Chinese Military,Political and Social Superthread

[Edward Campbell]

And Beijing, using the "big four" global accounting firms* as a stalking horse take aim, squarely, at HK's major vulnerability: it's status as one of the globe's few** significant financial centres, according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times:

http://www.ft.com/intl/cms/s/0/574791ee-fdc1-11e3-acf8-00144feab7de.html?siteedition=intl#axzz35vermjvQ

Big four accounting firms warn Hong Kong over democracy push

By Josh Noble in Hong Kong and Robin Kwong and John Aglionby in London

June 27, 2014

The big four global accounting companies have taken out press advertisements in Hong Kong stating they are “opposed” to the territory’s democracy movement, warning that their multinational clients may quit the city if activists carry out threats to disrupt business with street protests.

In an unusual joint statement published in three Chinese-language newspapers on Friday, the Hong Kong entities of EY, KPMG, Deloitte and PwC said the Occupy Central movement, which is calling for electoral reform in the former British colony, posed a threat to the territory’s rule of law.

The group of pro-democracy activists is calling for 10,000 people to block traffic in the central business district as part of a campaign to put pressure on the Hong Kong government, although if and when this will happen is still under discussion.

In the advert, the big four firms warned that protests would disrupt the Hong Kong stock exchange, banks and the headquarters of financial and professional services firms causing “inestimable losses in the economy”.

It added that clients of the four firms had reflected further concerns about the wider impact of the protests: “We are worried that multinational companies and investors would consider moving their regional headquarters from Hong Kong, or indeed leave the city entirely. This would have a long-term impact on Hong Kong’s status as a global financial centre,” the joint statement said.

Written in traditional Chinese characters clearly aimed at the local population, the advertisement is undersigned by the big four accountancy firms. It repeatedly calls for “negotiation and dialogue” to resolve the political stand-off.

The practice of multinationals taking out political advertisements in Hong Kong local-language media is extremely rare.

Hong Kong-based spokespeople for all four firms confirmed that the statement was authentic, but were unable to comment any further and did not have an English translation available.

Stella Fearnley, accounting professor at Bournemouth University, said the companies were “off their trolleys” for placing the advertisements.

“Speaking on behalf of your clients as an oligopoly is demonstrating a power that you think you have,” she said. “They’re harming their own reputations. Are they competing with each other or holding each others’ hands?”

When the Financial Times approached the big four’s global headquarters for comment, it emerged that they had only learned of the advertisement through press reports.

A person close to PwC said it was a local initiative in Hong Kong and not something that the firm’s global network had been involved in. The person added that senior individuals did not appear to have been pre-notified of the advertisement by the Hong Kong office. PwC declined to comment.

Prem Sikka, accountancy professor at the University of Essex, said the advertisements “showed the big four’s true colours”. “It’s utterly unwise and outrageous. People have a right to protest,” he said.

The Asia Pacific region contributes around one sixth of the big four’s combined global revenues, according to their latest annual reports, totalling $16.6bn. However, none of the big four split out how much revenue is attributable to their Chinese operations.

Of the four, Deloitte has the biggest Asian business, recording revenues of $4.9bn last year. Its Chinese business employs 13,500 people in 22 offices. It has had a presence in China since 1917 when it first opened an office in Shanghai.

Hong Kong faces a potential showdown over how it implements universal suffrage, a promise enshrined in the agreement between Beijing and the UK, in the former British colony after it was handed over to China in 1997.

Tensions have been raised further this month by an unofficial poll asking Hong Kong residents how they would like to see their electoral system reformed, which has drawn more than 750,000 votes and provoked anger in China.

The unofficial referendum is set to end on Sunday night, with results due out on Monday. By Friday afternoon, more than one in 10 of the city’s residents had participated in the poll organised by a group of academics, who had only been expecting half as many to vote. Of Hong Kong’s 7.2m inhabitants, about 3.5m are registered voters.

The referendum has rattled Beijing, which describes the vote as “illegal”, while Global Times, a state-run newspaper, has called it “ludicrous”.

Organisers said that Chinese customs had blocked the export of ballot boxes and voting booths to Hong Kong, the latest disruption to the unofficial poll. Calls to Chinese customs officials in Shenzhen went unanswered on Friday.

The poll’s online voting system also fell victim to a cyber attack the day after it went live on June 20, while anti-Beijing newspaper Apple Daily claims that Chinese officials have put pressure on companies to pull advertising.

Those taking part in the vote can choose between three options for a new nomination process for the city’s chief executive, Hong Kong’s top political post. All three options give residents and their local elected officials the power to put forward candidates for the job.

Hong Kong’s system allows just 1,200 people drawn from the city’s elite to vote for their preferred candidate from a shortlist of names managed by Beijing. The city was promised universal suffrage by 2017 under the “Basic Law”, effectively a mini-constitution that came into effect following the handover of Hong Kong to China.

While the government is in the process of drafting its own plans for a new election process, many suspect nominations will still be limited to a list of candidates vetted by the Chinese leadership.

The Financial Times has made a full translation of the advertisement taken out by the big Four, published below:

    In Opposition to the Occupy Central Movement

    With regards to some individuals proposing an ‘occupy central’ movement, we hereby announce that we are opposed to this movement, and are concerned that ‘occupy central’ would have negative and long-lasting impact on the rule of law,
    the society, and the economy of Hong Kong. We hope that the disagreements could be resolved through negotiation and dialogue instead.

