Two Steps Forward, One Step Backward–China to Maintain `Stable’ Yuan

September 30, 2006 at 11:12 pm (China, Economics)

A few days ago, China’s government allowed the yuan to break the level of 7.9 for the first time. When markets are upbeat on a further relax of the currency, China’ central bank interfered the optimism. Read the news from Bloomberg.

As I said before, the yuan valuation is a political issue, rather than an economic one. Let’s hope central bank’s current stance is just a temporary political reverse, because at the end of the day, a further revaluation of the currency is for the good of China, not the rest of world.

 

From Bloomberg

China will maintain “stability” in the yuan’s exchange rate as well as the country’s monetary policies, the central bank said today.

While the market will continue to play a “fundamental” role in setting the value of the yuan, the exchange rate will be maintained “basically stable at a reasonable and balanced level,” the People’s Bank of China’s 13-member monetary policy committee said in a statement on its Web site today.

The yuan completed its biggest monthly advance since a link to the dollar ended last year, as traders wagered China will allow faster appreciation to reward Treasury Secretary Henry Paulson for persuading U.S. senators to drop their threat of trade sanctions. The central bank risks attracting a flood of capital should the yuan rise too rapidly, said Shahab Jalinoos, head of Asian currency strategy at ABN Amro Bank NV in Singapore.

The central bank said it will continue to drain funds from the financial system as it seeks to improve the managed float of the country’s currency. It will also seek to “further curb excessive loan growth” and “strengthen the coordination between domestic-currency and foreign-currency policies.”

China’s currency can only be bought or sold for foreign trade purposes or to fund approved capital-investment projects, making it easier for the central bank to influence trading. Today’s statement summarizes conclusions reached at the central bank’s third quarterly monetary policy meeting (more).

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The Aftershocks of the Shanghai Political Earthquake (part 4): Property Developers Under Investigation

September 30, 2006 at 10:54 pm (China, Politics)

From My CDT Post

Not every one is happy during the National Day holiday. A special team from the Central government is scrutinizing more than 10 Shanghai property developers that might be implicated in the pension fund scandal, Chinese newspaper 21st Century Business Herald reported. Most developers under investigation are among Shanghai’s top 50 real estate companies.

Three state-owned developers’ bosses, who once were very influential and powerful, are implicated. The newspaper didn’t name the three people.

The special investigation team is led by He Yong(何勇), a senior CPC leader. He is the member of the Secretariat of the CPC Central Committee and vice secretary of Central Committee for Discipline Inspection.

The special team is also investigating Shanghai’s housing provident fund (住房公积金) and health care insurance fund (医疗保险金), the newspaper said.

Separately, Zhou Qiang (周强), who was just promoted as the vice chief of CPC Hunan Province Committee, was appointed as the acting governor (代省长) of Hunan province. Zhou said in his inaugural that he will be grateful, progressive, reverent, stainless, and clean (常怀感激之情,常葆进取之心,常存敬畏之念,清清白白做人,干干净净做事). Zhou was promoted from First Secretary of China Youth League Central Committee, a position Hu Jintao once held. The Youth League is considered to be the power base of the current CPC boss.

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The Chain Corruptions in Shanghai and Chen Liangyu

September 30, 2006 at 10:49 pm (China, Politics)

From 21st Century Business Herald

 

Sun Luyi, Director of the General Office of the CPC Shanghai Committee, was brought down on Sept. 28.

Sun used to be the vice principal of Shanghai Institute of Politics. Sun was promoted to the deputy chief of the Organization Department of the CPC Shanghai Committee in 1998 and director of Shanghai Human Resource Bureau in 2004.

People close to Sun said he was a shrewd, low-profile official. They were surprised that Sun got sacked.

Sun was bribed by Zhang Rongkun, boss of Fuxi Investment Company. Zhang was the key figure in the Shanghai pension fund scandal. Zhang bribed more than 20 officials. Sun was just one of them.

Zhang’s two sins

Zhang’s official counts were swindling and bribing.

