October 2011

MILITARYNaval Expansion:Cut-Price CarrierPOLITICSParty Vitality:Winning Back the Masses

SPECIAL REPORTWenzhou Train Crash:Victims of the System

$4.99www.newschinamag.com

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1NEWSCHINA I October 2011

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Published by China Newsweek CorporationPublisher: Liu Beixian

Executive Directors: Liu Beixian, Zhou Jianming

Editor-in-chief: Wang Xiaohui

Editorial OfficeManaging Editor: Zheng ZhonghaiAdvisor: Liu DizhongSenior Editor: Yang YiCopy Editors: Stephen George, Jack SmithLead Writer: Yu XiaodongEditors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Li JiaFirst Reader: David GreenAddress: 5th Floor, 12 Baiwanzhuang South Street, Xi Cheng District, Beijing, ChinaPost Code: 100037Tel: 86-10-88395566Fax: 86-10-88388045Email: [email protected]://www.newschinamag.com

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ISSN 1943-1902 CN11-5826/G2

EDITORIAL

2 NEWSCHINA I October 2011

F or years, the massive administrative expendi-ture of governmental agencies, especially ex-penditure relating to official travel, personal

vehicles and hospitability, commonly known as sangong, or the “three official spends,” has enraged the public. Yet despite widespread condemnation, many authorities continue to resist requests to open their accounts to the public. It is estimated that the total combined yearly cost of administrative expen-diture may be as high as 900 billion yuan (US$140bn). In Beijing alone, there are over 700,000 official vehicles, equivalent to 15 percent of all cars on the capital’s roads, all of which are paid for by public funds.

The reason why expenditure relating to official travel, personal vehicles and hospitality is particularly controversial is the ease with which it can be abused, making it a hotbed of corruption.

Responding to growing calls to crack down on government fraud, the State Council moved earlier this year to request that all agencies of the cen-tral and local government release information relating to sangong spending by the end of June. However, as of August, up to nine departments from a total of central 98 agencies had yet to open their accounts, while those that were disclosed offered little in the way of detail, with the vast majority providing only a broad spend-ing outline.

As long as government agencies are able to deter-mine what to release, and crucially what to withhold, efforts to promote transparency become ever more dif-ficult.

The public release of government information offers a modicum of progress. However, such measures fail to address the real reason behind bloated official spend-ing, namely, a lack of external supervision.

In a democratic country, government expenditure, as drawn from the taxpayer, is determined by the leg-islature. Although China’s constitution and other laws stipulate that the National People’s Congress(NPC) has budgetary powers, such power is very limited in reality. At all levels, budgets are typically set by those in government, with the NPC and its local branches pro-viding the necessary rubber stamp. It therefore comes as no surprise that official spending has risen rapidly

in recent years. Now, the State Council itself has finally promised

to reduce the amount of official spending. In March, it announced that it would refine the budget-making process and strengthen supervision over its implemen-tation. By requiring the release of relevant information, it is hoped that external supervision can push govern-ment agencies to constrain their lavish appetite. How-ever, without the threat of legal reppercussions, gov-ernment agencies remain free to ignore criticism from the media and the public.

To solve the problem, the current budgetary frame-work needs to be fundamentally altered. All budgetary powers should be returned to the NPC and its branch-es. If such a reform is too drastic, then at the very least, official spending related to travel, personal vehicles and hospitality should be subject to public scrutiny.

Handing Over the Reins

Despite widespread condemnation, many authorities continue to resist requests to open their accounts to the public.

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CONTENTS


EDITORIAL02 HandingOvertheReins POLITICS10 VaryingAgendas: AnsweringtheCall23 XinjiangAttacks: TheBloodyWeekend

SOCIETY26 PublicHearings: FamiliarFarce,FamiliarFace28 ForbiddenCityScandals: OpenGates,ClosedBooks30 UnionReform: TradingPlaces SPECIALREPORT32 WenzhouCrash: SpeedKills/DerailingChange

WORLD38 LumbiniProject: BuyingBuddha?