    The rule of law is a core value of Hong Kong and has been the last bastion in Hong Kong’s good business environment and its ability to attract foreign investment. Acting lawfully and respecting the rights of others is the responsibility of every citizen.

    The Central district is the heart of Hong Kong’s financial and business activity. Multinational and Hong Kong companies alike have always established their headquarters and main offices there. In addition, the Hong Kong stock exchange,
    the headquarters of financial and professional services companies conduct key large transactions and commercial activities there daily. We believe that once ‘Occupy Central’ happens, the above-mentioned commercial groups
    such as banks, exchanges, and the stock market will inevitably be affected. All types of transactions, contracts and other commercial activities will be delayed. In addition, regulatory bodies could also be unable to function as usual and
    this would increase the instability and confusion on the market and cause inestimable losses in the economy.

    In fact, many clients have reflected such concerns to us recently. We are worried that multinational companies and investor would consider moving their regional headquarters from Hong Kong, or indeed leave the city entirely.
    This would have a long-term impact on Hong Kong’s status as a global financial centre. In recent years, many international studies have pointed out that Hong Kong’s competitiveness is under increasing challenge. When a law-based
    society and the business environment continually comes under attack, Hong Kong’s competitiveness will be further lessened and this would lead to the next generation of our society facing an even tougher environment.

    Therefore, we once again call on the relevant parties to keep Hong Kong’s overall and long term interests in mind, to follow the law and resolve their differences through negotiation and dialogue.

    EY KPMG Deloitte PwC

The important feature of this story is that the corporate head offices, in New York and London, only learned of it when they read about it in the newspapers. It was a local, Hong Kong, initiative. All four of the "big four" have their China head offices ion HK. They are protecting their fast growing China markets, where their earnings are still growing faster and faster. They are, in my opinion, taking a stand because the CCP's central leadership, the (currently seven member) Standing Committee of the Politburo of the CCP who work in the Zhongnanha palace complex in Beijing, want them to. While I think the Standing Committee is looking, hard, for ways to tap into the public will, they do not believe that Western style mass democracy is the right way for China.

_____
*  EY (Ernst & Young), KPMG, Deloitte and PwC (Price-Waterhouse Coopers)
** Along with Singapore, Frankfurt, London and New York (in ascending order)


Edited to add:

Ian Bremmer, founder and President of The Eurasia Group, quips, online, that:

    China Problem
          The State Controlling Corporations

    US Problem
          Corporations Controlling the State

 

[Edward Campbell]

More, from the Financial Times, on one part of China's "soft power" offensive, this time, domestic, with newer, bigger, better museums to explain China's long, rich culture to the world and, more important, to the Chinese themselves, in this article, which is reproduced under the Faiur Dealing provisions of the Copyright Act that newspaper:

http://www.ft.com/intl/cms/s/2/5002360a-f632-11e3-a038-00144feabdc0.html#axzz35vermjvQ

China’s wealthy building new museums to display the country’s treasures

By Dalya Alberge

June 27, 12014

It is barely five decades since museums in China were being set alight and paintings destroyed during the Cultural Revolution. Today, though, a very different kind of cultural revolution is occurring. Like Feng Huang, the mythical phoenix consumed by fire and reborn from the flames, dozens of museums are emerging from the ashes, their walls filled with paintings.

Although there are no official figures, some reports suggest 100 new museums are being built each year, and so far about 3,800 museums are estimated to have mushroomed across mainland China. It is a far cry from the couple of dozen museums that existed in 1949 when the Communists came to power.

Spectacular art treasures in the Summer Palace in Beijing’s Forbidden City were once the preserve of the emperor. Today’s plutocrats are investing millions of yuan in their own palaces of art, alongside world-class state museums, such as those in Nanjing and Shanghai.

The Chinese have grown wealthy on the back of the country’s huge export trade and property. The mainland is home to 152 dollar billionaires, second only to the US, according to Forbes. The number of millionaires is predicted to rise to 2.2m by 2017 from some 1.4m in 2012, according to WealthInsight, the research company.

But, while private museums in the west are the ultimate vanity project, those in China – with its culture of modesty and the communist influence – are viewed as centres for the greater good of the people.

Philip Dodd, chairman of Made in China, a cultural consultancy that forges links between China and the UK, speaks of an “explosion” of museums. How times have changed, he says, remembering his first visit to China in 1998 when, as director of the Institute of Contemporary Arts in London, he was asked by then UK prime minister Tony Blair to stage an exhibition.

“I told him this was a waste of time because there was only one gallery,” Dodd recalls. “I said I would do it in shopping malls in Beijing and Shanghai. Rather to my amazement, he agreed. Fourteen years later, there are gallery [quarters] all over and very many interesting museums beginning to develop.”

Drawing parallels between China’s global domination today and the UK’s heyday as an empire, he says: “Most of the major museum institutions in London – the Tate, National Gallery, National Portrait Gallery – were built in the 19th century when Britain was a dominant power that wanted to understand itself and sell itself to the world. There are some correspondences here.”

