Posts tagged ‘Wen Jiabao’


Housing Cools in China; Developers Face Loans They Can’t Repay – Businessweek

Amid a cluster of half-built brick townhouses surrounded by peach groves on the outskirts of Fenghua city, workers could be seen taking down metal scaffolding and hauling away steel plates last month. They had heard that Zhejiang Xingrun Real Estate, the company building the housing development called Peach Blossom Palace, was insolvent. “The developer owed us hundreds of thousands of yuan” for scaffolding and steel, said workers Xie and Wang, who would only give their surnames. “We are taking these materials back for now because there’s no work here.”

Unfinished houses at Zhejiang Xingrun’s development in Fenghua

The collapse of Zhejiang Xingrun may signal the start of a shakeout among the nation’s almost 90,000 real estate companies. After China began allowing private homeownership in 1998, homebuilders binged on easy credit from banks and other lenders. Now many developers are struggling with debt as thousands of apartment buildings across the country sit empty and the government makes it harder to borrow. CBRE Global Investors says there are about 30,000 developers after small construction companies and those formed for only one project are eliminated. “That is far too many, even for a country as large as China,” says Richard van den Berg, country manager for China at CBRE. “Consolidation needs to take place.”

Home prices in China have climbed 60 percent since 2008, when the government began a 4 trillion yuan ($645 billion) stimulus program to counter the effects of the global financial crisis. Former Premier Wen Jiabao began trying to cool the property market in 2010, imposing higher down-payment requirements, raising interest rates on loans for second-home purchases, and increasing construction of low-cost housing. Li Keqiang, who succeeded Wen in March 2013, further tightened credit in June, in part by cracking down on nonbank lenders.

About 67 percent of housing under construction in China last year was in less affluent cities such as Fenghua, according to Nomura Holdings (NMR). About 120 miles south of Shanghai, with a population of 500,000, Fenghua is best known as the birthplace of former Chinese nationalist leader Chiang Kai-shek. The city is filled with pawn shops, textile and garment factories, and empty residential buildings.

via Housing Cools in China; Developers Face Loans They Can’t Repay – Businessweek.

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How Committed Is China to Reform? A Tip From ‘The Old Perfessor’ – China Real Time Report – WSJ

One of the most important questions in the global economy is the commitment to reform by China’s new leaders. Are they more reform-oriented than the last crew, who talked a lot about economic reform but often didn’t carry through?

China Real Time did a quick analysis based on the philosophy of Casey Stengel, the garrulous former manager of the New York Yankees and Mets known by the nickname “The Old Perfessor.” As Stengel often said, “You can look it up.” So we did.

In his just-delivered 2014 work report, Premier Li Keqiang, used the word “reform” 84 times in his lengthy address.  Last year, former Premier Wen Jiabao used “reform” a mere 51 times.

“Transformation?” Mr. Li, 17; Mr. Wen, 5.

What would Mr. Li like to reform? Among many other things: socialism, markets, government, agriculture, science, investment, taxes, finance and schools.

And what would he transform? Industry and foreign trade mostly.

It won’t be easy to do all this, Mr. Li warned:  “China’s reform has entered a critical stage and a deep water zone,” he told delegates to China’s rubber-stamp parliament, the National People’s Congress. “We  must rely fully on the people, break mental shackles and vested interests with great determination.”

Or as  Mr. Stengel reportedly said: “Without losers, where would the winners be?”

via How Committed Is China to Reform? A Tip From ‘The Old Perfessor’ – China Real Time Report – WSJ.

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Corruption: Less party time | The Economist

FOR a sense of how President Xi Jinping’s anti-corruption campaign is doing, a recent report by Xinhua, the official news agency, is a good place to start: it said that 56 five-star hotels in China had asked to be downgraded last year in order to survive, as local governments have been prohibited from using luxury hotels. Chen Miaolin, chairman of New Century Tourism Group, told Xinhua that revenues at his group’s (mostly five-star) hotels fell by 18% last year.

