Asian Correspondent » Michele Penna Asian Correspondent Wed, 20 May 2015 11:20:38 +0000 en-US hourly 1 China bans amateur weather forecasters Tue, 05 May 2015 02:32:16 +0000 China Daily Life

Pic: AP.

On May 1, a new regulation restricting the use of unofficial weather reports came into force in China. The regulation had been approved by China’s Meteorological Organization in March and states that aside from authorized entities, “any organization or individual cannot release in any form weather forecast to the public.”

The reasoning behind this tougher approach is that fake and inaccurate reports – which are common on the lively Chinese internet – can cause panic and possibly endanger citizens. Last month, Chinese media reported that in spite of official forecasts to the contrary, unfounded rumors according to which Typhoon Zhuhai would hit Shanghai during the Tomb Sweeping Day holiday caused local residents to make unnecessary changes to their plans.

The new regulation delves into details concerning what exactly constitutes a weather report, dividing forecasts into two categories. “Public weather forecasts” include “clouds, wind direction, wind speed, temperature, humidity, air pressure, precipitations etc,” whereas “disastrous weather warning and meteorological disaster warning” cover “typhoons, rainstorms, snow storms, heavy winds, sand storms, droughts, hail, fog, haze, solar flares, magnetic storms etc.”

Transgressors who are caught releasing weather forecasts or broadcasting weather reports to the public without relying on the latest information provided by the country’s meteorological authority can incur in a fine of up to o 50,000 yuan (about US$8,000.) If their actions cause loss of life, injuries or “significant damage”, they can be held criminally responsible.

The regulation is not the only one aimed at restricting the ability of common citizens to broadcast information about natural events. Another prohibits both individuals and danwei – work units – to spread opinions on earthquakes.

What remains to be seen is the extent to which these new rules will have an impact on China’s amateur forecasters. According to Global Times, a state-owned newspaper, the new regulation is unclear about how information can be broadcasted, as it “failed to define the boundaries for releasing meteorological information to the public, or how information published by commercial weather-related smartphone apps would be regulated.”

Some officials played down the new norm’s effects. Interviewed by Youth Daily, Zhang Tairen, deputy inspector of the policy and regulation division of China’s Meteorological Administration, said that weather forecasts can be distributed by citizens as long as their sources are official and duly stated. “There can be various ways of broadcasting weather forecast, all kinds of commercial weather apps and WeChat public pages are allowed and encouraged to broadcast weather forecast after they get the forecast from the weather stations,” the paper quoted him as saying. “But they should indicate the weather stations from which they got their information and when it was released.”

On social media, the public reacted – as often happens – by mocking authorities. “This means we will never have ‘heavy pollution’ anymore,” wrote one user worried about potential censorship. Another wondered whether the public will be allowed “to sue the official weather forecasters for fraud if forecasts are not correct.”

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In-depth: China’s land reclamation in the South China Sea Fri, 24 Apr 2015 02:26:36 +0000 A satellite image shows evidence of a runway on reclaimed land in the South China Sea. Image via IHS Jane's website.

A satellite image shows evidence of a runway on reclaimed land in the South China Sea. Image via IHS Jane’s website.

While the Chinese real estate market is experiencing some serious problems, construction work is booming in the South China Sea, the area whose sovereignty is disputed by China, Vietnam, the Philippines, Malaysia, Taiwan and Brunei.

Over the past year, IHS Jane’s has published several images showing large reclamation work underway on the Paracel Islands, just south of the coast of Hainan. Then, on April 16, the paper produced satellite photographs depicting a runway on Fiery Cross Reef, in the Spratly Islands. The paper claims that the airstrip – currently 503 meters by 53 meters – could potentially become a 3 kilometer runway which “would be well within the parameters of existing People’s Liberation Army Air Force runways on mainland China, which vary in length from about 2,700m to 4,000m at most.” It is the second airstrip China has built in the South China Sea, the first one being located on Woody Island in the Paracel chain.

The People’s Republic is hardly the only one who considers building infrastructures in disputed territories a good idea: Vietnam, Taiwan, Malaysia and the Philippines are all involved in land reclamation projects. What makes China different from the others is the scale of its efforts: besides the new runway, China is creating further infrastructure on Cuarteron, Eldad, Gaven, Johnson, Mischief and Hughes Reef. On the latter, satellite images reportedly show that 75,000 square meters of land have already been reclaimed, while a facility is under construction.

Beijing’s motivations for undertaking such controversial work are at least two. The first one is the wish to gain control over an area through which an estimated US$5.3 trillion worth of trade goods transit every year.

“China realizes that trade routes in the South China Sea are vulnerable. They want to strengthen their presence in order to defend their claims to resources,” said Timothy Heath, a senior international defense research analyst at the RAND Corporation. “At the moment, China is trying to maintain a presence in the area through deployments from Hainan, but that is too far away. With these bases they will be way more effective.”

One question that pretty much everyone is wondering about in chancelleries and government offices is whether Beijing intends to exploit the features it is dredging to create an Air Defense Identification Zone (ADIZ). On January 31, the Asahi Shimbun quoted Chinese anonymous sources as saying that officials in China are already laying out plans for the construction of an ADIZ which could be even more controversial than the one Beijing announced last year over the East China Sea.

China’s second goal is claiming de facto control over the disputed area and obtaining a definitive advantage over other contenders. The logic behind this tactic is that if Beijing can successfully install its military forces in the South China Sea other countries involved in territorial disputes will have no option but to cave in.

China’s sovereignty claims have been known for a long time, and the government’s interest in achieving control over the area is not much of a surprise either. After all, China is highly dependent on the trade and energy routes passing through the South China Sea. What has changed in recent years is that a stunning economic growth and a burgeoning military budget have given Beijing the clout it needed to carry its strategy forward.

What kind of counteraction other countries in the region will come up with remains to be seen. So far, there have been reciprocal accusations and naval confrontations, but China’s neighbors have not been able to do anything that could discourage Beijing from pursuing its plans.

The Philippines pushed themselves a bit further than others and in 2013 instituted arbitral proceedings against China under the United Nations Convention on the Law of the Sea (UNCLOS) questioning the legality of China’s nine dash line, which covers much of the disputed territory.

But even a ruling in Manila’s favor might prove of little help. Beijing has so far declined to send an agent to UNCLOS to counter Manila’s initiative. Instead, according to the Permanent Court of Arbitration’s website, “on February 19, 2013, China presented a Note Verbale to the Philippines in which it described ‘the Position of China on the South China Sea issues,’ and rejected and returned the Philippines’ Notification.”

This position was then repeated in a white paper published in 2014 whose first conclusion reads: “The essence of the subject-matter of the arbitration is the territorial sovereignty over the relevant maritime features in the South China Sea, which is beyond the scope of the Convention and is consequently not concerned with the interpretation or application of the Convention.”

It is hard to imagine that Beijing would backtrack on its policies, no matter how huge an impact the ruling could have on public opinion worldwide.

“I think China intends to have its own argument to counter the UCLOS. They will likely say that the position of the United Nations is outdated and should be updated to reflect new realities,” contended Abraham M. Denmark, the senior vice president for political and security affairs at the National Bureau of Asian Research, a US-based think tank.

Lacking a major diplomatic breakthrough, there is something of a consensus among experts that China’s actions will push contenders to rely more heavily on other powers – and particularly the United States – for their security. As pointed out by Mr. Denmark, “the main result will be countries reaching out to the States and the international community”.

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China mulls building new solar power station… in space Fri, 03 Apr 2015 03:59:23 +0000 This digital rendition provided by Mafic Studios, Inc. shows a possible design proposal for Spaced Based Solar Power. Pic: AP.

This digital rendition provided by Mafic Studios, Inc. shows a possible design proposal for Spaced Based Solar Power. Pic: AP.

Chinese scientists are studying the possibility of building a space power station which would orbit the earth and accumulate a massive amount of solar energy. The energy would then be transmitted back to the Earth either in the form of microwaves or lasers. And no, this is not from the latest sci-fi movie. It is for real. On March 30, Xinhua reported that China is mulling the construction of the largest spacecraft ever built, which would surpass both Apollo and the International Space Station.

Xinhua reported the opinion of Duan Baoyan, a member of the Chinese Academy of Engineering, according to whom space-based solar panels can generate “10 times as much electricity as ground-based panels per unit area”.

In spite of the would-be station’s epic proportions, the idea of getting solar energy from panels positioned in space is far from new. It was pioneered by US scientist Peter Glaser, who researched this topic as early as in 1968. Years later, Mr. Glaser stated that accumulating solar energy “can be accomplished on Earth and in space to ensure that the aspirations of all people for a better life can be met without endangering the quality of life on Earth, in this century and in the more distant future.”

The US has been working on this possibility since the 1970s, while Japan began its own research in 1998, when Tokyo began developing a Space Solar Power System. In 2009, Japanese authorities tasked a research group which included 16 companies to come up with the technology needed to transfer electricity through microwaves.

For all these efforts, the creation of an operational solar farm remains beyond reach. In 2000, John C. Mankins , a manager with the Advanced Concepts Studies Office of Space Flight, told the US House Science Committee that the technologies needed for a full-scale in-space platform producing 1-2 gigawatts of power could be demonstrated at a prototype level by 2025-2035. “Very large-scale, in-space SSP platforms in the greater than 10-gigawatt power class,” will only become viable by 2050, according to Mr. Mankins.

China and Japan face the same challenges. Tokyo plans to develop a fully operational 1-gigawatt solar station by 2030, while Xinhua reported that China aims to “build an experimental space solar power station by 2030, and construct a commercially viable space power station by 2050.”

Besides the huge gains it could deliver in terms of clean energy, China’s latest project is relevant because it provides yet more proof that Beijing is trying to step up its role in space-related technologies, a sector in which Beijing is already investing heavily.

After becoming the third country to independently send a human into space in 2003, China’s efforts to become a space power have been relentless, culminating in December 2013 with the launch of Yutu, a robotic rover that is currently exploring the surface of the moon. The robot has suffered a series of technical problems and its ability to operate is now impaired, but the debacle has not prevented Beijing from pursuing even more ambitious goals. Authorities are currently planning to send another rover to Mars in 2020 and create a manned space station by 2022.

This increasing fondness of space missions is motivated by Beijing’s desire to catch up with other countries – notably the United States – in the commercial and military spheres. Or, to put it simply, to acquire the great power status that Chinese leadership covets so much.

