Archive for ‘China alert’

26/08/2016

A horror confronted | The Economist

HUANG YANLAI was 74 when he first raped 11-year-old Xiao Yu.

He threatened her with a bamboo-harvesting knife while she was out gathering snails in the fields for her grandmother in Nan village, Guangxi province, in China’s south-west. Over the following two years, Xiao Yu (a nickname meaning Light Rain) was raped more than 50 times, her hands tied and a cloth stuffed in her mouth. She was a left-behind child, entrusted to relatives while her parents worked in distant cities. Her father returned home once a year. Told that his daughter was in trouble, he asked her what was wrong but she was too frightened to tell him. So he beat her up.

Her abusers bribed her to keep quiet, giving her about 10 yuan (about $1.50) each time they raped her, threatening that “if this gets out, it will be you who loses face, not us.” They were right. When Xiao Yu finally confided to her grandmother and went to the police, the villagers called her a prostitute and drove her out of town.

Xiao Yu’s story came to national attention after it was reported by state media. At the end of May it formed part of a study released by the Girls’ Protection Foundation, a charity in Beijing founded to increase awareness of child sexual abuse, a crime officials preferred not to discuss openly until recently. The study said there had been 968 cases of sexual abuse of children reported in the media between 2013 and 2015, involving 1,790 victims. Wang Dawei of the People’s Public Security University said that, for every case that was reported, at least seven were not. That would imply China had 12,000 victims of child sexual abuse during that period. “I have never seen this many child sexual-assault cases, ever,” ran one online reaction. “Why is it such things were hardly heard of five years ago,” asked another, “and now seem all over the media?”

China is no exception; it is no longer taboo to discuss the problem. In 2015 Fang Xiangming of China Agricultural University, in a report for the World Health Organisation (WHO), estimated, using local studies, that 9.5% of Chinese girls and 8% of boys had suffered some form of sexual abuse by adults, ranging from unwanted contact to rape. For boys the rate is as high as the global norm, for girls it is slightly less so. Because of the country’s size, however, the absolute numbers are staggering. Perhaps 25m people under 18 are victims of abuse.Chinese pride themselves on the protectiveness of their families. That children suffer even an average level of abuse is a surprise to many. But, as everywhere, children hide their experience. In 2014 Lijia Zhang, a journalist, wrote a first-hand account in the New York Times of sexual abuse at her school in the city of Nanjing in the 1970s. She said it never occurred to her and other victims to report the teacher. “We didn’t even know the term sexual abuse.” Even in Hong Kong, where sex is more openly discussed, a study of university students found that 60% of male victims and 68% of female ones surveyed since 2002 had not told anyone about their abuse. These rates of non-disclosure are considerably higher than in the West. Mr Fang, the author of the study for the WHO, says that if Chinese girls were more open, then the true rate of female sexual abuse might turn out to be as high as elsewhere, just as it is for boys.

In any country, child sexual abuse is hard to measure. China has never conducted a nationwide survey, though it is talking about holding one in the next couple of years. There are many provincial or citywide studies. But as in other countries, researchers use different measures and standards. And there are no studies of abuse over time, so it is hard to detect trends. Even so, there are reasons to believe that children are at growing risk.

First, China has huge numbers of “left-behind” children, like Xiao Yu. According to the All-China Women’s Federation, an official body, and UNICEF, the UN agency for children, 61m people below the age of 17 have been left in rural areas while one or both parents migrate for work. Over 30m boys and girls, some as young as four, live in state boarding schools in villages, far from parents and often away from grandparents or guardians. (A growing number of rural children whose parents are still at home have to board, because of the closure of many small schools in the countryside as village populations shrink.) Another 36m children have migrated with their families to cities, but their parents are often too busy to look after them properly.

Time for new thinking

About 10m left-behind children see their parents only once a year and otherwise rely on the occasional phone call. “Every time my mother called, she would tell me to study hard and listen to my teachers,” said one victim of sexual assault by a mathematics teacher at a school in You county, in the central province of Hunan. “I could not bring myself to tell her over the phone what was happening.”

How much abuse is inflicted on left-behind children is not known. Researchers complain that schools with large numbers of them often refuse to allow sexual-abuse surveys. But given their vulnerability, left-behind children are likely to be victims of such abuse more frequently—possibly much more so—than average.