In big cities business is down at many of the best private clubs and restaurants. A number of luxury brands have reported sharp falls in revenues. Rémy Cointreau saw sales of its flagship cognac fall by more than 30% in the last three months of 2013 over the previous year, mostly owing to falling Chinese demand.

The campaign begun more than a year ago by Mr Xi has been surprisingly broad and sustained, and is intensifying as it enters a second year. The Central Commission for Discipline and Inspection, the party’s watchdog, says that 182,000 officials were punished for disciplinary violations in 2013, an increase of more than 20,000 over 2012, and of nearly 40,000 over 2011. Thousands of officials have been disciplined for extravagances such as hosting lavish banquets, weddings and funerals, spending public funds inappropriately on travel, the improper use of government vehicles and constructing luxurious government buildings. But two recent developments illustrate the difficulty and sensitivity of the task the party has set itself.

On January 21st a report by a team of media outlets led by the International Consortium of Investigative Journalists (ICIJ), an American organisation, revealed the secret offshore holdings of close relatives of some of China’s elite, including Mr Xi’s brother-in-law and the son of Wen Jiabao, the former premier. Then on January 22nd authorities began criminal trials in Beijing of independent anti-corruption activists who campaigned for, among other things, public disclosure of official assets (see article).

The message from Mr Xi is that the party, and only the party, will patrol itself, and is perfectly capable of doing so. But the ICIJ report hints at the failures during decades of self-policing.

via Corruption: Less party time | The Economist.

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* China’s princelings storing riches in Caribbean offshore haven | World news | The Guardian

More than a dozen family members of China\’s top political and military leaders are making use of offshore companies based in the British Virgin Islands, leaked financial documents reveal.

The brother-in-law of China\’s current president, Xi Jinping, as well as the son and son-in-law of former premier Wen Jiabao are among the political relations making use of the offshore havens, financial records show.

Fu Liang is the son of Peng Zhen, former mayor of Beijing and one of China\’s \”eight elders\”. After a career in the rail industry, he shifted to a role in the leisure sector, as an investor in yacht clubs and golf courses.

The documents also disclose the central role of major Western banks and accountancy firms, including PricewaterhouseCoopers, Credit Suisse and UBS in the offshore world, acting as middlemen in the establishing of companies.

The Hong Kong office of Credit Suisse, for example, established the BVI company Trend Gold Consultants for Wen Yunsong, the son of Wen Jiabao, during his father\’s premiership — while PwC and UBS performed similar services for hundreds of other wealthy Chinese individuals.

The disclosure of China\’s use of secretive financial structures is the latest revelation from \”Offshore Secrets\”, a two-year reporting effort led by the International Consortium of Investigative Journalists (ICIJ), which obtained more than 200 gigabytes of leaked financial data from two companies in the British Virgin Islands, and shared the information with the Guardian and other international news outlets.

In all, the ICIJ data reveals more than 21,000 clients from mainland China and Hong Kong have made use of offshore havens in the Caribbean, adding to mounting scrutiny of the wealth and power amassed by family members of the country\’s inner circle.

As neither Chinese officials nor their families are required to issue public financial disclosures, citizens in the country and abroad have been left largely in the dark about the elite\’s use of offshore structures which can facilitate the avoidance of tax, or moving of money overseas. Between $1tn and $4tn in untraced assets have left China since 2000, according to estimates.


China\’s inequality problem

Income inequality is a mounting issue in China, a consequence of the country\’s rapid growth. A Beijing university study suggests that income at the richest 5th percentile are 34 times higher than those of the bottom 5th percentile.


5%     ¥1,000$170

10      ¥2,000$340

25      ¥4,500 $765

50      ¥9,000$1,530

75      ¥15,900$2,703

90      ¥25,800$4,386

95      ¥34,300$5,831

Source: Beijing university study, 2012 incomes


China\’s rapid economic growth is leading to a degree of internal tension within the nation, as the proceeds of the country\’s newfound prosperity are not evenly divided: the country\’s 100 richest men are collectively worth over $300bn, while an estimated 300m people in the country still live on less than $2 a day. The Chinese government has made efforts to crack down citizens\’ movements aimed at promoting transparency or accountability among the country\’s elite.