The budget is trailing the country’s ambitions: as of 2011, Xinhua reported that Beijing expenditure for its space program had been 20 billion yuan ($3.2 billion) between 1992 and 2005, while between 2005 and 2011 the government had already invested 15 billion yuan ($2.4 billion). The following year, the same agency quoted Wang Zhaoyao, an official with China’s manned space program office, as saying that Beijing had invested 39 billion yuan ($6.3 billion) in its aerospace program, meaning that in the seven years between 2015 and 2012 China had spent almost as much as between 1992 and 2005.

These numbers are a fraction of the United States’ budget, which in 2015 will total over $17 billion, but China is making good use of it. According to ‘China Dream, Space Dream,’ a report prepared this year for the U.S.-China Economic and Security Review Commission, “if the current trajectory of China’s space program continues, by 2030 China will have a new line of advanced launch vehicles, a robust, space-based C4ISR network made up of imagery satellites with resolutions well below one meter, and more capable electronic intelligence communication satellites linked together by data-relay satellites, in addition to a global satellite-navigation system that may gradually approach current GPS standards.”

The paper concludes that the strategy is aimed at becoming China’s capabilities in order to become “militarily, diplomatically, commercially, and economically” as competitive as the United States.

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Twitter opens Hong Kong office, targets China’s ‘big advertisers’ Mon, 16 Mar 2015 03:57:42 +0000 Wikileaks

Pic: AP.


Only a few days after setting up shop in Indonesia, Twitter made a comeback in China, too. On Tuesday last week, the company opened a one-man office in Hong Kong, a tiny corner of the People’s Republic where Western social media are allowed to function freely.

The news stirred attention worldwide, for Western social media are not having an easy life in the country: Chinese authorities locked Facebook, Twitter and YouTube out of the mainland in 2009, after deadly riots left 197 people dead in Urumqi, the capital of Xinjiang Province. The Great Firewall, as China’s internet control system has been nicknamed, was never reopened to let them back in. Controls have, if anything, become stricter over time: last year the doors were shut in the face of Gmail, too.

The most commonly cited reason for blocking social media is the desire of the Communist Party to filter sensitive content. While Chinese websites and news outlets can be promptly censored, were Chinese users able to freely access the wider web they might find unpleasant information that the government could not remove.

Besides, less competition is good for Chinese home brands. By preventing the likes of Facebook and Twitter from enlisting users, the government has fostered the growth of China’s own social media platforms, from Youku and Tudou, two video sharing websites, to Baidu, the country’s number one search engine.

Weibo, a Twitter-like real-time microblogging platform, has grown enormously in the four years since it was created. As of March 2014, the company had 143.8 million monthly active users and 66.6 million average daily active users, up from 107.3 and 48.6 million March 2013, respectively.

(MORE: Social news agency Storyful taps Chinese audience with Youku partnership)

Local Chinese media have expanded so much that it is not clear how much foreign companies could profit from reentering the market. When Google left the country in 2010, the company motivated its choice by arguing that authorities had become too heavy-handed. Mountain View was no longer willing to accept such invasive censorship. But some think that failing to achieve the results the company had hoped for and Baidu’s competition played an equally significant role in influencing the decision. According to Forbes, “no matter the global brand name, the maximized effort and the financial resources, Google’s Chinese search engine couldn’t trump Baidu.”

For now, Twitter should not be affected by these issues. Interviewed by the South China Morning Post, Peter Greenberger, Twitter’s sales director for emerging markets, said that the company has no interest in getting back into the mainland: what they are after are “big advertisers looking to reach overseas”. Mr Greenberger also told the Hong Kong paper that the company is “very strong in markets that Chinese companies are targeting”.

To put it simply, Twitter is not camping in the shadow of the Great Firewall in the hope of finding a way to open the gates. It issitting there to catch those who are getting out, which could be a smart strategy as there are plenty of Chinese companies that are trying to diversify their investments and build a market outside the People’s Republic. Outbound investment by non-financial firms was $89.8 billion in the first 11 months of 2014, up 11.9 percent from a year earlier, Reuters reported in December, and a host of firms have invested in various sectors across the globe.

While some of these companies have already taken to Western social media to market their products – interestingly, these include major state media like Xinhua, China Daily, People’s Daily and CCTV – most are not properly exploiting the tools at their disposal. According to the Financial Times, “only a handful of Chinese companies have a presence on Twitter. [..] big businesses including PetroChina, the country’s biggest company by stock market capitalisation, and Fosun are largely absent from overseas social media.”

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Website reignites Japan-China friction over disputed islands Fri, 06 Mar 2015 03:45:28 +0000 The banner on the newly released English version of the website has not gone down well in Japan.

The banner on the newly released English version of the website has not gone down well in Japan.

After Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe frostily shook hands last November, relations between the world’s second and third largest economies seemed to be improving. However, a recent exchange of comments over the launch of the English and Japanese versions of a website detailing China’s claim over the Diaoyu/Senkaku Islands suggests that tensions remain very much alive.

According to Japanese media, Japan’s Chief Cabinet Secretary Yoshihide Suga said Wednesday that his country has lodged a diplomatic protest with China because the website “distorts facts and reiterates China’s own claim.” The Japanese official argued that “historically and diplomatically, the Senkaku Islands are our country’s inherent territory, and in reality, we have valid control over them.”

Mr. Suga was referring to a website that Chinese authorities created – possibly as a response to Japan’s own website about the islands – on December 30, 2014. The website was translated in English and Japanese earlier this week.

Beijing’s goal in launching its new digital initiative could not be clearer: “Diaoyu Dao: The Inherent Territory of China,” reads the banner on the homepage. Below the banner are listed four “basic facts” reinstating China’s claims and ending with the warning that “China’s resolve to uphold agreements made after the global anti-fascist war will not be shaken by any force. China has confidence and ability to stand up to Japan’s illegal acts, which have ignored historical facts and international legal principles.”

Posted in various sections one can find articles, interviews, images, ancient maps and pretty much any information that helps substantiate China’s position. There are photographs of the Treaty of Shimonoseki, signed in 1895, and excerpt of Shun Feng Xiang Song’s ‘Voyage with a Tail Wind’, an ancient record of sea travels written four centuries ago. The website even reports the details of the visits paid by the Chinese coast guard to the disputed area, beginning with a trip made by “public Service Vessels 2337, 2112 and 2151” on January 27, 2014.

The website appears to be China’s latest move in a geopolitical game of chess that has been going on since 2012, when Japanese authorities announced they were going to nationalize the Diaoyu/Senkaku, which used to be owned by private Japanese citizens. At the time, the Japanese government argued it had to do so in order to prevent the mayor of Tokyo, Shintaro Ishihara, from purchasing the islands and put them under his city’s administration. Beijing begged to disagree: from China’s perspective Japan was trying to assert its sovereignty over the area. A bitter dispute ensued and quickly became one of the most severe irritants in international relations in East Asia.

It took China little time to respond to Japan’s protests. On Thursday, Foreign Ministry Spokesperson Hua Chunying told reporters that “facts are facts, and the objective fact will not change whether the Japanese side is or is not willing to accept it.” Ms. Hua stated that Beijing has no intention of shutting down the website: “China does not accept the unreasonable request of Japan,” she said, adding that Japan should “look squarely at the history, respect facts and make constructive efforts to properly settle relevant issue.”

The verbal clash comes less than two weeks before the 13th meeting of the Japan-China security dialogue is scheduled to take place. On March 19, Chinese and Japanese officials will get together for the first time since 2011, when the last round of talks was held before tensions erupted. The two delegations will have plenty to talk about: over the course of the past two and a half years, China and Japan have exchanged heated comments, scrambled jets and confronted each other in almost any possible way but for open military conflict.

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President Xi Jinping vows to tackle China’s football woes Wed, 04 Mar 2015 10:24:45 +0000 Pic: AP.

Pic: AP.

On February 27, Chinese President Xi Jinping embarked on his latest attention-grabbing initiative. After a sweeping anti-corruption campaign – which many see as an attempt to purge the party from adversaries – and a series of reforms, the government he leads is now beginning to tackle yet another thorny issue: the poor quality of Chinese football.

Last Friday, Mr. Xi chaired a meeting of China’s central reform group which came up with a plan to ‘revitalize’ the sport. As reported by Xinhua, a statement released by the institution said that “more efforts should be made at the grassroots level to nurture young talents and to ensure the integration of professional clubs, school teams and amateur teams.” Besides, “China must overcome its ‘defective system’, which has impeded its progress in soccer, and provide better ‘institutional guarantees’ for its development.” The plan is supposed to help realize three wishes Mr. Xi expressed back in 2011: the People’s Republic should qualify for the World Cup, host the event and, finally, win it.

Rumors about China’s interest in hosting a World Cup have been circulating for some time. In 2010, Wei Di, the head of China’s Football Association, told the Youth Daily that a debate on such possibility had been ongoing, and that the time had come for the country to take action. It actually had not: the proposal to bid for the 2026 World Cup was dropped. But after Xi Jinping’s new plan was made public, Xinhua reported that “talks about World Cup bid went rife again.”

Some within China believe that hosting the tournament would help improve the quality of Chinese football, so often an embarrassment to the country that left the London Olympics with 88 medals. Results at home are dreadful: China languishes at the 82nd place in the FIFA world ranking and the only time the national team managed to qualify for a World Cup was in 2002. Since that year things have, if anything, deteriorated: in 2013, the Chinese team managed to lose 5-1 to Thailand’s under-23 team.

On the surface, this is hard to explain, for China has everything it needs to produce both decent clubs and a passable national team. The sport is widely popular, keeping people glued in front of televisions screens whenever a major event takes place. Funding is growing: in 2014 China entered the list of 10 richest football markets in the world, and Guangzhou Evergrande recently managed to pay Italian coach Marcello Lippi $14 million, making him one of the world’s best-paid coaches.

Deep-rooted corruption and the unwillingness of parents to see their children ‘waste their time’ on the pitch, along with a lack of infrastructure, are likely culprits. In 2013, following a national scandal, Xie Yalong and Nan Yong, who both had been at the helm of China’s football association, were given heavy prison sentences for corruption. Lu Jun, a referee who had taken part to the 2002 World Cup, was also convicted for fixing the results of seven games in the Chinese league.

On a final note, it is interesting – and paradoxical – that while football keeps struggling at home, Chinese billionaires have been increasing their presence on the European market. On January 21, Wanda Group, lead by Wang Jianlin, bought a 20 percent stake in Atletico Madrid for $52 million. Shortly afterwards, Mr. Wang also invested $1.2 billion to purchase Infront, a Swiss marketing group that holds broadcasting rights to the World Cup.

According to Xinhua, Mr. Wang said that Infront’s ‘rich and valuable resources’ could turn out to be useful for China in order to realize its dream of “qualifying for a World Cup again, hosting a World Cup and winning a World Cup.’” Not much a surprise in a sport in which money can go a long way in achieving success.