Another risk factor is a mixture of ignorance, shame and legal uncertainty that makes it very difficult for children to defend themselves. Fei Yunxia works for the Girls’ Protection Foundation, the NGO that released the recent study of abuse cases. She travels to schools, giving sex-education classes. “No one tells these students about their bodies or how to protect themselves from harm,” she told Xinhua, a government news agency. Sex education in China is rare and never touches on abuse. The NGO says that 40% of 4,700 secondary-school pupils polled in 2015, when asked what was meant by their “private parts”, said they did not know. When cases are reported to the authorities, little is done, either because of legal loopholes, or because officials refuse to recognise the problem, or because they cover up for colleagues.

It does not help that China’s statute of limitations is only two years. Wang Yi of Renmin University says this is too short for cases involving child sexual abuse: victims often remain silent for years. There is no national register of sex offenders, though Cixi, a city in Zhejiang province, aroused controversy in June when it said it would publish “personal information” about major sex criminals after their release to let the public monitor them (some commentators worried about an invasion of privacy).

The lack of well-developed sex-crime laws means victims are often failed by the justice system. In Liaoning province eight school girls aged between 12 and 17 were kidnapped, stripped, beaten, and forced to watch and wait their turn while men who had paid $270 per visit raped them repeatedly in hotel rooms. The men were charged with having “sex with under-aged prostitutes”, a charge that shamed the victims into silence. The law that allowed child-rape victims to be classified as prostitutes was scrapped in 2015. But a women’s legal-counselling centre in Beijing, which had led a campaign against it, was itself closed earlier this year as part of a crackdown on civil society launched by China’s president, Xi Jinping. No wonder that, as a lawyer in the You county case put it, “silence is the preferred solution.”

A shift in moral assumptions about sex presents another challenge. China is in the middle of a sexual revolution. Sex before marriage is more common. The age of first sexual experience is dropping. Most researchers into child abuse think there may be a link between such changes and sexual violence against children, if only because the revolution in mores seems to go hand in hand with changes to the traditional child-rearing system that, through intense surveillance, may limit abuse.

Ye Haiyan, challenging abuse

When a country confronts the problem of child abuse it typically goes through three stages, argues David Finkelhor of the University of New Hampshire. First the public and media become alert to the problem. This is happening. With the help of social media, and thanks to a greater willingness to speak out on social matters, campaigners have begun to organise. Ye Haiyan (pictured), known online as “Hooligan Sparrow”, helped arouse public awareness with her protests in 2013 against the rape of six girls aged between 11 and 14 by their school principal. In the next stage the government becomes concerned and starts to tighten laws. Then the police, social workers and public prosecutors begin to deal with problems on the ground. China is moving into this third stage.

Make them safer

Since early this decade, prosecutors and police have been spelling out how cases of abuse should be handled, from the collection of evidence to support for victims and procedures for separating a child from his or her parents. At the end of 2015 China adopted its first domestic-violence law. It says that preventing this is the “joint responsibility of the state, society and every family”. All this, says Ron Pouwels, UNICEF’s head of child protection in China, means that “China gets it and is determined to do something about it.”

But much more work is needed. For example, there are very few social workers. The government has set a target of 250,000 properly qualified ones by the end of 2020. But only 30,000 take up such jobs each year. Crucially, Mr Xi needs to reverse his campaign against civil society and his efforts to stifle media debate. Further improving public awareness of the problem will need the help of NGOs and a freer press (free, for example, to point out that abusers are often people in authority—Ms Ye, the activist, was harassed by officials for trying to do so). Over the past 30 years, China has enhanced the life prospects of millions of children by providing them with better education and health care. Now it is time to protect them from sexual violence, too.

Source: A horror confronted | The Economist

26/08/2016

China’s Oil Industry Destined for Big Changes – China Real Time Report – WSJ

China’s largest oil fields are the stuff of Communist Party folklore, but today they’re potent symbols of the challenges facing China’s energy industry.

Significant falls in the first half of this year at China’s biggest-producing oil fields — Daqing, Shengli, and Changqing — have solidified a moment anticipated by the global energy industry: Oil production in China is in long-term decline.

The turnabout is jarring for an industry that has long held huge political sway in China. The “Daqing Spirit”– meaning hard work in the face of challenges — has long been celebrated by top leaders. The companies have been held up as critical to fueling China’s economic rise.

The London-based consultancy Energy Aspects compiled data from China’s oil fields. It shows just how great a toll the plunge in crude prices has taken on overall domestic production.

China’s three biggest oil fields experienced production declines of between 7-9% in the first half, according to Energy Aspects. That far outpaced China’s production decline as a whole. Small gains from output in the Xinjiang region and elsewhere haven’t been enough to compensate.

The declines are important, Energy Aspects said in a recent report, “because it symbolizes a significant shift in thinking” by Chinese officials. While the government has a long-held goal of limiting imports — and protecting jobs in places like Daqing — by keeping production high, leaders seem to have realized that track was both unsustainable and expensive.

