1 Talking Point 6 Week in 60 Seconds 7 China Consumer Week in China 8 Banking and Finance 9 Economy 11 Internet and Tech 12 Auto Industry 20 September 2013 13 Society and Culture Issue 209 17 And Finally www.weekinchina.com 18 The Back Page

Will Beijing like the new bloke? www.benitaepstein.com

As Tony Abbott takes over as Australian prime minister,

what’s the outlook for Canberra’s ties with Beijing? Brought to you by Week in China Talking Point 20 September 2013

Beijing sizes up Abbott Will Australia’s new leader be less friendly to Chinese business interests?

Next stop, Beijing: Tony Abbott has said he wants to sign a free trade pact with China within a year

oliticians have often been keen But the swimmer supreme this reputation as a Sinophile and fluent Pto take the plunge to get a bit of month must be Tony Abbott, who is Mandarin speaker. But his policy publicity. Mao Zedong was reported now tripling up as Australian prime achievements with the Chinese were to have swum so rapidly down the minister, triathlete and volunteer more limited than he would have Yangtze in 1966 that he started get- lifeguard. Abbott was seen so often hoped. At home he took early criti- ting invitations to compete at inter- in his swimming trunks that his cism as a Chinese stooge (his oppo- national swim meets (see WiC116). election team called a halt to fur- nents labelled him “the Manchurian Beppe Grillo, leader of the populist ther photos, declaring the cam- candidate”) before drawing susbse- Five Star Movement in Italy, made paign a “budgie smuggler-free quent fire from Beijing after a series his own headlines last year by zone”. The ploy worked: Abbott won of rows when Australia blocked Chi- swimming to Sicily across the the vote and was sworn into the top nese investment (see WiC22). His Straits of Messina (which looked a job this week. Aside from more ac- hosts were also left unimpressed by lot narrower on Google Maps, Grillo tion shots from the beach, what else some straight talking during a trip said afterwards). Christine Lagarde, can the Chinese expect from Aus- Rudd made to the Chinese capital, managing director at the IMF, says tralia’s new Iron Man? despite his suggestion that true Photo Source: Reuters the national medal she won for syn- friends (or zhengyou) could speak chronised swimming also taught an How does Abbott’s China experi- freely on matters on which they dis- important political lesson: “Grit ence compare to his predecessor? agreed. But back in Australia the your teeth and smile.” Kevin Rudd arrived in office with a sniping was that Rudd never man- 1

Week in China Talking Point 20 September 2013

No one-child policy in this family: Abbott celebrates victory with wife and three daughters

aged to establish much rapport with So is the country still dependent ble digit levels a few years ago to his Chinese counterparts, even if he on mining and China for its 7.5% this year. But Australia has still could speak their language. growth? done very well.” Abbott starts out with a lot less This was a point the two candidates Because China’s economy is now expected of him, not least because disagreed over during campaigning. so much bigger, it continues to be a of his reputation as a surf-and- Rudd argued that the resources major contributor to commodity de- sausages Aussie more at home in an boom had come to an end, while Ab- mand, even as growth tapers off. Anglo-centric world than an Asian bott saw things differently, claim- Even so, Australian investors have one. Perhaps overcompensating for ing that a change in government been watching the economic data this, he is insisting that he will pur- would “reboot” the mining sector. with concern, especially earlier in sue an “Asia first” foreign policy. Certainly, Australia is entering a the summer when the indicators “It’s not that I lack a sense of the new era after a lengthy period of looked bleak and the Chinese banks community of values’” with Eng- spectacular growth for its com- seemed to be on the verge of a credit lish-speaking nations, he explained modities firms. China played a key crunch (see WiC199). Since then the in an interview to the Lowy Insti- role in the boom, first as a leading mood has improved, with better tute that was picked up by the wider customer but then as financial numbers for trade, investment, retail media, “But in the end your focus backer for many of the new mining sales and production. And longer has got to be on the relationships projects intended to extract more term, Bloxham seems fairly confi- that need the most attention.” coal, copper and iron ore. dent: “Our HSBC house view is that Abbott says “Asia first” is prag- But the concern over the last year the commodity boom is changing matic because the decisions shap- has been whether demand from shape. It’s fair to say that it is slow- ing Australian interests are now just emerging markets can keep up the ing down, but it’s not collapsing.” as likely to be taken in cities like pace, which is why Paul Bloxham, Partly, that’s based on the prem- Jakarta and Beijing as they are in HSBC’s chief economist for Aus- ise that the new investment in Washington. It also means that he tralia and New Zealand, says that mines is about to pay off, as the ad- will visit Asian capitals before going the most common question he is ditional capacity boosts supply. to Europe and the United States. In- asked by clients is “What happens if There’s also the view that the com- donesia is first on the list (“in the China slows down?” position of demand is going to great scheme of things, it’s our most “The first thing to note is that evolve. Coal and iron ore have been Photo Source: Reuters important relationship”). But his China has already slowed,” Blox- the largest contributors to Aus- next priority is to pay “appropriate ham told WiC from his Sydney of- tralian exports in the past, feeding respects” to Australia’s main trad- fice this week. “In fact, growth has the infrastructure build-out across ing partners, China among them. been slowing for a while, from dou- the Chinese economy (a trend that 2 Week in China Talking Point 20 September 2013

HSBC says has some way to run). But Bloxham thinks that demand for energy is going to be another major feature in the years ahead, particularly as millions more peo- ple move into cities. An example of this newer sweet spot is liquefied natural gas (LNG), with seven major projects soon to start operations in Australia. “Once they’re switched on, the increase in LNG exports is going to be massive, up by as much as 400% by 2020,” he predicts. Bigger picture, the commodity-in- tensive growth path of economies like China also bodes well for the Australian economy. “The countries driving global growth need lots of Chinese tourists like her are Australia’s highest spending visitors natural resources,” Bloxham says. “Western countries had similar needs Chinese feature strongly, constitut- bott delivers on his pledge of equal in the 1950s and 1960s but what ing 40% of international enroll- treatment. we’re seeing now is that demand is ments, far ahead of second-placed Back in Australia, there wasn’t coming from the emerging Malaysia with 7.2%. much discussion of the country’s economies, led by China, as they Both sectors will be helped by a relationship with China during build new infrastructure and as more weaker Aussie dollar, as too will campaigning, says Peter Cai, a jour- people move into cities. That’s good agri-business, another area getting nalist at The Age in Melbourne. The news for commodity producers.” more focus in trade terms. Sales of only real mention of the Chinese meat, oil seeds, cotton and dairy to was an indirect one as part of the Is Chinese demand shaping other Chinese customers have been grow- debate about restricting purchases sectors of the Australian economy? ing and Abbott told an audience in of land by foreigners, Cai told WiC WiC’s Focus edition on Sino-Aus- Beijing last July that he had high this week. tralian ties a little over a year ago hopes that Australia could become The context to this debate: grow- discussed whether a “resources a “food bowl for Asia”. ing political pressure to make it curse” was hollowing out other more difficult for foreign investors parts of the economy. It also ex- But are the Chinese being sent to take control of Australian assets, plored other areas in which Chi- mixed messages in respect to trade particularly in the rural economy. nese demand could boost the and investment? Abbott himself seems to favour a “Lucky Country’s” economy. And On the same trip to China, Abbott tougher line and in June his Liberal as the boom subsides, there are spoke positively about foreign in- Party backed recommendations for early indications of rebalancing to- vestment too, saying that it was “vi- greater scrutiny of sales of domes- wards other industries like tal” for Australia and promising that tic agribusinesses to overseas inter- tourism, where the Chinese are al- any government under his leader- ests. He has also promised to look at ready the highest-spending visitor ship would welcome the Chinese on “extra safeguards”, based on lower- group and are poised to overtake the same basis as investors from ing the limits in which acquisitions the New Zealanders for first place other countries. can pass unchallenged. He warned: in visitor numbers. But the Chinese aren’t con- “Under a coalition government, International education, Aus- vinced. They know they are wel- should we win the election, the tralia’s fourth largest export last comed as customers but they threshold for Foreign Investment year after iron ore, coal and gold, is aren’t so sure that they are as pop- Review Board (scrutiny) of foreign Photo Source: Reuters another focal point. It already deliv- ular in Australia as investors. One land acquisitions will come right ers about A$14.5 billion ($13.77 bil- way in which Beijing will judge the down from A$200-odd million to lion) in export revenue, according success of its relationship with the about A$15 million.” to government figures. Again, the new government is on whether Ab- Of course, it’s worth asking how 3 Week in China Talking Point 20 September 2013