The confidential records obtained by the ICIJ relate to the incorporation and ownership of offshore companies, which is legal, and give little if any information as to what activities the businesses were used for once established. Offshore companies can be an important tool for legitimate Chinese businesses, especially when operating overseas, due to restrictions and legislation in the country.

via China’s princelings storing riches in Caribbean offshore haven | World news | The Guardian.

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Chinese Leader Xi Weakens Role of Beijing’s No. 2 –

We did notice at the time and commented on PM Cameron being hosted by President Xi.  See –

“British officials were finalizing details of Prime Minister David Cameron\’s visit this month to Beijing when they received a last-minute scheduling change: President Xi Jinping would host a banquet in Mr. Cameron\’s honor.

The invitation, which delighted the British officials, effectively scrubbed dinner plans with Mr. Cameron\’s official host, Premier Li Keqiang. And it illustrates an important shift in the Chinese leadership\’s internal dynamics: Mr. Xi is downgrading the premier\’s role and assuming the primary duty of overseeing economic reforms as well as briefing foreign leaders on economic affairs, Communist Party insiders say.

In the frantic diplomatic exchanges over the scheduling dilemma, Premier Li\’s dinner was first postponed, then turned into a lunch, and Mr. Cameron had to cancel a visit to the city of Hangzhou. Previous protocol dictated only a brief meeting with the Chinese president as Mr. Cameron isn\’t head of state.

There is no evidence of discord between Messrs. Xi and Li, the party insiders say. But Mr. Xi is subverting a nearly two-decade-old division of power whereby the president, who is also party chief, handles politics, diplomacy and security, while the premier manages the economy.

Having rapidly established his authority over the party and the military in his first year in power, Mr. Xi is now stepping in on the economy, making him the most individually powerful leader since Deng Xiaoping, the man who launched China\’s economic liberalization in 1978. \”The really big change is that Xi is saying, \’I\’m the boss, and that extends to everything,\’ \” says Barry Naughton, an expert on the Chinese economy at the University of California, San Diego.

Some party insiders welcome the concentration of power in Mr. Xi\’s hands as a way to combat the bureaucratic inertia that some say bogged down reforms under the previous leadership. Others, however, fear that it could lead to impulsive, or misinformed, decision-making. One possible example was China\’s sudden announcement last month of a new air-defense identification zone over the East China Sea without consulting neighboring countries, analysts and diplomats say.

Mr. Xi\’s predecessor, Hu Jintao, played a negligible role in the economy and shared power evenly with Wen Jiabao, the last premier, who was in charge of the massive stimulus plan to respond to the 2008-09 global financial crisis. Before them, President Jiang Zemin left the economy to Premier Zhu Rongji, who pushed through wrenching state-sector reforms and secured China\’s entry to the World Trade Organization.

By contrast, Mr. Xi is depicted as playing a central role in the ambitious economic-reform package approved by the 376-member Central Committee last month. State media published a lengthy official account saying Mr. Xi had personally led the drafting of the plan—the first time a party chief had done so since 2000. The account mentioned Mr. Xi\’s name 34 times. Mr. Li wasn\’t mentioned once.

Drafting of a similar economic plan, unveiled in 2003, was overseen by Premier Wen.

The latest plan calls for a new party body to oversee the reforms. While the group\’s composition hasn\’t yet been chosen, members are likely to report to Mr. Xi, according to several party officials. That will help the president bypass the State Council, or cabinet, which is headed by the premier, party insiders say, and has been a choke point for reform because its many ministries represent different interest groups.”

via Chinese Leader Xi Weakens Role of Beijing’s No. 2 –


China employs two million microblog monitors state media say – BBC News

More than two million people in China are employed by the government to monitor web activity, state media say, providing a rare glimpse into how the state tries to control the internet.

Sina Weibo

The Beijing News says the monitors, described as internet opinion analysts, are on state and commercial payrolls.

China’s hundreds of millions of web users increasingly use microblogs to criticise the state or vent anger.