With global crude prices under $50 per barrel, many aging wells at big oil fields in China lose money with each barrel they pump. Shutting off the taps at home helps to stem losses when cheaper oil can be purchased from overseas.

So what does it mean?In short, the assets that long served as the cornerstone for revenue for companies such as PetroChina are drying up. If China’s energy giants want to be more profitable–as outside investors and China’s government are pressuring them to do–they’re going to need to look to diversify revenue.

That’s likely to include a mix of initiatives, say Chinese executives and analysts. One part of the drive might be trying to secure new oil production overseas. That would mean a renewed push for outbound deals. Big discoveries in Brazil and elsewhere appear particularly attractive to China.

The other path to future growth is more complicated. For example, China’s oil companies are keen to learn how to boost sales and profits at the thousands of retail gas stations across China. Earning more money from sales of Snickers bars or cigarettes would make them somewhat less vulnerable to the vicissitudes of global oil prices.

The bottom line: China’s oil industry, like the economy as a whole, is destined for big changes. Many of those in the coming years will involve a greater global role for the oil giants — PetroChina, Sinopec, and Cnooc — than they currently have today.

The bigger global footprint is inevitable, says one person with ties to China’s top oil executives, as production at home begins to dwindle. The international revenues are needed to stave off a domestic slowdown.

“We are coming. We are coming,” he said.

Source: China’s Oil Industry Destined for Big Changes – China Real Time Report – WSJ

25/08/2016

China’s logistic hub in Djibouti to stabilize region, protect interests – Global Times

About 7,700 kilometers away from Beijing, in Djibouti in the Horn of Africa, China’s first overseas installation for naval vessels is under construction.

Scheduled to be completed in 2017, the base is set to resupply Chinese warships, according to government statements.

But despite Beijing’s insistence that the facility will simply help with escort missions, peacekeeping and humanitarian rescues in the Gulf of Aden and the waters off Somalia, many have argued this move represents Chinese “military expansion” beyond the Asia-Pacific region.

“Through exaggerating or distorting, they attempt to hype the ‘threat of China’ and tarnish China’s image, so as to suppress China’s efforts to build maritime power,” Li Jie, a Beijing-based maritime expert, told the Global Times.

“The base is far less than a military base in its scale and function,” said Zhang Junshe, a researcher from PLA Naval Military Studies Research Institute. “The base will be a logistic hub for Chinese vessels to get replenishment and temporary rest. It differs from US-style military bases, which have become bridgeheads for the country to easily and quickly wield military deterrence or intervention to other territories,” Li noted. The Republic of Djibouti, located in a strategically important position between the Indian Ocean and the Red Sea, hosts the military facilities of several countries, including the US, Japan and France, the country’s former colonial ruler. Italy and Spain also have permanent military installations in the country, according to a recent report by Hong Kong-based Phoenix TV.

These countries have stationed a variety of assets in these bases, including personnel, ships, UAVs and surveillance aircraft which are used for anti-terror and anti-piracy operations in Africa and the Middle East.

International obligations

The news that China will build a “military base” in Djibouti was first revealed in May last year, when Djiboutian President Ismail Omar Guelleh told AFP that “discussions are ongoing,” and China’s presence would be “welcome.

“Since then, it has aroused wide attention and concern. The US even reportedly protested against it. “Washington protested against the China-Djibouti pact and expressed concern over China’s plans to build a military base in the Obock region, but to no avail,” according to an article published in April on foreignaffairs.com, a US-based international affairs news portal.

At a regular press briefing on November 26, 2015, China’s foreign ministry first confirmed that China was negotiating with Djibouti over the construction of a “logistics facility.” Spokesman Hong Lei citied the need to resolve resupply difficulties for Chinese escort vessels, adding “[The facility] will be significant for Chinese army to fulfill its international obligations and safeguard global and regional peace and stability.”

Three months later at a press briefing by Chinese defense ministry on February 25, spokesman Wu Qian told media that China had reached an agreement with Djibouti to build a facility and construction had already begun. According to official figures, China has deployed more than 30,000 personnel on peacekeeping missions, the most of any of the five permanent members of the UN Security Council.Since 2008, China has sent 22 escort fleets, a total of more than 60 vessels, to the Gulf of Aden and Somali waters, escorting more than 6,000 ships from home and abroad.

In March last year, hundreds of Chinese nationals threatened by escalating violence in Yemen were evacuated to Djibouti by their government.

But currently, these fleets need to dock in the ports of other countries to get rest and food supplies. “They need to organize people to purchase food locally. Besides, due to different types of fuels, refueling is also a problem,” Zhang said.