Zhang illegally loaned 3.65 billion yuan from Shanghai pension fund. The loan was never disclosed in the company’s financial statements. Without revealing the heavy debt, Zhang issued 1-billion-yuan short term bonds, and became the first private company that ever issued bonds in China. Fuxi’s bonds were downgraded to C after the scandal was uncovered.

Zhang’s bribery has implicated Zhu Junyi, former head of Shanghai Labor and Social Security Bureau, Qin Yu, former vice chief of Baoshan District Committee, and Sun Luyi.

Four years ago, before Zhang acquired Lu Qiao Group, he bribed officials at Shanghai CPC Committee for financial support. He was granted with the pension fund. Qin Yu and Zhu Junyi were two key officials executed the grant.

Qin Yu owned five apartments in Shanghai. With his own salary, Qin could never afford such a luxury.

Shanghai Electric

In March of 2004, Shanghai Electric invited five strategic investors, one of whom was Zhang Rongkun’s Fuxi Investment. Zhang paid 1 billion yuan for an 8.15 percent stake. After Shanghai Electric’s IPO, the value of Zhang’s stake jumped to 2.7 billion yuan. Without briberies, this assured deal wasn’t possible to land on Zhang.

Wang Chengming, Chairman of Shanghai Electric, was also implicated.

Li Songjian, Chairman of Mingyuan Group, another shareholder of Shanghai Electric, is also under investigation. Li disappeared half a month ago.

Li Songjian was among 2004 Forbes Chinese Billionaire list with $850 million. The main business of Li’s Mingyuan Group is property development, hardly having anything to do with electric.

New Huangpu Group

Another person involved in the pension fund scandal is Wu Minglie, Chairman of New Huangpu Group. Wu loaned 1 billion yuan from the pension fund in 2005. The loan was immediately handed to Huanwen Investment Company, which then bought a 75 percent stake from New Huangpu Group and a 18 percent stake from New Huangpu Co., a public company under the group.

 

Also read The Aftershocks of the Shanghai Political Earthquake (part 3): Reactions from Citizens

 

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New York Times Review on “Brother”, Yu Hua’s New Novel

September 29, 2006 at 9:12 pm (China, Culture)

 

This review has been out for a while.

I prefer Yu Hua’s old novels more than this one. Yu lost his inspiration on the new novel. All he did is repeating himself, in a more grotesque, exaggerated way. It’s understandable that most writers’ creativity could be exhausted. Yu Hua is apparently not among a small group of geniuses.

 

A Portrait of China Running Amok by David Barboza

 

The most talked about novel in China this year is “Brothers,” by Yu Hua, a surreal tale of two stepbrothers coming of age during the economic boom in the 1990’s.

The novel, published in two volumes in 2005 and 2006, has sold nearly one million copies here, a remarkable achievement in a country where book piracy is widespread and novels are easily downloaded free from the Internet.

The China of Mr. Yu’s black comedy is a society in which everyone is scrambling to get rich and con artists abound. Li Guangtou, the younger brother in the novel, becomes famous by creating a beauty pageant for virgins; Song Gang, the older brother, has one of his breasts surgically enlarged to help sell a line of breast-enlargement gels for women in the countryside.

Many critics here have lashed out at Mr. Yu, who has long been one of China’s most respected novelists, for producing what one called a trashy, Hollywood-style portrait of the country.

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The Aftershocks of the Shanghai Political Earthquake (part 3): Reactions from Citizens

September 29, 2006 at 8:48 pm (China, Politics)

From My CDT Post:

The turmoil following the dismissal of Shanghai’s boss is far from over, and finally we have some voices from the mass. They are demanding their pensions, which were embezzled by the greedy officials and businessmen, including Chen himself. Read story by Geoff Dyer from Financial Times:

 

Shanghai’s disgruntled want pensions Mao cost them

Shanghai, like most Chinese cities, has a small core of disgruntled citizens who regularly congregate outside public buildings in the hope of getting officials to hear their complaints. Many are unemployed or retired and feel they have little to lose by challenging authority.