making it harder to source over- seas investment is going to help Planet China Australia achieve its goals of be- Strange but true stories from the new China coming Asia’s food bowl. It is also likely to rile the Chinese, who are already frustrated by the insistence GET STUFFED. Goodbye luxury watches, designer ties and vintage wine. that any takeover involving one of Chinese government officials are keen on a new gift: stuffed animals (and not its state-owned entities needs to be the type you give to kids). No, these ones are the real beasts. Southern Weekend reports that there has been a suspiciously large referred for review, whatever the uptick in the number of “natural deaths and losses” of animals in Chinese sum involved. zoos. According to the newspaper, many were killed so that their pelts could Abbott has already admitted that be sold to taxidermists. Tigers, deer and monkeys are particularly prized as Chinese investment “is complicated prestige items because of their symbolic value. “These specimen show by the prevalence of state-owned nobility and elegance. They are gifts that demonstrate the gift-giver’s enterprises”. But he’s shown little respect and sincerity,” according to the brochure of one taxidermist. sign of more flexibility on the issue, Siberian tigers are especially popular. The endangered species – there warning that it was rarely in the na- are only 360 left – fetch as much as Rmb3 million ($490,000). “Zoos are the tional interest “to allow a foreign most important part of the chain,” the head of one taxidermy firm told government or its agencies to con- Southern Weekend. “They can buy a live tiger for between Rmb20,000 to trol an Australian business”. Rmb30,000. If you can have it die a ‘natural death’, [zoos] can make a lot more money selling them.” Can we expect changes in the in- vestment rules? Perhaps Abbott will try to soften his suggested that no more than 6% of Could this create problems for a stance now he is in office. But he Australian land was foreign-owned, new trade deal with China? also needs to keep the National little changed on the levels of the Cai’s prediction is that the Abbott Party onside, as his governing part- early 1980s. China’s share of the administration will bring down the ner in the coalition. total is much smaller still. amount at which foreign invest- The Nationals have been the The difficulty, The Age’s Cai says, ment needs approval, although most vocal in warning about the is that the information about land probably not as low as the A$15 mil- foreign threat to farmland and their sales is disputed and incomplete. lion threshold that the parliamen- deputy leader Barnaby Joyce was Plus there’s been little discussion in tary committee recommended. appointed as agriculture minister in Australia of what might constitute That’s not going to be viewed too the new government this week. an “acceptable level” of foreign positively by the Chinese and could “What benefit is it to Australian ownership. Besides, plenty of farm- dent the prospects for a long farmers, to Australian taxpayers, if ers seem more than happy to sell awaited free trade agreement (FTA) another entity buys our land to their holdings to foreign buyers. between the two countries. breed their cattle, exports them to “Some of these businesses are strug- Abbott has said he wants to sign a their own facilities and pays tax in gling to survive financially or they deal within a year. But if so, there is another country?” he asks. “We have huge issues with succession some hard negotiating ahead: the want to be a partner in the growth planning,” Cai notes. “The next gen- two sides have been talking for more of the food economy in northern eration just doesn’t want to take on than eight years, and have got Australia, not just the location of it.” the family farm.” through 19 negotiating rounds. The target in this instance was In- In the meantime the political While Canberra prevaricates, other donesian money but it’s the Chi- mood seems to be hardening, with countries have agreed terms with the nese who have felt the most singled individual cases grabbing the head- Chinese, leading to handwringing out by the investment regulations. lines, like last year’s sale of Aus- among Australian farmers that they Yet as WiC discussed in last year’s tralia’s largest cotton farm Cubbie are losing market share. New Zealand Focus Issue, the suggestion that Station to Chinese textile investors; signed its own FTA with China five large swathes of Australia’s econ- or the announcement that a con- years ago, for instance, and its dairy omy are about to fall into Chinese sortium led by Shanghai Zhongfu exports have quadrupled. In the hands looks far-fetched. Especially has got the green light for a $700 same period, Australian milk sales to so for farmland: the most recent million sugar investment in the China have grown just 20%. study from the Bureau of Statistics northern Kimberley region. In the meantime the Chinese 4 Week in China Talking Point 20 September 2013

media has been linking progress avoiding the more controversial is- tion will find hard to countenance. on a trade deal to changing atti- sues, stitching together a basic deal The other issue is equally prob- tudes on investment. Truth be and then seeking to build in further lematic. Because of the high costs told, comment about Abbott’s elec- provisions as time progresses. Aus- of employing Australian workers – tion victory in the Chinese media tralia, by comparison, has preferred especially in more remote loca- has been limited. But the China to start out with a more compre- tions – Chinese investors in larger Daily was typical in mentioning hensive agreement and Abbott may mining projects want permission that he must do more to get an FTA struggle to move forward without a to bring in their own workforces approved. Its editorial also im- change in approach. on much lower wages. “It’s hugely plied that the likelihood of a deal Cai picks out two of the most controversial and I doubt that depends on a rethink from Aus- likely stumbling blocks. One is Canberra will cave in to Chinese tralia on how it handles invest- that Beijing wants investment demands,” Cai says. ment from Chinese companies. from its state-owned firms to be His conclusion: “It means that I One option for progress on an treated in the same way as pur- really don’t see much chance of a FTA is to copy the Kiwis, who seem chases by private companies –a trade deal being concluded any time to have been more successful by stance which Abbott’s administra- soon.” n