The new base will help China save money. Yang Huawen, a captain from China’s Northern Theater Command who joined a 10-month peacekeeping operation in Mali in 2014, is happy this facility is being built.

“In those tropical areas, the food goes bad quickly. The cost of mending equipment and maintenance is high,” Yang told the Global Times. “Building a logistic hub in the region can provide stable supplies efficiently and economically.”

Djibouti, with a landmass of 23,200 square kilometers of which 90 percent is volcanic desert, is poor in natural resources. Its ability to produce fruits, vegetables, and seafood is limited, according to a Chinese national who has spent time in the country. “Most of its vegetables are imported from its neighbor Ethiopia. Vegetables sell for there as much as five to 10 times what they do on the domestic market in China,” said the person.

Zhang also cited another advantage of the new facility – the Chinese government needn’t conduct diplomatic negotiations with the host country each time its vessels dock in their port.

 

Source: China’s logistic hub in Djibouti to stabilize region, protect interests – Global Times

25/08/2016

Iran keen to join China in rival to Panama Canal | Business | The Times & The Sunday Times

Iran has expressed interest in joining forces with a Chinese company that plans to build a $50 billion canal across Nicaragua that links the Atlantic and Pacific and rivals the Panama Canal.Mohammed Javad Zarif, the Iranian foreign minister, said that business leaders who went with him to the Central American state this week had discussed teaming up with HKND, a private Hong Kong company that has broken ground on the project but made little progress in the past two years.

Iranian involvement in a Chinese-run strategic waterway may raise concerns in the United States, which was instrumental in building the Panama Canal a century ago.

Daniel Ortega, Nicaragua’s left-wing president, shares Iran’s antipathy towards the US and is favoured for re-election in polls this November.

The project to build the 172-mile waterway has caused controversy at home, where environmentalists say that the route would take supertankers across Lake Nicaragua, bulldoze fragile ecosystems and involve the biggest earth-moving operation in history.

With an estimated 30,000 people likely to be displaced by construction, there have been protests against the canal, although the government insists that more than 80 per cent of the population of the country backs it. Amnesty International has denounced what it called Nicaragua’s “reckless handling” of the project.

There have been doubts about the financial health of Wang Jing, the Hong Kong tycoon behind the canal, and whether he might be backed by the Chinese government, which has massively invested across Latin America and Africa in the past decade.

Mr Wang is understood to have lost more than 80 per cent of his $10 billion fortune as a result of the volatility in the Chinese stock market. The project managers say that it is an international initiative not dependent on the vagaries of the Chinese share prices. After the groundbreaking ceremony in December 2014, the project appeared to have been put on hold, prompting speculation that it had run out of steam.

However, Mr Wang’s HKND group said this year that work on the Pacific terminal and wharf would begin this month, with work on the canal scheduled to start at the end of the year.

Mr Zarif, whose country recently had years of crippling US sanctions lifted, is on a tour of Latin America that began on Monday in Cuba, which has renewed diplomatic ties with the US but has yet to have its own half-century of sanctions lifted.Nicaragua was Mr Zarif’s second stop with an entourage of 120 Iranian business leaders and state economists, and he was scheduled to head on to Ecuador, Venezuela, Bolivia and Chile.

Source: Iran keen to join China in rival to Panama Canal | Business | The Times & The Sunday Times

25/08/2016

China and US to ratify landmark Paris climate deal ahead of G20 summit, sources reveal | South China Morning Post

China and the United States are set to jointly announce their ratification of a landmark climate change pact before the G20 summit early next month, the South China Morning Post has learned.

Senior climate officials from both countries worked late into the night in Beijing on Tuesday to finalise details, and a bilateral announcement is likely to be made on September 2, according to sources familiar with the issue.

President Xi Jinping will meet his US counterpart Barack Obama for the G20 summit in Hangzhou, Zhejiang province, two days later on September 4.

How China, the ‘world’s largest polluter’, is taking on climate change

“There are still some uncertainties from the US side due to the complicated US system in ratifying such a treaty, but the announcement is still quite likely to be ready by Sept 2,” said a source, who declined to be named.

If both sides announce the ratification on the day, it would be the last major joint statement between the two leaders before Obama leaves office.

China and the US account for about 38 per cent of global greenhouse gas emissions, according to the World Resources Institute.

By ratifying the Paris Agreement on climate change, Beijing and Washington could generate momentum for the accord to come into effect as a binding international treaty.

The pact agreed by representatives from 195 countries in Paris last December aims to keep the increase in the global average temperature to well below 2 degrees Celsius on pre-industrial levels.