Recent research suggested Chinese censors actively target social media.

The report by the Beijing News said that these monitors were not required to delete postings.


China’s internet is one of the most controlled and censored in the world.

Websites deemed to be subversive are blocked. Politically sensitive postings are routinely deleted . Even the name of the former Prime Minister Wen Jiabao was censored when rumours were circulating on the internet that his family had amassed a fortune while he was in power.

But with the rapid growth of internet users, the ruling Communist Party has found itself fighting an uphill battle.

The Beijing News, while reporting the story of microblog monitors, has admitted that it is impossible for the government to delete all “undesirable” postings.

The more postings deleted, the more they appear, it says.

China seldom reveals details about how it monitors and controls the internet. The government even does not acknowledge that it blocks web sites.

But the report does offer a rare glimpse into this opaque world.

They are “strictly to gather and analyse public opinions on microblog sites and compile reports for decision-makers”, it said. It also added details about how some of these monitors work.

Tang Xiaotao has been working as a monitor for less than six months, the report says, without revealing where he works.

“He sits in front of a PC every day, and opening up an application, he types in key words which are specified by clients.

“He then monitors negative opinions related to the clients, and gathers (them) and compile reports and send them to the clients,” it says.

The reports says the software used in the office is even more advanced and supported by thousands of servers. It also monitors websites outside China.

China rarely reveals any details concerning the scale and sophistication of its internet police force.

It is believed that the two million internet monitors are part of a huge army which the government relies on to control the internet.

The government is also to organise training classes for them for the first time from 14 to 18 October, the paper says.

via BBC News – China employs two million microblog monitors state media say.

See also:


Reading Li Keqiang’s Tea Leaves at the World Economic Forum

In my opinion, this is another important article to read. It complements the Reuter’s piece: see –


WSJ: “What’s the outlook for growth and the plans for reform of China’s economy? China Real Time planned an exclusive interview with Premier Li Keqiang to get the lowdown.

Unfortunately there wasn’t a time when both of us were free. So instead we read the transcript of Mr. Li’s question and answer session with executives at a closed door session at the World Economic Forum in Dalian, Tuesday.

Mr. Li’s remarks on everything from the role of government to the importance of financial reforms contained little in the way of new commitments. But coming ahead of a November meeting of senior Communist Party leaders – billed as the decisive moment for shifting China’s economic model – they raise expectations of concrete progress.

Here are the edited highlights of what Mr. Li said, and what we think it means.

“First, I think we need to get the relationship between government, the market and society right, that’s the key to economic reform, let the market do what the market should do, society do what society should do, and the government do what the government should do.”

A theme Mr. Li hit at his first press conference as Premier back at the National People’s Congress in March, and again here, is the need to get the roles of government and the market right. One of the main criticisms of Wen Jiabao – Mr. Li’s predecessor – was that he allowed the state to grow its role at the expense of a dynamic private sector. The hope among many economists is that Mr. Li will push back in the other direction.

“When there’s downward pressure on growth, one choice is to adjust economic policy, increase deficits, relax monetary policy. That might have a short-term benefit, but may not be beneficial for the future.”

Another criticism of Mr. Wen’s approach was that every hiccup in the economy was greeted with a credit- and investment-fueled stimulus. That helped keep growth buoyant and employment high, but also left a legacy of high debt and industrial overcapacity. Mr. Li is signaling he wants to focus on long-term reform rather than short-term stimulus.

“We will continue to liberalize interest rates… we eliminated the floor on lending interest rates. This is a step forward in the process of making interest rates market based, and we will keep moving forward.”

China’s artificially low government-set interest rates channel funds from household savers to business borrowers – contributing to lackluster consumption and overdone investment. Mr. Wen struck an early blow to liberalize interest rates toward the end of his administration by raising the ceiling on deposit rates and lowering the floor on loan rates. Mr. Li has continued in the same direction, with loan rates now set entirely by the market. The next step is further liberalization of deposit rates – good for savers but bad for banks, which would see profit margins fall.