Li sounds Shanghai warning

The annual press conference for Cheung Kong Holdings and Hutchison Whampoa has traditionally been one of Hong Kong’s most anticipated media events. That’s because Li Ka-shing, Asia’s richest man, takes the time to answer questions on a range of subjects – from whether it’s the right time to buy a flat to his views on Hong Kong politics. This year Li decided to opt out of the meeting, following an awkward few weeks after announcing that he will sell ParknShop, Hong Kong’s leading supermarket chain. The sale has prompted speculation about whether he is losing confidence in Hong Kong (see WiC205). But no matter. Superman, as he’s often called in Hong Kong, was back in the limelight this week. According to the China Daily, Li appeared “by surprise” More importantly, he made some pretty grave on Tuesday at a media lunch hosted by Chiu Kwok- predictions about Hong Kong’s position as Asia’s hung, executive director of Cheung Kong Holdings. financial centre too, saying that Shanghai’s new Turning on the charm, he told reporters: “I love free-trade zone will help it to catch up and even Hong Kong. Cheung Kong and Hutchison Whampoa surpass Hong Kong quicker than most people will absolutely not relocate and I believe they will stand imagine. strong in Hong Kong for many years to come.” “[The free-trade zone] will have a big impact on In the past Li has generally dodged political Hong Kong,” says Li. “It has different aspects, questions. However, this time round, when a reporter including financial services. When the yuan asked him about social protest and Hong Kong’s becomes fully convertible, it will benefit the “Occupy Central” movement, the billionaire couldn’t development of Shanghai.” seem to hold back. Li said: “Personally I do not agree According to the Shanghai Daily the zone will Illustration: www.benitaepstein.com with occupying Central. It will adversely affect Hong “launch” on September 29 (see WiC202). The Kong’s image as a financial city and have a negative newspaper also adds that the Ministry of impact on the city’s economy,” adding that there are Commerce has confirmed that Shanghai is the many ways to express an opinion and it doesn’t have only place in the country to have been given the to be “confrontational”. go-ahead for a free-trade location so far.

5 Week in China The Week in 60 Seconds 20 September 2013

Bo verdict due this weekend The major news items from China this week were...

Zong Qinghou, chairman of beverage giant Hangzhou 1Wahaha Group, was attacked near his home in Hangzhou last week, said Xinhua. China’s second rich- est man suffered injuries to fingers on one hand. Police arrested a 49 year-old man a few hours later. Police say the suspect was looking for a job and saw Zong on TV of- fering to help migrant workers find jobs. The man found Zong and asked for his assistance, but was refused. A Wa- haha spokesman said Zong is back at work this week.

The Jinan court hearing the case of former Politburo 2member Bo Xilai is expected to hand down its ver- dict this weekend, said the South China Morning Post. Zong: China’s second richest man was stabbed The source said it was unlikely that the verdict would bring an end to China’s most sensational scandal in Four months after internet portal Sohu announced decades, as Bo would probably lodge an appeal. Politi- 4that it was looking to sell some (if not all) of its cal analysts said they expected Bo to be found guilty search engine Sogou, Tencent has emerged as the win- and receive a lengthy prison sentence. Estimates ranged ner. China’s largest internet firm by market value (its from 15 to 20 years at the low end to life in prison market cap topped $100 billion this week, nearing Face- though most agree that it is highly unlikely that he will book’s) said it has bought a 36.5% stake in Sogou with an receive the death penalty. option to increase it to 40%, according to a joint state- ment by the companies this week. Sohu remains the China has approved a pilot free trade zone pro- controlling shareholder. The final valuation for Sogou is 3gramme in Shanghai, said Commerce Ministry between $1.2 billion and $1.4 billion. spokesman Shen Danyang in response to a question about other cities’ applications to run similar trials. Beijing threw China’s electric carmakers another Shanghai’s free trade zone will officially at the end of this 5lifeline this week by announcing that it is resum- month, according to Shanghai Daily, to allow financial ing a policy to provide up to Rmb60,000 ($9,801) in product reforms such as liberalised interest rates. Some subsidies for the purchase of new all-electric models. other cities, including Tianjin in northern China and The government will also offer Rmb35,000 for each Shenzhen in the south, were reported to be wanting to new plug-in gasoline-electric vehicle, though the also launch similar, competing zones. amount was reduced by 30% compared with earlier subsidies. The move is part of an effort to put 500,000 hybrid and electric cars on Chinese roads by 2015 and five million by 2020.

Prices for new homes rose to their highest level this 6year in August. The statistics revealed that residen- tial property prices jumped almost a fifth in the month of August from a year ago in cities like Beijing, Shang- Photo Source: Reuters hai, Guangzhou and Shenzhen. On average, new home prices in 70 major cities also rose 8.3% from a year ear- lier. The jump has led to worries that the property bub- Looking to buy: house prices surged in August ble might be forming again. n 6 Week in China China Consumer 20 September 2013

Baby, we’ve got a problem The latest foreign brand to be hit by scandal: Danone’s Dumex

alaries for doctors and nurses companies were found guilty of Sin China are often pitifully low. price-fixing. Six of them, including A recently graduated medical stu- Danone, were fined a collective $110 dent earns about $500 a month. All million (see WiC201). of which makes hospital staff very The issue is a sensitive one in susceptible to gifts or bribes. China because many parents, even In China’s main cities it is rou- those on relatively low incomes, tine to buy appointments rather feel compelled to buy imported than put your name on the wait- products because of the melamine ing list and if you are admitted to milk powder scandal in 2008 hospital it might be worth greas- which killed six infants and sick- ing a few palms to ensure full and ened tens of thousands of others proper attention. (see WiC6). But according to a raft of recent Shortly after the latest expose reports, it is not just the patients who aired on CCTV the programme be- have been offering the incentives. In the spotlight: Dumex formula came a hot topic on China’s most As readers of WiC will know, the popular microblogging website, UK drug giant GlaxoSmithKline, mothers to use their formula in- Sina Weibo. and French pharma firm Sanofi are stead of breast milk. Although the “Appalling. You and I see a baby, both under formal investigation for report said that many brands were but they only see money,” wrote one paying medical staff to prescribe engaged in such activity, concrete user without clarifying who she- their medicines. Last month the Chi- allegations were made only meant by ‘they’. Another wrote: “So nese offices of German pharmaceu- against Dumex, a baby formula I guess I was cheated. My son was tical company Bayer were also brand owned by French dairy giant just born in hospital and they rec- raided by the State Administration Danone. “Each year we gave hospi- ommended Dumex.” for Industry and Commerce – the tals hundreds of thousands of yuan Yet while there was fury that body in charge of enforcing non- to reach an understanding,” a per- newborns may have been the un- price related antitrust law. son who claimed to be a former em- witting victims of corruption, few Thus far Bayer has not been ployee of Dumex told CCTV. contributors placed the blame solely drawn into any action similar to its “The Tianjin market is very com- on the milk companies. two European peers. petitive, all the hospital floors ‘be- “The milk producers’ actions are However, as of this week, it long’ to different milk companies. beside the point. The key question is seemed that the spotlight might If the money that you give is insuf- why the hospital takes the money,” soon (again) involve the activities of ficient, your milk will be replaced wrote one. foreign baby formula producers – by another the following month,” Others questioned another of the this time owing to their activities in she added. dramatic premises in the pro- maternity wards. On Monday Dumex released a gramme – that mothers were being On Monday morning state statement saying it was “shocked” steered away from breastfeeding. broadcaster CCTV aired a long, un- by the allegations and that it was As on weibo user wrote: “Of Photo Source: Reuters dercover news report that alleged launching an investigation to dis- course breast is best but some foreign milk powder firms were cover whether they had any merit. mothers can’t breast feed. And at paying doctors in hospitals in the The CCTV report comes only a least they are trying to get us to use eastern city of Tianjin to tell new month after several baby formula healthy [foreign] milk.” n 7 Week in China Banking and Finance 20 September 2013