Countries began the ratification process on April 22, Earth Day, and by Tuesday, 23 nations had joined, but they account for just 1 per cent of emissions.

China and the US create a new climate for international collaboration on the environment

The treaty will enter into force only after 55 countries representing at least 55 per cent of emissions ratify or join the deal in other ways.

China had said earlier it would ratify the accord before the G20 summit in September.

In June, the US said it would “work towards” approving the deal before end of the year, with the White House keen to seal a key part of Obama’s environmental protection legacy before he leaves office in January.

US law allows the nation to join international agreements in a number of ways, including through the authority of the president.

With China and US joining, some civil society trackers say they are confident the deal could hit the 55 per cent threshold before the end of the year.

On Wednesday, investors managing more than US$13 trillion of assets urged leaders of the Group of Twenty major economies to ratify the deal before the end of December.

The 130 investors also called for the G20 to double global investment in clean energy, develop carbon pricing and phase out fossil fuel subsidies.

How a little-known chapter in Sino-US cooperation may have helped save the planet

“Governments must ratify the Paris agreement swiftly and have a responsibility to implement policies that drive better disclosure of climate risk, curb fossil fuel subsidies and put in place strong pricing signals sufficient to catalyse the significant private sector investment in low carbon solutions,” said Stephanie Pfeifer, chief executive at Institutional Investors Group on Climate Change.

Ratification is expected to play out differently in the US compared with China.

While China has “few uncertainties” at home for passing the deal, it could cause controversy within the US, according to Liu Shuang, an officer with Energy Foundation’s low-carbon development programme.But the Obama administration’s commitment to international frameworks suggests the accord would be passed in a way that would make it difficult for his successors to undo, civil society trackers said.

‘I may do something else’: Donald Trump’s threat to renegotiate UN climate deal greeted with widespread dismay

The two countries started extensive cooperation at the leadership level in 2014. In a joint declaration that year, China promised its emissions would peak before 2030, while the US promised to cut emission by at least 26 per cent. That deal is widely regarded as paving the way for the Paris Agreement.

Source: China and US to ratify landmark Paris climate deal ahead of G20 summit, sources reveal | South China Morning Post

25/08/2016

TV Show Spotlights Middle Class Anxieties in China – China Real Time Report – WSJ

A hit Chinese TV drama that tells the story of three families who sent their young teens to study abroad has surfaced middle-class doubts about their future in the country.

“A Love for Separation,” based on a novel by Lu Yingong, started screening last week and grabbed the public’s attention despite competing with the Olympic games for viewers. Users on the cultural website douban.com gave the show an average score of 8.2 out of 10.

Some critics say it reflects a widespread anxiety among China’s middle class: they constantly feel insecure and believe that the only way for their children to get a better life is to leave China and pursue their dreams elsewhere. The story line has triggered discussions about the country’s test-based education system and about “tiger” mothers, fathers and teachers. Many scenes of domestic conflict in the show center around the children’s test scores.

In one clip circulating on social media, Fang Duoduo, a ninth-grader, yells at her father, “You want respect from me? You only treat me like an exam machine!”

In this still from the TV show “A Love for Separation,” the character Fang Duoduo’s mother helps with her homework late at night.

PHOTO: SCREENSHOT

Stress about the highly-competitive gaokao, or college entrance exam, is one of the reasons why some parents would rather send their kids abroad to study.

In the show, Duoduo’s mother tells her, “If you can’t make sure you in the top 100 right now, you won’t enter a key senior high school. If you can’t enter a key senior high, you won’t enter a key university. If you can’t enter a key university, you whole life is done.”

In China, college admission hinges on the gaokao, which can only be taken once annually. Competition is so intense that parents would do anything to make sure their kids’ sail through the exam without interruptions. Last summer, a Sichuan family made headlines when it emerged that a mother hid from her daughter news of her father’s death for nearly two weeks until she’d finished taking the test, for fear it would influence her results.

The show reflects a “collective anxiety” among the middle class, the writer Huang Tongtong said in an article on her public WeChat account.

“Do you sometimes feel like everything you own is so fragile? Is it merely a fluke that you have the kind of life you live? Do you have the confidence that your children can live a good life? These are the questions that each one of us has to face,” Ms. Huang wrote.

Frustrated with a rigid education system and a growing list of grievances, more and more well-off Chinese parents send their children away when the children are increasingly young. More than 520,000 people left China to study abroad last year, up nearly 14% from 2014, according to China’s education ministry.