“We will continue to open up the financial markets – to internal and external competition. For example… we are moving ahead with making the yuan convertible on the capital account.”

Mr. Li says he wants to allow a greater role for private firms in the financial system, and a more open capital account. Both would increase the efficiency of capital allocation. But some economists worry that with China’s state banks overextended from years of breakneck lending, rapid reforms could lay weakness bare and precipitate a crisis.

“We want to create a market environment of fair competition… Enterprises of different ownerships should all enjoy fair opportunities and conditions to compete in the market.”

Low productivity in state-dominated sectors of the economy is a key barrier to sustaining growth. Mr. Li stops short of any specific proposals, but the hope is that areas like telecoms, banking and logistics will be increasingly open to competition.

With an audience of foreign executives, Mr. Li also threw in a reference to protecting intellectual property, a key concern for multinationals that fear their technology and know-how will be pilfered by Chinese rivals.

“I can also tell you all, a few decades ago I was a farmer. That experience has helped me a lot as Premier. If the managers of this building have the experience of ‘cleaning the toilet,’ I believe they can better manage this complex.”

China’s domestic media have focused attention on this line, where Mr. Li nods to his experience as a farmer in the 1970s in inland Anhui province.The message is aimed partly at China’s students.  Anticipating close to 7 million university graduates nationwide this year, the government has been trying to encourage realistic expectation on employment prospects. High ambitions are good, but starting at the bottom is OK.

via Reading Li Keqiang’s Tea Leaves at the World Economic Forum – China Real Time Report – WSJ.

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* China confirms Li Keqiang as premier

BBC: “China’s leaders have named Li Keqiang premier, placing him at the helm of the world’s second-largest economy.

Mr Li, who already holds the number two spot in the Communist Party, takes over from Wen Jiabao.

Mr Li was elected for a five-year term but, like his predecessor, would be expected to spend a decade in office.

On Thursday, Xi Jinping was confirmed by legislators as the new president, completing the transition of power from Hu Jintao.

Li Keqiang’s widely-signalled elevation was confirmed by 3,000 legislators at the National People’s Congress, the annual parliament session, in Beijing. He received 2,940 votes to three, with six abstentions.

From humble beginnings, Li Keqiang has risen high in politics, but his career has not been without controversy. During the mid-1990s a scandal of stunning proportions devastated many rural communities in Henan. Thousands of farmers and their families contracted HIV after receiving contaminated blood transfusions. Most infections in the government-backed blood-selling scheme happened before Li Keqiang became the province’s party boss. But he was widely criticised for silencing those speaking out.

Many villagers still travel to Beijing every year to protest about the issue. One demonstrator told the BBC she hoped Li Keqiang would pay more attention, saying she had still not received any compensation. But others have seen a different side to the politician. One gay-rights activist told the BBC that Li Keqiang was very “easy-going” during a recent meeting. “He didn’t act at all like a government official,” said Kong Lingkun. “During the discussion he wanted everyone’s opinion and he encouraged us to speak freely.”

China’s new premier likes to project an image that he’s modern, sophisticated and ready to listen. But he has also shown he can be ruthless when the party’s reputation is at risk.

As premier, he will oversee a large portfolio of domestic affairs, managing economic challenges, environmental woes and China’s urbanisation drive.

The appointments seal the shift from one generation of leaders to the next. A raft of vice-premiers and state councillors will be named on Saturday, before the NPC closes on Sunday.

Mr Li, 57, who is seen as close to outgoing leader Hu Jintao, speaks fluent English and has a PhD in economics.

He has called for a more streamlined government, eliminating some ministries while boosting the size of others.

The son of a local official in Anhui province, he became China’s youngest provincial governor when he was tasked to run Henan.

But his time there was marked by a scandal involving the spread of HIV through contaminated blood.

Mr Li is expected to end the NPC with a press conference on Sunday, given by Wen Jiabao in the past.

via BBC News – China confirms Li Keqiang as premier.


* Xi Jinping named president of China

BBC: “Leaders in Beijing have confirmed Xi Jinping as president, completing China’s 10-yearly transition of power.