Over the past few weeks, however, their sense of injustice has risen as details have dripped out about a scandal at the Shanghai government pension fund, which on Monday led to the dismissal of the unloved party secretary, Chen Liangyu.

Police have already detained 17 people who were protesting outside a hotel where more than 100 anti-corruption investigators from Beijing are based, according to Human Rights in China.[Full Text]

Also read CDT’s series coverage on the Shanghai pension fund scandal and the political shock.

Shanghai Boss Downed Amid Pension Funds Crackdown

The After Shocks of the Shanghai Political Earthquake (part 1): Further turmoil grips Shanghai

The Aftershocks of the Shanghai Political Earthquake (part 2): More Officials Came Down

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Berkeley Lecture Videos Online

September 29, 2006 at 5:51 pm (Berkeley, US)

Berkeley is setting up a special page on Google Video to upload lecture videos. This is consistent with Berkeley’s principle, that education is from the public and for the public. Until now, Berkeley is the only top university insisting on the spirit of public education.

More courses will come online in months.

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China Blogging Report Released

September 29, 2006 at 4:57 pm (China, Internet)

From my CDT post

China Internet Network Information Center (CNNIC) put its “2006 China Blogging Report” online. Click HERE to download. For more information, click HERE to read the summary (in Chinese) from CNNIC.

CDT’s previous coverage on this news:

China Blogging Report by CNNIC

China Internet Network Information Center (CNNIC) released its 2006 China Blogging Report on Sept. 23. The report said the number of Chinese bloggers reached 17.5 million at the end of August, and active bloggers (with at least one update each month) reached 7.70 million. Blog readers were more than 75 million.

The report estimated active bloggers will break 10 million at the end of this year.

The report also covered blog advertisements. Forty percent of blog readers were willing to accept blog advertisements, twenty percent claimed blog advertisements won’t shift their reading preference, and about one third of readers held a neutral attitude towards blog advertisements.

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Is Singapore Ruled by Law?

September 29, 2006 at 12:08 am (Media, Other Countries)

 

Singapore banned Far Eastern Economic Review today.

In August, FEER was sued by Singapore Prime Minister Lee Hsien Loong and his father Lee Kuan Yew for defamation, after the magazine published an interview of an opposition politician.

The ban, however, was not issued by the court, but by the government. And the reason was, quite “unreasonably”, that the magazine didn’t appoint a legal representative and pay a 200,000 Singapore dollar (US$126,000) bond, a new requirement imposed on foreign publications. The new rule was released by the authority in August, after FEER published its allegedly defamatory story. Click here to read story on the lawsuit from the International Herald Tribune.

From the Wall Street Journal:

Singapore Bans Business Publication

Singapore has banned the Far Eastern Economic Review, a magazine that published an article about an opposition politician in the city-state, after it didn’t comply with requirements that it appoint a legal representative and pay a 200,000 Singapore dollar (US$126,000) bond.

In August, Singapore imposed tighter restrictions on foreign publications, including FEER, Newsweek, Time, the Financial Times and the International Herald Tribune.

The ministry said FEER would be classified as an “offshore newspaper” and had to appoint a legal representative in Singapore and pay the bond by Sept. 11.

“It is a privilege and not a right for foreign newspapers to circulate in Singapore,” the Ministry of Information, Communications and the Arts said in a statement.

The ministry warned that it is now an offense to import the magazine or reproduce it for distribution (more).

 

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Which Battery is Safe

September 28, 2006 at 11:17 pm (China, Companies, US)

 

Following Dell and Apple, Lenovo and IBM are recalling laptop batteries made by Sony. Yes, Sony again.

So no matter what your laptop’s brand is, just check the battery. And if it’s made by Sony, immediately pick up your phone and call your laptop manufacturer. After all, we don’t want our laptops to burn our “laps”.

Well, I have to stop typing and check my battery.

For your convenience, HERE is lenovo’s official policy on how to identify and return the batteries.

From The New York Times:

A Battery Recall for ThinkPads

The Lenovo Group and I.B.M. are recalling more than half a million notebook computer batteries made by Sony after a computer caught fire at Los Angeles International Airport, Lenovo and federal safety officials said yesterday.