In a survey of 458 Chinese millionaires by China Citic Bank and Hurun Report, 30% of them said they plan to send their children to attend senior high schools overseas, while 14% of them said their children should leave at a younger age, for junior high school.

In the U.S. alone, Chinese students make up about half of the 60,815 foreign pupils in high schools and 6,074 in primary schools.

“The show makes me so sad. I used to argue with my parents all because of my scores. Study is the most important issue in my family. Only study study hard, there was never love and care,” said one user on the Twitter-like Weibo platform in China.

Source: TV Show Spotlights Middle Class Anxieties in China – China Real Time Report – WSJ

24/08/2016

The perils of peace in China’s commodity industries | The Economist

WHEN the number of strikes plummets, something significant is usually going on. Strikes in China’s mining, iron and steel industries have fallen from more than 40 in January to four a month or fewer between May and August, according to China Labour Bulletin, an NGO based in Hong Kong. The explanation seems to be that China is backtracking on plans for the restructuring of state-owned firms in these sectors.

In February the government announced that it would redeploy 1.8m people, or 15% of the workforce, in the bloated and debt-laden coal, iron and steel industries. Just after that, a huge strike over unpaid wages by coal miners in the north-east dramatised the risks of trying to force through massive lay-offs and plant closures. So local officials have dragged their feet. According to the national planning authority, in the first seven months of the year provincial governments achieved only 38% of their full year’s targets for coal production cuts.

Fear of unrest is not the only explanation. Commodity prices have rebounded slightly this year, so local authorities are playing a game of chicken, keeping mines and factories open and hoping the neighbours will close theirs, so they themselves will be the ones to gain from higher prices. China itself is not benefiting.

Source: The perils of peace in China’s commodity industries | The Economist

22/08/2016

Capturing China’s $5 trillion productivity opportunity | McKinsey & Company

It won’t be easy, but shifting to a productivity-led economy from one focused on investment could add trillions of dollars to the country’s growth by 2030.

After three decades of sizzling growth, China is now regarded by the World Bank as an upper-middle-income nation, and it’s on its way to being one of the world’s advanced economies. The investment-led growth model that underpinned this extraordinary progress has served China well. Yet some strains associated with that approach have become evident.In 2015, the country’s GDP growth dipped to a 25-year low, corporate debt soared, foreign reserves fell by $500 billion, and the stock market dropped by nearly 50 percent. A long tail of poorly performing companies pulls down the average, although top-performing Chinese companies often have returns comparable with those of top US companies in their industries. More than 80 percent of economic profit comes from financial services—a distorted economy. Speculation that China could be on track for a financial crisis has been on the rise.

The nation faces an important choice: whether to continue with its old model and raise the risk of a hard landing for the economy, or to shift gears. A new McKinsey Global Institute report, China’s choice: Capturing the $5 trillion productivity opportunity, finds that a new approach centered on productivity could generate 36 trillion renminbi ($5.6 trillion) of additional GDP by 2030, compared with continuing the investment-led path. Household income could rise by 33 trillion renminbi ($5.1 trillion), as the exhibit shows.

Pursuing a new economic model

China has the capacity to manage the decisive shift to a productivity-led model. Its government can pull fiscal and monetary levers, such as raising sovereign debt and securing additional financing on the basis of 123 trillion renminbi in state-owned assets. China has a vibrant private sector, earning three times the returns on assets of state-owned enterprises. There are now 116 million middle-class and affluent households (with annual disposable income of at least $21,000 per year), compared with just 2 million such households in 2000. And the country is ripe for a productivity revolution. Labor productivity is 15 to 30 percent of the average in countries that are part of the Organisation for Economic Co-operation and Development (OECD).

A new productivity-led model would enable China to create more sustainable jobs, reinforcing the rise of the consuming middle class and accelerating progress toward being a full-fledged advanced economy. Such a shift will require China to steer investment away from overbuilt industries to businesses that have the potential to raise productivity and create new jobs. Weak competitors would need to be allowed to fail rather than drag down profitability in major sectors. Consumers would have more access to services and opportunities to participate in the economy.

Making this transition is an urgent imperative. The longer China continues to accumulate debt to support near-term goals for GDP growth, the greater the risks of a hard landing. We estimate that the nonperforming-loan ratio in 2015 was already at about 7 percent, well above the reported 1.7 percent. If no visible progress is made to curb lending to poorly performing companies, and if the performance of Chinese companies overall continues to deteriorate, we estimate that the nonperforming-loan ratio could rise to 15 percent. This would trigger a substantial impairment of banks’ capital and require replenishing equity by as much as 8.2 trillion renminbi ($1.3 trillion) in 2019. In other words, every year of delay could raise the potential cost by more than 2 trillion renminbi ($310 billion). Although such an escalation would not lead to a systemic banking crisis, a liquidity crunch among corporate borrowers and waning confidence of investors and consumers during the recovery phase would have a significant negative impact on growth.

