China’s diplomatic history this had the internet that was attended by 28 “Whereas the outside world is wor -

S o u r been done”. tech titans from China and the US. ried about the economic slowdown c e :

R e Of course, the same newspaper The invitee list read like a veritable in China, Xi Jinping has rendered u t e r s

was in no mood to belittle the im - who’s who of the digital elite: on the hope to the US business commu - 3 Week in China Talking Point 2 October 2015

nity: he said that in the next five years, China is expected to import Planet China $10 trillion of goods, make more Strange but true stories from the new China than $500 billion in overseas in - vestment and provide more than ICY THINKING. 500 million outbound tourists.” Last week it was revealed that children’s author Du Hong, Xi also showed off a little of his who died from pancreatic cancer in May, has had her head cryogenically classical history in denying that frozen, making her the first Chinese to undergo such a procedure. America and China were heading The operation was conducted by American cryonics company, Alcor. for the “Thucydides trap”, a refer - Since its founding in 1967, Alcor has carried out 141 freezing procedures, ence to the thesis based on ancient but reported exactly zero reanimation procedures. In a brief Q&A Athens and Sparta that a newly ris - published by 21CN Business Herald, Alcor explains that the freezing ing power is bound to challenge the process is currently “irreversible” but that the “technology of the future is boundless in possibility”. existing power, making war in - Du Hong was the fifth Alcor patient this year. In addition to writing evitable. children’s books, she was also the editor of The Three-Body Problem , a For CCTV the key thing about the Chinese work of science fiction which won the Hugo Award for Best Novel trip was the tone set by their man. (see WiC262). In the book a character’s head is cryogenically frozen and Reflecting on his Seattle speech the despatched to outer space, where it is eventually reanimated by aliens. state broadcaster said : “Xi did a fine Du Hong’s connection to the novel and her decision to undergo job in addressing US concerns while cryostasis has attracted great debate. Most have questioned the scientific advocating his views on fostering benefits of the operation. Jiang Jiyao, a noted neurosurgeon, is sceptical peaceful and symbiotic relations that the structure and tissue of the brain can survive the low temperatures and affirmed that China’s economy required for cryostasis. Alcor’s endeavours are “commercial rather than is in fine fettle. Xi’s references to medical”, he also suggests. American culture, such as the pop - Although Alcor is a registered non-profit body, its patients have to pay a range of fees to undergo the procedure. According to Du Hong’s husband, ular television series House of the cost of freezing her body would have been Rmb2 million ($314,329) so Cards , also endeared the president they only froze her head, which was cheaper at Rmb750,000. But even after to the American public.” making this economy, her husband still had to sell their flat and fully deplete Du Hong’s savings account. And the key announcements? As WiC reported in last week’s issue there was the obligatory Boeing air - firms helped it to snoop”. nothing,” it commented dismis - craft purchase (a stock feature of A truce of sorts seems to have sively. Sino-US summitry), as well as the been agreed, with the two leaders More substantive was Xi’s new news that the Seattle firm would set announcing a cyber pact that “nei - policy promise on climate change. up a production facility in China. ther country’s government will con - He committed to putting a cap-and- Additionally, there were two duct or knowingly support trade mechanism in place by 2017 major policy areas where Xi sought cyber-enabled theft of intellectual to lower China’s carbon emissions. to either calm US concerns or take property, including trade secrets or He also said China would create a $3 the initiative. The first related to other confidential business infor - billion fund to help developing cyber espionage, an area of growing mation, with the intent of provid - countries address climate change. concern in Washington, particularly ing competitive advantages to Given that a cap-and-trade bill in relation to American businesses companies or commercial sectors.” died in the US Senate in 2010, the having their intellectual property They also agreed to set up a ‘high- New York Times commented that compromised by Chinese hackers. level joint dialogue mechanism on Xi’s move “puts the ball back in As The Economist pointed out, fighting cybercrime’. Washington’s court on climate China has its own concerns about But few were convinced that the change”. Environmentalists were cyberspying. “America is hardly commitments would add up to genuinely positive too, with The blameless on this front,” the maga - much, with the Wall Street Journal Diplomat writing that it “will prob - zine warned, noting that the NSA calling it the “Obama-Xi Cyber Mi - ably go down as the biggest out - has spied on Chinese targets includ - rage”. come of this meeting”. ing telecoms equipment firm “All of this is an elaborate way of However, the cynics pointed out Huawei and that “American tech saying the two sides have agreed to that building an effective exchange 4 Week in China Talking Point 2 October 2015

for emission trading is going to be There was also no advance on the was readying to leave the US, De - very challenging. Getting powerful row in the South China Sea, where mocrat frontrunner Hillary Clinton companies to take part “will be China’ s activities have antagonised entered the fray too, tweeting about daunting even for China’s authori - US allies. It seems that the two sides that favourite bugbear of Sino-US tarian leaders,” the New York Times did little more than restate their re - relations: human rights. conceded. spective positions on the various Clinton called it “shameless” that maritime disputes in the region. Xi had hosted a meeting on What did China get? Some analysts expect the South women’s rights at the UN “while Xi didn’t come away from the US China Sea tensions to steadily poi - persecuting feminists”. with many major goodies, with one soning the overall relationship be - Back in China the Global Times exception: the White House an - tween the two countries. In a Fox dismissed Clinton’s “ignominious nounced that it now supports the News op-ed, Michael Auslin, a resi - shenanigans” and likened her to the idea of the IMF including the ren - dent scholar at the American Enter - “demagogue Donald Trump”. minbi as part of its special drawing prise Institute, a conservative think That led the Financial Times to rights currency scheme. The yuan’s tank in Washington, argued that the comment: “The spat signals the re - inclusion in the SDR regime is seen Sino-American relationship is sumption of Sino-US sniping fol - by Beijing as key to internationalis - “more dysfunctional than ever”. lowing a week of diplomatic good ing the Chinese currency. “All the right things were said,” feeling.” The sniping looks set to get Perhaps the biggest disappoint - he conceded of the summit, “but worse as next year’s US election ap - ment related to the bilateral invest - leaving the biggest impression, was proaches. ment treaty (BIT), or rather the lack the unavoidable fact that US-China That said, the New Yorker went of one. Business bosses had hoped relations are locked into their cur - back to the bigger picture: “Amid some sort of breakthrough would rent pattern of competition and dis - the anxieties, it is easy to overlook be achieved in Washington, but no trust.” a powerful fact: trade between progress was made. (The treaty will Indeed, practically all of the pres - China and the US has grown from $2 reduce the number of sectors that idential candidates for the 2016 race billion in 1979 to $592 billion last are off-limits to investors from the have recently said something un - year, making the nations more in - other country.) pleasant about China. And just as Xi terdependent than ever.” n