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Chinese tourists opt for luxury Japanese toilet seats Sat, 28 Feb 2015 02:56:04 +0000 Photo credit:

Photo credit:

On February 26,  Global Times, a Chinese state-run outlet, published an editorial in both Chinese and English decrying a horrible habit many Chinese have fallen prey to: buying Japanese toilet seats. Quoting Japanese media, Global Times wrote that during this year’s Spring Festival tourists from the People’s Republic spent six billion yuan – about $959 million – on luxury toilets seats manufactured by their neighbor. The news “makes a mockery of China’s boycott of Japanese goods over the past two years,” says the article, and has caused some Chinese citizens to “feel ashamed.”

The article admits that there are reasons why consumers like Japanese products, beginning with their “human touch, intelligent design and sophistication.” It also argues that there is no need to blame people who shop abroad, as “in the era of globalization, consumers’ choices will decide everything.” Besides, “world-class toilet seats are not what Chinese manufacturers aspire to make. ‘Made in China’ goods must aim for higher goals.”

Perhaps contradictorily, however, the authors do not miss the chance to lambast those who actually made the choice to lay their hands on the shameful objects. “That Chinese tourists swamp Japanese stores at a time when the country is facing a sluggish domestic demand is certainly not something to be proud of,” they write, contending that people who support the local economy are commendable.

The editorial received a mixed response on Weibo, the Chinese equivalent of Twitter. Some support the editorial’s line: “I still enjoy quality life without using Japanese goods. China should have self reliance,” one user writes.

But most seem to think otherwise, highlighting that when it comes down to one’s bathroom, people should be free to do as they see fit. “Why shouldn’t Japanese toilet seats be coveted by China? They are very convenient. They take care of your butt,” quips one user. “Products that nobody likes are nothing but rubbish products. Nowadays we prefer to buy stuff made in Japan even when it comes to something like toilet seats. Although it might seem that Chinese people are unreasonable, this also reflects the pathetic situation of our domestic manufacturing industry,” writes another, concluding that the paper, rather than reflecting on real problems, “talks rubbish.”

In spite of its nationalistic tone, the article hits the nail on the head with regard to one obvious development in the Chinese market: the preference often accorded to foreign-made goods, of which toilet seats are but one tiny example.

China Daily recently reported that according to the China Tourism Academy roughly 116 million Chinese are believed to have traveled overseas in 2014, spending $155 billion – about 20 percent more than in 2013. The trend was confirmed this month: according to CTA, for the first time ever, the number of people taking a trip overseas during the Spring Festival was higher than that of people traveling inside the People’s Republic.

There are many reasons why people tend to prefer foreign goods. On the one hand, a series of safety scandals have dented confidence in domestic products. Cases such as the 2008 tainted baby formula have created a sense that whatever comes from abroad must – or at least should – be safer. Besides, a stronger yuan and China’s rapid growth have sensibly increased China’s buying power, meaning that nowadays Chinese citizens do not only like foreign goods, they are also wealthy enough to be able to afford them.

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Kokang clashes in Burma will not draw Chinese intervention Wed, 25 Feb 2015 23:58:32 +0000 Kokang ethnic soldiers. Pic: AP.

Kokang ethnic soldiers. Pic: AP.

In Northern Burma/Myanmar the situation has seriously deteriorated after violence between Myanmar National Democratic Alliance Army (MNDAA) rebels and the army erupted on February 9 in Laukkai, the capital of Kokang region. The fight began after Kokang fighters led by 85-year-old Peng Jiasheng, launched an attack on government forces in what is widely perceived to be an attempt to reestablish the MNDAA’s control on the region after the defeat they suffered in 2009. According to the Associated Press, on February 21 the fighting had already claimed the lives of more than 50 soldiers and 70 rebels.

For policy makers in Beijing the crisis poses various problems, the most immediate of which is the preservation of border security. Aid workers interviewed by Radio Free Asia claim that about 100,000 refugees have already poured across the border to seek shelter in the Chinese Province of Yunnan.

Right after clashes began, Chinese Foreign Ministry spokeswoman Hua Chunying told reporters that refugees who had entered Chinese territory were being looked after. She reiterated the message on February 14, adding that Chinese authorities “hope that all sides in Myanmar can work hard with China to calm down the situation, returning the situation at the border to one of peace and tranquility as soon as possible, so these border residents can go home.”

The historical links between the Kokang minority – who are ethnically Han Chinese – and the mainland are another issue for officials in Beijing. In order to gain leverage on Myanmar’s central government, China used to support the Communist Party of Burma, which was partly composed by Kokangs. Given these ties, it is no surprise that rebels are hoping that China will take their defense.

Yun Sun, a fellow with the Henry L. Stimson Center and the Brookings Institution, argued on the Irrawaddy that Mr. Peng’s decision to take action was directly linked to the expectation that the Chinese government would intervene to broker a deal. “Peng’s strategic choice to instigate war and send refugees to China right before the Chinese New Year is a calculated move to force Beijing to push the Burmese government to deflate the tension,” she wrote.

If that is truly the case, the gamble is not paying off. On February 16, Global Times, a Chinese state-run paper, published an article warning that “China stands firm on its Myanmar policy. Speculation that China will alter its policy toward Myanmar is a misinterpretation, which will mislead the citizens of Myanmar and China. The intimacy and sympathy that Chinese society holds toward the Kokang people are not decisive elements determining Beijing’s policy.” The media outlet also said that those who compare Kokang and Crimea are ‘spouting nonsense, or have ulterior motives.’

Peng Jiasheng has explicitly denied such claims in an interview, arguing that “since August 8, 2009, Kokangs have forbidden Chinese nationals to join the army,” and that no Chinese national will be allowed to join the struggle, as it would be ‘detrimental’ to their cause. However, on February 19 a government official in Myanmar called on China to cooperate in preventing ‘terrorist attacks’ being launched from inside Chinese territory.

The reason why China is no longer willing to come to the rescue of Chinese ethnic minorities in Myanmar lies in the large investments made by Chinese companies in the country. According to a paper published by the International Crisis Group, Beijing’s priority is “maintaining stability and protecting economic and strategic interests in the country above any democratic or political reforms.”

In this regard, it should be noted that China has a lot to lose by escalating tensions with the government in Naypyidaw. In July 2014, authorities in Myanmar said that China had invested a whopping $14.25 billion in the country. Last year, a gas pipeline capable of transporting 12 billion cubic meters of natural gas per year began operating, while an oil pipeline has begun testing in January. Stretching for hundreds of miles from the Bay of Bengal to southern China, they are supposed to alleviate the country’s dependence on energy resources imported through the strategically vulnerable Strait of Malacca.

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New Sri Lanka govt to probe $1.4bn Chinese port project Fri, 20 Feb 2015 09:48:22 +0000 China's President Xi Jinping pictured with former Sri Lanka President Mahinda Rajapaksa during a visit to Colombo last year. Pic: AP.

China’s President Xi Jinping pictured with former Sri Lanka President Mahinda Rajapaksa during a visit to Colombo last year. Pic: AP.

On Wednesday, February 19, Sri Lanka’s new government announced that the China-backed Colombo Port City project will be investigated by two committees, after a first assessment showed irregularities. According to Reuters, Prime Minister Ranil Wickremesinghe told Parliament that “all the activities of the Port City deal were done without transparency and without following many legal procedures. The agreement was signed without cabinet approval.”

The project had been approved during the term of former President Mahinda Rajapaksa, who had agreed to the construction of luxury real estate to be built on 230 hectares of land reclaimed from the ocean. The project, launched last September when Chinese President Xi Jinping visited the island, is worth roughly $1.4 billion. It will be developed by China Harbour Engineering Co and financed by China Communications Construction Co.

The fortunes of the mega-project began to change during last year’s electoral campaign. At the time, Mr. Wickremesinghe said that if his side won, they would scrap the project altogether because no proper study of its impact on the environment and of its feasibility had been brought before Parliament.

Things, however, did not turn out to be that straightforward: on January 22, the new government backtracked, saying that the City Port would not be canceled – it only needed to be reassessed. On that occasion, Kabir Hashim, Sri Lanka’s Minister of Highways, Higher Education and Investment Promotion, argued that the project presents serious security issues: “the port city project has to be completely looked at,” reports quoted the Minister as saying. “You cannot have land given on freehold basis to another country in a high security zone.”

According to  Reuters, the agreement endorsed by the former administration allows China Construction Company Co to take over 108 hectares of land, 88 hectares on a 99-year lease and 20 on an outright basis.

Despite the lack of a thorough environment assessment, at the beginning of February Cabinet spokesman Rajitha Senaratne said that the project would go ahead in order to avoid a ‘misunderstanding’ with China. Finally, this week the government announced the decision to have the project further investigated.

What is interesting about the project is that the Colombo City Port has come to symbolize the new government’s rather suspicious attitude toward Beijing. The loudest words were uttered during the electoral campaign, when soon-to-be President Maithripala Sirisena warned against excessive foreign investments: “the land that the White Man took over by means of military strength is now being obtained by foreigners by paying ransom to a handful of persons,” reads his electoral manifesto.

Observers were quick to link the People’s Republic with Mr. Sirisena’s words, for China’s influence on the island’s economy has been steadily growing in the past years. According to Bloomberg, Chinese investments have grown 50 times over the past decade, reaching $490 million in 2012 and turning China into the country’s “top investor, biggest government lender and second-biggest trading partner.”

From Beijing’s perspective, Sri Lanka looks like an attractive, if not essential, partner for its New Silk Road Initiative, a network of highways, railways and sea lanes that China intends to finance in order to spread its capitals and influence across Asia and Europe.

Colombo, in any case, has started to look for alternatives. Only a few days ago authorities signed a deal to acquire nuclear expertise from India. According to  Reuters, “under the deal, India will help Sri Lanka build its nuclear energy infrastructure, including training of personnel,” and in the future, Delhi could sell light small-scale nuclear reactors to the country.

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China opens ‘largest’ embassy in Pakistan, strengthens South Asia presence Tue, 17 Feb 2015 12:46:28 +0000 Chinese Foreign Minister Wang Yi, left, speaks during a meeting with Pakistan's Prime Minister's Adviser on Foreign Affairs Sartaj Aziz, in Islamabad, Pakistan last week. Pic: AP.

Chinese Foreign Minister Wang Yi, left, speaks during a meeting with Pakistan’s Prime Minister’s Adviser on Foreign Affairs Sartaj Aziz, in Islamabad, Pakistan last week. Pic: AP.

You might expect the largest Chinese embassy to be in the United States, the world’s biggest economy. Or in Japan, China’s most powerful neighbor. Or, given the growing sympathies between China and Russia, it might be headquartered in Moscow.