Our report identifies five major opportunities to raise productivity by 2030:

  • unleashing more than 39 trillion renminbi ($6 trillion) in consumption by serving middle-class consumers better
  • enabling new business processes through digitization
  • moving up the value chain through innovation, especially in R&D-intensive sectors, where profits are only about one-third of those of global leaders
  • improving business operations through lean techniques and higher energy efficiency, for instance, which could deliver a 15 to 30 percent productivity boost
  • strengthening competitiveness by deepening global connections, potentially raising productivity by 10 to 15 percent

Capturing these opportunities requires sweeping change to institutions. China needs to open up more sectors to competition, enable

corporate restructuring, and further develop its capital markets. It needs to raise the skills of the labor force to fill its talent gap and to sustain labor mobility. The government will need to manage conflicts among many stakeholders, as well as shift governance and incentives that rewarded a single-minded focus on rising GDP, even as it modernizes its own processes.

Exactly how can China’s economy become more productive? Go to Tableau Public to examine how six industry archetypes contribute to the country’s growth by province.

Source: Capturing China’s $5 trillion productivity opportunity | McKinsey & Company

20/08/2016

The Chinese admiral who spread Islam across Southeast Asia | South China Morning Post

Near my childhood home in Kunming (昆明), Yunnan (雲南) province, is a park dedicated to its most famous son: Admiral Zheng He.

Our teacher would take us to pay tribute to the great eunuch of the Ming dynasty, recounting his legendary seven expeditions that brought glory to the motherland.

The marble bust of Zheng He shows the face of a typical Chinese, with a square chin, brushy eyebrows and a flat nose. My father joked it more resembled comrade Lei Feng than the admiral. Not until years later did I realise how true this was.

A statue of Zheng He in Nanjing, where his armada was built. File photo

The statue was erected in 1979 – a year after Deng Xiaoping (鄧小平) launched his open-door policy. Zheng, barely mentioned during the Cultural Revolution, was plucked from obscurity and hailed as a national hero who embodied China’s open spirit. A park near his ancestral home was dedicated to him. The same craftsmen who churned out revolutionary statues were employed to build his.

In real life, Zheng probably looked very different. My school textbook mentioned only that he was a Hui minority (Muslim Chinese). In fact, the admiral was a descendent of a powerful Persian family. Records discovered in 1913 trace his lineage to Sayyid Ajall, who was sent by Kublai Khan to conquer Yunnan and became its first governor. In 2014, Chinese scientists at Fudan University in Shanghai put the theory to test. They examined DNA samples collected from descendents of the admiral’s close kin and found they originated from Persia, modern-day Iran. In addition to Zheng He, most senior officers of the storied Ming armada were also Muslims.

Beijing follows the route well travelled by Admiral Zheng He in its belt and road initiative

Over the past decades, researchers have concluded Zhang and his armada were the key force behind Islam’s spread in Southeast Asia. The Arabs established settlements in Southeast Asia from the eighth century. But Islam did not become dominant there until the 15th century – around the time Admiral Zheng began to sail in the South China Sea. Historians found evidence of Zheng’s missionary work in documents discovered in Semarang, Indonesia, by Dutch officials in 1925. This prompted Indonesian religious leader Hamka to write in 1961: “The development of Islam in Indonesia and Malaysia is intimately related to a Chinese Muslim, Admiral Zheng He.

”A crowning moment of Zheng’s expedition was converting the King of Malacca, Parameswara, to Islam shortly after he paid homage to the Yongle Emperor in Beijing in 1411. The conversion played a crucial role in the spread of Islam in Southeast Asia, according to Professor Xiao Xian of Yunnan University.

A replica of a ship used by Ming Dynasty eunuch explorer Zheng He, in Nanjing. Photo: Reuters

Xiao was one of the scholars who presented research work on Zheng He at an international symposium in 2005. They painted a vivid picture of the Ming armada, which had all the elements of a multinational enterprise.

The 300 ships – many twice as big as the largest European vessels of the time – were constructed in dry docks in Nanjing ( 南京 ), Jiangsu ( 江蘇 ) province. Building materials were sourced from across the Ming Empire. The 27,000-strong crew included Han Chinese, Muslim Hui, Arabs, Persians, and peoples from Central and East Asia. The lingua franca was Persian or Sogdian – a language used for centuries by merchants of the ancient Silk Road, according to Professor Liu Yingsheng of Nanjing University.