MILITARY42 China’sFirstCarrier: PurchasingPower

ECONOMY46 FatalFlaws: ACreditor’sCrisis48 CourierTax: ReturntoSender50 SolarPower: SurfaceHeat ENVIRONMENT52 DesertAgriculture: TurningSandintoGold

FEATURE54 ConservationistMonk: ASacredResponsibility

CULTURE58 JinDalu: LifeGoesOn

VISUALREPORT60 LastLookBack

OUTSIDEIN64 MountWutai: ATasteoftheSpiritual67 FlavoroftheMonth: WrigglingEatsandCandiedTreats

04 MEDIAFOCUS05 WHATTHEYSAY06 NEWSBRIEF08 NETIZENWATCH51 CHINABYNUMBERS66 REALCHINESE68 ESSAY70 CULTURALLISTINGS71 COMMERICALLISTINGS72 COMMENTARY

COVERSTORY12 China’sMostWanted: OnTheRun/MissionUnaccomplished

China’s Most WantedOnthetrailofthecountry’smulti-million-dollarwhite-collarcriminals

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More Housing for Less?An announcement by the Ministry of Housing and Urban-Ru-ral Development in May declaring that, “The construction of 10 million units of affordable housing is not only an economic task, but a political task,” has added renewed impetus to China’s sag-ging affordable housing program. As of January this year, ground had been broken on over 7 million units, with the majority of those currently under construction either redevelopments of pre-existing poor-and low-quality housing, or so-called “economic housing,” new builds aimed at middle-and low-income groups. However, this new quasi-government housing intended for low- income groups, has not been embraced by local governments, many of whom continue to rely heavily on revenues derived from the sale of land to developers. In order to help combat this, State-owned enterprises have been required to take responsibil-ity in some cities, such as Chongqing. In other cities, including Beijing and Shanghai, developers have been ordered to provide affordable housing which will be pur-chased by local governments. But how that buy-back will be conducted has yet to be clarified.

China Economic Weekly August 2, 2011

Globe August 16, 2011

Die Young

Death rates among the under 50s have soared in big cities across China, with Shanghai topping the table for lethal diseases such as cancer. In Beijing, cancer is now the city’s biggest killer, claiming more lives per year than any other single cause. The increase in the number of young cancer patients is particu-larly alarming. Doctors and sociologists have attributed the rise to deteriorat-ing health, environmental pollution and mounting work pressures. It is time for the country to choose between a hospital bed and a healthy lifestyle. Fast development, or a potential early death.

China’s Journey to the Center of the EarthDriven by a rapid increase in demand for mineral resources, in 2008 China initiated a three billion yuan (US$470m) scientific project aimed at drill-ing deep below the earth’s surface. Teams of Chinese scientists have since led efforts to turn the mega-project into a reality. However, only now, al-most three years after the project was first announced, is it attracting public attention, thanks largely to the news of a “super drill,” expected to tunnel a record 10,000 meters down. According to reports, China’s goal is to have a clear geological map of an area 4,000 meters below the surface. China currently lags far behind the US, Australia, Germany and the UK in the race to the “center of the earth.” The program, once completed successfully, will be a prelude to an even more ambitious project aimed at exploring the lithosphere.

NewsChina Chinese Edition August 22, 2011

Xinmin WeeklyAugust 22, 2011

Oriental OutlookAugust 15, 2011

Behind Chinese Offshore Companies

The offshore affiliates of China-based companies in places such as the British Virgin Islands, Mauritius, the Cayman Island and Samoa are posing an increas-ing risk to China’s economy. Insider trading, tax evasion, and widespread fraud are just a few of the accusations currently being leveled at offshore com-panies. However, experts also think that offshore operations could in fact help Chinese companies go global, especially State-owned enterprises (SOEs) whose overseas expansion is often hampered by the political considerations of host countries. Success stories have already been pioneered by giants like Sinopec.

Internet Privacy – Indefensible?