Instead, it is in Pakistan. The new embassy was inaugurated on February 13 in the presence of China’s Foreign Minister Wang Yi, who described China’s new diplomatic mission as a “symbol of friendship”. No further details were offered to the public, but the number of exclamation marks dotting the Foreign Ministry’s report seems to prove that a certain amount of excitement was part of the enterprise.

According to the official version of the event, “Wang Yi said that the five-starred red flag, won by martyrs with their blood, carries the Chinese nation’s tradition of unremitting efforts for self-improvement and opens up bright prospects for us, and it will wave in the heart of every Chinese forever!” Furthermore, “as a symbol of the special friendship between China and Pakistan, it will definitely play its due role in China-Pakistan all-weather friendly relations!”

Hype aside, the fact that China’s largest embassy is now in Islamabad says a lot about Beijing’s interest in South and Central Asian affairs. The two countries have been long-standing allies and are currently trying to establish a China-Pak Economic Corridor (CPEC) that will link the port of Gwadar on the Pakistani coast to the western province of Xinjiang with railways, roads and pipelines for gas and oil. The project is meant to be an important part of China’s New Silk Road initiative, as Beijing calls its plan for investments across the Eurasian Continent. In November, Reuters reported that in the coming six years Beijing will back energy and infrastructure projects in Pakistan with $45.6 billion.

Some of the projects that China is supporting are nuclear. The Wall Street Journal wrote in 2014 that China was in talks with Pakistani authorities to get three nuclear power plants worth $13 billion. Earlier this month Wang Xiaotao, vice-minister of the National Development and Reform Commission (NDRC), confirmed what had already been rumored a year before: much to the chagrin of international observers who believe that the deal will undermine non-proliferation, Beijing is backing the construction of six reactors.

Besides economic cooperation, there is also a geopolitical side to the story. The Chinese government is troubled by separatism in the tumultuous province of Xinjiang, which shares a long and porous border with Central Asia. What worries Beijing is the possibility that a crisis triggered by instability in Afghanistan could spill over on Chinese soil, making matters even worse.

As journalist and author Ahmed Rashid wrote on the Financial Times in January, “of particular concern to China is the national security threat in its northwestern ‘autonomous region’ of Xinjiang, which has seen a recent surge in riots and terrorist attacks. Some Islamic radicals belonging to the Uighur ethnic group have trained with the Taliban in Pakistan and Afghanistan. Beijing would like to ensure that such militants gain neither training nor protection within Taliban-controlled territory in the future.” This problem is worsened by NATO’s gradual retreat from the region, which could leave a power and economic vacuum behind.

Islamabad’s help is fundamental to work out a political solution to the Afghan problem. The war in Afghanistan is deeply influenced by what happens in Pakistan and fighters operate across the border. In other words, in order to tackle its own problems – real and potential – China needs to have the Pakistani authorities as much as possible on its side. And that might be precisely what Mr. Wang had in mind last week, when he told the press that “Pakistan has always played a unique and irreplaceable role in dealing with the issue of Afghanistan. In future, both China and Pakistan are willing to strengthen communication and coordination with Afghanistan and work with the international community to make unremitting efforts to realize the successful transition of Afghanistan.”

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Chinese participants removed from Harvard event amid Taiwan row Fri, 13 Feb 2015 04:41:00 +0000 Harvard University. Pic: AP.

Harvard University. Pic: AP.

Taiwan is a truly contentious topic when it comes to mainland China foreign policy and, if further proof of this was ever needed, it came on January 29, when a row shook the usually quiet life of the Harvard Model United Nations (HMUN). The news has surfaced on the web after a Chinese student named Deng wrote a post on Ren Ren, a Chinese social media network, on February 2.

HMUN is a chance for high school students to gain a better understanding in international relations by impersonating diplomats and pushing forward the interests of the country the organizers assign to them during a replica of a discussion at the United Nations. It typically serves its purpose, but this year things went awry when the issue of Taiwan status on the international stage was mentioned in the event’s handbook, which listed the island as a ‘participant country’.

Members of the People’s Republic delegation did not quite appreciate the remark. China is extremely sensitive about the status of Taiwan, which is widely seen on the mainland as a lost province in need of being liberated. The issue is all the more controversial because of the Sunflower movement, whose supporters occupied the country’s parliament in March 2014 to protest against a trade pact with China that they saw as excessively friendly to Beijing.

(MORE: Taiwan indicts 119 over anti-China protests)

A crisis – for this is a diplomatic setting, isn’t it? – ensued, and on January 30 the Chinese delegation wrote a letter requiring the organizers to modify the book and change the wording from ‘countries’ to ‘countries and regions.’ One of the instructors left the room in protest and three Chinese teachers were reportedly expelled after been deemed a ‘security threat’ by the organizers.

According to the Global Times, on January 31, HMUN Secretary-General Ruth Kagan explained in an email that “the inclusion of Taiwan is not meant as a political statement by the conference, nor does that listing represent the views of the Harvard International Relations Council.” As the book could not be reprinted, Harvard opted for a compromise: on February 1, those who wished to could pick up stickers which said “by countries and regions” and cover the original wording.

It was not enough. In its article the Global Times reported that according to one student “the organizer needs to apologize to Chinese participants”. One is left wondering what students from Taiwan would think of such apologies, or for that matter, of the stickers that were distributed at the event. And one is also bound to reflect on what the organizers will decide to do next year: ‘country’ or ‘country and region,’ that will be the question for Harvard.

As unpleasant as it must have felt, probably the event was not a waste of time. Far from it: it was instead some real politics trickling down into the HUNM and showing participants what a tricky issue the status of Taiwan can be.

“True to the spirit of the United Nations,” the organization’s website says, “HMUN strives to foster a constructive forum for open dialogue on complex global issues, including international peace and security and economic and social progress. [..] During the conference, students learn the importance of balancing national interests with the needs of the international community, while also learning about the powers and limitations of international negotiation. Delegates will preserve their countries’ national policy while negotiating in the face of other, sometimes conflicting, international policies.” Pupils have certainly learned a lesson on complex issues and conflicting policies. They only need to work a bit more on fostering a constructive forum.

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China’s dismal air pollution stats are an improvement on 2013 Fri, 06 Feb 2015 03:37:27 +0000 Miners shovel coal at a mine in China's Hebei province. Pic: AP.

Miners shovel coal at a mine in China’s Hebei province. Pic: AP.

The latest news concerning Chinese cities’ air quality is as grim as Beijing’s sky on a smoggy day. According to data disclosed by the environment ministry on Monday, in 2014 almost 90 percent of major Chinese cities failed to meet air quality standards. Sixty-six of the 74 urban centers monitored by the government did not live up to national standards, leaving only Fuzhou, Haikou, Huizhou, Kunming, Lhasa, Shenzhen, Zhoushan and Zhuhai with acceptable air quality.

The news is somehow positive, as it shows some improvement if compared to 2013 – the year in which the monitoring program began – when only three cities were up to standard. Yet, this state of affairs is of little consolation to citizens constantly besieged by noxious fumes, and a powerful reaffirmation of what Wang Anshun, Beijing’s mayor, said a week ago. In a report published by the China Youth Daily, Mr. Wang contended that “to establish a first-tier, international, livable and harmonious city, it is very important to establish a system of standards, and Beijing is currently doing this.” He added, however, that “at the present time, Beijing is not a livable city.”

The Chinese capital, according to the recent report by the environment ministry, is actually one of the worst polluted in the country: “the metropolitan area centered on Beijing and Tianjin was the most seriously polluted, with eight of the 13 cities in the area featuring on a list of the 10 smoggiest cities,” reads the report.

What is worse is that there is increasing proof that poor air quality is taking a toll the people’s health: according to a joint research by Peking University and Greenpeace, in 2013, 257,000 people living in China’s 31 capital cities died prematurely, with the highest numbers in Chongqing (29,805), Shanghai (19,476) and Beijing (16,745). The research concludes that “air pollution is a grave environmental issue currently faced by China and has seriously affected people’s health nationwide.”

The pollution that is vexing Chinese cities is the byproduct of the country’s very success: decades of skyrocketing growth pushed by rapid industrialization have transformed China from a tiny economy into a global powerhouse, but they have also strained the country’s natural resources.

Despite some of the inevitable effects of modernity, much could be done to preserve the environment – and, by extension, public health. Last year the government took action, overhauling outdated environmental laws and promising a ‘war on pollution’. As reported by Xinhua, “the new law stipulates that enterprises will be named and shamed for breaking environmental protection laws.” An important principle of the new legislation is also “handing out heavier punishment for environmental wrongdoing.”

It is obviously too soon to judge these recent rules, but so far – in spite of the public’s growing attention – progress has come at snail’s pace, as the study published by Peking University and Greenpeace makes clear: the authors write that “although a series of relevant policies have been launched in the past two years there still is a huge gap between the effect of the PM 2.5 control and the public’s expectations. Efforts on various fronts need to be made.”

The war on pollution, in other words, promises to be a long one. Not a blitzkrieg, as German strategist called their tactic in World War One, but an exhausting conflict in the trenches. Which, sadly, is likely to claim many more victims.

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China’s 2nd aircraft carrier plans leaked on social media Thu, 05 Feb 2015 06:53:21 +0000 China's existing Liaoning aircraft carrier seen during  a trial run in 2011. Pic: AP.

China’s existing Liaoning aircraft carrier seen during a trial run in 2011. Pic: AP.

“Hide your capabilities, bide your time” said Deng Xiaoping, China’s former leader. The question is how do you hide your strength when you are surrounded by garrulous officials? This problem became apparent this week, after authorities in the Chinese province of Jiangsu leaked details about a new aircraft carrier that the government is apparently building.

Information hinting at the project appeared on the Chinese web last Sunday, after officials in the city of Changzhou wrote on social media that Jiangsu Shangshang Cable Group will provide the ship with cabling. According to the Global Times, the news was then reported on the Changzhou Evening News, which wrote: “Shangshang Cable Group, ranked as the number one company of its kind in China and 10th in the world, successfully bid for China’s second aircraft carrier and will replace overseas companies in supplying equipment for frigates and submarines.”

Authorities were quick to sweep the web clean of sensitive content but have not dismissed the news as inaccurate, and that looks quite like an answer in itself. In an interview with the Global Times, Li Jie, a naval expert, argued that the leak is not tantamount to an official announcement, but also stressed that “a regional power needs three aircraft carriers in general, two at least, if it attempts to maintain control of the air and seas.”