Size was not the only difference between Zheng’s fleet and that of Christopher Columbus 70 years later. The Europeans aboard the Santa Maria were exclusively Catholic – the Ming fleet was culturally and religiously diverse. Zheng was a Muslim but he was fluent in the teachings of Confucius, Buddhism and classic Chinese philosophy. The fleet included many Buddhist missionaries. Many regard his expeditions as the high-water mark of Chinese civilization. The Ming armada’s true greatness lay not in its size or sophistication but in its diversity and tolerance.

A statue of famed Chinese navigator Zheng He overlooks the city of Nanjing, Jiangsu province. Photo: AFP

After the Yongle Emperor’s death, the Ming court lost its global vision. Power was in the hands of the Confucius gentry-class, who jealously guarded against other schools of thoughts. China became increasingly introspective and insulated. The court stopped further expeditions and banned seafaring. The Chinese civilization gradually lost its vigour and started a long decline.

Today as the new “Silk Road” and “soft power” become China’s new catchphrases, it is important to remember what makes the Chinese civilization unique in the first place. Its greatest strength lies in its people’s amazing ability to absorb, adopt and assimilate different cultures.

Buddhism, which originated in India, flourished in China. The Zen school – a hybrid of Indian Buddhism and Chinese Taoism – spread to East Asia by monks in the Tang dynasty and became mainstream. Islam arrived from Central Asia and the Middle East during the Yuan and Ming dynasties. It took root in western China before spreading to Southeast Asia with Zhang’s fleet. We should remember that until 100 years ago, China was not a nation state in the Westphalian sense. Narrow-minded nationalism and xenophobia are the exception rather than the norm of the world’s oldest surviving civilization.

Source: The Chinese admiral who spread Islam across Southeast Asia | South China Morning Post

19/08/2016

The return of the Xia | The Economist

CHINA’S leaders are immensely proud of their country’s ancient origins. President Xi Jinping peppers his speeches with references to China’s “5,000 years of history”. The problem is that archaeological evidence of a political entity in China going back that far is scant.

There is some, including engravings on animal bones, that shows the second dynasty, the Shang, really did control an area in the Yellow river basin about 3,500 years ago. But no such confirmation exists for the legendary first ruling house, the Xia. Even inside China, some historians have long suspected that the country’s founding story—in which Emperor Yu tames flooding on the Yellow river (with the help of a magic black-shelled turtle, pictured), earns for himself the “mandate of heaven” and establishes the first dynasty—was either a Noah’s-Ark flood-myth or perhaps propaganda invented later to justify centralised state power. This month, however, state-controlled media have been crowing over newly published evidence in Science, an American journal, that at least the flooding was real. This, they say, has made it more credible that the Xia was, too. Not everyone is so convinced.

Catastrophic floods leave their mark on soil and rocks. Qinglong Wu of Peking University and others have examined the geology of the upper reaches of the Yellow river. In the journal, they conclude that a vast flood did take place in the right area and not long after the right time for the supposed founding of the Xia. Although their evidence does not prove the existence of an Emperor Yu or of the dynasty he founded, it does provide a historical context in which someone might have gained power with the help of flood-taming exploits.

According to Mr Wu, a vast landslide, probably caused by an earthquake, blocked the course of the Yellow river as it flowed through the Jishi gorge on the edge of the Tibetan plateau. For six to nine months as much as 16 cubic kilometres (3.8 cubic miles) of water built up behind the accidental dam, which, when it finally burst, produced one of the biggest floods ever. At its peak, the authors calculate, the flow was 500 times the normal discharge at Jishi Gorge. Mr Wu reckons the ancient flood could easily have been felt 2,000km downstream in the area of the Yellow river said by Chinese historians to have been the realm of the Xia.

At about this time, either coincidentally or (more probably) because of the flood, the river changed its course, carving out its vast loop across the north China plain. The significance is that, while the river was finding its new course, it would have flooded repeatedly. This is consistent with old folk tales about Emperor Yu taming the river not through one dramatic action, but by decades of dredging.

The ancient flood can be dated because the earthquake that set the catastrophic events in motion also destroyed a settlement in the Jishi gorge. Radiocarbon dating of inhabitants’ bones puts the earthquake at about 1920BC—not 5,000 years ago but close-ish. Xinhua, a state news agency, lauded the study as “important support” for the Xia’s existence. Xu Hong of the Chinese Academy of Social Sciences challenged this, saying the scholars’ findings had not proved their conclusions. The first dynasty has gone from myth to controversy.

Source: The return of the Xia | The Economist

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