Some of the Chinese museums are completely new, while others are being renovated or extended, but establishing firm facts and figures is complex because there are so many municipalities, Dodd says. To his astonishment, though, 200 owners of private museums turned up when he lectured in Shanghai. He took some Chinese collectors in London to see an artist whose dealer “got down there faster than I could strike a match”, he jokes.

Dodd notes that increasing numbers of collectors are looking beyond homegrown art: “My Chinese friends say they spent 10 years buying their own history in order to be able to exhibit it. Now, given globalisation, they want to integrate their own history with the west’s.”

With so much wall space to fill, Chinese collectors have been buying art and antiques from auctioneers and dealers worldwide at an unprecedented rate, as if they are a commodity. When Hauser & Wirth, a London gallery, staged an exhibition devoted to Zhang Enli, whose semi-figurative paintings reportedly sell for up to six-figure sums, 11 were snapped up by owners of Chinese private museums.

Neil Wenman, senior director at the gallery, says: “What is really interesting is that the collectors I work with take things very seriously in terms of research. They travel a lot to art fairs. They visit galleries. I have taken them to artist studios in Los Angeles, New York and London. It is quite a phenomenon that so many are wanting to open private museums all at the same time.

“There is an assumption they buy in bulk and don’t know what they are doing. That is all completely untrue. They are very aware of what they are doing. They are very well researched. Many have children at universities in New York or London and they are travelling all the time. They are very global in their knowledge.”

The newest museums include The Yuz, Shanghai’s equivalent to London’s South Bank. It was opened in May by Budi Tek, a Chinese-Indonesian entrepreneur listed by Art & Auction magazine as one of the world’s top 10 art collectors by money spent. His museum, which is in a former aircraft hangar, is full of Chinese and international art.

He was among Chinese collectors who descended on London in February for the Art14 fair. Tek exudes an infectious passion for art, singling out purchases such as “Untitled (Tree of Light)”, a sculptural installation of a real tree, by Italian artist Maurizio Cattelan. “Many artists touch my heart. One of them is Cattelan,” Tek says. Another is the British sculptor Sir Antony Gormley.

Another collector at Art14 was Wang Wei, who, with her billionaire financier husband, Liu Yiqian, has amassed one of China’s largest private collections, ranging from antiquities to contemporary art. Liu, born to a working-class family in Shanghai, left school aged 14 to make handbags sold by his mother from a street stall, undercutting rivals and investing the profits in a wide range of companies.

In March, the couple opened a second private museum in Shanghai, this time on an abandoned airfield, to display a wide-ranging collection of Chinese contemporary artists, including Fang Lijun and Zhou Chunya, and ancient artefacts. The unveiling came barely 16 months after the couple opened their first museum in the city, on which they are said to have spent Rmb271m ($43m).

The Chinese Museums Association Guide (CMAG), which has just been reprinted, reflects the sheer range of China’s treasure houses, from art and archaeology, including a unique Eastern Zhou dynasty six-horse chariot in Luoyang, Henan, to science and technology.

Art historian Cathy Giangrande, co-author of CMAG, says that beyond China’s most famous attractions – notably the Forbidden City, where much more of the site and the Palace Museum are expected to be opened up – she has been particularly struck by the imaginative approach of other new museums.

That is exemplified by the Museum Cluster Jianchuan in Anren, Sichuan, described by CMAG as “one of the most impressive museum experiences you will ever have”. The cluster is series of museums devoted to different themes and was opened by Fan Jianchuan, a wealthy property developer and, according to CMAG, a “charismatic powerhouse of a man… not a materialist gone mad”.

His collection of an astonishing 8m artefacts deals primarily with the Cultural Revolution and the war against Japan, and his museums are “an expression of his wish to expose man’s inhumanity to man, and to show that although the Japanese behaved savagely to the Chinese during the war, the Chinese did the same to their own people during the Cultural Revolution”, CMAG observes. “The fact that this museum even exists in China is reason enough to visit.” Giangrande describes Fan Jianchuan as “a fascinating man” and his museum complex as “one of the most amazing places I’ve ever been”.

The Jianchuan cluster grounds are set around a lake, and the museums are reached either on foot down tree-shaded lanes, or by golf cart. The themes are certainly unusual. There is even a museum devoted to foot binding, The Museum of Shoes for Bounded Feet, that recalls the extreme mutilation young girls were forced to suffer in an ancient practice that lasted until the early 20th century. Giangrande says: “Inside, [Fan Jianchuan] made the levels uneven, so as you walk around… you have the feeling of being uncomfortable and the painfulness of bound [and broken] feet. Incredible! The interior was pink, like a brothel, because it was all about using women. He really had thought about it.” Another museum is devoted to the Japanese war and is built like a prison – “so grim and cold”, Giangrande says. “He was trying to get people to think about the past.”

Part of the imperial collection is split between the Forbidden City Palace Museum and the Nanjing Museum, which opened a huge new wing last November. Many of the treasures surfaced in recent excavations and some will be coming to the British Museum in London in September for a blockbuster exhibition, Ming: 50 Years That Changed China.

The show will present jewels of China’s museums – exquisite porcelain, gold, furniture, paintings, sculptures and textiles – to explore the first half of the 15th century, when China was a global superpower run by one family, the Ming dynasty, which established Beijing as the capital and built the Forbidden City. The parallels with today cannot be ignored. This was a time of great exploration for China, which had a multicultural imperial court and artists absorbing outside influences in creating artworks of supreme beauty.