It would not be a surprise if Beijing were indeed in the process of building a new ship. The ability to deploy another aircraft carrier would fit the logic of a rapidly modernizing military such as China’s. The country’s military budget has been growing steadily at over 10 percent year-on-year for most of the past two decades. In 2014, official figures put total spending at roughly $132 billion, 12.2 percent higher than the year before, and other institutions estimate that the real budget could be even larger. Citing lack of transparency, the Stockholm International Peace Research Institute (SIPRI) says that total spending last year could be “about 55 per cent higher than the total central and local defense budget”.

However, in spite of a growing naval fleet and new stealth jets, the Chinese armed forces still have only one carrier, the Liaoning, which is an adaptation of a Soviet Varyag bought in Ukraine. That leaves the People’s Republic lagging behind the United States, whose navy controls the Pacific Ocean. With 10 aircraft carriers, Washington leads the way in the field.

Another reason why Beijing may feel the need for more of these sea giants is that carriers are indispensable to create a proper blue water navy, as a military fleet that can operate at significant distance from the coast and project power on the oceans is called. This, in turn, would boost China’s position in the South and East China Seas, where Beijing is currently stuck in disputes with various countries, including the Philippines, Japan and Vietnam.

Finally, that the Chinese military might be building a second carrier is the kind of secret everybody knows about. In January 2014, Wang Min, the official in charge of Liaoning province, publicly said that another carrier was under construction in the city of Dalian. His comments were censored, but the news had somehow already been anticipated by Ministry of National Defence’s spokesman Yang Yujun, who said in 2013 that “there will surely be more [aircraft carriers] in future”.

In fact, even two might be a conservative number when it comes to the PLAN’s ambition. In his comments, Mr. Wang said that China is prepared to build four, a figure that appears also in the annual report to congress published by the U.S.-China Economic and Security Review Commission in 2014. “China probably intends to follow the Liaoning with at least two and potentially as many as four indigenously-produced hulls 77,” reads the paper, according to which the latter “will be larger than the Liaoning’s 60,000 tons and feature design and engine improvements”.

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Chinese journalists beaten for exposing ‘salamander banquet’ Fri, 30 Jan 2015 02:59:06 +0000 China Daily Life

Pic: AP.

There are times when a detail can tell a whole story, and the death of a giant amphibious animal in Guangdong is one such case. It all began on Monday, when the Southern Metropolis Daily, a local Chinese newspaper, published the story of how three of its journalists were beaten by police after they caught officials banqueting on a giant salamander.

The paper says it was tipped off that a group of local officials was about to dine on the endangered amphibian, a specialty in Cantonese cuisine, in a restaurant in Guandong on January 21 and sent two reporters and one photographer to investigate. Once they arrived at the restaurant, the three journalists managed to snoop on 28 diners, including police officials. Their identity was soon discovered and they were beaten, the photographer’s camera was smashed and their phones taken.

The story is so unusual it has left readers flabbergasted – one of the officials involved even said, in a rather mafia-like style: “In my territory, it is my treat.” But it also works as a pocket-sized compendium of some of the issues faced by contemporary China, beginning with the main course on the menu: the giant salamander – known to specialists as andrias davidianus – is the largest amphibious animal on the planet, and is highly endangered.

According to the International Union for Conservation of Nature (IUCN), the giant salamander “was once reasonably common but has declined catastrophically over the last 30 years, principally due to over-exploitation, and it is now very rare, with few surviving populations known.” In China, says the  IUCN, the species is included among the Class II major protected wildlife species.

At a moment when many Chinese citizens are becoming increasingly sensitive dwindling wildlife and authorities are trying to somehow protect the environment, the news comes as a powerful reminder that old ways die hard.

The banquet, which reportedly cost $1,000, also flies in the face of a recent crackdown on extravagance by the Chinese government. In the very first months of his presidency Xi Jinping intervened to curb excessive spending by public servants: parties, lavish gifts, gargantuan banquets and pretty much all that used to be common among officials quickly became problematic.

The public reacted positively to the campaign, but the crackdown went so far that it had an impact on the economy, according to Chinese media. In August 2014 shark fins prices – shark fins being an expensive treat usually regarded as a luxury – declined by almost 50 percent as compared to the same period in 2013, while sales were down by 80 percent in Guangzhou’s market.

In an interview with Bloomberg, Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, argued that “the anti-corruption action by Xi is creating unprecedented phenomena, including an absolute fall in high-end restaurant sales.”

Finally, another important part of the story is the role played by Chinese media, who exposed local officials and won their battle: the trio of journalists was attacked, sure, but they were eventually able to publish and were protected by authorities, who turned against the police forces. So far 14 policemen have been suspended and on Tuesday a police chief in Shenzhen was put under investigation. This time around, scribes and salamanders alike have been avenged.

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New study reveals 40% of Chinese urbanites are overweight Wed, 28 Jan 2015 05:24:38 +0000 Obese patients take their lunch at a special weight clinic in Tainjin, China. Pic: AP.

Obese patients take their lunch at a special weight clinic in Tainjin, China. Pic: AP.

In China, the economy is not the only thing that is on the rise – obesity is growing fast, too. According to the second edition of the China Obesity Index, the People’s Republic ranks second in the list of countries with the highest number of obese people.

Reporting on the launch of the new edition of the index on Sunday, the People’s Daily wrote: “The country’s obesity rate has skyrocketed over the last three decades, resulting in 46 million Chinese adults who are obese, and 300 million who are overweight.” The problem is most serious in cities, where over 40 percent of adults are overweight.

These results are more of a confirmation of previous findings than a new discovery. Last year, a study published by the University of Washington’s Institute for Health Metrics and Evaluation came up with the exact same figures: 300 million Chinese adults are overweight and 46 million are outright obese.

Even earlier, in 2013, China Daily reported that a national survey had found an increase of 2 percent in the number of obese people aged between 20 and 39 as compared to 2010. The survey pointed out that 11 percent of the people in this age group are heavily overweight.

Together with obesity, another threat has intensified in recent years: diabetes. According to a study published by a group of Chinese researchers on the Journal of the American Medical Association in 2013, the disease has been on the march throughout recent decades:

The prevalence of diabetes was less than 1 percent in the Chinese population in 1980. In subsequent national surveys conducted in 1994 and 2000-2001, the prevalence of diabetes was 2.5 percent and 5.5 percent, respectively. The most recent national survey in 2007 reported that the prevalence of diabetes was 9.7 percent, representing an estimated 92.4 million adults in China with diabetes. Bottom line: The prevalence of diabetes [..] is now reaching epidemic proportions in China.

Changing eating habits are certainly playing a role in these dynamics. Over the past three decades, as China has shifted from an agricultural to an industrialized society, people have begun to ingest more fats and sugars.

“In China, when per capita income grew fourfold after the economic reforms of the late 1970s, the consumption of high-fat foods soared,” says the Food and Agriculture Organization of the United Nations (FAO). “And while incomes grew, the income needed to purchase a fatty diet decreased. In 1962, a diet containing 20 percent of total energy from fat correlated with a per capita GNP of US$1,475. By 1990, a GNP of just $750 correlated with the same diet.”

To put it simply, it has become cheaper and easier to eat unhealthy foods, as demonstrated by the thousands of food stalls and shops lined up on Chinese streets: from roasted meat to western pastries, from fried chicken to sugary juices, everything is available.

Paradoxically, these issues are the product of a positive development: boosted by breakneck growth, China has become richer and more inclined to enjoy the pleasures of life – which, no doubt, include eating excessive quantities of unhealthy food. Long gone are the days of the Great Leap Forward’s famine and abject poverty – even though the latter survives in some parts of the country and among certain social groups. It is now the age of the new, literally fatter, People’s Republic.

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Shanghai stock market dive highlights China’s economic woes Wed, 21 Jan 2015 05:10:05 +0000 An investor walks in front of a stock price monitor at a private securities company in Shanghai. Pic: AP.

An investor walks in front of a stock price monitor at a private securities company in Shanghai. Pic: AP.

China started the week on the wrong foot, as the Shanghai composite index tumbled 7 percent, declining from 3,377 points on Friday to 3,114 points on Monday. It has been its worst crash since 2008, when it fell 7.2 percent. The crisis was triggered by China Securities Regulatory Commission’s decision to clamp down on margin lending, as the practice of borrowing money from a broker to purchase stock is defined. On Friday, authorities banned Haitong Securities, Guotai Junan and Citic Securities from opening new margin trading accounts for three months. Unsurprisingly, banking companies were the worst-hit by the slump, with some losing over 10 percent of their value, the maximum allowed in a single day.

According to Bank of America Merrill Lynch, margin trading in China is up 9 percent in 2015, a number that looks quite dodgy, as margin trading tends to magnify both gains and losses. In an interview to the Associated Press, Dickie Wong, executive director of research at Kingston Securities in Hong Kong, argued that the introduction of margin financing and short selling caused plenty of excitement in the Chinese financial world: “In the past, mainland investors had no clue on margin financing and short selling, but after China introduced these two ways to trade stocks, people became so happy because they can borrow money and just go all in.”

The blow came after an incredibly good year for the Chinese stock market, which grew 53 percent last year. According to The Economist, Chinese investors flocked to stocks, with something close to 600,000 stock accounts being opened in the first week of December, “almost four times the average since July.” The Central Bank’s decision to cut interest rates on November 21 added fuel to the fire by seemingly confirming that monetary easing was on its way.

Sure enough, not everyone was convinced by the soaring markets: on December 5, right after two golden weeks of surging stocks, Bloomberg interviewed Ken Peng, a strategist at Citigroup’s private bank in Hong Kong, who argued that “China’s stock rally in the last two weeks can’t be explained by any economic fundamentals.”

Fundamentals are indeed a big issue. Even if one brushes away concerns about the recent slump – it was, after all, caused by a sudden government decision and on Tuesday stocks were back in positive territory – economic data is gloomy, at least by Chinese standards. Property prices, an essential element in the Chinese economy, have been under the spotlight for quite some time. In December they fell by 4.3 percent in 68 of the 70 major cities surveyed by the National Bureau of Statistics (NBS), while debt has grown from 176 per cent of GDP in 2007 to 258 per cent last year, fuelled by a dangerous credit binge.

Even GDP growth, the single most important gauge of China’s economic rise, is showing signs of weakness. According to figures published yesterday, the Chinese economy has expanded by 7.4 percent in 2014: better than most expected and a great performance when compared to other major economies, but still below the government target of 7.5 percent and the slowest growth registered in a 24 years. The trend seems likely to continue: the International Monetary Fund (IMF) has just reduced its growth forecasts for China to 6.8 percent in 2015 and 6.3 in 2016, down 0.5 points from previous previsions .