Not giving up on China

The war of words between the Chinese media and Hong Kong tycoon Li Ka-shing entered a new phase this week. As we reported in WiC297, a Xinhua think tank had recently accused Li of abandoning China and trying to ‘run away’ as he continues to move his assets overseas. In a rare move Li’s flagship company CK Hutchison Holdings has issued a defiant rebuttal. “We are vigilant not to let these unfounded allegations escalate to cause investor concerns and mitigate against President Xi’s positive message to the business community and investors at large,” the statement read. denies that this means it is abandoning China. Invoking Xi Jinping by name may be a tactic to According to the company, the number of retail I l l counter the accusations that Li’s actions have been stores it operates in mainland China has grown by 77% u s t r a

t “unpatriotic”. Li’s company, when asked why it didn’t to 2,300 in the last two years. i o n : w issue a response earlier, claimed that it did not want to Li also noted that freedom of speech is a “double- w w . b “stoke controversy” while Xi was on a state visit to the edged sword”, but in a riposte the Global Times advised e n i t a e US. It also contends it has taken a “prudent” approach him to get used to it, saying a “de-deification process” is p s t e i n to scaling back its mainland property investments, but underway to diminish the tycoon’s god-like status. . c o m

5 Week in China The Week in 60 Seconds 2 October 2015

China slows, Glencore drops The major news items from China this week were...

Shares in Glencore fell 23.54% on the London stock 1exchange on Monday, before recovering much of these dramatic losses over the course of the week. The commodities giant has suffered particularly from China’s slowdown as demand for metals have slumped amid waning industrial production. Chinese industrial profits for August fell 8.8% year-on-year – the steepest decline in four years. Glencore’s latest sell-off was sparked by an analyst note that suggested its equity value could be worth nothing if metal prices remain at their current lows.

During his first speech at the UN headquarters in Bhavish Aggarwal, CEO and co-founder of Ola 2New York, President Xi Jinping pledged to establish a $1 billion “China-UN Peace and Development Fund” to Global Times called Clinton a “rabble-rouser” resorting support the work of the UN. In addition, Xi pledged to to “ignominious shenanigans”. Meanwhile, a senior of - increase China’s commitments to peacekeeping by es - ficial with Xi’s delegation in the US said it should be left tablishing a permanent peacekeeping police force, to Chinese women to judge their rights, not outsiders. building a standby force of 8,000 men, and training 5,000 more foreign peacekeepers over the next five Car-hailing app Didi Kuaidi has invested in one of its years. Xi’s string of promises are a response to persist - 4Indian counterparts, Ola, which dominates 80% of ent entreaties that China take on more international re - that market. The value of the investment was not dis - sponsibility as the world’s second largest economy. closed but a statement from the Chinese firm said it planned to “team up with local players such as Ola to Chinese state media has slammed US presidential carry out cooperation in product development and tech - 3hopeful Hillary Clinton over a tweet deploring nology, as well as sharing their experience in algorithms China’s lack of commitment to women’s rights. After Xi and operations management”. In recent months, Didi Jinping hosted a summit to commemorate the 20th an - Kuaidi has invested in US-based Lyft, and Southeast niversary of the Fourth World Conference on Women, Asia’s Grab Taxi. The three investments are considered Clinton dubbed the affair “shameless”, claiming that a move to counter rival Uber’s push into China. China is still “persecuting feminists”. The state-run Chinese firms have won the bid for Indonesia’s high- 5speed railway project, says the Japanese government. Following the collapse of the previous proposal to es - tablish a high-speed link between Indonesia’s capital and nearby Bandung, Indonesia invited the leading par - ties, China and Japan, to bid for a revised proposal. Japan’s government spokesperson Yoshihide Suga an - nounced on Tuesday that its bid had been rejected and the project awarded to China, in a move he described as P h o t

o “extremely regrettable”. According to Suga, the Chinese

S o u r proposal relieves Indonesia of any financial burden. In - c e :

R e donesia and China have yet to confirm the new deal, u t e r s Clinton’s comments riled the Global Times which will involve $5 billion of Chinese financing. n 6 Week in China Banking and Finance 2 October 2015

The default option As one SOE gets a last-minute reprieve, another faces bankruptcy

hina South Industries Group come up with a restructuring plan CCorp (CSGC) and China National (before being dissolved by receivers) Machinery Industry Corp (Sino - and it remains possible that CSGC mach) have long been the poster might step in as a white knight. boys for China’s heavy machinery Sinomach, another Baoding- industry. The direct translation of based company, has had some bad CSGC’s Chinese name would be news of its own, although its unit “China Weapon Equipment Corp”, China National Erzhong Group is in while Sinomach once prided itself a less dire situation. as the country’s answer to General A state-owned manufacturer of Electric. smelting equipment, Erzhong had But the question now being warned that it may have to stop asked: are the state-owned arms paying interest on a Rmb1 billion manufacturers too big to fail? The note after being sued by a creditor. answer could still be ‘yes’ at the par - Such a default would be the second ent level – at least for the time being. by a Chinese state-owned company But recent developments in China’s Poorly timed: Tianwei’s solar bid in the interbank bond market, fol - bond market have seen CSGC and lowing that of Tianwei. But Erzhong Sinomach sending mixed signals on supply electrical transformers to hopes of avoiding Tianwei’s exam - whether they are prepared to let state power firms. But as competi - ple were boosted last week with a their subsidiaries go under. tion from foreign and local rivals statement which said Sinomach was In May this year electrical trans - grew, it decided to transform its core planning to “take over” the bond to former maker Baoding Tianwei be - business. In 2000 it became the first “protect investors”. came the first state-owned borrower state-owned enterprise (SOE) to The default warning and poten - to default in the domestic bond branch into the new energy sector tial bailout come just days after Bei - market after failing to pay Rmb85.5 by acquiring a small Tibet-based so - jing unveiled guidelines for an over - million ($13.5 million) in interest on lar power firm. In 2007 it then raised haul of SOEs aimed at improving a Rmb1.5 billion bond (see WiC279). its bet significantly, inking a Rmb30 their financial performance (see The bond’s underwriter China billion joint venture with CSGC to WiC296). Construction Bank stepped in with a create a “solar electricity valley” in “Erzhong’s bailout announce - bridging loan for Tianwei to refi - Baoding. ment signals that authorities re - nance its debts. But the short-term The problem? According to the main nervous about the conse - lifeline hasn’t proved to be sufficient. National Business Daily, other firms quences for financial stability,” the A bailout from its powerful parent were doing similar things and the Financial Times has noted. CSGC hasn’t happened either. Last solar sector was rapidly reaping the “The endgame is the bonds will month Tianwei told investors that it consequences of overcapacity: slid - be paid,” Ivan Chung from Moody’s would be filing for bankruptcy. ing prices and rising losses. in Hong Kong told Bloomberg. “The “The bankruptcy of Baoding Tian - “Other SOEs should look at Baod - outcome of Erzhong bond repay - wei is an indication that the un - ing Tianwei as a mirror and reflect if ment is in contrast to Baoding Tai - P h o t o breakable golden shield of state- they too have expanded or diversi - wei’s restructuring. Those are two