Ambitious plans for Beijing include turning part of the 2008 Olympic park into a cultural centre with several new museums, notably a new building, set to open in 2017, for the lavish National Art Museum of China, for which French architect Jean Nouvel has won the commission.

Nouvel is among numerous western architects who have secured high-profile commissions in China. Others include the Edinburgh-based firm Sutherland Hussey, which won an international competition to design the new Chengdu city museum, and New York-based Steven Holl, which designed the Nanjing Sifang Art Museum. Part of a $164m development in a national park outside the city, this opened last November with an exhibition that included Danish-Icelandic artist Olafur Eliasson, who creates installations using light, water, fire and wind. Property developer Lu Jun and his son Lu Xun commissioned Steven Holl to create a museum inspired by “shifting viewpoints, layers of space, expanses of mist and water, which characterise the deep alternating spatial mysteries of the composition of Chinese painting”.

Foreign tourism is not yet sufficiently widespread to fill so many museums, but such is the Chinese public’s interest in them that the Ullens Centre for Contemporary Art alone – a not-for-profit centre in Beijing – attracts half a million visitors a year. Its director, Philip Tinari, says of the boom: “It’s a really interesting moment right now.”

I think that if you change all the Chinese names to ones like Carnegie, Eastman, Getty, Mellon and Rockefeller, you can see the parallel with the "golden age" of American philanthropy (19th and early 20th century) which set the stage for the vast American "soft power" offensive of the mid 20th century.

 

[CougarKing]

Anti-Chinese mainlander sentiment remains strong despite recent overtures by Beijing toward Taipei...

China official cancels events in Taiwan amid violent protests
By Faith Hung
Reuters - 5 hours ago


TAIPEI (Reuters) - China's top official in charge of relations with Taiwan has returned to Beijing, hailing his visit to the self-ruled island as "historic", despite violent protests that forced him to cancel several meetings.

Throughout his four-day tour of the island, Zhang was greeted by protesters, including at the high-speed train station in the pro-independence southern port of Kaohsiung on Friday. There hundreds of demonstrators gathered, some waving placards reading "Communist Zhang Zhijun, get the hell back to China".

Protesters in the city became violent and at one point attempted to pour white paint on Zhang, but missed him and instead splashed security staff. Some protesters were bloodied after scuffles with police.

Security personnel protect Zhang Zhijun (in white shirt), director of China's Taiwan Affairs Office, with bullet-proof suitcases
after anti-China protesters attempted to pour white paint on him,
in Kaohsiung, southern Taiwan, June 27, 2014. - REUTERS/Donald Ol


An official at Taiwan's Mainland Affairs Council told Reuters by phone that three of Zhang's public appearances had been called off on Saturday following the protests. Hundreds of pro-independence banner-toting demonstrators were at the Taoyuan International Airport near Taipei on Saturday as Zhang prepared to depart for the mainland.

Speaking to state media after arriving back in Beijing on Saturday, Zhang glossed over the protests and hailed the trip a success.

"This visit received an enthusiastic welcome from all circles and peoples in Taiwan. Despite differing voices, the popular will is extremely clear. Everyone universally believes that peaceful development of cross-strait relations is the correct path and brings real benefits to people on both sides. Everyone believes we should continue down this path."

- Zhang Zhijun, director of China's Taiwan Affairs Office

Zhang did not meet with Taiwan's China-friendly president, Ma Ying-jeou, who has never held talks with senior Chinese officials since taking office in 2008.


Reuters / Yahoo

 

[Edward Campbell]

I think China, official China, the big men in the Zhongnanhai, understand that they must 'court' Taiwan, but the whole notion grates on them, like rubbing sandpaper on a sunburn. The Chinese, broadly and generally, are very nationalistic and most, in my understanding of them, think that the Taiwanese, being Chinese, ought to want to join China now, on Beijing's terms ... like an estranged child wants, eventually, to return to her/his family.

The route to reunification lies, in fact, through Hong Kong, and official China has the same problem there: they cannot understand, emotionally, I suppose, that Hong Kong wants all of its rights and privileges, and more, and that it doesn't want to be just another a 'city-province' like, say, Tianjin. Equally, Taiwan will not join to be just another province. It will want everything HK has and a whole lot more, and HK will want whatever Taiwan gets.

I think the leaders in Zhongnanhai understand that, intellectually, and, most likely they accept it, too, intellectually ... but they don't like it.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the South China Morning Post (HK's premier English language daily paper) is a local view from financial journalist Peter Guy:

http://www.scmp.com/business/article/1543163/occupy-central-hong-kongs-mad-hell-moment

Occupy Central is Hong Kong's 'mad as hell' moment
Self-serving arguments from property tycoons and government officials are demeaning to an educated population who support the local democratic process

Peter Guy

PUBLISHED : Monday, 30 June, 2014

"Ever get the feeling you've been cheated?" asked punk rock icon Johnny Rotten of the Sex Pistols. He directed that leering remark at disenchanted English youth in the 1970s, but he could just have easily been describing the emotional undercurrent of disenfranchisement that feeds the Occupy Central movement.

The movement has been vilified with the kind of fear-mongering reserved for medieval witch-hunts. Doomsayers are warning about the kind of chaos and turmoil that resembles a zombie apocalypse rather than civil protest.