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Beijing bans US poultry over virus that originated in China Thu, 15 Jan 2015 02:53:40 +0000 Pic: AP.

Pic: AP.

In a surprising move, Beijing has banned imports of poultry and eggs from the United States. According to the USA Poultry & Egg Export Council, “The ban is in response to a December detection of a highly pathogenic strain of H5N8 influenza in wild birds and in a backyard flock of guinea hens and chickens in Oregon, along with separate H5N2 HPAI detections in wild birds in California and Washington State.”

H5N8 is a type of virus related to the notorious H5N1, which infected 694 people and killed 402 between 2003 and 2015. H5N8 has so far proved far less threatening than its lethal cousin. Aaccording to the World Health Organization (WHO), “No cases of H5N8 in human beings are known, and the risk to the general public is extremely low.” For birds, on the other hand, the illness is a serious danger: “People in close contact with live poultry should watch for any signs of illness in their flocks and immediately inform their veterinarians if they notice any cause for concern,” suggests the WHO.

According to the European Centre for Disease Prevention and Control (ECDPC), outbreaks of the virus began to be reported five years ago in Asia, where, ironically, it was first detected in China. The ECDPC points out that since 2014, “several outbreaks” took place in the People’s Republic as well as in Japan and South Korea. Most recently, on January 8, a goose farm was infected in Taiwan. In November, the virus arrived in Germany, the Netherlands and the UK, and by mid-December it was found in Italy.

H5N8, as well as another form of the virus, the H5N2, were found in Washington on December 16. Two days later, H5N8 appeared in Oregon, in what the US Department of Agriculture says is a “small backyard poultry flock.” The reaction to the news was swift: as of now, 30 countries – one of which is the European Union, which includes 28 states – have announced restrictive measures of one kind or another on imports from the US.

What makes China extraordinary is the extent to which the government has gone: only Sri Lanka, Thailand and South Korea, according to the US-based Politico Magazine, have banned imports from the entire country. The decision has predictably attracted the ire of American businesses: “There’s absolutely no justification for China to take such a drastic action,” a press release quoted Jim Sumner, president of the USA Poultry & Egg Export Council, as saying. According to Mr. Sumner, the incidents took place very far away from the breeding centers and there should be no reason for alarm: “Most all of our other trading partners have taken some sort of regionalized approach, and have limited their restrictions to the state or, in some cases, to the county,” reads the press release.

The country’s past experiences with health safety issues might explain why China has reacted in such fashion. SARS first came to light in Guangdong in 2002, subsequently killing over 700 people globally. In 2008, a tainted milk formula killed six babies and made hundreds sick. As recently as last week, Chinese authorities arrested more than 110 people on the grounds that they might have sold meat from diseased pigs. Scandals have been so frequent that health and food safety have become two of the most discussed topics in the country, putting pressure on politicians to strike hard on anything that might give rise to threats. Against such background, it is no surprise that Beijing does not want to take chances.

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Will Sri Lanka’s new leader bring an end to China ‘colonization’? Tue, 13 Jan 2015 04:51:09 +0000 China's President Xi Jinping pictured with former Sri Lanka President Mahinda Rajapaksa during a visit to Colombo last year. Pic: AP.

China’s President Xi Jinping pictured with former Sri Lanka President Mahinda Rajapaksa during a visit to Colombo last year. Pic: AP.

January 8 marked an important transition for Sri Lanka: on that day, former Health Minister Maithripala Sirisena won a clear victory against president Mahinda Rajapaksa, who had been in power since 2005. Few expected such a result.

The election was followed by disturbing rumors. At first, it seemed that the former president had given up his position in a friendly manner, but it later turned out that he might have sought the help of the military to stage a coup. “People think it was a peaceful transition. It was anything but,” said Mangala Samaraweera, an aide of president Sirisena.

The change of government on the island could have international implications, particularly for China. In the past few years, Beijing has invested heavily in Sri Lanka, funding infrastructure projects and providing financial help. According to Bloomberg, “Chinese government lending to Sri Lanka increased 50-fold over the past decade to $490 million in 2012, more than double the combined amount from the U.S. as well as allied governments and lending agencies.” The media outlet says that “under Rajapaksa, China became the island’s top investor, biggest government lender and second-biggest trading partner.”

Among the largest projects funded by China is a new port city in Colombo that will be developed on 230 hectares of land reclaimed from the ocean. The infrastructure is worth roughly $1.4 billion and will be built by China Harbour Engineering Co Ltd with financial backing from China Communications Construction Co.

The port city is part of the ‘21st Century Maritime Silk Road initiative’, a network facilities aimed at connecting sea routes through the Pacific and Indian Oceans toward the Mediterranean Sea. This initiative will be matched by a land-based New Silk Road, linking China with the rest of Asia and, ultimately, with Europe. Besides providing trading partners with better access to the Chinese market and foreign destinations to Chinese capitals, analysts believe that the New Silk Road will also have a significant geopolitical impact, bolstering Chinese influence in neighboring countries.

Thanks to its strategic location in the middle of the Indian Ocean, Sri Lanka could play an important role in such a scenario. During a visit to Sri Lanka last September, President Xi Jinping himself stressed that, “China is willing to take the construction of the 21st Century Maritime Silk Road as an opportunity to strengthen cooperation with Sri Lanka in such fields as the port construction and operation, the development and construction of industrial parks near the ports, maritime economy, and maritime security, as well as discuss and decide development-first and pilot-first projects so as to achieve early results.”

All of this was based on former president Rajapaksa’s willingness to endorse Chinese ambitions, but his successor seems to be rather wary of foreign credit. In a manifesto outlining his program, Mr. Sirisena wrote: “This mega ransom goes to a few individuals. Generations of our children and grandchildren would be unable to completely finish paying off this debt. As a consequence the country and its properties would be forfeited as mortgages. That is our land and property would fall into the hands of foreigners.” Mr. Sirisena went so far as to compare the current situation to a new form of colonization: “The land that the White Man took over by means of military strength is now being obtained by foreigners by paying ransom to a handful of persons.”

“If this trend continues for another six years,” he said, “our country would become a colony and we would become slaves.”

The new president’s stance is hardly encouraging for growing Chinese investment, and the election’s results have been widely interpreted as a loss for Beijing. It remains to be seen if Mr. Sirisena will stick to his line, a topic on which there is little certainty. According to Suthaharan Nadarajah, Assistant
Professor of international relations at SOAS, University of London, “China’s relations with Sri Lanka do not depend on one leader. A change of government will not alter relations with China: the Chinese will simply compete with Japan and others to invest.”

Improved relations with the West will instead largely depend on Sri Lanka’s internal politics. Suspicions that Mr. Rajapaksa played a role in the atrocities that took place toward the end of the country’s 26-year civil war have so far hampered cooperation. As Dr. Nadarajah put it in an interview with Asian Correspondent that, “in order to improve relations with India and the West, there is a need to improve on domestic issues, particularly in terms of power sharing between different groups and accountability for mass atrocities.”

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Analysis: What now for Hong Kong’s Occupy movement? Tue, 16 Dec 2014 03:55:06 +0000 An excavation shovel is lowered to pick up an umbrella left behind by protesters as police clear barricades and tents on a main road in the occupied areas at Causeway Bay district in Hong Kong Monday. Pic: AP.

An excavation shovel is lowered to pick up an umbrella left behind by protesters as police clear barricades and tents on a main road in the occupied areas at Causeway Bay district in Hong Kong Monday. Pic: AP.

And so the protest in Hong Kong ends, not with a bang but with a whimper. Yesterday, the last protest site in Causeway Bay was cleared, effectively terminating the occupation of public spaces by protesters belonging to the ‘Umbrella Movement’. Last Thursday, the police had already removed the barricades at the main protest site in Admiralty, arresting over 200 people. According to reports, the protesters allowed the police to take them away without putting up resistance and, so far, no backlash has occurred.

The struggle had begun in September, when angry citizens took to the streets to vent their dissatisfaction at the electoral law which will regulate the 2017 election. The current system does not support authentic universal suffrage – which is supposedly guaranteed by Hong Kong’s Basic Law – and leaves pro-Mainland parties with a large amount of influence. Besides the electoral reform a number of reasons have pushed Hongkongers to the streets: excessive rents, economic anxiety, inequality and the influence of the Mainland on the city all played a role in fomenting the crisis.

After almost three months of confrontation, the winners in the battle for Hong Kong politics are the two governments involved: the city administration and the central government in Beijing. They have not conceded reforms, made commitments or even tried to appear accommodating – in fact, CY Leung, Hong Kong’s Chief Executive and the occupiers’ chief target went so far as to say that changing the electoral law would be dangerous as poor people would have a larger share of power.

The fact that authorities won comes as no surprise: many of the protesters themselves believed that the Occupy Movement did not stand a chance against Beijing’s unmovable stance on political reform. Just as important, however, is the fact that protests have ended without a major clash with the police. A crackdown on umbrella-wielding citizens would have smeared China’s image, especially as Beijing is promoting the country’s ‘peaceful rise’ and the idea of a harmonious society around the world.

Violence would have also compromised the relationship between the mainland and Taiwan, where problems are already brewing for China’s policymakers. In March, students occupied the country’s parliament to protest against a trade agreement which was supposed to deepen ties with the People’s Republic. Local elections held in November saw a major victory for the Democratic Progressive Party (DPP), forcing pro-mainland President Ma Ying-jeou to resign as chairman of the ruling Kuomintang.

Authorities chose instead to bide their time while turning a deaf ear to activists and preventing any possible foreign involvement in the city’s affairs. The most relevant case in this regard was the decision to forbid Sir Richard Ottoway, chairman of the UK’s House of Commons Foreign Affairs Committee, from entering Hong Kong. The Committee is conducting an inquiry into the UK’s relations with Hong Kong three decades after the Joint Declaration which handed the colony back to China.

So far, the tactic has worked. The protest had been losing steam for a while before the police moved in to remove the barricades. In a survey conducted in November by the Chinese University of Hong Kong, 55 percent of the interviewees answered that they were against the movement and 82.9 percent responded they would prefer the protest to end. Even publisher Jimmy Lai, the pro-Occupy owner of ‘Apple Daily’, called for a strategic retreat, warning that occupiers should not “exhaust the goodwill of the people”.

However, as much as the Occupy movement in its current form might have lost public support, it would be naive to believe that the political confrontation is over. Electoral reform has not been approved, or even seriously discussed, and all the issues that the protesters worry about have not been addressed. In such conditions, tensions could easily flare up again, and occupiers have already tried alternative ways of demonstrating. These include shopping tours during which protesters turn up to buy few things and chant slogans. To put it in a way that will certainly sound familiar to the Communist Party, one could paraphrase one of Marx’s most famous lines: “A specter is haunting Hong Kong – the specter of Occupy.”