Social networks like Facebook, Twit-ter and their counterparts in China are putting personal privacy at risk. With concepts such as private and public space becoming increasingly blurred, it has become difficult to identify pri-vacy infringements under existing legal systems. In China, however, social net-works have grown into an important means of supervising the actions of gov-ernment and big business. Yet the line between privacy protection as a civil right and public scrutiny has yet to be fully defined, and as such, the exact role of social networks remains controversial.

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“The Chinese are ashamed to talk about money and materialism, so money-grabbing comes coated with moral sugar and materialism is dressed up as acting in the public interest. This makes us, as a race, uniquely hypocritical.”Finance and economics professor of the China-Europe International

Business School Xu Xiaonian, on his microblog.

“We all know how to be ‘loyal subjects,’ but this knowledge is rotten. Now, it is high time we learned how to be citizens.”Literary professor Yi Zhongtian calls for a more civil society in the Beijing-based magazine Famous.

“China should stop whichever policy it is that encourages ever-increasing reserves of foreign currency. This is one of the few lessons we can draw from the US bond crisis.”Former monetary policy director of the People’s Bank of China Yu Yongding in an interview with the British paper Financial Times, calls for a free flotation of the Chinese yuan to prevent “destructive losses” from its expanding investment in the greenback.

“What a pity it is that a third-party investigation system has been the sleeping beauty in our Constitution for over 30 years.Critic He Weifang adds his voice to calls for an independent inquiry into the Wenzhou train crash July 23.

“I have been to more than 60 countries.”Xu Jin, vice-mayor of Yibin, Sichuan Province in an interview with a local reporter. His remarks have triggered widespread calls for an inquiry into official expenses after doubts surfaced about the justification for his many overseas trips.

- “Where would you most like to visit?”- “The moon, because there are no people there.”Chinese basketball star Yao Ming, who recently announced his retirement, reveals what he’d most like to do with his free time. “We should define specific criteria to judge whether inflation control is really effective. If a 10 or 20 percent success rate could somehow be considered effective, it would be a piece of cake.”Economist Liang Xiaomin, interviewed in Southern People Weekly, struggles to agree with government assertions that China’s central bank has brought runaway inflation under control.

“How could I know whether or not we have carried out an environment test report? How can you call me directly? Is a bureau director so cheap that nobodies like you can just call them up?”Chen Guiguang, the Director of the Fujian Environment Bureau gives a curt response to a reporter enquiring about an environmental investigation into a local factory.

“Beijing’s ‘literary youth’ are now standardized – they’ve been on TV once, published one book, taken one trip to Tibet and believe in Jesus …. Actually, most don’t genuinely believe in Jesus, but just place Him alongside Hermès and Louis Vuitton.” Popular online critic Yao Bo on the growing trend towards Christianity among China’s young socialites.

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US Vice-President Joe Biden, made his first visit to China this year from August 17 to 22, once again putting Sino-US relations in the spotlight.

Following Standard & Poor’s downgrade of the US credit rating as a result of partisan politics stymieing fiscal policy in Washington, Biden’s trip was seen as an attempt to reassure its largest overseas creditor, as Biden emphasized in a speech at Sichuan University, that the US is confident it can revive its flagging economy.

China’s State media ran a glut of editorials slamming the US for “debt addiction,” echoing outspoken US politicians in its calls for Washington to “live within its means.” Such calls stem from self-interest, with many prominent Chinese economists offer-ing suggestions for offsetting any po-tential financial meltdown in China stemming from its overreliance on foreign currency.

However, given that Biden’s trip came at the invitation of his opposite number in China, Xi Jinping, widely touted as Hu Jintao’s successor, many domestic analysts believe Biden’s ar-

rival is aimed at strengthening bilat-eral ties following saber-rattling over a series of issues such as continued US arms sales to Taiwan, trade imbalanc-es and the value of the Chinese yuan.