Brusque declarations and a blunt white paper from Beijing are predictable, but the arguments from Hong Kong's business establishment have been disappointing because they are unsophisticated and out of touch with events in the rest of the world.

A protest and show of support of this magnitude for local democratic process will actually be a healthy event for Hong Kong's development as a financial and business centre. International investors welcome political dissent and positive change towards a more civil society rather than outright insurrection. Similar protests regularly come and go in London and New York without invoking the apocalyptic scenarios. Hong Kong has experienced large-scale marches and protests before with little trouble so there is no reason to believe Occupy will cause chaos.

Terse warnings by property tycoons and Hong Kong's former central banker Joseph Yam Chi-kwong proclaim that protests will be bad for business and social stability. They have predictably backfired as more than 700,000 people participated in an Occupy plebiscite. Between the greater social good and political expediency, our business leaders chose the latter. Between the truth of history and their own business, they chose their own business.

These self-serving arguments are demeaning to an educated population. Describing how Occupy will hurt businesses only draws the cynical response that what is good for the tycoons' business is not necessarily good for Hong Kong. It also shows that most of our tycoons and government officials lack international perspectives. Almost all of them have never lived or worked extensively in a democratic and developed country. Their views are shaped through yesterday's Hong Kong. They cannot envision the future.

For someone who once served the people, Yam surprisingly says Occupy creates political risk that endangers Hong Kong's status as a financial centre. But, he forgets that five years ago, global financial markets endured the worst implosion in history. Most major financial institutions and central banks barely survived an event far worse than a protest.

Yam's opinions are a parochial contrast to remarks made earlier this month by Bank of England governor Mark Carney. The former governor of the Bank of Canada spoke at the Conference on Inclusive Capitalism. He expressed the view that business leaders and policymakers needed to restore "social capital" to capitalism. While Carney recognised capitalism's virtues, he also called for "a sense of vocation and responsibility". While the rest of the world's central bankers comprehend the need for change, Yam demands blind obedience to the old system.

Rule of law, which is most important to investors, is stronger in Hong Kong than on the mainland. That will not be easily replaced overnight, no matter how many free-trade zones are opened in Shanghai.

Any attempt to achieve a more democratic society through free elections is good for any financial centre. Ultimately, financial markets and international investors want to see strong, publicly accountable institutions in Hong Kong and on the mainland.

Today's Hongkonger cannot be fooled or cajoled into specious arguments. Everyone has unrestricted internet access and can seek their version of the truth. Hong Kong's economic oligarchs and an unrepresentative and unresponsive government are seen to be the very source of instability in the lives of average people, making Hong Kong an almost impossibly expensive place to live and raise a family.

Occupy is Hong Kong's "I'm mad as hell and I'm not going to take it any more" moment drawn from the Oscar-winning movie Network. In the movie Howard Beale, a TV anchor, exhorts American viewers to overcome their collective malaise and sense of helplessness. "First you've got to get mad. You've got to say, I'm a human being. My life has value." And that is what participants in the Occupy poll are actually saying with their ballots.

Peter Guy is a financial writer and former international banker

Here, in my opinion is the key element: "Rule of law, which is most important to investors, is stronger in Hong Kong than on the mainland. That will not be easily replaced overnight, no matter how many free-trade zones are opened in Shanghai."

Basically, China needs HK more than HK needs China. At a guess HK (pop. 10 Million) is more productive, more valuable than any two, maybe even any three of Chongqing (pop. 30 Million), Shanghai (pop. 25 Million), Beijing (pop. 20 Million), Guangzhou (pop. 20 Million) and Tianjin (pop. 10 Million). HK is too important to China's economic welfare to be treated as many high and most mid-level bureaucrats and even some leaders in Beijing might wish. China's biggest companies, energy giants like Sinopec and banks like ICBC rely upon the HK stock exchange for their access to global capital. They may be listed on the Shanghai, London and New York exchanges but their home is HK and HK is where their market value is determined.

Anson Chan used to quip that the immediate, adminstrative matter was that HK had (re)joined China but the long term, strategic matter was that China needed to 'grow up' and join HK ~ she meant that China had to overcome its very traditional, ingrained, culture of corruption and learn the advantages of the rule of law. Liberal democracy is not, in my opinion, the key issue; it, the key, is institutions, large and official and small and unofficial: the central bank and the street level merchants' association (there are hundreds (thousands?) of them) alike. They all, together, bind HK in a tight web of (reasonably) fair, (generally) effective and (broadly) accepted rules and regulations that aim to smooth the very rough edges of capitalism and make healthy, productive competition a reality. That doesn't exist, yet, in China ...

There are a lot of people in Beijing, important people, who believe that if they can reign in HK then Shanghai will reap the advantages. They are wrong. If they reign in HK then the economic and commercial advantages will flow, nearly 100% to Singapore.

 

[Edward Campbell]

Here is a link to some photos of today's pro-democracy demonstrations in HK ... my favourite is:

She could be right here in Canada, couldn't she? :nod:


Edit: typo

 

[CougarKing]

The fall of former PLA General Xu...

Defense News

Experts: China General's Ousting Tightens Xi's Grip on Military
Jul. 1, 2014 - 07:29PM  |  By AGENCE FRANCE-PRESSE

BEIJING — The Chinese Communist Party’s dramatic expulsion of a former top general — the most senior figure to fall in President Xi Jinping’s anti-corruption campaign — is an assertion of political control over the powerful and wealthy military, analysts say.