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Australia’s climate fund u-turn unlikely to pacify China Wed, 10 Dec 2014 06:40:20 +0000 Andean Indians attend the inauguration of the "People's Summit" in Lima, an alternative forum that demands that climatic justice should be reflected in international and national policies. Pic: AP.

Andean Indians attend the inauguration of the “People’s Summit” in Lima, an alternative forum that demands that climatic justice should be reflected in international and national policies. Pic: AP.

The UN Climate Change Conference currently underway in Lima is supposed to provide a platform to discuss what countries are willing to do to mitigate emissions change and pave the way for the real big deal, the conference that will be held next year in Paris, when nations from around the world will hopefully do their best to boost the fight against climate change.

A controversial topic which surfaced during the conference is that of the U.N. Green Climate Fund (GCF), which was set up in 2010 to promote “the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change.”

To do so, the GCF receives financial contributions from developed countries and potentially from other public and private sources. The logic behind such aid is that developing countries, which live in a world that has already been polluted by developed nations and often lack the resources to exploit green technologies, should be helped to clean up the environment. That should benefit world as a whole, since global warming is a threat that knows no border.

On December 4, the head of China’s delegation, Su Wei, argued that donations from developed nations to the fund are “far from adequate”. At first, Mr. Su had singled out Australia for its unwillingness to provide any funding: “It is not good news (about) Australia, if it is true that they refuse to provide any money to the GCF,” he said. On December 10, however, Canberra pledged AUS$200 million (US$165 million) to the fund and stated that authorities intend to create a taskforce “to propose possible new post-2020 targets for Australia to take to the Paris Conference of the UNCCC in December 2015″.

While Mr. Su’s animosity against Australia might have been placated, his general point concerning the insufficient finances allocated to the GCF still stands: the developed world had pledged to come up with $100 billion a year by 2020 and that goal, judged by the $10 billion gathered so far, seems distant. Despite billions donated by countries such as the US, Japan, the United Kingdom, France, Germany and many others, the fund had to scale down its expectations: according to media reports, the original plan to get at least $15 billion by the end of 2014 had to be substituted with a more modest $10 billion.

Yet, the vocal position adopted by China is somewhat surprising, particularly given the country’s own environmental record. For decades, breakneck growth has increased the country’s share of global CO2 emissions, to the point that China is now by far the largest emitter in the world. According to a report released by Global Carbon Project, an organization which conducts researches on carbon emissions, the People’s Republic accounted for 28 percent of global emissions in 2013, twice as much as the United States and almost three times more than Europe. The same study also points out that China’s per capita CO2 emissions have quickly grown in the past years and now stand at 7.2 tons per person, well beyond European levels.

Chinese authorities, however, are increasingly willing to be proactive in tackling environmental problems. Beijing outlined its toughest commitments to the fight against global warming in November this year, when US President Barack Obama met with his Chinese counterpart Xi Jinping. On that occasion, Chinese policymakers said they intend to reach the peaking of CO2 emissions around 2030 and at the same time increase the share of non-fossil fuels in primary energy consumption to around 20 percent.

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China’s anti-corruption crusade ‘not enough’, says transparency group Mon, 08 Dec 2014 02:49:51 +0000 Zhou Yongkang, center, is one of the most high-profile officials caught in China's corruption crackdown. Pic: AP.

Zhou Yongkang, center, is one of the most high-profile officials caught in China’s corruption crackdown. Pic: AP.

Since the new government headed by Xi Jinping was installed in 2013, a massive campaign to smoke out and punish corrupted officials and businessmen has been underway. Authorities have repeatedly promised to catch ‘tigers and flies,’ meaning that they are after both large and small cases. A new report, however, suggests that many flies – and perhaps a few tigers – might be slipping out of Xi’s net.

Last week, Transparency International, a Berlin-based NGO, released its yearly Corruption Perceptions Index, which scores countries according to how corrupt their public sectors are perceived to be. China took a serious beating. The People’s Republic had occupied 80th position in the 2013 and 2012 rankings, but is now ranked the 100th out of 175 nations.

The index stands in contrast with the Party’s official line, which continually highlights the breakthroughs made by the government in its anti-corruption crusade. Mr. Xi himself has received praise from his fellow citizens for cracking down on what is perceived as one of China’s biggest problems.

In their hunt, authorities can indeed claim some success. Since the anti-corruption drive was launched in 2012, more than 84,000 people have been disciplined. Big trophies have been secured, too. One of the latest was Xu Caihou, a high-ranking general who was arrested in November for allegedly stashing away an enormous amount of ill-gained cash. According to Chinese media, investigators found gems and boxes containing millions upon millions of banknotes in his Beijing home. Altogether, they weighed more than one ton.

China’s police forces have also launched an operation called ‘Fox Hunt’ to find those who, after embezzling money at home, have fled abroad.

Given all this, how can the People’s Republic be more corrupt today than it was last year? One may think that the ongoing anti-corruption campaign might have influenced the index: if everyone suddenly starts talking about corruption in China, the public will perceive the country as being more corrupt than before, when the dirt could be safely swept under the carpet. But in a phone interview with Asian Correspondent, Srirak Plipat, regional director for the Asia Pacific Department at Transparency International, dismissed such a possibility: “This is not about the perception of the general public, which might be affected by the media. Our sources are experts and the index is based on research: we say perceptions but it actually is research.”

The reason why corruption remains rampant, he argued, is the approach of Chinese authorities. “Going after one guy is good,” he said, “but at the same time you need to change the whole system. You need a climate of transparency. You need a stronger role for the rule of law. Going after single individuals is not enough, it has its limitations.”

“Over the years we have learned that fighting corruption cannot be done by the state alone. There is a need for more bottom-up action, whistleblowers need to be protected,” said Plipat. He contends that one of the most important steps would be passing a law that discloses the beneficial ownership of companies. “A corrupted individual will often open other companies to hide dirty money. We urge the Chinese authorities to pass a law showing who owns a certain company. This would show Beijing’s commitment.”

Whether we will see a different approach, however, remains highly uncertain, as anti-corruption campaigns tend to be intertwined with political fights. While authorities may be honest in their desire to stamp out bad elements – out of patriotism or, a cynic might think, because of the anger that corruption creates among average Chinese citizens – investigations are powerful tools to hit enemies, too.

Take, for instance, the investigation of ex-security chief Zhou Yongkang, so far the most powerful tiger to be caught and the first former Politburo Member to be investigated since the death of Mao. Mr. Zhou, who last week was formally accused of bribery, leaking state secrets and ‘fornication’, was the main supporter of Bo Xilai, the former mayor of Chongqing who at one point was supposed to enter the Politburo Standing Committee, China’s ruling political body. As it happens, Bo was also a political competitor of current president Xi, and few would think that this detail did not play a role in his protector’s downfall.

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CUHK poll shows waning support for Hong Kong protests Sun, 23 Nov 2014 05:42:03 +0000 A woman talks on a mobile phone next to some anti-government posters at an occupied area outside government headquarters in Hong Kong Friday. Pic: AP.

A woman talks on a mobile phone next to some anti-government posters at an occupied area outside government headquarters in Hong Kong Friday. Pic: AP.

Just one month ago, protests in Hong Kong were in full swing: it was mid-October, and fresh clashes between the protesters and the police were taking place in both Admiralty and Mongkok. Even then, however, some worried that fatigue could take a toll on activists and nuisances created by the protest might erode the public’s patience. Those worries have now become a reality, as a poll by the Chinese University of Hong Kong recently showed.

Almost 55 percent of the interviewees told the University that they are against the movement and 82.9 percent responded they would prefer the protest to end. The latest poll found that 28 per cent support the movement, a significant fall from one month ago when another poll conducted by the same institution showed that 37.8 percent of respondents either strongly supported or quite supported the Occupy Movement. At the time, 35.5 percent were opposed to it.

As the latter data suggests, there has never been a complete agreement over the protests: traffic jams, blocked streets and a feeling that protesters are going too far in challenging authorities have been a feature of the debate on the Occupy Movement since it started.

Over time, the lack of breakthroughs and the rigid line adopted by the local administration have added to the movement’s decline in popularity. The latest disappointment came last week, when a mission that had once again raised the public’s attention quickly sank. On Saturday, three student leaders led by Alex Chow, the Hong Kong Federation of Students’ leader, tried to fly to Beijing to meet China’s Premier Li Keqiang. They were not even allowed on the plane to the Chinese capital: their permits had been invalidated, a Cathay Pacific spokesperson said.

As the public’s patience wanes, fatigue is denting the stamina of those out on the streets. When the police started clearing part of the main protest site last week, the resistance of the protesters was minimal and in a recent poll compiled by students and analyzed by the South China Morning Post nearly half of the protesters – 958 out of 2,183 – said they are ready to demobilize if the movement’s leaders ask them to do so (another 963, however, argued that they would stay no matter what the leaders say.)

Even Jimmy Lai, the tycoon who owns the pro-Occupy Apple Daily, has argued that it might be time to wrap up tents and leave the streets. “People are getting tired,” he told the media. “We cannot exhaust the goodwill of the people.” Mr. Lai said he believes that students should take a rest today so they can fight tomorrow: “We should retreat when the momentum is there, while our determination and will are strong.”

To be sure, few ever really believed that the government would cave in. At best, some hoped for a compromise. Many just wanted the government to know that they are not willing to accept an electoral law without meaningful universal suffrage and resent many features of today’s Hong Kong, from ever-rising rents to the increasing influence of the mainland.

Faced with an uncompromising local government and a more uncompromising central one, it is rather unsurprising that the protest is reaching the point where it is not able to catch the people’s attention anymore. But watch out: as the issues that fuelled the protest remain unsolved, dissatisfaction may linger for a long time.

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S&P report reveals true extent of China’s corporate debt Wed, 19 Nov 2014 02:07:05 +0000 A man walks past the office building of the People's Bank of China in Beijing. Pic: AP.

A man walks past the office building of the People’s Bank of China in Beijing. Pic: AP.

The notion that Chinese companies have an increasingly large problem with debt is not new, but a recent report by Standard and Poor’s, one of the three US rating agencies, has shed some extra light on the extent of the difficulties faced by the People’s Republic.

The report, titled ‘Credit China Spotlight: Financial Risks Are Rising For The Top 200 Corporates,’ argues that “Weaker revenue growth and margins have offset moderating capital expenditure. Many industries are also battling chronic overcapacity, low profitability, and rising leverage.”