Following an udder strategy The biggest Hong Kong IPO for months is for a Chinese dairy firm

oes Yang Kai know something niu secure the quality and quantity Dwe don’t about China’s single- of its supply,” says Song Liang, a child policy? dairy analyst from the Distribution Last week, the chief executive of Productivity Promotion Centre. Huishan Dairy, which is about to Huishan is already a key supplier IPO in Hong Kong, told the South of raw milk to Mengniu and its rival China Morning Post that his firm is Yili in the Liaoning region. gearing up for an easing in the rules After the tainted milk scandal, limiting most families to a single Mengniu has invested heavily in se- child. Yang reckons that as the one- curing a more reliable supply of raw child policy is relaxed – meaning ur- milk. Back in May, it increased its ban families can have two children – stake in Hong Kong-listed Modern that will likely jumpstart demand Dairy. In 2011, Modern Dairy sold al- for domestic infant formula. Sourced by Huishan from Australia most all of its output to Mengniu. Huishan – based in Shenyang in At first sight, the involvement of Liaoning province – is betting that nual production of raw milk reached COFCO and Yili as major investors China’s dairy industry will not only two million tonnes last year, while in the deal looks odd. Huishan, enjoy a boost from a rising birth its output of baby formula totalled which produces infant formula and rate; but likewise that his own firm 240,000 tonnes. other milk products, is a direct will be able to persuade increasing The IPO has attracted plenty of in- competitor to Yili and Mengniu. numbers of local consumers to buy terest. The cornerstone investors in- But the sense is that the three firms a product – local milk and baby milk clude Yili Group, one of China’s may have come to an informal powder – that’s still struggling to largest dairy firms, Norway’s central agreement. overcome the taint of a dairy scan- bank, and the private equity arm of “It suggests that Huishan has dal five years ago (see page 7 for state-owned food industry giant reached some kind of understand- more details). COFCO Group (which also owns a ma- ing with Yili and Mengniu in the That’s why Huishan has tried to jor stake in China’s largest milk pro- sense that they will not attack each position itself as superior to its ri- ducer by sales volume, Mengniu). To- other’s turf. Judging from Huishan’s vals because of the way that it gether the three took up shares worth positioning, it seems that the com- manages its supply chain. It does- $220 million, representing a decent pany plans to expand primarily in n’t just make dairy products, it slice of the entire IPO. The rest of the the northeast region but not na- breeds its own cows. Huishan al- offer was reportedly fully subscribed tionally like the other two,” Lei ready owns the country’s second on the first day. Yongjun, head of the China Dairy In- largest herd including imported Hong Kong billionaire Cheng Yu- dustry Committee told 21CN Busi- heifers from Australia. And it feeds tung (who owns the Chow Tai Fook ness Herald. its cows with alfalfa seed from jewellery chain among other things) According to Liaoning Daily North America as fodder. was also an earlier investor in the News, Huishan controls about 80% Huishan plans to raise up to $1.3 dairy in 2011. of the market in Shenyang and billion in what is set to be Hong Industry observers say COFCO’s nearby areas. But its share in the en- Photo Source: Shutterstock Kong’s largest initial public offering investment in Huishan is not purely tire northeast is only 20%. in four months. It says it will buy for financial gain. “There is little Huishan hired HSBC as one of its up to 500,000 more cattle with the doubt that Cofco invested in Huis- sponsors and joint global coordina- proceeds to increase its herd and han because of Mengniu. What it’s tors of the IPO. The listing is expected improve milk yields. Huishan’s an- trying to achieve is to help Meng- on September 27 in Hong Kong. n 8 Week in China Economy 20 September 2013

No concrete solutions China’s cement industry is in crisis, facing massive overcapacity

he term ‘skyscraper’ wasn’t Toriginally used in an architec- tural context. As the author Neal Bascomb points out in his book Higher, it can be traced back to the winning horse at the 1789 Epsom Derby. “The word went on to refer to high-standing horses,” he writes, “then later to the triangular sail raised at the top of a ship’s mast to catch a strong wind.” It was only in 1889 that the Ameri- cans started using it to describe their tallest buildings. Today megatower mania is con- centrated in China, home to more There’s a lot more where that came from... in fact, far too much of it than half of skyscraper construction worldwide. Last month the Shang- scribes a large cement plant in Za- wider crisis. But how did supply and hai Tower in Pudong topped out at ozhuang, a city in Shandong demand get so out of whack? 2,074 feet, taking the mantle as province. Outside, four trucks are Culprit one: a decade-long boom China’s tallest building. It won’t waiting to load up. “It is no exagger- in property and infrastructure con- hold the title for long if Sky City in ation to describe the scene as de- struction which over-egged invest- Changsha – forecast to become the serted,” the publication observes. ment in the sector. But culprit two is world’s tallest tower at 2,740 feet “Two years ago there would have the ambitions of local government (see WiC155) – gets permission to go been nearly 200 trucks lining up bureaucrats. The economics of ce- ahead. each day.” ment are shaped by its limited sales All these new skyscrapers, plus The problem is that Zaozhuang ‘radius’. Expensive to truck large dis- the broader urbanisation trend that has dozens of smaller cement pro- tances, it has to be consumed nearby, WiC has discussed elsewhere (for an ducers and at least 10 larger firms. meaning there is already pressure example, see issue 171) sound like The outcome is 30 million tonnes of for each locality to have its own pro- good news for cement makers. But supply for only 10 million tonnes of duction. But Song Zhiping, who runs as magazine China Entrepreneur demand, says Ge Quanwei, vice-pres- the country’s biggest cement firm, notes, the industry is on far from a ident of one of the biggest local ce- state-owned China Building Materi- solid footing. Just like steel, (see ment makers (the one with just four als Group, says local governments Talking Point in WiC208) it is strug- trucks waiting outside). In better have made things much worse. gling with chronic overcapacity and times his cement was selling for Imagine that County A had in- falling prices. Rmb350 ($57.1) per tonne, Ge recalls, vested in a cement factory, Song Chinese producers are expected but now the market price is about says, while County B is buying to churn out 2.3 billion tonnes of ce- Rmb230, or close to cost. County A’s cement. That means ment this year, or roughly two “There is too much supply and County B gets no tax revenues, so it Photo Source: Reuters thirds of global output. Simply put, the competition to sell is intense. also wants to build a plant, encour- this is more than the economy can We are sacrificing profit for sur- aging a producer with an offer of presently absorb. As an anecdotal vival,” Ge bemoans. free land, bank guarantees and so example, China Entrepreneur de Zaozhuang’s case exemplifies a forth. Once the plant opens, County 9 Week in China Economy 20 September 2013