Xu Caihou, former vice chairman of China’s Central Military Commission and until two years ago a member of the ruling party’s elite 25-strong Politburo, was stripped of his party membership on Monday and his case was handed over to prosecutors.

The 71-year-old is the highest-ranking Chinese military officer to face trial in decades.

The authorities’ move to pursue charges against him — despite reports that he is dying of bladder cancer — is intended to send the People’s Liberation Army (PLA) a clear message, analysts said.

The PLA’s influence in domestic affairs has waned since the days of Communist China’s founding father Mao Zedong, but it remains a political force to be reckoned with and has at the same time built up a vast network of business interests.

(...EDITED)

 

[CougarKing]

Considering that China has other religious minorities, wouldn't this be a rather extreme measure that will only fan ethnic tension?

China bans Ramadan fasting in Xinjiang

Agence France-Presse1:55 pm |

Wednesday, July 2nd, 2014

China has banned civil servants, students and teachers in its mainly Muslim Xinjiang region from taking part in Ramadan fasting, government websites said, prompting condemnation from an exile group on Wednesday.

China’s ruling Communist party is officially atheist, and for years has restricted fasting in Xinjiang, home to the mostly Muslim Uighur minority.
Xinjiang sees regular and often deadly clashes between Uighurs and state security forces, and Beijing has blamed recent deadly attacks elsewhere in China on militants seeking independence for the resource-rich region.

Rights groups blame tensions on religious and cultural restrictions placed on Uighurs and other Muslim minorities in the vast area, which abuts Central Asia.

Several government departments posted notices on their websites in recent days banning fasting during Ramadan, which began this weekend. During the holy month, the faithful fast from dawn to dusk and strive to be more pious.
The commercial affairs bureau of Turfan City said on its website Monday that “civil servants and students cannot take part in fasting and other religious activities.”

The state-run Bozhou Radio and TV university said on its website that it would “enforce the ban on party members, teachers, and young people from taking part in Ramadan activities.”

“We remind everyone that they are not permitted to observe a Ramadan fast,” it added.

(...EDITED)

 

[Edward Campbell]

Considering that China has other religious minorities, wouldn't this be a rather extreme measure that will only fan ethnic tension?

And here, from the Geopolitics in the 21st Century thread is, I suspect, your answer:

I don't think anything that happens with China's foreign policy is done without a stern eye on the domestic situation. A notable number of Chinese have tasted the good life and want more, a large number can see the good life from afar and know they will never have it. Some dream of the days where everything was controlled. I can imagine the internal forces pulling and pushing within China must give her leaders constant indigestion.

My sense is that the mainstream, Han Chinese want the Muslims (and Tibetans) to be like other minorities: 'happy' (if that's the right word) with a few folk festivals and subsidies for shrines. That requires some suppression of Muslim (and Tibetan) national identity. There is, also, I think, an immediate desire for some revenge against Uyghur terrorists. Finally, I guess that the official Chinese are still coming to grips with the notion that Islam might be perceived to offer an alternative to CCP rule ... and that's not a comfortable thought for them.

 

[CougarKing]

Looks like someone's spooks have been busy...  :Tin-Foil-Hat:

Reuters

China military bases threatened by luxury villas, fake tourists

Reuters

BEIJING (Reuters) - The security of Chinese military bases is being threatened by illegally built high-rise buildings, and in one case villas built inside a base, and fake tourists seeking access to sensitive sites to spy, state media said on Wednesday.

Only a tiny fraction of the 4,800 local government and military bodies which are supposed to protect such facilities are currently doing their jobs properly, the official China Daily cited senior military officers as saying.

"Fake companies or sight-seeing tours are often used as pretexts by outside entities to approach sensitive Chinese facilities for the purpose of gathering military secrets," officer Song Xinfei told the newspaper.

One government on the southern resort island of Hainan, a province which has responsibility for the disputed South China Sea, allowed villas to be built by a foreign firm inside a base, it added, quoting the military's People's Liberation Army Daily.

(...EDITED)

 

[Retired AF Guy]

Here is a link to some photos of today's pro-democracy demonstrations in HK ... my favourite is:

She could be right here in Canada, couldn't she? :nod:


Edit: typo

Except here in Canada the Children Aide's Society would get involved because, obvisously her parents aren't doing a proper job and the girl would be kidnapped removed from her parents for her own protection.

 

[Edward Campbell]

I'm sorry that this article, which is reproduced under the Fair Dealing provisions of the Copyright Ac t from the Financial Times, is boring but, unlike young women complaining about being fucked by the giovernment, any government, anywhere, it actually matters:

http://blogs.ft.com/beyond-brics/2014/07/02/guest-post-china-rebalancing-is-a-dangerous-obsession/

Guest post: China rebalancing is a dangerous obsession

By Qu Hongbin, Co-Head of Asian Economic Research, HSBC

Jul 2, 2014

For many, China’s growth model, which has delivered average annual GDP growth of 10 per cent over the past three decades, simply looks wrong: a national savings rate of around 50 per cent is unheard of in a large, modern economy.