S o u r c owned enterprises has finally fied recklessly,” the Economic Infor - extreme outcomes and they make it e :

I m

a shattered,” the state-run Economic mation Daily opines. difficult for investors to assess the g i n e

C Information Daily has suggested. The newspaper says there is still a government’s intention to get rid of h i n a Tianwei was founded in 1958 to six-month window for Tianwei to moral hazards.” n 7 Week in China Economy 2 October 2015

More bets, please Junkets feel the brunt of Macau’s meltdown

“ ust as parents never refuse to Business Daily. “In many firms, the Jhelp their children when they are monthly interest rate is 1%.” in trouble, so the government Sympathy for the investor group should help us to get our money in Macau seems limited, however. back.” “Isn’t it funny that those who bene - This appeal to the paternalistic fit from the legal loopholes now ask In fact, Macau’s government has instincts of Macau’s government for legal support?” asked an editorial been talking for years about en - was made last week in the wake of in the Macau Daily Times. couraging larger numbers of ‘mass an alleged theft at Dore Entertain - The case says something more market’ visitors who bet less at the ment. The junket firm operates about the meltdown in Macau’s tables but spend more on food, three rooms for high roller gam - gaming industry, after 15 consecu - shopping, leisure and entertain - blers at the Wynn Macau casino. tive months of falling revenues. ment in the city. This transition It follows a similar story last April The junkets have played a crucial seems to be underway, spurred by when an agent from Kimren, an - role in the city’s extraordinary suc - Xi Jinping’s crackdown on corrup - other junket operator, fled the city cess as a gambling centre. The Chi - tion, which has hit the high-roller with what was reported to be HK$10 nese government limits how much VIP gambling segment hardest. billion ($1.28 billion) in assets. money its citizens can take out of But the more immediate danger In the latest case the investors the country and it doesn’t recognise is a disorderly collapse in the junket claim that at least HK$440 million is gambling debts. So the junkets bring sector as the boom unravels. “The missing but that Dore is refusing to wealthy gamblers to Macau, lend number of VIP rooms is shrinking pay them back. Dore disputes the them money to play, and then col - and revenues are dropping like a demand for repayment, saying that lect any debts back on the mainland. stone, something has to give be - a former manager called Mimi Visitors from the junkets ac - cause without the huge cashflows Chow used its name to attract de - counted for over 70% of monthly they have become used to, the jun - posits offering high interest rates. gaming revenues at the start of 2014, ket operators will not be able to She is alleged to have run off with according to estimates from meet their commitments to the the cash. Reuters, but their share of business casinos and somebody is going to Only authorised credit institu - has now fallen to about half. have to pay,” a casino insider told tions can take deposits and other re - Macau’s casino boom has gone the South China Morning Post. imbursable funds in Macau, and through two main phases. The ini - The mood, already jittery, has not Dore insists that it has never col - tial surge began 10 years ago, when been helped by a surge in lawsuits lected capital by offering high in - foreign firms invested in thousands by junket bosses chasing bad debts. terest rates because it knows the of new gaming tables and hotel Five-star hotels are also reported to practice is illegal. rooms. But the second explosion be boosting their kidnap insurance Kwok Chi Chung, president of the was fuelled by the easy credit con - after a rise in abductions of wealthy Association of Gaming and Enter - ditions enabled by Beijing’s vast guests over unpaid gambling debts. tainment Promoters of Macau, ac - stimulus campaign following the And the grim news for gaming knowledges that it’s unlawful to global financial crisis in 2008. bosses continued this week when raise funds in this way but says that Now those good times are gone. shares in several casino operators it is still a common practice in the The junkets are suffering most, with fell to five-year-lows after Neptune city. “We call these investors ‘share - fewer high rollers making the trip Group, one of Macau’s biggest jun - holders’ that earn fixed monthly in - to Macau, and the tighter credit con - kets, said it may have to wind down terest from their placed deposits ditions making it tougher to finance operations if the number of VIP with the junket firms,” he told Macau their visits to the tables. gamers continues to plummet. n 8 Week in China Auto Industry 2 October 2015

The crude truth How have the Chinese reacted to Volkswagen’s emission test scandal?