B is happy as its industrial taxes are ment had toyed with the idea of up. But now there are two cement launching a new stimulus package, factories in a market that hasn’t nec- Davos in Dalian but then decided against it. essarily changed in size. All ears on Premier Li’s speech Instead he sought to manage Over the past four years the cen- growth expectations, saying the tral government has been trying to hu Rongji was the last Chinese double-digit levels of days gone by limit the kind of commercial be- Zprime minister to fail to meet an were “a miracle in history”. Now the haviour that Song describes by annual growth target. That was in economy has entered a phase of blocking bank lending to the sector 1998, the year he took office, and “medium to high rate growth”, Li and pressuring outdated plants to which (to be fair) saw Asia plunge said, adding that this year’s target – close. into financial crisis. The recent pub- 7.5% – should still be regarded as a But local governments have got lication of a series of Zhu’s speeches strong performance for any major around the restrictions in creative has refocused attention on his economy. ways, including breaking up larger legacy, especially how some of his Li also opined that his experi- projects into smaller parcels, and more ruthless reforms inflicted ences working the land during the thus staying below the investment short-term pain for long-term gain. Cultural Revolution has helped him thresholds at which centralised ap- Another question then beckons: is face the challenges in managing the proval is supposed to be sought to the current prime minister ready to Chinese economy. “If the managers build new plants. adopt a similar playbook? of this building have the experience Despite the talk of a clampdown At the World Economic Forum of cleaning the toilets, I believe they on new plants, 800 million tonnes in Dalian last week, Premier Li Ke- can better manage this complex,” of capacity has come into the mar- qiang gave another keynote speech he said, referring to the conference ket in the last four years – most of it calling for an overhaul of many of centre where the Summer Davos with a nod from local bureaucrats. the state-dominated sectors in the summit was held. Song estimates that this accounts domestic economy, as well as It probably wasn’t the sort of for almost all of the excess produc- promising to continue to take metaphor that the business folk in tion ailing the industry. “The pro- steps towards interest rate liberal- the audience were expecting. But it motion of local interests is the root isation and to achieve the full con- might be indicative that – like Zhu – cause of cement oversupply,” he vertibility of China’s currency. Li’s term is going to be marked by told China Entrepreneur. Li also revealed that the govern- some welcome plain speaking… n

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10 Week in China Internet and Tech 20 September 2013

Screen idol Xiaomi surprises market with cheap smart TV

week before Apple unveiled China. Tencent, the largest internet Atwo new iPhones, Xiaomi – firm by market cap (this week its sometimes touted as China’s an- stock market value breached $100 swer to the Californian tech giant billion for the first time), sold $5 – wowed fans and investors with a billion worth of them last year. new flagship smartphone product Lei’s detractors say that monetis- of its own. It too is available in ing Xiaomi’s televisions is not go- multiple colours but costs as little ing to be so straightforward. Even as $325 (compared with Apple’s though it has made some headway new “cheaper” iPhone priced at in mobile games (see WiC207) it may about $738). struggle to convince developers to At the event Xiaomi also unveiled make videogames for its smart TV. Television ambitions: Lei Jun its first ‘smart’ TV – a new genera- “For a start, the games operate tion of television that can connect to very differently on phones than on Nor is Xiaomi the only player in the internet (a product Apple is also TV. Mobile games are much easier the market, which is looking in- rumoured to be developing but has to play on screen but video games creasingly crowded. Back in June so far yet to launch). require other equipment like a mo- Lenovo announced that it has co-de- During the glitzy Beijing event, tion-sensing remote control. At this veloped a smart TV with Sharp, a chief executive Lei Jun (whose com- stage of development, many game leading LCD panel manufacturer. pany we first introduced readers to makers will be reluctant to invest a Baidu has also announced a tie-up back in August 2011, in issue 119) lot in a platform that has yet to with TV maker TCL to launch a 48- said the smart TV will go on sale prove successful,” predicts 21CN inch smart TV (which will feature next month and run on Google’s Business Herald. content from its online video site Android operating system. The 47- Others point to the differences iQiyi). Another video site Youku Tu- inch TV features LCD screens from between the phone and TV markets. dou is reportedly working on its own LG or Samsung and runs on the “The life cycle for a TV is much branded internet TV. LeTV has one Qualcomm Snapdragon 600 chip. longer than a handset. Many mobile too (see page 14). Lei told the audience it will cost just users get a new phone every year That entire group will also be Rmb2,999 ($490). but TVs are durable consumer prod- fearful of Alibaba, China’s largest e- Analysts say Xiaomi’s foray into ucts so no matter how cheap they commerce firm, which has plans to the smart TV sector is based around are, the product cycle is much roll out two new smart TVs in Octo- Lei’s strategy to make most of his longer. Sales will definitely be con- ber with the cheapest one priced profits from customers as they con- strained,” says Wang Jung at much lower than Xiaomi’s at tinue to use the device, rather than Analysys International. Rmb1,999. Of course, Alibaba will from the sale of the actual hardware The market for smart TVs is a lot try to take advantage of its domi- (rather as Amazon sells its Kindle e- smaller too. About 23.9 million are nant e-commerce and online pay- readers at low prices but makes forecast to be sold in China this ment assets like Tmall, Taobao and most of its money later through the year, up at least 40% from a year Alipay to allow users to shop and sale of e-books for them). ago. But that doesn’t seem such a pay bills via their televisions. An app Lei is also betting that his smart big number when you consider that store for video games and music Photo Source: Reuters TVs will generate sales from online the Chinese are likely buy more streaming service also comes pre- video gaming. As documented in than 301 million smartphones in loaded on the devices. previous WiCs, sales of games and the same period, says technology It looks like an all-out smart TV virtual gifts are substantial in research firm IDC. war is brewing. Can Lei Jun win it? n 11 Week in China Auto Industry 20 September 2013