In the wake of the debt crisis and turmoil in the global market-place, Obama’s approval rating has plunged, and Biden, a popular char-acter in Washington, will likely be crucial to the President’s reelection campaign. While his visit was marred by scuffles between Chinese and for-

Biden in ChinaLeading News

Business

CCTV Attacks BaiduChina’s powerful State broadcaster, China Central Television (CCTV), has televised four days of programming criticizing the country’s leading search engine Baidu for allowing phony websites to advertise on its search results.

Revealing a series of cases of online fraud such as phony ticket sellers, CCTV reports claimed that Baidu’s “Phoenix Nest” advertising system is engaging in profiteering, listing websites according to payment, not reliability or popularity.

Baidu suffered a 3.67 percent drop in its stock price following the CCTV re-ports and soon claimed in an open apol-ogy that it had expelled the advertisers in question from their listings.

However, many netizens have called into question the motivation behind this attack, especially after some Sina microb-loggers revealed that CCTV has secretly launched a beta version of its own heav-ily-censored search engine. Baidu’s su-premacy may be undermined by its lack of ties to the central government, which has increased its incursions into lucrative Internet services formerly dominated by private enterprises.

Law

China to Revise Criminal ProcedureThe National People’s Congress, China’s highest legislative body, pledged in late August to “review” a new draft of the country’s Criminal Procedure statute.

Following the first revision, made 15 years ago, it is the country’s second major revision of acceptable practices in the treatment of suspected criminals. One major change is the outlawing of using torture to extort confessions, as well as forcing guilty pleas on all suspects. However, the new draft also extends the right to tap phones to procuratorates, ostensibly to reduce police reliance on torture.

The draft has also aroused concern by asserting that parents, children and spouses of any suspect will have the right to refuse to testify in court, a clean break with Chi-na’s support for “sacrificing blood ties to denounce family members,” a prominent feature of Chinese legal procedure since the establishment of the People’s Republic of China in 1949.

eign media during the Beijing press conference, and a fistfight between US and Chinese basketball players during a so-called goodwill game at Beijing’s National Stadium, the usually gaffe-prone Biden didn’t put a foot wrong in his efforts to charm his hosts. Qiu Feng, the US issues vice-director of the Chinese Academy of Social Sciences, be-lieves that Biden’s aim has been to “show a responsible US” to the world’s second-largest economy.

In the wake of the debt crisis Obama’s approval rating has plunged, and Biden will likely be crucial to the President’s reelection campaign

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Society

Guangxi Cracks Down on Pyramid Schemes

In mid-August China’s Guangxi gov-ernment rolled out a clampdown on pyramid schemes, leading to the im-plication of over 10,000 people and the arrest of 300 more.

Located in southern China, close to the financial hubs of Hong Kong and Shenzhen, Guangxi has seen an explosion of pyramid schemes since the late 1990s. Orchestrators often lured in consumers by emphasizing the province’s status as part of the Sino-Asean Free Trade Region and Beibu Gulf. Meanwhile, rapid urban development also led local residents to rent idle apartment space out to traveling pyramid salesmen who were more likely to pay high rent than mi-grant construction workers.

China’s lack of laws pertaining to pyramid and Ponzi schemes has left local lawmakers in a quandary over how to prosecute those arrested. Meanwhile, many more schemes may have passed under the police radar.

Economy

China Issues GDP Quality RatingOn August 1, China’s main State think tank, the Chinese Academy of Social Sciences, issued the coun-try’s first assessment of GDP quality for its 31 provinces, municipalities and autonomous regions.

Using five criteria including economic growth, social development, environmental protection, liv-ing standards and governance, the new rating system placed Beijing in the top spot, followed by Shanghai and affluent Zhejiang Province.

In contrast to its GDP quality rating, Beijing ranked last in GDP growth for the first half of 2011, which experts have attributed to the local government’s crackdown on the real estate market and car ownership, formerly the capital’s growth engines. The city also plans to move steel conglomerate Shougang Group out of the city in order to reduce urban pollution.

Experts said big cities like Beijing and Shanghai have shifted policy towards high-tech and service industries, while many other regions, especially those in China’s impoverished west such as Qinghai and Gansu, continue to struggle for improved GDP growth.