iesel, as well as the engines Dpowered by the liquid fuel, are named after Rudolf Diesel. The Ger - man engineer patented a compres - sion ignition engine and first demonstrated it at the 1900 World Fair. He powered it with peanut oil. But he didn’t live to witness how his invention would revolutionise heavy machinery. On September 29, 1913 Diesel disappeared from a steamship off the English coast. Days later his body was said to have Diesel damage: Wolfsburg-based carmaker in turmoil over tests been found by a Belgian boat and then buried at sea. half of this year? swagen’s brand image among con - Exactly 102 years ago this week Volkswagen ranks top in China’s sumers. “Its reputation will suffer the newspapers were full of specu - car market with about 18.1% of the and the tarnished image will lead to lation as what had led to Diesel’s market as of August, according to more sales slumps,” Yale Zhang, a mysterious demise. Conspiracy the - research group LMC Automotive. consultant at Automotive Foresight, ories abounded. One was that he Chinese car sales also contributed told the newspaper. “To make mat - was snuffed out by the German se - about 65% of the German firm’s ters worse, the scandal comes at a cret service (the thinking: his diesel profits last year. time when Volkswagen’s sales are al - engine played a key role in the de - The most common reaction from ready falling in China.” velopment of the submarine and Chinese consumers on the scandal Sales dropped 5.6% year-on-year they didn’t want him to share its se - has been disbelief, given the very to 1.74 million units in the first six crets with the Brits). Another was strong reputation of German engi - months of 2015. The decline came that worried petroleum companies neering in China. “I thought ‘Made in at a time of attacks from state broad - were behind his death. Germany’ was the seal of absolute caster CCTV, which criticised VW Diesel was back in the headlines quality,” one widely forwarded re - and other foreign carmakers for again this week. This time it was on mark on weibo complained. “Isn’t overcharging for spare parts at their news that Germany’s biggest car - Volkswagen’s company motto: Truth local dealerships (see WiC275). maker Volkswagen had systemati - in Engineering?” another asked. Volkswagen was also singled out cally cheated on US emission tests More cynically, another netizen by the channel’s consumer affairs (making its cars seem more fuel-ef - wrote: “The Germans have learned programme for ignoring customer ficient than they actually are). At how to cheat, perhaps because they complaints about oil leaks in some least 11 million cars are set for recall [Volkswagen executives] have been of its engines. and the German firm has already in China too long.” Volkswagen had intended to dou - lost 40%, or $30 billion, of its mar - Volkswagen’s two main joint ven - ble-down on its spending on the ket value. tures in China – with state giants China market, revealing plans to in - But what does the scandal mean FAW and SAIC – have both put out vest $25 billion between 2015 to 2019 P h o t

o for Volkswagen in China, a market statements saying that they don’t to consolidate its leading position.

S o u r that had just helped to propel the make any of the models implicated But will the scandal lessen the ap - c e :

R e German producer past Toyota as the in the scandal. But China Daily reck - peal of diesel fuel in China too? Ac - u t e r s world’s biggest carmaker in the first ons the episode will still dent Volk - cording to the Global Times, Volk - 9 Week in China Auto Industry 2 October 2015

swagen had been trying to export Protection suggest, almost all of hardly any firm bothers to make its diesel-powered cars to the coun - them trucks and buses. However, them in China. Only 9,046 cars try for several years. However, its their diesel engines accounted for with diesel engines were produced plans ran into stiff resistance after nearly 90% of particulate matter there last year, according to IHS Au - intensive lobbying from American emissions in 2013. Diesel exhausts tomotive, another car industry re - and Japanese carmakers. tend to emit more particulates than search group. “Volkswagen enjoys an absolute their gasoline equivalent, and par - But the irony for Volkswagen is technological edge in diesel vehi - ticulates are already a major health that this diesel deficit could limit cles. If this market is opened the concern in many Chinese cities. Be - the backlash against the German only beneficiary will be Volkswa - cause policymakers don’t want to firm in its largest market. gen,” the Global Times reports, cit - see the same levels of pollution “The Chinese government has ing an industry insider. from cars, they’ve pushed for emis - been supporting development of This technological mastery is sion-reducing equipment that adds electric vehicles instead of diesel- now heavily in question, of course. 15% to the price of a new diesel ve - powered cars,” says Steve Man, an But before that became plain, rival hicle. In the capital city Beijing the analyst with Bloomberg Intelli - foreign automakers seemed to have local government has gone further, gence. He adds that given the negli - convinced China’s environment banning drivers of diesel cars from gible Chinese market for diesel cars, bosses that diesel cars weren’t a getting licence plates at all. Volkswagen’s sales there ought to be good idea. Only about 15% of vehi - The result is that sales of diesel far less impacted than its sales in cles in China run on diesel, figures cars account for such a miniscule Europe and the US, making China from the Ministry of Environmental fraction of the total market that “the saviour for the company”. n

Who’s Hu: Pan Sutong Profiles of China’s business leaders

The title of China’s tallest building changes Big break hands quite frequently these days. But Pan’s consumer electronic business was according to the People’s Daily, Tianjin’s Goldin successful, but not enough to make him Finance 117 took top spot last month. At 597 mega rich. Things began to change in 2007, metres of structural height, Tianjin’s new giant when his company acquired the property claims to have overtaken Shanghai Tower project in Tianjin where Goldin Finance 117 is (which stands at 632 metres, but with a main now built. A year later he renamed his structure of only 580 metres) and now trails company Goldin Property to reflect the only Dubai’s Burj Khalifa in the global change in his core business. skyscraper stakes. Pan soon gained the image of a property Goldin Finance 117 is the iconic heart of the tycoon who liked to flaunt his wealth. For new business district Pan Sutong is building on instance, he loves horse racing in Hong Kong, the outskirts of Tianjin. It won’t derive any an expensive hobby that allows him to rub rental income until it opens next year. But it shoulders with the territory’s high society. He seems to have enough of a presence to keep invests in Chinese art and enjoys fine wine its owner close to the peak of the wealth (launching the glossy Le Pan magazine about pyramid. the industry this year). British princes William and Harry have faced off at Goldin’s charity polo matches in To start with Gloucestershire, while Pan has built a vast new polo club of his Born in Guangdong in 1963, Pan was raised first by his own as part of a new business district outside Tianjin. grandmother, who died when he was 13. Then he was sent to California to live with his step-grandmother, returning to China Need to know four years later. As a high-school dropout, Pan worked as the This has been a rollercoaster year for the tycoon. The share price driver of a Party official at his hometown Shaoguan. In 1993 he of Goldin Property went on a spectacular rise earlier this year, started his own business, making MP3 products and karaoke spiking 400% in the three months to May, with Goldin’s market equipment under the Matsunichi brand. To promote his company value touching HK$100 billion ($12.8 billion). It has since dwindled he acquired a football team in 1996 and named it Matsunichi. He to HK$27 billion, although Pan says he is unfazed by the plunge. sold the club six years later but took his company public in Hong He may take comfort from Forbes’ data, which has his net worth Kong via a backdoor listing, also with the faux-Japanese brand. still at $12 billion.