A typical diagnosis states that China invests too much and consumes too little. The prescription is “rebalancing” – moving the economy away from investment towards consumption-led growth. However, a consumption-led growth model has little in theory or evidence to support it.

For developing economies (which China still is in per capita terms), the theory is quite clear: they should invest in building up their capital stock per worker. A higher savings rate will mean less consumption, but it funds greater investment too. That ultimately allows poorer countries to catch up to higher per-capital GDP levels faster.

Economists generally agree that sustained economic growth depends on supply-side fundamentals such as the stock of capital and technological innovation. Ultimately, it is productivity growth that drives GDP growth in the long run. There is little in the academic literature that suggests a causal link between higher consumption and higher growth rates.

Consumption-led growth models have also performed poorly in practice. In the 1970s and before economic reforms, China’s household consumption share of GDP was over 60% – higher than that of the US at the time. However, growth during the decade was significantly slower than what came after, when investment as share of GDP rose steadily.

Furthermore, a credit-driven consumption model is not only unsustainable, but the debilitating effects of consumers deleveraging from high levels of debt in a deflationary environment will make the recovery much more difficult. Of course, no country consumes nothing and saves everything for investment; it would be a bad idea even if it could as the investment would eventually run into diminishing returns.

The key debate then, is whether China has already reached the point where extra investment becomes over-investment. On a macro level, we think China’s capital stock per worker is still low and less likely to be subject to diminishing returns. China’s development into a modern economy is far from finished. Much more infrastructure investment is still needed to cope with the rapid pace of urbanisation and industrialisation.

While the recent infrastructure boom has boosted the country’s transport capacity, China’s railway network is still shorter than that of the US in the 19th century. There are no doubt plenty of examples of over-investment in certain sectors. But it does not mean one can draw a simple with the economy as a whole. There are still more useful infrastructure projects to be built before China is overrun by bridges to nowhere.

Critics would point to data showing the incremental capital-output ratio in China coming down substantially since the global financial crisis. But this mainly reflects a shift in the focus of investment away from say, toy factories, and toward subways, which are more capital-intensive and generate less of a boost to short-term output.

That would indeed pull down the short-term return on capital (which still remains high). However, it does not imply diminishing returns have set in because infrastructure investments generate significant spill-over effects through lifting the whole economy’s efficiency and labour productivity, which will boost return on capital in the future.

China’s problem is not that investment is too high, but that underdeveloped capital markets have meant investment has been funded through the wrong financing model. Too much has been funded by short-term bank lending, sometimes through non-transparent local government vehicles or other parts of the shadow banking system.

This creates a duration mismatch, as many of these projects have returns that accrue over a long period of time. The real rebalancing challenge is therefore more subtle. It involves changing the way investment is funded by improving credit supply through a more developed credit market, improving access for small and medium-sized enterprises, and expanding the local government bond market to fund long-term infrastructure investment.

This would be more efficient than having the government introduce further distortions by micro-managing the demand side. In the long term it is inevitable that the savings rate will fall due to demographics, but that makes it even more important for China to invest now. Otherwise, once the savings rate begins is natural decline, it becomes more difficult to fund investment.

Rebalancing through deliberately forcing down the savings rate would be more difficult and dangerous. Say the authorities tried to reduce the real interest rate to discourage saving. Without all manner of reforms to boost the social safety net, that could lead to even greater precautionary savings.

Consumption would fall, as would firms’ profits and government tax revenues, making it more difficult to finance the required safety net. Far better, we would argue, to target the distortions at source with structural reforms. The obsession with rebalancing China’s economy is instead leading to misguided policy recommendations that are too blunt, and which may carry unintended consequences.

This piece was written jointly by Qu Hongbin and John Zhu, HSBC’s Greater China Economist.

The key, it seems to me, is this: "China’s development into a modern economy is far from finished. Much more infrastructure investment is still needed to cope with the rapid pace of urbanisation and industrialisation." But, you might well say, what about the empty blocks of apartments and roads to nowhere? All very real, I reply, and living proof of why an anti-corruption campaign is urgent. The Chinese are neither bad economist nor bad planners; what they are is hamstrung by corruption, at all levels, which, in my guesstimation,* costs them 1 to 2% of GDP growth every year.


____
* I made my guesstimate a couple of years ago when I was very fortunate to be allowed to visit a small cluster of villages in a remote part of (underdeveloped) Anhui Province and where the village captain (senior official) was very open in letting me track his work and how he disposed of each transaction. I watched the corruption, close up, and I saw the distribution, up and down, of the proceeds. I made a rough numerical calculation (nnn RMB per person, per year multiplied by 450 Million (adult workers) then factored as a % of GDP and then as a % of growth) and arrived at 1+% of GDP growth per year. Not rigorous, at all, but illustrative of what I believe to be the scope of the problem.

 

[Kirkhill]

* I made my guesstimate a couple of years ago when I was very fortunate to be allowed to visit a small cluster of villages in a remote part of (underdeveloped) Anhui Province and where the village captain (senior official) was very open in letting me track his work and how he disposed of each transaction. I watched the corruption, close up, and I saw the distribution, up and down, of the proceeds. I made a rough numerical calculation (nnn RMB per person, per year multiplied by 450 Million (adult workers) then factored as a % of GDP and then as a % of growth) and arrived at 1+% of GDP growth per year. Not rigorous, at all, but illustrative of what I believe to be the scope of the problem.

