Archive for ‘China alert’

02/05/2014

Freedom of information: Right to know | The Economist

IN THE summer of 2013 Wu Youshui sent an open government information (OGI) request to every provincial-level government in China. Mr Wu, a lawyer based in the eastern city of Hangzhou, wanted to know about the fines imposed on violators of the one-child policy. Each year provincial governments collect billions of yuan from couples who have too many children, but how this money is spent is not public knowledge. That leaves the system vulnerable to corruption, says Mr Wu. To expose misconduct and spur public debate, he used the legal mechanism of the OGI regulations, China’s version of a freedom of information act.

When the regulations took effect in 2008 it marked, on paper at least, the beginning of a profound change in how the Chinese government handles some kinds of information. A culture of secrecy had for decades been the mainstay of the authoritarian state. But in the modern era absolute opacity can cause discontent that threatens stability. The government’s failure to disclose information about the spread of SARS, a respiratory disease, in 2003 hurt its standing at home and abroad. A government operating in “sunshine”, as state media have put it, could regain citizens’ trust and, the party hoped, help ease tensions.

The OGI regulations set up two ways of accessing government information. Government offices at local and central level had to issue findings of interest, such as plans for land requisitions or house demolition. The information was to be published on official websites and community bulletin boards and in government journals. Departments also became answerable to citizens. A response to a public request had to come within 15 days. This created a new way for people to contact and monitor the government, says Jamie Horsley of the China Law Centre at Yale Law School. At the last nationwide count, in 2011, roughly 3,000 requests had been filed to central-government departments and 1.3m others to offices at the provincial level. Over 70% led to the full or partial release of information, on everything from pollution to food safety to the tax on air fares. “It is as if there has been a pent-up demand and now people are pushing for the information,” Ms Horsley says.

In an important case in 2012 the All-China Environment Federation, a non-profit organisation with links to the government, took an environment-protection bureau in Guizhou province to court. The bureau had twice failed to give a good answer to an OGI request about a dairy farm that was discharging waste. The court ordered the release of the information within ten days. Such rulings against government departments, once rare, are becoming more common. In 2010 the chance of a citizen winning an OGI-related lawsuit in Beijing was 5%, according to research from Peking and Yale Universities. In 2012 courts ruled with the plaintiff in 18% of cases.

On April 1st the State Council, China’s cabinet, issued new guidelines, requiring that officials pay more attention to disclosing information. The guidelines come as the government is curtailing freedom of expression online and in the press.

Inevitably, plenty of information remains off limits. Article Eight of the regulations says disclosure must not endanger state, public or economic security or social stability, an open-ended list that prompts utmost caution from compliers. State and commercial secrets—however vaguely defined—are out-of-bounds. Last June Xie Yanyi, a Beijing lawyer, applied to the public security ministry for information about the surveillance of citizens. He received a note saying such details were not covered by the law. China’s regulations are more restrictive than those elsewhere. In America a request in the public interest suffices. In China, people must prove a personal need.

Government departments, at all levels, still do not release everything they should. But Mr Wu, the lawyer, found they are less able to opt out without a good reason. Guangdong province’s Health and Family Planning Commission initially rebuffed his OGI request, saying “internal management issues” prevented compliance. Mr Wu tried again. On April 1st Guangzhou Intermediate Court ruled in his favour. The commission was ordered to reprocess his request. He awaits word of its decision.

via Freedom of information: Right to know | The Economist.

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02/05/2014

Agriculture: Bring back the landlords | The Economist

CHINA’S Communist Party has always had a problem with big landowners. In Communist culture, they are synonymous with evil. In January on the country’s most-watched television show—a gala at lunar new year—viewers were treated to a scene from a Mao-era ballet featuring young peasants fired with zeal for revenge against a despotic rural landlord. Some critics rolled their eyes about such a throwback to the party’s radical past, but few complained about the stereotyping of landowners. Yet when it comes to letting individual families control large tracts of farmland, Communist Party leaders are beginning to have a change of heart.

Since January last year the term “family farm” has come into vogue in the party’s vocabulary. It refers not to the myriad tiny plots, each farmed by a single family, that are characteristic of the Chinese countryside; but to much larger-scale operations of a kind more familiar elsewhere, such as Europe or America. The trigger for this was the term’s use in a Communist Party directive known as “document number one”, the name traditionally given to the party’s new-year policy pronouncement on rural issues. It said the consolidation of household plots into family farms should be given “encouragement and support”.