10 Week in China Internet and Tech 2 October 2015

Comeback kid Is Google plotting China return with Huawei’s smartphone tie-up?

photograph of Xi Jinping with A28 of the top tech CEOs from America and China taken during his US visit last week has prompted much speculation about who was positioned where in the line-up. Yet perhaps just as telling was who was missing from the photo. According to the Wall Street Jour - nal, Google, the world’s second largest listed company by market capitalisation, had not been invited. The company famously withdrew from China in 2010 on the grounds that it would not self-censor con - tent. At the time co-founder Sergey Google exited China on principle but could be having second thoughts Brin likened China’s limited free - doms to those of the former Soviet the first time the US firm has used a also one of the few companies to Union, where he had grown up. mainland Chinese partner. be given access to the operating Fast forward five years and recent In part this is testament to system that will power Google’s newspaper reports suggest Google Huawei’s strong surge up the smart - wearable device Android Wear. is actively trying to re-enter China. phone handset rankings. According Tech website The Information re - The snub to its new CEO, Sundar to IDC data, it is now the world’s ports that Google wants Chinese Pichai, may show it still has a lot third largest manufacturer, with an handset manufacturers, including more work to do before it wins 8.9% market share at the end of June Huawei, to pre-load its app store favour again in Beijing. Or it may be compared to Apple’s 14.1% and Sam - Google Play onto their smart - a sign that relations are evolving sung’s 21.7% share. But with 48.15% phones. None currently use Google’s rapidly behind the scenes, but nei - year-on-year growth, its shipments ecosystem of apps, search and email ther side wants to publicly draw at - are rising much faster than all of its because they are blocked in China. tention to the fact. rivals in the top 10, particularly In Google’s place Baidu, Tencent and Ironically Google’s China strategy Samsung, which was down 2.3%. Qihoo 360 have all developed app is centred round a company which However tech analysts say the stores that Google may now find has been just as publicly snubbed Huawei partnership also demon - hard to dislodge even if regulatory by the US: Huawei Technologies. In strates Google’s desire to tap China’s approval is forthcoming (tech web - 2012, a Congressional committee huge domestic market and reassert sites say it has been trying to gain blacklisted the latter on the grounds control over its Android operating permission from Beijing since 2013). that its telecoms equipment might system. Most of China’s smartphone The Information says Google has provide a conduit for China to spy manufacturers, including Xiaomi now agreed to provide apps which on the US. and Lenovo, use variants of its op - are acceptable on the Chinese side of The fruits of Google and Huawei’s erating system but not in licenced the Great Firewall – if true, not a P h o t

o new partnership were unveiled in partnership with Google. move it is probably keen to flag too

S o u r San Francisco this Tuesday. Huawei By contrast Huawei will use publicly. To win over the developer c e :

R e is the manufacturer of Google’s new Google’s most advanced operating community, it is also said to be of - u t e r s Nexus 6P smartphone, representing system called Marshmallow. It is fering a 70/30 revenue sharing split 11 Week in China Internet and Tech 2 October 2015

in favour of app designers. Other cess.” He says Huawei hopes to em - Chinese app stores typically take ulate this approach. 70%. Finally the tech website says Google will partner with ChinaPay, the same third-party payment provider that Apple currently uses. Ghost protocol From Huawei’s perspective the Apple gets hacked in China tie-up with the American internet giant not only provides it with the he bubonic plague, SARS and prestige of working with one of the Tvarious forms of bird flu are be - world’s leading tech companies, but lieved to have come from China. may also offer it an entry point into Last week, the country added to the US market. While it may be the its virus tally – this time digitally – world’s third largest handset manu - when a Chinese hacker was able to One hack of a problem facturer, Huawei only ranks 13th in embed a virus that caused the first the US with a market share slightly major security breach of Apple’s then inject its malware into apps. less than 1%. firmware. Apple has not released any fig - The company also appears to be As National Business Day reports, ures for how many apps were in - trying to shake off its solitary and the breach occurred because a num - fected, but some tech websites have secretive image by forging partner - ber of Chinese app developers had said the total could top 4,000. Those ships with many of the world’s lead - been routinely bypassing Apple’s US that have been publicly named in - ing firms. Earlier this year it began servers to download Xcode, the soft - clude a number of China’s most pop - working with Deutsche Telekom ware they need to create iOS and ular apps encompassing messaging over cloud storage and likewise with Mac software. Instead they had been service WeChat, Uber rival Didi Volkswagen (a move that will make using faster local servers dubbed Kuaidi, Baidu Music, Netease and its handsets compatible with the en - Black Apples. Railway 12306, the country’s official tertainment systems used in VW’s One server became infected with train ticketing agency. cars). a modified version of Xcode that What Apple founder Steve Jobs The latest partnership added to transferred phishing ads to infected would have made of the breach is its roster is Foxconn. ThePaper.cn apps. According to Jiemian.com, the easy to guess, given his famed tem - says the Taiwanese company is first person to analyse the malware per. But according to Tencent Tech - spending Rmb25 billion ($3.9 bil - was Alibaba’s head of mobile secu - nologies this wouldn’t be his only lion) to build a 6th-generation low rity Zheng Mi. He was alerted to the source of irritation. It argues that temperature polysilicon (LTPS) problem by a posting on a local iOS CEO Tim Cook is no longer acting as panel factory in Guizhou province. forum. a trustee of Job’s design legacy, cit - Huawei is committing Rmb5 bil - He called the malware XcodeGhost ing as an example the company’s re - lion to the project, which will and told the website how ingenious it cent decision to release a stylus. make advanced screens. was. “If you’ve got a dirty cooking pot Jobs hated the idea of a stylus, Wang Yanhui Secretary General of then all the dishes served from it are with Tencent saying that he would the China Mobile League (CNMO) going to have problems as well,” he be anything but impressed by Cook’s tells China Business News that explained. newly branded Apple Pencil. (CNN Huawei’s move should be viewed as The as yet unidentified hackers reports Jobs once said “God gave us part of its desire to create the same may have been inspired by Amer - 10 styluses. Let’s not invent another.”) integrated industry chains and ica’s CIA. The Snowden leaks re - The new $99 Pencil can be used with ecosystems that Apple and Google vealed how the US spy agency spent Apple’s latest iPad Pro, a device that’s have. He observes, “Apple has al - years trying to work out how to pen - targeted more at the workplace than ready invested in panels so it can etrate Apple’s encrypted firmware the home. maintain production quotas and so it could gain access to computer Social media users were quick to P h o t

o stay ahead of the pack in terms of data. One of its ideas involved the sharpen their jokes. One tweeted, “