Just curious.  Did you share your observations on corruption with village captain and if so what was his reaction?  Did he see the lost opportunity, passively accept the inevitability of the corruption or angrily reject the entire notion of endemic corruption?

 

[Edward Campbell]

Just curious.  Did you share your observations on corruption with village captain and if so what was his reaction?  Did he see the lost opportunity, passively accept the inevitability of the corruption or angrily reject the entire notion of endemic corruption?

I did share, and, in fact, we discussed it - he and I and a small handful of students home on summer vacation - and he agreed, generally, that: a) corruption is a problem and ought to be stamped out; and b) it doesn't benefit him, for example, any more than a proper, decent salary would - in line with low level civil service salaries in HK, for example.

But: he explained that the system is deeply, deeply entrenched, and we went to the district and, later, the provincial capital, where I observed the village captain pay off the district chief - and receive a very small share of the district slush fund, too, and then I saw the district chief pay off provincial officials ... but only from a distance, demonstrating the all pervasive nature of the problem.

The two way nature of the system - the village captain collects from locals then goes to the district and pays but he comes back with some money, too, and he shares that out (repeat at each level) - is very crafty, it makes people 'forget' how much they are paying because, a bit later, they 'get something for nothing.' (Think high taxes and social programmes and it's not an entirely foreign system, is it?)

I think it needs firm direction - positive, exemplary direction from the very top.

 

[Kirkhill]

Don't we call that system "Income Redistribution" here in Canada?

Thanks for the grist ERC. Still milling and mulling.

 

[CougarKing]

Another thing to "mill and mull" over:

Reuters

With one eye on Washington, China plots its own Asia 'pivot'
By: Ben Blanchard, Reuters
July 4, 2014 9:08 AM

BEIJING -- The Silk Road, an obscure Kazakh-inspired security forum and a $50-billion Asian infrastructure bank are just some of the disparate elements in an evolving Chinese strategy to try to counter Washington's "pivot" to the region.

While Chinese leaders have not given the government's growing list of initiatives a label or said they had an overall purpose, Chinese experts and diplomats said Beijing appeared set on shaping Asia's security and financial architecture more to its liking.

"China is trying to work out its own counterbalance strategy," said Sun Zhe, director of the Centre for US-China Relations at Beijing's Tsinghua University and who has advised China's government on its foreign policy.

Added one Beijing-based Western diplomat who follows China's international relations: "This is all clearly aimed at the United States."

(...EDITED)

Rival bank?

Another Chinese initiative is the $50 billion Asian Infrastructure Investment Bank, which Xi first proposed in October during a visit to Southeast Asia.

Finance Minister Lou Jiwei said this week Beijing would likely have a 50 percent stake in the bank, which diplomats see as a possible rival to the World Bank and the Asian Development Bank, though China says its role is a complementary one, not competitive.

Washington and Tokyo have the biggest voting rights in both the decades-old institutions.

China sees the infrastructure bank as a way to spread the message of its benign intentions in Asia, where developing countries such as the Philippines and Vietnam accuse Beijing of being the aggressor over territorial claims.

"China upholds a basic guiding principle in regional diplomacy -- being friends and partners with our neighbors," Lou said.

(...EDITED)

 

[economicsaboteur]

Another thing to "mill and mull" over:

Reuters

There are thousands of ways and means the Chinese or Chinese intelligence apply, to quote a relative of mine, "to take over the whole world or 'rule the world'. One is findings ways and means to bankrupt a competitor in USA or Canada through unfair competition. The competing Chinese company lowers it prices too a low level that competitor will end up in a losing end and turns away buyers. Another is manipulating the stocks through their agents of influence in Canadian Broadcasting Corporation. Of course, trade unions are also infiltrated by Chinese agents to effect illegal strikes and slowdowns to bankrupt the factory. You also cannot set up a company in China if you are not a bonafide Chinese agent in USA or Canada or Australia. Your company end up sabotaged if not. Just like my ex co-worker Theodore Butler who admittedly told me "I'm Chinese", you cannot end up owning almost all of the stocks in Canadian Imperial Bank of Commerce if you are not a Chinese spy. We are being sc***d big time. We need CSIS in this trying times. So if you have that patriotic streak, apply in CSIS.. ;D ;D

 

[George Wallace]

economicsaboteur is a BANNED entity who keeps recreating themself with new profiles and spamming this site with a common theme.

 

[incorrigiblelawyer]

Do you also notice that despite of their common knowledge of suppression of Islam as evidenced by underground mosques and severe punishment of fasting, no Arab terrorist has criticized China but turn to USA and Canada instead as "oppressors"? Even the Communist Party of Canada despite of their promise to retain the Charter of Rights' freedom of religion has never criticized China's underground churches and mosques? Anything that will hurt the American and Canadian government these citizens whom CSIS has labelled as 'terrorists', these commies and Arab terrorists will do in cahoots with the Political Left, Cuban sympathizers and journalists of CBC. We're being sc***d big time. We need CSIS and RCMP in these trying times. So if you have that patriotic streak, join CSIS and RCMP. ;D ;D

 

[GAP]

economicsaboteur is a BANNED entity who keeps recreating themself with new profiles and spamming this site with a common theme.

Hmmm....a reincarnation? incorrigiblelawyer