On his first trip outside the capital after being appointed prime minister in March last year, Li Keqiang visited a 450-hectare (1,110-acre) family farm in the coastal province of Jiangsu. He said that boosting production was impossible on the tiny plots that most rural households farm (the average is less than half a hectare). “It can only be done through concentrating the land into larger farms”, Mr Li said. With more government support, “the earth could yield gold”, he told residents; a notion that would surprise the 260m people who have left the countryside to work in cities over the last three decades. Many villages are now home mainly to the elderly and left-behind children. During a visit to Switzerland two months later Mr Li again stopped by at a family farm (of a more modest 40 hectares). Chinese media said he wanted to pick up tips from Europe’s “advanced experiences” in running them. Chen Xiwen, a senior party policymaker on rural affairs, was even quoted as saying last year that he would like China to have vast “family farms like America’s”, but that he was worried about the impact on rural employment if farmland were to be managed by so few hands.

As is often the case whenever party policy appears to shift in the countryside, reality on the ground had long been changing before official rhetoric began to catch up. (Peasants started dismantling Mao’s disastrous “people’s communes” before the party began formally doing so in 1982.) The exodus from the countryside has allowed entrepreneurial farmers to build up their holdings by renting land from neighbours who no longer need it. They have not been able to buy it since all rural land is owned “collectively” by villagers. But they have been allowed to take over the right to farm it, and keep any profits. The party does not harp on about evil landlords of yore, since the new big-farmers are, legally speaking, merely tenants. In March last year the agriculture ministry took its first survey of family farms, though it has yet even to define the term precisely. It found there were already 877,000 of them, with an average size of around 13 hectares. They covered 13% of China’s arable land. Since 2008 the area of farmland rented out to other farmers has more than tripled.

via Agriculture: Bring back the landlords | The Economist.

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02/05/2014

Chinese College Grads Choose Jobs Over More Study – Businessweek

As China’s college students prepare for graduation, more are aiming to join the job market than ever before.

Job seekers in Hong Kong

More than 76 percent of those surveyed say they plan to begin working immediately after graduation, up from 73.6 percent last year and 68.5 percent in 2012. Meanwhile, about one-fifth say they will continue with higher education and 4 percent plan to start their own businesses.

That’s shown in an annual survey by Zhaopin.com, one of China’s largest job-seeking websites, which was released on April 15. Zhaopin canvassed more than 52,000 college students across China, 70 percent of which were in their final year as undergraduates, with the remainder being graduate students.

via Chinese College Grads Choose Jobs Over More Study – Businessweek.

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02/05/2014

Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ

Spring hasn’t sprung for China’s chilly housing market and it may not for some time, a high level executive with the country’s largest real-estate developer said in rare remarks leaked online.

A glut of apartments and tightness in the credit market don’t bode well for property developers, said Mao Daqing, vice chairman of China Vanke.

A Chinese flag flies in front of a residential building developed by China Vanke Co., in the Fangshan district of Beijing. Bloomberg News

“Overall, China has reached its capacity limit for new construction of housing projects, only some coastal third- and fourth-tier cities have potential for capacity expansion,” Mr. Mao, who oversees the firm’s Beijing operations, said at a closed door meeting in Beijing on Wednesday (in Chinese). “As to whether there is room for home prices to rise, I don’t see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion (in stimulus).”

China Vanke Beijing confirmed that Mr. Mao provided an analysis of the housing market in a private event, but added that there were no official transcripts.

Housing sales fell 7.7% in the first quarter this year, and remained sluggish in April, according to private sector estimates.

There is a glut of homes in China’s second-tier cities and some third- and fourth-tier cities due to oversupply of land, Mr. Mao said, highlighting cities like Tangshan, Shenyang and Wuxi. There is insufficient demand as there are not enough new migrants moving into these cities, and with the rich preferring to buy homes in major cities like Beijing.

Any developer who invests in Tangshan, an industrial city east of Beijing, is walking into a trap, he said.

China Vanke, which has a presence in more than 60 Chinese cities, earlier this weak reported a rare year-on-year slide in net profit in its first quarter results.

Mr. Mao also raised some red flags in tier-one cities such as Beijing and Shanghai as well. While demand from end-users is still strong in such cities, he said, land values — seen as a measure of a potential property bubble — are too high. He said land prices were accelerating faster than housing prices in the capital as a result of government efforts to containing prices of new homes there.

He went on to compare land values in Beijing with those in Japan and Hong Kong just before bubbles in those cities burst.  Tokyo’s total land value in 1990, prior to the property bust there, was equal to 63.3% of U.S. GDP in 1990, he said. During the Hong Kong bubble in 1997, land values there reached 66.3% of U.S. GDP

In 2012, the total land value in Beijing was 61.6% of U.S. GDP, “which is a scary number”, Mr Mao said.

via Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ.

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02/05/2014

Maybe China’s Currency Isn’t Undervalued After All – China Real Time Report – WSJ

Note to rest of the world: Stop bugging China on undervaluation of its currency.

The World Bank’s re-estimation of global pricing is leading to a second day of questioning of economic verities. Yesterday, a number of publications used the new numbers to pronounce that the U.S. would next year lose its century-long ranking as the world’s number one economy. (China Real Time came to a more nuanced—and skeptical—conclusion.)