S o u r technology. Apple controls the in - creation of a modified version of All I need now is my Apple pencil c e :

R e dustry chain and its own ecosystem. Xcode, which could be slipped into case and ruler. Then my stationery u t e r s This is the foundation of its suc - the development community and dreams will be complete.” n 12 Week in China Energy and Resources 2 October 2015

220,000 angry investors Protesters seek justice in Fanya Metal Exchange debacle

ne of the most intriguing ques - quire Rmb500 million in assets Otions in China’s financial mar - within four months of its launch. ket is how many exchanges there The fiasco now has commentators really are across the country. calling for tighter oversight of the There are two major equity country’s “exchange craze”, although bourses, obviously, in Shanghai and CBN reported that there is still no of - Shenzhen. But according to China ficial figure for the number of ex - News Weekly, there were more than changes being operated nationwide. 300 exchanges set up by local gov - (Though the newspaper noted there ernments as of September 2011, of - are over 50 art market exchanges fering trading services and invest - alone.) ment products in everything from China’s biggest Ponzi scheme? A report on Sina Finance blamed gold, stamps, and art pieces to garlic. Kunming’s local government for pro - Most of these marketplaces are of Fanya, Shan Jiuliang, was ab - moting “the barbarous growth of the only loosely regulated by local gov - ducted by a mob of investors from financial sector”. The report also ar - ernments. But the stock market his hotel in Shanghai and dragged to gued that local exchanges need “strict watchdog the China Securities Regu - a police station. He was released and expert supervision” from central latory Commission has been under without charge. authorities such as the CSRC. pressure to do more, as scores of pro - The ongoing protests have led to However, the local government testors gathered outside its head - concerns that Fanya will turn out to does appear to be taking some ac - quarters last month, demanding the be “China’s biggest Ponzi scheme”, tion. At a conference in Yunnan CSRC investigate the controversial reckons China Economic Weekly. A province in June, Shan Jiuliang re - case of the Fanya Metals Exchange. source told China Daily the allega - quested that a travel ban imposed Based in Yunnan’s Kunming city, tion is not too far-fetched, as Fanya’s upon himself and his high-level as - Fanya commenced operation four business model “did not generate sociates be lifted, which suggested years ago and according to CBN, any profits”. Instead, it’s claimed that an investigation into their quickly rose to become China’s that some of the investment dealings was already underway. largest trader of minor metals such schemes were used to pay back ear - Furthermore, Kunming city gov - as indium. Its trading network cov - lier investors. ernment stated last week that it had ered 20 provinces, lured 220,000 in - At the head of this suspected ordered Fanya to “reform” on multi - vestors, and had received monies pyramid scheme sits Shan Jiuliang, ple occasions. That said, this does from those investors totalling and his wife, Zhang Peng, who Shan raise the question of why local au - Rmb40 billion ($6.2 billion). appointed as, amongst other roles, thorities failed to intervene each The big draw: it has also been of - vice-president of the exchange. time the metals exchange failed to fering investment products which An investigation by Futures Daily comply. promised up to 13.7% returns, as well reveals that Shan and Zhang have a Protestors who gathered outside as unconditional redemption rights. combined annual salary of only the CSRC accused the commission However, beginning in April, in - Rmb120,000: an income deemed of ignoring the Fanya scandal. But vestors have found themselves un - far too low given their positions. having raised the profile of the scan - P h o t o able to withdraw funds from their The report elicits further in - dal with their demonstration in Bei -

S o u r c accounts. trigue, revealing that the couple jing, it seems unlikely the regulator e :

I m

a This breach has sparked numer - are the founders of another com - will still be able to claim that Fanya g i n e

C ous protests across China, most no - pany which, after opening with al - is merely a problem for the local au - h i n a table of all in August when the CEO most zero cash, managed to ac - thorities to sort out. n 13 Week in China Society and Culture 2 October 2015

Getting lost proves lucrative Chinese comedy about Hong Kong is breaking records at the box office

or anyone unfamiliar with the FHollywood comedy The Hang - over Part II , it is a near-identical copy of the 2009 original: the same bunch of blokes, another bachelor party, and, of course, memory loss. It largely transplants the original Vegas-based plot to Bangkok. Lost in Thailand – which was re - leased in 2012 – has been dubbed China’s answer to The Hangover Part II . It was also set in the Land of Smiles, though Chinese comedian Xu Zheng opted to focus more on Thailand’s natural beauty in his di - rectorial debut (rather than the Xu shares a stage with his co-stars Vicky Zhao and Du Juan seedier side of Bangkok featured in The Hangover ). The result was a sur - ties with Beijing have long been on Kong movie classics from the 1980s prise hit. The road-trip comedy be - good terms, Hong Kong has devel - and 1990s, such as Wong Kar-wai’s came the first Chinese movie to oped into a more troubled spot for Chungking Express . “ Lost in Hong gross more than Rmb1 billion ($156 China (it’s almost exactly a year ago Kong looks to be an all-encompass - million, see WiC177). It was also that the Occupy Central protests be - ing love letter to Hong Kong film - credited with boosting Chinese gan). We have reported extensively making. It’s chock-full of movie ref - tourist arrivals to Thailand (see on the fraying of Hong Kong’s rela - erences and in-jokes,” the Los WiC192). Former Chinese Premier tions with its mainland overlord. Angeles Times notes. Li Keqiang even gave it an hon - This has affected tourist arrivals Many Hong Kong screen legends ourable mention when addressing (down), hit sales in shops and led to – again largely unknown to foreign - the Thai parliament in 2013. falling rents for commercial land - ers but familiar faces to Chinese After this spectacular success, the lords (see Wi295). fans who grew up watching Hong sequel was eagerly awaited. And this In the 1980s – when Hong Kong Kong movies – make cameo appear - time the franchise shifted its loca - was known as the Oriental Holly - aances. The soundtrack features a tion to Hong Kong. wood – mainlanders were depicted new theme song from top Chinese Unusually Lost in Hong Kong in its movies as bumpkins. No singer Faye Wong, but likewise con - opened simultaneously in China more: China has become the new tains so many iconic Hong Kong and the US, hitting screens on Sep - driving force behind the city’s en - pop tunes that the reviewer from tember 25. Starring Xu again, as well tertainment industry. But rather the New York Times appears to have as starlet Vicki Zhao and fashion than use the movie’s Hong Kong tuned out: “At times it seems like an model Du Juan, its opening day take setting to make a satire about anti- extended, sappy pop-music video.” topped $32 million at home. That’s mainland sentiment in the city, Xu Several mainland Chinese and the biggest debut ever for a Chinese has taken a different tack, paying Hong Kong firms worked together P h o t

o movie, and the third largest overall tribute to the local film industry. on the project. Travel agency Ctrip,