Christopher Lee, an analyst with S&P, is quoted in the report as saying he expects some companies to experience “considerable pain, even possibly consolidation or default,” noting that, “Asset-heavy and capital-intensive sectors are the most vulnerable.” Mr. Lee also told Reuters that, “The baseline assumption is that the next 12 months could see an acceleration of corporate stress. The deteriorating trend is still there in almost all industries.”

The underlying cause of such problems is debt, which Chinese companies have been very fond of accumulating in recent times. According to a report published earlier this year by S&P, in 2013 China overtook the United States to become the largest outstanding corporate debt holder in the world. In June, China’s state-owned Global Times quoted the Chinese Academy of Social Sciences (CASS) as saying that “Chinese nonfinancial corporations owed 58.67 trillion yuan ($9.41 trillion) to their creditors by the end of 2012, representing 113 percent of GDP that year.”

The massive borrowing can be traced back to the 2008 financial crisis, which put the Chinese government in a tight spot: faced with strong headwinds, it had to choose between stimulating the economy and dealing with underperformance. Authorities chose the former, and opened the floodgates of credit.

The flood was powerful and the government successful, for growth was soon nosing up again. But the policy had serious collateral consequences: by injecting money into the system, authorities encouraged a credit binge. Debt subsequently rose from about 125 percent of GDP in 2008 to over 250 percent this year (to be precise, according to Standard and Chartered 251 percent in the second quarter of 2014.)

Part of this credit has served to finance projects whose profitability is questionable and a significant part of it has been channeled through the so-called shadow banking sector, as largely unregulated unofficial lenders are usually called. In an opinion piece published on Project Syndicate, Andrew Sheng, a fellow of the Fung Global Institute, and Xiao Geng, director of research at the same institute, said that, “Since 2008, SOEs and so-called local-government financing platforms have been using loans to fund massive fixed-asset investments, while private-sector actors have been borrowing – often from the shadow-banking sector – to finance investment in real-estate development.”

In its recent study, S&P shows some optimism regarding the future, arguing that “As China transitions into a more balanced growth model and introduces financial and economic reforms, the credit profiles of some companies should start to slowly improve over the next few years.” However, the authors caution that Beijing will find it hard to bring the corporate sector back to life, and that state-owned enterprises will, “Play a critical role in the government’s reform program because these behemoths account for the largest share of debt and assets in the corporate sector.”

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China steps up fight against Ebola amid international pressure Thu, 13 Nov 2014 10:37:46 +0000 Guinea West Africa Ebola

Workers unload Ebola related aid goods from China at the airport in Conakry, Guinea, last August. Pic: AP.

As the largest outbreak of the Ebola virus keeps on killing in West Africa – so far over 5,000 people have died – China has stepped up its relief efforts, which now include the construction of a hospital located in the SKD stadium in Monrovia. Chinese media reported that the construction site is about 5,600 square meters and that the facility will cover an area of 21,000 square meters. The center will include a living area, a treatment area, a “mild infections quarantine area,” and a “severe infections quarantine area,” among others.

On Thursday last week, as reported by The Guardian, foreign ministry spokesman Hong Lei told reporters that Beijing had already sent 160 medical workers to Liberia on November 9 and that 320 additional workers would arrive in Monrovia in the future. The center, according to the minister, will be capable of hosting 100 beds and should be open in 30 days (starting, presumably, from last week).

Roughly one week later, on November 12, China Central Television (CCTV) said in a video report that “the core structure of the Ebola treatment built by Chinese troops and construction companies has been completed.” That is also because, according to the Chinese outlet, “The soldiers work 14 hours on average every day.”

Interviewed by the TV station, PLA commander Guan Shouqiang, who heads the troops building the facility, said: “So far we’ve finished the construction of the center’s main structure and we will soon start installing power facilities and other equipment in the building to ensure that the treatment center can open as scheduled.” China Radio International reported that the treatment center is “part of China’s broader efforts to help deal with the spread of the deadly virus.”

These efforts have increased over time, particularly after widespread criticism from media and organizations involved with the crisis.

Earlier this week, U.N. General Secretary Ban Ki-moon called on all Asian countries to step up their efforts in the global fight against the virus. He said experts worry that border control measures and other preparations are insufficient and that Asian countries should be doing more to fight the viral outbreak in the hardest-hit West African nations.

A powerful indictment came from Jim Yong Kim, the World Bank’s president, on November 4, when he told the public in Seoul that, “Many countries in Asia who could help simply are not, especially when it comes to sending health workers.” Mr. Kim did not point fingers at China specifically, but the country with the world’s second biggest economy could hardly be excluded from such remarks.

In October, Brett Rierson, the World Food Program’s China representative, had called on Chinese tycoons to step up and do more: “Where are the Chinese billionaires and their potential impact?” he publicly wondered. “Because this is the time that they could really have a huge impact.” Mr. Rierson observed that large investments in the African continent had yet to translate into an equivalent degree of commitment to help: “You can ask the same thing of the corporate sector, being the largest investors in West Africa right now.”

The People’s Republic has been grilled particularly in light of its booming relations with the African continent. According to the Brookings Institution, China surpassed the United States as Africa’s largest trading partner in 2009. Two years later, in 2011, Chinese imports from the continent stood at $93.2 billion and in 2012 the country’s trade with Africa reached $198.5 billion.

Criticism has yielded more aid: as of November 3, Beijing had committed 750 million RMB, or about $122 million, a dramatic increase from mid September, when the Chinese government had pledged ‘only’ $32.54 million. But this is still much less than her global peer, the United States, which has pledged $175 million.

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Analysis: The frosty handshake that could thaw Sino-Japanese relations Tue, 11 Nov 2014 10:20:31 +0000

The Asia-Pacific Economic Cooperation (APEC) meeting seemingly worked its magic: Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe finally shook hands on Oct. 10, after two years of suspended high level visits and of deteriorating relations.

The graphic was remarkably unconvincing: against the flowery choreography of the Great Hall of People, a wary Mr. Abe looks at cameras with a barely visible smirk, while Mr. Xi seems to make no attempt to smile at all (see for yourself in the video above). But shake hands they did, and that is what everyone was waiting for.

Besides, by the time the widely expected meeting took place the real big news had already been out for a while. Last Friday, the two countries agreed to disagree on the disputed Diaoyu/Senkaku Islands, stating that they are willing to set up a crisis management system in order to prevent confrontations from escalating.

The dispute has been poisoning mutual relations between the two countries since 2012, when the Japanese government decided to nationalize the islands, which used to be property of a private family. Beijing argued that such a decision was an infringement on its territorial integrity and a crisis ensued, preventing the two leaders from holding meetings and causing some serious damage to business relations.

The agreement reached by China’s State Councilor Yang Jiechi and Japan’s National Security Advisor Shotaro Yachi – here is the version translated by Xinhua – includes four points. Two are fairly vague: the first affirms that Beijing and Tokyo will “continue to develop the China-Japan strategic relationship of mutual benefit,” while the second points out that “the two sides have reached some agreement on overcoming political obstacles in the bilateral relations.”

The really interesting stuff comes with the third, according to which, “The two sides have acknowledged that different positions exist between them regarding the tensions which have emerged in recent years over the Diaoyu Islands and some waters in the East China Sea, and agreed to prevent the situation from aggravating through dialogue and consultation and establish crisis management mechanisms to avoid contingencies.” The fourth, finally, states that “The two sides have agreed to gradually resume political, diplomatic and security dialogue through various multilateral and bilateral channels and to make efforts to build political mutual trust.”

“I think it’s monumentally important,” said William Choong, Shangri-La Dialogue Senior Fellow International Institute for Strategic Studies, in a phone interview with the Asian Correspondent. “They are the second and third largest economies in the world: because of their different opinions, the bilateral relationship has been bad and that has affected the whole strategic triangle between China, Japan and the United States. Besides, they have also affected Asia’s emerging security architecture.”

According to Dr. Choong, the institution of a mechanism to prevent crises from reaching dangerous levels – essentially a hotline to be used for direct contact in case of incidents – is an important bit of the deal. “What happened in the past – vessels being arrested, naval confrontations, etc. – all these incidents would be avoided with a crisis management system,” said Dr. Choong.

The APEC meeting might have provided a good excuse for the two statesmen to get together, but it would be simplistic to think that what was a fraught relationship yesterday was healed yesterday just for the benefit of the cameras.

According to Jim Nolt, Adjunct Professor of U.S.-China relations at New York University and Senior Fellow at the World Policy Institute, economic headaches might go a long way in explaining why this limited agreement has been reached now rather than earlier. “I think it is partly based on the fact that there is bad economic news in both China and Japan. They need to continue to do trade and business, it would be bad for both if that did not do so. Besides, the agreement would help restore confidence and benefit their respective countries,” he said in an interview with the Asian Correspondent.

It should be noted that China recorded a five-year low growth of 7.3 percent in the third quarter, raising doubts whether the government’s 7.5 percent yearly target can be met. In Japan, Abeconomics – the set of measures used by the Abe administration to kick-start the Japanese economy – has not stood up to the expectations it had raised. Against such background, warm economic ties would come as a relief. As Prof. Nolt put it, the two Asian nations “realize they cannot afford a dispute.”

It will be interesting to see what the two countries’ respective nationalists will make of the deal. According to analysts not much, as both parties can somehow claim victory: China has finally got Japan to agree that there is a dispute (even though the Japanese side reportedly said they merely acknowledge that Beijing has a different point of view.) Tokyo can also claim that it has managed to mend ties while not giving up territory.

Matthew Funaiole, a research associate with the Foreign Policy Centre, told us in an email interview that the agreement may in fact indicate that both sides are becoming increasingly attentive to nationalist movements. “In Japan, nationalists and conservatives (many of whom support Prime Minister Abe) may interpret the agreement as evidence of China backing down from its territorial claims,” Dr. Funaiole said. In China, “the agreement may afford the CCP the opportunity to reaffirm its legitimacy to the international community, in light of the recent crackdown on protestors in Hong Kong.”

Good as it may be, the handshake will hardly be the end of tensions. First of all, the ‘agreement to disagree’ does not per se rule out incidents, which could still aggravate the situation. Furthermore, no direct mention was made of the other significant irritant in Sino-Japanese relations: the Yasukuni Shrine, where the spirits of rank-and-file Japanese soldiers sleep next to those of World War II criminals. In 2013, a visit by Mr. Abe provided fuel to nationalistic debates in China and apparently supported the theory that Japan has not yet fully come to terms with its imperialistic past.

An end to official visits to the shrine – along with the recognition that a territorial dispute exists – were the preconditions set by China for meeting with Japanese leaders. Beijing must have shown some flexibility in that regard, because little appears to have changed: all that has been said, it seems, is that Japan “must look at history squarely and move towards the future.”

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