Getting bigger in China BMW’s marketing savvy sees surge in sales of iconic British car, the Mini

ans of the Michael Caine movie – which costs between Rmb399,000 FThe Italian Job typically re- ($65,188) and Rmb439,000 in China member two scenes most. The first – will help to strengthen Mini’s ap- features Caine and his explosives peal in China, particularly among expert trying to force their way men. As 21CN Business Herald into an armoured van (“You were points out, many Chinese men had only supposed to blow the bloody long viewed the Mini as merely a doors off!”). The not-so-mini version “shopping cart for housewives”. An- The other sees Caine and his col- other factor counting against the leagues racing through the streets of between the three sets of bumpers. Mini was its compact size. Most men Turin in their Mini Coopers in one Han achieved this feat by ‘drifting’ also believed the larger the car the of the most famous car chases in cin- the car into the space at high speed, better, in status terms. ematic history. The high-speed chase a technique that requires an expert BMW has been working on chang- boosted the status of the small but combination of braking, steering ing these perceptions. “Five years nimble British car all over the world. and timing. (Footage can be seen on ago, 95% of Mini customers were The film even has a China con- YouTube, with the clip titled ‘Tight- women,” says Zhu. “From 2009 we nection, and one that more bizarrely est parallel parking record beaten at began to strengthen the brand’s still also involves the car industry. new Mini launch’ – though earlier masculine positioning as a sporty That’s because the gold that Caine this year Han’s record was broken vehicle. Today the male-female ratio and his gang plan to steal belongs to in the UK, albeit also using a Mini.) is about 70:30.” the Chinese government. It’s set to More recent news again high- Aside from some of its high-oc- be paid to Fiat on the fictional prem- lights the growing importance of tane events, Zhu’s team has also ise that the Italian firm will build a Chinese consumers for Mini’s fu- changed the car’s slogan in China to factory in the country. ture, including this summer’s appeal more to men, adapting a So perhaps it’s fitting that when launch of the John Cooper Works Confucian saying that translates as BMW, Mini’s current owner, wanted models. Ten years after the first ‘a gentleman is always open and at to boost the brand’s sales in China, it Mini was sold in China, its range ease’ (it sounds catchier in Chinese). released a special edition vehicle now boasts a line-up of 22 models. Sales have been growing. In 2009 that it named ‘The Chinese Job’. The new Mini John Cooper Works the brand sold 4,368 cars; last year To promote the new model BMW GP is the brand’s highest-perfor- sales were 23,275. also hosted an event in which it in- mance vehicle, having lapped the Zhu says that the Mini is a pre- vited the country’s best drivers to Nurburgring’s Nordschleife circuit mium vehicle for China’s increas- compete on a circuit that mimicked in 8 minutes 23 seconds, putting it ingly affluent middle class. And al- Caine’s chase through Turin. First in sports car territory. “The launch of though he wants more men to buy held in 2011, the Chinese contest John Cooper Works models is the his cars, he hasn’t forgotten his fe- now happens every year, showing best birthday gift to celebrate Mini’s male audience. One selling point for off the car’s manoeuvrability to the decade of development in China,” lady buyers is that the car can be watching crowds. says Zhu Jiang, head of Mini brand personalised to a much greater ex- In fact, Mini’s Chinese marketers management at BMW. “From its first tent than its rivals, Zhu says. At com- Photo Source: China Imagine are a creative bunch. Last year, they win in the 1964 Monte Carlo Rally to pany dealerships (of which there are even set a world record, when Chi- its most recent victories in the Dakar now over 70), customers can choose nese driver Han Yue parallel parked Rally, it’s a symbol of Mini’s strong from a wide range of trims and up- a Mini between two adjoining cars racing heritage.” holsteries as well as customise parts with a combined 15cm of separation The hope is that the latest release of the car’s exterior. n 12 Week in China Society and Culture 20 September 2013

Splittist tendencies Debate sparked over rising divorce rate as celebrity couple end marriage

he Singapore audience sat in Tstunned silence as the lights came up, signalling the concert had ended. After finishing a song, Faye Wong had simply left the stage, de- ciding she was done for the evening. “ ‘Thank you. Goodbye,’ is not diffi- cult to say” commented a Singa- porean blogger who attended the 2011 show. But the blogger recalls that Wong said nothing as she walked off. “We wrongly thought she’d gone for another costume change.” Instead, the audience re- alised that the gig was over. Blindsiding her fans is nothing new for the Chinese pop diva. In fact, it’s been something of a Wong speciality. Some singers feed off au- dience applause. Not Faye. She reg- ularly refuses to indulge in encores or waste much effort talking to fans during concerts. Or say goodbye as she departs the stage. In the mid-1990s Wong’s man- ager even admitted to TIME maga- zine: “Faye does whatever she wants. It’s really quite a miracle that she became a success.” But Wong – who has released 19 Parting ways: pop diva Faye Wong is divorcing her second husband albums and starred in six films – has become a modern Chinese icon, whom she married in 2005. was due to arrive and then chased coming out of self-imposed retire- “Our affinity and connection as a her car back to the city. Over the ment to stage a comeback tour in husband and wife in this life has weekend, Wong’s break-up message 2010 that earned Rmb200 million come to an end,” Wong wrote enig- was forwarded more than 760,000 ($32.66 million) in China alone. matically. times on weibo, making it easily the Wong was back in the news last Her husband – who will get cus- most popular topic. weekend for reasons that had noth- tody of their daughter – responded Media explanation for the split ing to do with her singing. In a re- on his own weibo: “What I want is a were varied. Tencent Entertain- flection of her enduring celebrity, family, but you are destined to be a ment speculated that Wong had

Photo Source: CFP the 44 year-old provoked a wave of legend.” wanted her husband to become, media interest when she announced After the postings on Friday like her, a Buddhist. Apple Daily on her weibo that she was divorcing night, over 100 journalists staked thought the mood was a lot less her second husband Li Yapeng, out Beijing’s airport where Wong spiritual and that tensions were 13 Week in China Society and Culture 20 September 2013

new album since 2003. More bizarrely, news about the break-up has piqued investor inter- est, as netizens wonder if the Wong divorce might pave the way for a new bull market in China’s A-shares. That’s because when Wong married her first husband in July 1996, the stock index began a steady climb from 753 to 2,245 points. When she married again in July 2005, it rose from 988 to 6,124. The thinking, re- ports Eastmoney, is that it might be time to get back into the market if Wong ever marries again…