Mr Xi, appointed to the Communist Party’s top post in November, replaces Hu Jintao, who is stepping down.

Some 3,000 deputies to the National People’s Congress, the annual parliament session, took part in the vote at the Great Hall of the People.

The new premier – widely expected to be Li Keqiang – is scheduled to be named on Friday, replacing Wen Jiabao.

While votes are held for the posts, they are largely ceremonial and the results very rarely a surprise.

Mr Xi, who bowed to the delegates after his name was announced but made no formal remarks, was elected by 2,952 votes to one, with three abstentions.

He was named general secretary of the Communist Party on 8 November and also given the leadership of the top military body, the Central Military Commission.

China’s parliament engaged in a political ceremony that involved all the hallmarks of a real election: a ballot box, long lines of delegates queuing to vote, and a televised announcement of a winner. However, no-one was surprised to hear the results: with a whopping 99.86% of the vote, Xi Jinping was anointed President of the People’s Republic of China and Chairman of the People’s Liberation Army.

In November, Mr Xi was elevated to the top spot in China’s Communist Party. However, he did not become the country’s official head of state until his candidacy was approved by China’s parliament.

According to China’s constitution, almost 3,000 NPC delegates are allowed to “elect” candidates for the state’s top positions. However, in practice, delegates merely endorse the names put forward by the party.

Perhaps the only interesting result of the election is that Mr Xi did not receive 100% of the ballot. One person voted against him and three people abstained. The result leaves some in China to wonder: perhaps, in an act of modesty, Mr Xi voted against himself.

This vote, handing him the role of head of state, was the final stage in the transition of power to him and his team, the slimmed-down, seven-member Standing Committee.

The largely symbolic role of vice-president went to Li Yuanchao, seen as a close ally of Mr Hu and a possible reformist.

The 61-year-old, who is not a member of the Standing Committee, has in the past called for reforms to the way the Communist Party promotes officials and consults the public on policies.”

via BBC News – Xi Jinping named president of China.


* China scraps railways ministry in streamlining drive

BBC: “China has dissolved its powerful railways ministry in a raft of measures aimed at boosting government efficiency and tackling corruption.

Travellers at the Beijing West Railway Station, Jan 2013

The railways ministry, which has been criticised for fraud and wasting funds, now comes under the transport ministry.

The family planning commission, which oversees the controversial one-child policy, joins with the health ministry.

China is holding its National People’s Congress, which will cement its once-in-a-decade leadership change.

Communist Party chief Xi Jinping will become president, replacing Hu Jintao, while Li Keqiang will replace Wen Jiabao as premier.

In his work report, which opened the congress last week, Mr Wen promised stable growth, anti-corruption efforts and better welfare provision.

The latest streamlining of ministries reflects the public’s and leadership’s concern at corruption and the wasteful overlapping of bureaucracy.

State Council Secretary-General Ma Kai told the congress that “breach of duty, using positions for personal gain and corruption” had not been effectively tackled.


He said poor supervision had led to “work left undone or done messily”.

Mr Ma said that overlapping of duties within various ministries had often led to officials passing the buck.

The streamlining abolishes four bodies and cuts the number of ministries by two to 25. The food and drug administration will become a fully fledged ministry, following a number of tainted product scandals.

The railways ministry has been slow to change.

Former railways minister Liu Zhijun was sacked in 2011 and is facing corruption charges.

The new structure will place construction and the management of services under the new China Railway Corp, while safety and regulation will come under the transport ministry.

It is unclear whether placing the family planning commission under the health ministry indicates a rethink of the one-child policy.

However, the Communist Party says it will continue to set policy on the issue, with family planning continuing “on the basis of stable and low birth rates”.

A number of maritime agencies are to be pulled into a single administration as China faces rising disputes over sovereignty in the East and South China seas.

The National Oceanic Administration will have control over the coastguard forces, customs and fisheries enforcement.

The two media watchdogs, the General Administration of Press and Publication and the State Administration of Radio, Film and Television, will also be merged.”

via BBC News – China scraps railways ministry in streamlining drive.

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