Today, two economists at the Peterson Institute for International Economics, perhaps the world’s top econ think tank, used the numbers to conclude that the Chinese yuan was no longer undervalued, as it has been for decades.

“This estimate is of potential historic significance,” conclude Martin Kessler and Arvind Subramanian. “The end of Chinese mercantilism—and relief for the rest of the world—may be in sight,” they write in a Peterson blog post.

To review, the World Bank re-estimated the size of different economies using a calculation known as purchasing power parity (PPP), which tries to estimate relative wealth by looking at differing prices in different countries for the same goods or services. Such comparisons usually show that developing countries aren’t as poor as they seem.  For instance: A haircut in Beijing costs far less than a haircut in Boston, which means the wealth of a Chinese person with a full head of hair –- let’s call him Mr. Wang—is greater than usually understood.

Cheaper in China: haircuts. Not cheaper: iPhones, BMWs and other imports. Reuters

But Mr. Wang doesn’t buy things in PPP; he buys them using actual currency. When he leaves the hair salon and buys an import, say a U.S. iPhone or a German car, his yuan are converted into dollars or euros at the current exchange rate. Given that Chinese earn far less money than Americans or Germans on average, exchange rate comparisons accentuate the gap between developing and developed nations. Most comparisons of international power are done using the prevailing exchange rate, not PPP.

Now, back to the value of the yuan.

Messrs. Kessler and Subramanian use the new PPP calculations to estimate that between 2011 and March 2014 China’s per-capita GDP grew about 13 percentage points faster than the U.S., which they say should translate into a currency appreciation of around 3.2%. Since the actual appreciation was 7%, that suggests the yuan appreciated too rapidly during that period and made up for some of the time when the yuan didn’t strengthen rapidly enough.  “The renminbi in 2014 is thus fairly valued,” they conclude.

Any estimate of a currency’s valuation is a black art. Different economists use different methods and come up with different conclusions, especially if there isn’t an obvious undervaluation or overvaluation.

It’s hardly surprising that many countries accuse the others of deliberately undervaluing their currencies, and use estimates of currency valuation to make their point. Nearly every government has the same strategy for growth — export more — and a cheap currency helps exporters.

via Maybe China’s Currency Isn’t Undervalued After All – China Real Time Report – WSJ.

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01/05/2014

How Women Lost Out as China’s Property Market Boomed – Businessweek

In 2005, Zhang Yuan and her husband bought an apartment in Beijing for $30,000. Seven years later, in 2012, the same apartment was worth $317,000. Zhang, a professional woman in her 30s, and her husband both contributed money to the down payment and mortgage payments. Only her husband’s name appears on the property deed.

Beijing's central business District is home to high-end housing

At the time the young couple bought their home, Zhang wasn’t thinking much about legal formalities. Men—still regarded as the ostensible heads of households in China—have commonly registered property in their own names.

Since China’s Supreme Court issued a new interpretation of the country’s Marriage Law in 2011, Zhang’s has had second thoughts. The law now stipulates that if a couple divorces and only one person’s name is on the deed, that person—usually a “he”—walks away with full ownership of the marital home.

Since she took two years off work to care for her young child, Zhang has had trouble climbing back onto the career ladder. Today she worries more about money—and her financial dependence on her husband.

According to a 2012 Horizon Research and IFeng.com survey of homeowners in China’s leading cities, men’s names appear on property deeds for marital homes 80 percent of the time, while women’s names appear on just 30 percent of them. “The law is so unfair to women,” Zhang told sociologist Leta Hong Fincher, author of a new book, Leftover Women: The Resurgence of Gender Inequality in China.

The upshot, as Fincher’s book argues, is that China’s women have a claim that is tenuous, at best, to the country’s burgeoning real estate wealth. “Chinese women have largely missed out on what is arguably the biggest accumulation of residential real-estate wealth in history, valued at around 3.3 times China’s [gross domestic product], according to figures from the bank HSBC,” she writes. “That amounted to over $27 trillion at the end of 2012.”

via How Women Lost Out as China’s Property Market Boomed – Businessweek.

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01/05/2014

China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek

The gap between China’s rich and poor is now one of the world’s highest, surpassing even that in the U.S., according to a report being released this week by researchers at the University of Michigan.

The metric used in these studies, the Gini coefficient, would be zero in a society in which all income is equally distributed, while a score of one would reflect a society in which all income is concentrated in the hands of a single individual. Over a three-decade period starting in 1980—shortly after China’s economic reform and opening commenced—the Gini coefficient has grown from 0.3 to 0.55 in 2010.