Timeless appeal Zhang Yuxi: stars as a court beauty in hit drama Tang Dynasty Good Man LeTV online drama pulls in record 200 million viewers high because Li’s failed invest- people concerned, it also affects ments had reduced Wong’s net their children’s upbringing,” Shu fter Mo Yan won the 2012 Nobel worth (estimated at $85 million at Xin, head of the China Marriage APrize for Literature, an old the time of their marriage). and Family Counselling Centre, photo of him with film director But as the speculation began to said on Sunday. Zhang Yimou soon went viral. The insinuate a lover might be involved, Li Yinhe, another sociologist, said picture was taken 25 years ago at Wong took to her weibo yet again, China’s divorce rate had rocketed Mo’s cottage in the rural county of this time less enigmatically. On from around 2% in the 1970s to Gaomi. Mo had just sold the movie Wednesday she denied either was more than 20% today and said the rights to his novel Red Sorghum for having an affair, nor that money or country’s dramatic transformation Rmb800 (about $215 in 1987). The Buddhism were factors. She said it from a rural to urban society was film not only made Mo famous – it was her decision and “we separated one of the key reasons. also helped him afford to buy a cow. peacefully”. An editorial in the Global Times Producers are still on the look- However, as the China Daily re- noted that attitudinal change partly out for books that might be turned ported, the parting of the two explained the phenomenon too. into hit dramas. The latest success celebrities also sparked a broader “Fewer young Chinese would com- story is Tang Dynasty Good Man debate about China’s rising rates of promise their own happiness for an made by LeTV – an online firm divorce. Over three million couples unsatisfactory marriage simply to which specialises in streaming tele- divorced last year, according to the avoid losing face or embarrassing vision shows. Ministry of Civil Affairs. their parents,” it noted. Unlike Mo’s masterpiece, Tang Dy- In a country where divorce was Li, who is a professor with the nasty Good Man started out on the once almost unknown and carried Chinese Academy of Social Sciences, internet as a serialised novel from an a social stigma, the sudden surge in said more infidelity was another im- author whose pen name is Duoyiban. marital breakdowns has some so- portant factor for the explosion in It rapidly became a six-edition best- ciologists nervous. “I am not jok- divorces. Financial difficulties and seller, attracting the attention of LeTV ing that our society will disinte- disagreements over parenting are for its own online channel. LeTV grate if the family dissolves. cited as key factors too. struck it lucky: the series has been

Photo Source: CFP Problems within the family are the As for Wong’s fans, there were viewed more than 200 million times. fundamental cause of many social hopes that the soon-to-be single So what is Tang Dynasty Good problems. Divorce not only affects again singer might go back to the Man about? the lives, work and families of the recording studio and cut her first The main character – called Wang 14 Week in China Society and Culture 20 September 2013

Zihao – is a demoralised bank exec- phone and tablet. Most people utive who fails to meet his sales tar- watch on smartphones. “The main gets and has been dumped by his pool of our audience come from girlfriend. One night he gets drunk white-collar workers riding on the and is hit by a truck. Somehow this metro everyday,” a LeTV producer sees him travel back in time 1,200 told the Economic Observer. years to the Tang Dynasty, where he All told, eight year-old LeTV looks is reincarnated in the body of a to be a media firm to watch. While newly-dead duke. The tale follows some Chinese video websites owe Wang’s transformation from a bank their success to pirated material, lackey to the most popular aristo- LeTV has built its audience by airing crat in the Tang capital of Chang’an legitimate content. The bulk of its (today’s Xi’an). revenue is derived from subscription The Tang Dynasty is generally re- fees (which cost around Rmb20 per garded as the golden age of Chinese month), although a free service is civilisation, which may explain available to those who don’t mind a some of the audience fascination minute or so of advertisements with this costume drama. But the ahead of shows. 40-episode series also bridges two The firm also buys copyrights different worlds. Thanks to his for films and popular TV dramas. modern-day knowledge and mar- But as these costs climb, LeTV is keting know-how, Wang proves producing more original content adept at becoming rich. He then and China’s literary websites have ple of China’s Mid-Autumn Festival, uses his fortune to seduce a slew of become a favourite hunting which fell on Thursday this week. Tang beauties. ground for inspiration. The strat- As WiC has documented in previ- It’s an enticing fantasy, but the egy is that fans of popular novel- ous issues, mooncakes are hardly an premise of a modern-day loser mak- ists provide a ready audience and ordinary pastry (see WiC79). The ing good in the distant past is not according to the Economic Ob- confection has also been used as a wholly new. As we reported in server, members of LeTV’s produc- gift for business associates and offi- WiC98, Gong was the first of the so- tion team are tasked with reading cials. The higher the recipient’s sta- called ‘time travel’ dramas to prove a 30 million words of internet novels tus, the more lavish the cake might commercial hit. It spawned plenty every year in search of the next hit. be: some are packaged in bejewelled of copycats, but the TV regulator “Almost all of the rights to the top boxes, often with cash, liquor or viewed them as so mindless that it 20 novels on each literature web- watches hidden within. banned them from network and site have been bought by LeTV,” the But mooncakes have become the satellite television channels. newspaper said. latest casualty of President Xi Jin- But as LeTV’s success shows, au- A media revolution, then? ping’s anti-corruption drive. The diences seem to love the format. And People’s Daily thinks so: “Televi- People’s Daily is reporting that the because the series is being distrib- sion’s role as the leading medium has government has banned the use of uted exclusively online, objections been weakening. The era of big inter- public funds to buy the pastries, say- from the regulator don’t apply. net productions is arriving.” ing: “Polite reciprocity, when over- Tang Dynasty Good Man is being done, becomes a kind of squander- watched on internet-enabled ing of cash.” China’s anti-graft tsar ‘smart TVs’. As we reported in Wang Qishan has offered similar ad- WiC194, LeTV has signed a deal with vice: “Giving gifts like costly moon- Foxconn to make LeTV branded Blue moon cakes… has deviated from the tradi- smart TVs, which are optimised for Let them not eat cake... tional virtue of frugality, and buying its own content. LeTV’s strategy is them with public funds has eroded Photo Source: Shutterstock to offer a number of different view- t’s the time of the year that the Party and social atmosphere.” ing formats. Each new episode is Imooncakes make their annual Vendors say the austerity drive made available on the so-called ‘four appearance. They come stuffed has hurt their revenues. In the city screens’ at the same time – i.e. on with anything from lotus paste to of Guangzhou, mooncake sales are personal computer, smart TV, smart- salted egg yolk as the ritualistic sta- at their lowest in 10 years. Similarly 15 Week in China Society and Culture 20 September 2013