S o u r behind only Furious 7 and Trans - Some of this may be lost on West - for example, is now offering a Lost c e :

R e formers 4 . ern audiences, but the movie is in Hong Kong -themed package that u t e r s Compared with Thailand, where packed with references to Hong involves a tour of the locations fea - 14 Week in China Society and Culture 2 October 2015

tured in the movie. Those Chinese who plays the title role. Prior to the tourists will be arriving in Hong release of the show, she published Kong on the airline Cathay Pacific, frequent posts about the series on another sponsor of the movie. her personal weibo, where she has An olive branch like this is over - over 65 million followers. due, suggests am730, a Hong Kong “Angelababy is so pretty. Who newspaper: “The movie helps im - cares if she is [in a TV series] that’s prove mainland Chinese percep - like a very long music video, we’d tions of Hong Kong, and redirect the still watch it,” was Tencent Enter - mainland-Hong Kong relationship tainment’s verdict. in a feel-good direction.” “All the flashbacks in the first Perhaps this explains why Lost episode made me want to give up in Hong Kong was shown on an un - on the show until Angelababy precedented 100,000 cinema showed up in the second episode. screens across China in its first 24 She is the only reason I tune in every hours (though, ironically, it is yet night,” another fan wrote on weibo. to screen in Hong Kong itself). The Adapted from the novel Yun Southern Metropolis Daily says the Zhong Ge , written by popular au - comedy is set to break box office thor Tong Hua, the drama wrapped records. That would mean surpass - up filming more than two years ago ing domestic animation film Mon - but was unable to secure a broad - ster Hunt which had taken Rmb2.4 cast date until recently. billion as of September. But despite the strong ratings, Meanwhile, Lost in Hong Kong the show has plenty of detractors. has also performed respectably in Since it began airing late last month, the US, making $558,900 from 27 fan reactions have been decidedly theatres (including AMC cinemas mixed. On Douban, a popular Chi - owned by Chinese conglomerate nese film and TV review site, the se - Wanda since 2013). This is a signif - ries received a rating of 4.1 out of 10. icant improvement on Lost in Thai - Fans of the book complain that the land , which took less than $30,000 adaptation of the story deviates too in its US opening two years ago. much from the original work. Could the UK be the next target “If you are going to base a story for China’s cinematic soft power? Pretty in pink: Angelababy on a book at least respect the work,” The Telegraph reports this week that one netizen lambasted on weibo. Wanda’s boss Wang Jianlin is looking appear in the blockbuster film Inde - “Is the show even based on the to purchase the country’s iconic pendence Day: Resurgence , which is same book I read?” another asked. Odeon cinema chain too... due for release next year. Critics also say it’s obvious the Meanwhile, her first appearance drama was filmed two years ago. in a TV series, Yunge from the Desert , Shenzhen Evening News makes the which recently premiered on Hunan observation that the costumes in Satellite TV, has also topped the local the series are outdated (ironic for a In demand ratings. Already, it has accumulated historical drama). “Angelababy has Angelababy has a lot to smile over 250 million views on iQiyi, the so many colours on her she looks about, as Hollywood beckons online video platform that bought like a peacock. While Du Chun [an - the online distribution rights to the other lead actor] looks like a red cab - ngelababy has a lot to celebrate series. bage because he’s always in that pur - this year. Romantically, the 26 The drama, set during the West - ple cloak,” the newspaper mocks. P A h o t o year-old starlet got engaged to Chi - ern Han Dynasty, tells the story of a Subsequent advances in digital

S o u r c nese heart-throb Huang Xiaoming young girl, Yunge. The chief reason technology also make the com - e :

I m

a back in May – and is set to wed next for the show’s success appears to be puter-generated imagery in Yunge g i n e

C week. Career-wise, she landed her the star power of Angelababy (see from the Desert seem dated: “It looks h i n a debut role in Hollywood and will WiC29 for our first mention of her), like the producers have spent 5 cents 15 Week in China Society and Culture 2 October 2015