In the U.S., by contrast, the index reads 0.45. Anything over 0.50 is considered “severe disparity,” says the report in the Proceedings of the National Academy of Sciences. The authors used data from seven separate surveys conducted by a number of Chinese university-affiliated organizations, including Peking University’s Institute of Social Sciences.

via China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek.

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01/05/2014

The U.S. Is Big and Rich. China Is Just Big – Businessweek

Let’s assume, for the sake of argument, that China’s economy is on the verge of surpassing the U.S. economy in size. (By one measure, anyway—purchasing power parity as calculated by the World Bank’s International Comparison Program.) What does it mean?

Start with what it doesn’t mean. It doesn’t mean China is rich. All that gross domestic product has to be spread around more than a billion people. On a per-capita basis, the highest-income country in the world in 2011 was the oil-soaked and lightly populated Gulf monarchy of Qatar, at $146,000 per person. The U.S., as this chart shows, was No. 12, at just under $50,000.

China? China was No. 101, at a little less than $10,000 per capita. It’s not labeled on the chart, but if it were, it would appear between Serbia and Dominica.

via The U.S. Is Big and Rich. China Is Just Big – Businessweek.

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01/05/2014

Will ‘Mega-Trader’ China Turn Into a Free Trader? – China Real Time Report – WSJ

For more than a decade, China has been accused of one protectionist move after another: subsidizing state-owned firms, blocking imports, manipulating currency. Just yesterday, the U.S. Trade Representative put China, once again, on its “Priority Watch List” for ripping off intellectual property.

But if Standard Chartered is right, all that may soon be changing. China depends so much on global trade, the bank argues in a new report, that Beijing will likely become a “champion of free trade.”

Here’s the logic: China has become the world’s first “true mega-trader” since Britain in the 1800s, the report says, borrowing mega-trader terminology coined in a report last year by two Peterson Institute for International trade researchers.

As the Peterson Institute researchers describe it, a country qualifies as a mega-trader if it is has a big share of global trade and also if its economy depends greatly on trade. By that definition, the U.S. hasn’t really made the cut even though the U.S. and China both had about 12% of global merchandise exports at their height. That’s because the U.S. economy is far less dependent on exports than China’s is.

Once a country reaches such an exalted status, Standard Chartered reasons, it recognizes that its interest lies in opening markets overseas and at home.

“Our view is that because China is a highly competitive exporter and also needs substantial imports, it will increasingly recognize that it is in its self-interest to encourage global free trade,” said John Calverley, the bank’s head of economic research in an email. He adds that China’s reform agenda “would be well-served by increasing opening, including closer to a free-trader position on issues like services, intellectual property, competition policy” and other areas.

Well, maybe.

via Will ‘Mega-Trader’ China Turn Into a Free Trader? – China Real Time Report – WSJ.

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01/05/2014

Two attackers among three killed in China bombing | Reuters

Two of the assailants who carried out a bombing in western China were among the three people killed, state media said on Thursday, in an attack which also wounded 79 and has raised concerns over its apparent sophistication and daring.

Paramilitary policemen stand guard near the exit of the South Railway Station, where three people were killed and 79 wounded in a bomb and knife attack on Wednesday, in Urumqi, Xinjiang Uighur Autonomous region, May 1, 2014. REUTERS/Petar Kujundzic

The People’s Daily, the official newspaper of the ruling Chinese Communist Party, said on its official microblog that “two mobsters set off bombs on their bodies and died”, though the report did not call it a suicide bombing.

The other person who died was a bystander, the People’s Daily said.

Knives and explosives were used in the assault on a railway station in Urumqi on Wednesday, the first bomb attack in the capital of Xinjiang region in 17 years. The attack was carried out soon after the arrival of a train from a mainly Han Chinese province, state media said.

The bombing was possibly timed to coincide with a visit to the region with a large Muslim minority by President Xi Jinping, when security was likely to have been heavy.

On Thursday, dozens of black police vans were parked around the station, while camouflaged police with assault rifles patrolled its entrance. Despite the security, the station was bustling and appeared to be operating normally.

The government blamed the attack on “terrorists”, a term it uses to describe Islamist militants and separatists in Xinjiang who have waged a sometimes violent campaign for an independent East Turkestan state – a campaign that has stirred fears that jihadist groups could become active in western China.

State media accounts did not say if any other attackers had been killed or captured. Nor did they say if Xi, who was wrapping up his visit, was anywhere near Urumqi at the time.

Pan Zhiping, a retired expert on Central Asia at Xinjiang’s Academy of Social Science, described the attack as very well organized, saying it was timed to coincide with Xi’s visit.

“It is very clear that they are challenging the Chinese government,” he said.

“There was a time last year when they were targeting the public security bureau, the police stations and the troops. Now it’s indiscriminate – terrorist activities are conducted in places where people gather the most.”

There has been no claim of responsibility for the attack.

via Two attackers among three killed in China bombing | Reuters.

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