Sony separately initiated a global replacement program for lithium-ion batteries it made for notebook PC companies, saying short circuits could occur on rare occasions when tiny metal particles come in contact with other parts of the batteries.

The move by Lenovo and I.B.M. to recall ThinkPad batteries brings the number of battery cells recalled to more than six million since Dell said in August it was recalling 4.1 million notebook batteries made by Sony. Apple Computer announced a recall on Aug. 25 of 1.8 million lithium-ion batteries made by Sony.

A Lenovo spokesman, Ray Gorman, said the company expected the financial impact of the recall to Lenovo and I.B.M. to be minimal as Sony was “supporting us financially in this recall.”

 

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An Economic Analysis of China’s Internet Censorship

September 28, 2006 at 11:00 pm (China, Internet, Politics)

China Digital Times has a delicious story on China’s Internet censorship told by an inside man.

China’s government spends tons of money, the tax payers’ money, on monitoring and controlling the online behaviors of tax payers. More over, Internet surveillance and control have been a lucrative source of profits and budgets to some government administrations, most prominently the Ministry of Public Security and the Ministry of Information Industry, two powerful administrations that often compete fiercely on state budget.

Internet censorship is a special market, where the suppliers are a few administrations and their conspirators–those facility and technique suppliers. And the buyers are, well, not the tax payers, but the communist party.

So it’s a market with competitive suppliers but only one buyer. Definitely a buyer’s monopolistic market.

I strongly recommend economists to join in the research on China’s internet censorship, where human rights activists and academics from political, social and technical circles have invested huge amounts of time.

With my shallow economic knowledge, what I observed is that in a buyer’s market, suppliers will make their best endeavors to seduce buyer’s attention. And their services will be increasingly solid, cutting-edge and even breath-taking. That’s why the lives of China’s Internet users are getting worse.

Hopefully we will have a counter-censorship market that could be as monopolistic as the censorship market is. Unfortunately, in the counter-censorship market, there are a slew of demands but only sprinkling supplies. To make things worse, buyers in this market are usually penniless, and suppliers are largely voluntary.

Since Mao’s “marvelous” people’s communal economy, when was the last time you witnessed a durable voluntary economy?

 

Story from China Digital Times (translated by CDT):

 

I am a network manager of a telecom company (sorry I don’t dare to disclose the name of our company).

I can confirm that the operating unit which is responsible for blocking and filtering the national gateways belongs to the Ministry of Information Industry. Before we can expand our bandwidth, we have to ask for their permission, and tip them a “surveillance and control fee.” They are shameless.

Additional administrations are involved in the surveillance and control of our provincial and municipal networks, including the Ministry of Public Security, the Ministry of State Security, the Commission for Discipline Inspection, the Army, etc. Their operations often stress the limits of our capacity.

A few days ago, a deputy director of the Bureau of Internet Monitoring of the Ministry of Public Security, whose name is Gu Jian (顾坚), had a conversation with us about renting our bandwidth. He said the state government allocated a large amount of funds for the use of the online information surveillance and control project.

How could a Bureau of Internet Monitoring have this huge amount of money? We were suspicious. We managed to unearth the truth using our connections with the Information and Telecom Bureau and the Golden Shield Project of the Ministry of Public Security. They were surprised too, and said it was impossible because leasing bandwidth is the business of the Information and Telecom Bureau.

Later on we discovered that the project Gu Jian was talking about has nothing to do with bandwidth leasing. What the project really needs is an interface on our network for monitoring purposes. Gu, however, was asking to rent our commercial use bandwidth, which is not related to interface monitoring.

The undisclosed aim of the Bureau of Internet Supervision and Beijing Municipal Department of Internet Supervision (a director named Yu Bing (于兵) from the municipal department joined Gu Jian in the visit) was to use the excuse of information monitoring to lease our bandwidth with extremely low prices, and then sell the bandwidth to business users with high prices to reap lucrative profits. How avaricious they are!

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