on CGI,” says Southern Metropolis husband’s meetings with tech and Daily. industry leaders. In Washington she Another netizen concurs: “I can’t attended a panda naming ceremony believe the CGI technology was so with Michelle Obama, as well as the crappy two years ago.” state banquet alongside her hus - Still, Hunan Satellite TV can po - band. litely ignore the criticisms as the But in New York during the third show continues to perform well in leg of their trip, she delivered a short the ratings. “As we all know, in the speech – like Soong in fluent Eng - Chinese TV market, a good platform lish – at the United Nations. is everything. No matter how good a “Education is very close to my drama, it is going to tank if it is not heart,” she said in the speech, which shown on a good network. And no was on the importance of schooling matter how bad a series is, as long as First lady Peng Liyuan for girls. “After generations of hard it is on a top platform it is going to work China has come a long way in generate buzz, thereby winning over to have a wife like Peng. Together education. I myself am a benefici - viewers as well as advertisers,” says they are so great,” wrote another. ary of that progress. Otherwise I Information Times. The low profile of former Chinese would never have become a soprano first ladies is, in part, said to have or a professor of music,” she added. come about in reaction to Jiang Delivering the speech in English Qing, an actress who became Mao’s came as a major surprise – and was fourth spouse and was a key insti - evidently designed to win over her Soft power gator of the Cultural Revolution. American hosts. Back home it led ne - China’s first lady impresses Prior to Jiang, Chiang Kai-shek’s tizens to litter social media with with fluent English speech wife, Soong Mei-ling, had played an “clapping hands” emoticons. active role in national politics. Soong There was much positive feed - efore Chinese leader Xi Jinping even appeared on TIME magazine’s back. “Our first lady’s style equals Bassumed power in late 2012 his cover (twice) and made an address – in great-nation power,” wrote one ne - singer wife Peng Liyuan was ar - fluent English – to the US Congress in tizen and in the words of another “If guably better known than he was. 1943 to lobby for China’s war effort. our first lady is so elegant and in - Many asked at the time: would As Chinanet.com wrote this tellectual, it is hard for our country China finally get a US-style ‘first week: “Peng has now changed the to not get stronger”. (To be fair, not lady’? international impression that Chi - all of the comments were flatter - In the three years since then Peng nese first ladies are always quiet, un - ing – quite a few critiqued the stan - has frequently appeared in public known. She projected an image of dard of her English. The bigger sur - and become something of an am - national confidence and has shown prise was that these more negative bassador for Chinese fashion the world the grace and talent of remarks weren’t deleted by the cen - brands. She also hosted America’s modern Chinese women.” sors.) first lady when Michelle Obama vis - Sohu seconded that by saying; This generation of Chinese lead - ited China with her daughters. “Peng is the only first lady of her ers look to be more willing to let During foreign trips Peng has kind in recent years… We are proud their wives become part of the na - largely left her husband to claim the she represents us.” tion’s charm offensive. Cheng Hong, political limelight. But the couple’s So what is it that Peng did to the wife of Chinese Premier Li Ke - recent visit to the US called for a cause all this excitement? qiang, has also attracted the media slightly different approach, one In reality not all that much – and spotlight during her recent foreign which saw Peng play a more central according to some reports, way less tours (see WiC237). In fact, she has role. It has gone down incredibly then she was scheduled to do. even stronger language skills – the well with the Chinese public. During the couple’s first stop in Peking University graduate has “Peng is the best diplomat our Seattle she played a very low key worked as a professor in foreign lan - P h o t

o country has, she is clever, confident, role and apparently turned down a guages for 30 years . Beijing News

S o u r beautiful and kind. I am proud she is separate programme that included calls it the new politics of the first c e :

R e our first lady,” wrote one weibo user. trips to a school and an art centre ladies, arguing that it helps to raise u t e r s “Xi Dada [Xi’s nickname] is so lucky lest it should divert focus from her China’s soft power. n 16 Week in China And Finally 2 October 2015

Food for thought Can you conserve salamanders by eating them?

ooking at the giant salamander cousin species of the giant salaman - Lwith its flat, wide head and long der. It featured cooking displays, muscular tail it is hard to imagine plus tanks containing live salaman - how anyone could have mistaken ders for purchase, and medical its skeleton for that of a human. But products made from the amphib - in 1726 that’s exactly what Swiss nat - ian. The fair’s slogan: “Healthy del - uralist Johann Jakob Scheuchzer icacies which have lived on earth for did, and for almost a century the 350 million years.” fossil he found was believed to be The authorities said all the ani - that of a man who lived at the time mals were raised in captivity and of the great biblical flood. thus can be legally consumed under Taking it for a wok The Chinese too ascribe human Chinese law. Xinhua has reported qualities to this ancient amphibian, that China now has more than The decision to use the same city calling it the ‘baby fish” because its 2,622 salamander farming firms, to also promote farm-reared sala - cry sounds like that of a child. which have mainly bred the manders is confusing, say activists. But none of this anthropomor - smaller, cousin species of the giant “It’s a very real risk that promoting phism has stopped people in China salamanders. The Zhangjiajie gov - increased consumption will lead to wanting to eat the lizard-like crea - ernment’s plan is to have 200,000 increased demand that cannot be ture. Today the giant salamander is edible salamander in its farms by met from farmed sources,” Richard on the verge of extinction as a result 2017. Thomas, of wildlife trade monitor - of loss of habitat and over-con - “We want to turn Zhangjiajie’s ing group Traffic, told AFP. sumption by humans. salamanders into a global brand,” Some Chinese animal lovers were One solution, according to the au - an official told the city’s newspaper. also outraged. “It is like the park is thorities in Hunan, is to give into Environmentalists are uncon - just an advert for their business,” this gastronomic demand and then vinced. Part of the problem is that said one on weibo. channel the proceeds back into con - Zhangjiajie is home to China’s main Another said it was wrong to servation. giant salamander conservation cen - compare the festival to the role sa - Last week as part of a new ‘pro - tre – a massive national park de - fari parks play in conservation: tection’ plan, the city of Zhangjiajie signed to provide the amphibians “When people go to Africa to see li - hosted a three-day festival celebrat - with the clean, fast-running streams ons they are paying to see them ing consumption of the smaller, they need to thrive and reproduce. alive not dead on their plate.” n

Perpetual bond

“If this is all part of trying to boost British exports, Britain has to get over one of its perpetual problems of being a fair-weather friend”

* Lord O’Neill, a UK Treasury minister, defends George Osborne against critics in the UK media, who said he was too generous to China during his trip to the country last week (see WiC297). The peer told the Finan - cial Times he was “baffled” by the backlash. Lord O’Neill

17 Week in China The Back Page 2 October 2015

Photo of the Week In Numbers 17 billion The measure in cubic metres of water “over-extracted” from underground in China each year, according to the Ministry of Water Sources. The figure was given ahead of the unveiling of a scheme to preserve groundwater levels, as overuse now affects 21 provinces. P h 8.8% o t o

S The year-on-year decrease in China’s o u r c e industrial profits for August, knocking the :

I m a sector’s aggregate net incomes down g i n e

Rmb156.6 billion ($24.66 billion) – the C h i n a largest year-on-year decline since records

began in 2011. For comparison, July’s fall Men at work: a (glass-bottomed) pedestrian bridge – seen under was only 2.9%. construction above – opened this week in the Shiniuzhai National Park 60% The percentage of high-emission cars removed from China’s roads between Where is it? January and August – amounting to Some of the places referred to in this issue 696,500 vehicles. The government has pledged to strip out all high-emission vehicles with pre-2006 registrations by the Beijing end of this year.

55.2% China The year-on-year fall in the value of cross- Shanghai border listings by Chinese companies in the Zhangjiajie first three quarters of the year, according to Hunan data from Dealogic. The total value raised Guizhou overseas by Chinese companies issuing Yunnan Kunming stock dropped to $18.9 billion. Shenzhen Hong Kong Macau

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