in Chengdu, where sellers say sales The speculation spread like wild- “Brother Wristwatch” who got a 14- of luxury mooncakes have fallen by fire, even among those who hadn’t year sentence for corrupt behaviour half – although more traditional lo- heard of atomic warfare. Men and this month, see WiC163). tus-seed and sesame-paste varieties boys were so afraid that they slept on Other ‘Big V’ personalities seem were holding up better. their roofs. Strangers wandering into to be taking note. For example, “Government offices almost dis- villages were beaten close to death. SOHO China’s chairman Pan Shiyi, appeared from our customer list According to Li Ruojian, whose re- a weibo celebrity with 16 million this year,” says Chen Yaoliang, gen- search on the “castration scandal” fans, looked unusually nervous dur- eral manager of Xinya Cantonese was published in 2007, the case ex- ing an interview with CCTV last week Restaurant, a restaurant in Shang- emplifies how rumours have often when he discussed the “social re- hai that also makes mooncakes. gripped millions of Chinese. sponsibilities” of his peer group. “People who come to buy moon- And still do, in the view of Beijing Pan was one of the first people cakes these days are usually gifting policymakers. Lately the government that Sina invited to blog on its serv- to friends and relatives so they opt has been clamping down on specula- ice and his weibo postings have for the cheaper kind around tive chat, although the target kept the property tycoon in the Rmb200 ($32.66) a box. They also medium has changed from word of public eye. But Pan also admitted don’t buy in large quantities.” mouth to the written word online. that they have led to “one public Foreign firms have also slashed In the last few weeks several relations crisis a year” and exposed their mooncake budgets. “We found hundred people have been de- him to online slander, including that this year’s mooncake orders tained on charges of “spreading ru- unfounded rumours that he had from pharmaceutical companies mours” in social media. Among the stolen Rmb5 billion ($816 million) have dropped to virtually zero. This group, the Xinhua news agency re- in state-owned assets. could be related to the Glaxo- ports, are the owners and employ- In the interview Pan seemed to SmithKline corruption scandal,” an ees of public relation firms that agree that Chinese cyberspace observant manager at Shanghai’s help clients defame competitors needed a “new order” and said he Ritz Carlton Hotel told CBN (GSK is online. But others suggest that the was ready to lead by example. facing a corruption investigation, regulators are really targeting in- “I…I…think as a micro-blogging see WiC203 for details). fluential voices in social media. celebrity with a larger number of But the mooncake industry is still One of them was Xue Manzi, an f...f…fans, I…I… should be more sizeable. There are more than outspoken Chinese-American ven- di…disciplined with myself,” he con- 10,000 manufacturers, collectively ture capitalist with more than 12 fessed. producing more than 280,000 met- million followers on Sina Weibo. Pan’s stutter was one of the most ric tonnes of pastry annually. The He was arrested for soliciting sex- talked about parts of his TV appear- market is thought to be worth ual services (see WiC206) and later ance. “Was Mr Pan singing a rap? He Rmb15 billion, says the Hong Kong made a public apology on TV in was trembling!” one weibo user Trade Development Council. which he also admitted to “irre- wrote cruelly. Others suggested Pan sponsible” internet postings. was trying to give a good impression More detentions were to follow. and wanted to appear as “honest and The South China Morning Post re- reliable”. ported last week that Wang The Economic Observer preferred Rumour has it Gongquan, another venture capital- to focus on the government’s cam- Control of internet escalates ist but also outspoken advocate for paign against rumour-mongers, civic involvement, was taken away wondering if much of the problem n 1950 an unlikely rumour from his Beijing home (see WiC103 wasn’t the fault of an opaque style of Ispread across China. The whisper for our profile of Wang). government. “An old Chinese saying was that one of the ingredients fu- Another “Big V” – the term being suggests rumours stop when they elling atomic bombs was testicles, used to describe opinionated weibo spread to intelligent people, but and that Mao Zedong had promised commentators with huge followings transparency would also help,” it the Soviets a mass supply as a way – was detained for investigation this wrote in an editorial. of repaying China’s debts. Accord- week. He had popularised the prac- Li Ruojian’s own study of the phe- ingly, the government was sending tice of posting online photos of offi- nomenon made a similar point. “Ru- teams of special agents on castra- cials wearing luxury watches (one mours speak of people’s anxiety and tion missions. was worn by Yang Dacai, the discontent with power,” he wrote. n 16 Week in China And Finally 20 September 2013

Absolutely quackers Why Chinese cities have been invaded by giant yellow birds

hen a 16.5-metre duck made WHong Kong’s Victoria Har- bour its temporary home earlier this year, people flocked to see the enormous visitor. The mood was al- most giddy. The South China Morn- ing Post covered the story with an editorial under the heading: “Giant rubber duck has united the city”. But now that imitations of the inflatable bird have arrived in Bei- jing as well as a host of other Chi- nese cities – including Chongqing and Hangzhou – it is bringing con- sternation rather than celebration with it. Peking duck: the Beijing version disappointed owing to a saggy beak The original duck was designed by a Dutch artist called Florentijn iour could destroy society and cul- taken away by Quanjude,” the news- Hofman. But his success in Hong ture,” he darkly told Economy and paper cites a netizen as saying, re- Kong has led to a proliferation of Nation Weekly. ferring to the capital’s renowned copycats across China. Some sport Another problem for Beijing’s Peking duck restaurant. blue bow-ties or long eyelashes, re- duck is that it hasn’t wowed the Another gripe in Beijing is that ports Economy and Nation Weekly, crowds like its Hong Kong predeces- there is a charge to see the duck, while others have donned green sor. Quality control seems to be which wasn’t the case in Hong waistcoats or turn up accompa- partly to blame. The Shanghai Daily Kong. Tickets at the Beijing Garden nied by eggs. reports that a bout of beak fixing Expo cost Rmb100 ($16.33), reports You might say that they are vari- was required soon after the duck’s Cankaoxiaoxi.com. Wang Yu, a 30 ations on a theme, taking the origi- arrival, with onlookers quick to com- year-old IT engineer, summed up nal as their inspiration. But Hofman plain about its droopy mouth and the complaints: “I really do not is furious about the shanzhai (fake) wrinkly skin (see photo). want to spend money to glance at a versions. “If I were a Chinese, I “He must have disguised himself giant rubber duck across a sea of would resent this – as such behav- as a chicken so that he won’t be people.” n

China’s road to Damascus

“The Chinese side welcomes the framework agreement between the US and Russia. This agreement

Photo Source: Reuters will enable tensions in Syria to be eased” * Chinese foreign minister, Wang Yi sounds a positive note on the recent deal seeking to force Syria’s Bashar al-Assad to hand over his chemical weapons. Wang Yi

17 Week in China The Back Page 20 September 2013

Photo of the Week In Numbers 100,000 Pre-orders for the iPhone 5S and 5C received by China Unicom, far lower than the 300,000-plus units pre-ordered for the iPhone 5 when it was first released.

$79.77 billion Foreign direct investment (FDI) inflow into China between January and August, according to the Ministry of Commerce, up

Photo Source: Reuters 6.37% versus the same period last year.

2.4 million The number of chickens to initially be raised in China’s largest hen farm, a joint The great outdoors: tents on a hillside at a camping festival on Mount venture between Bright Foods and Japan’s Ise Foods. The farm, to be built in Dafeng, Wugongshan in Jiangxi province Jiangsu province, will then expand to house 9 million chickens by 2019 producing 120,000 tonnes of eggs annually. The eggs, to be promoted as exceptionally hygienic, Where is it? will be supplied to Shanghai stores catering Some of the places referred to in this issue to the wealthy.

Shenyang Liaoning Rmb51 billion Beijing Tianjin The assets owned by China’s richest Shandong woman, Yang Huiyan, majority shareholder of property developer Country Garden, China Jiangsu according to the latest Hurun Report Nanjing Shanghai released this week. Yang is followed by Hangzhou Chengdu Chen Lihua, chairwoman of Fu Wah Chongqing Jiangxi International Group with a fortune of Rmb37 billion ($6 billion) and Wu Yajun of Yunnan Longfor Properties, who was ranked first on Guangzhou Hong Kong the 2012 list.

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