Hunting has become a hot topic after an animal hunting committee authorized by the Forestry Ministry recently approved two applications by foreigners for hunting permits.

According to the media, applicants plan to kill six bhara and four tibetan antelope in Qin-ghai Province, prompting an outcry from 70 animal rights organizations that view this pre-liminary approval as a sign that the government is looking to lift a five-year ban on international hunters.

Both applications are pending approval from the ministry. Wang Wei, a Chinese agency specializing in hunting applications, argued in a press conference that restricted hunting al-lows for better protection of China’s dwindling protected species, though animal rights activ-ists claim that a resumption of international hunting is purely for commercial benefit. Many organizations have called for a public hearing concerning any future approvals, as well as the full disclosure of the details of each application.

After Typhoon Muifa swept across China’s east coast, resulting in widespread damage to coastal defenses, Dalian’s municipal government finally agreed to move its unpopular PX chemical plant following mass protests outside the local govern-ment headquarters, leaving the future of this billion-dollar concern in doubt.

Typhoon Muifa broke a dam attached to the PX plant, causing seawater to back up into the site. Worrying that the 700,000-ton chemical tanks would leak under the typhoon, residents evacuated their homes and thronged outside government buildings demanding the plant’s re-moval.

Despite the government’s promise to relocate the plant, a move which has been planned for some time, media reports said officials had failed to reveal any details of the move.

With chemical industries booming in China,

chemical pollution from factories clustered along the coast and major inland waterways is a pri-mary environmental threat. Just two months prior to the protests in Dalian, a chemical plant in Qujin, Yunnan Province, was revealed to have poured 5,000 tons of toxic chemical residue into a nearby riverbed, actions which may threaten the fertility of southern China’s Pearl River Delta.

Environment

Dalian Chemical Project Forced Out

Animal

Doubts over Hunting

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What’s Making China Angry?

What’s Amusing China?

975,081 times between July 26 and August 18 195,339 respondents Most Circulated Post on Sina-Weibo Poll the People

After two-year-old Xiang Weiyi was found alive in the wreckage of one of the Wenzhou train cars after Ministry of Railways (MOR) officials had called off the search for survivors, Chen Lihao, president of a software company, posted July 26 that he will donate one yuan to Xiang each time someone retweeted his post.

Xiang Weiyi was found 21 hours after the crash, which claimed 40 lives. She was discovered crushed under wreckage near the bodies of her dead parents by special

unit officer Shao Yerong, who refused to stop searching for survivors despite an order from MOR officials to “speed up the cleanup.” Shao continued to search through the metal debris with his bare hands and found Xiang trapped crouching in a tiny space in the wreckage.

Chen eventually donated 1,072,417.20 yuan (US$166,840) to mark the time when the girl was saved – 17:20, July 24. One million yuan (US$155,570) went directly to Xiang, with the rest given to Shao and his colleagues as a reward for their courage and integrity.

Are you satisfied with the Ministry of Railways’ handling of the Wenzhou train collision?

What’s Shocking China?

If Mark Twain was right when he said “Every time you stop a school, you will have to build a jail,” then Beijing city authorities will need to draw up plans for 24 new jails, to match the number of temporary schools for the children of migrant workers that were closed in August this year. Authorities claimed the schools lacked official credentials and were op-erating “illegally.” The closures have left more than 14,000 children with no access to education – just one of the many rights denied to migrant workers working in the capital.

The school closures are part of an ongoing crackdown on unregistered migrant workers by Beijing’s municipal government, which began last year with a blanket ban on the renting out of basements, often used by migrant workers as cheap housing. After netizens responded angrily to the school closures, the city government issued a statement claiming the displaced students would be “channeled into official schools nearby.”

What the statement didn’t mention was that most of these youngsters lack the documentation required to register in a public school. Five cer-tificates are needed – including a temporary residence permit proving that at least one of the child’s parents is a legal Beijing resident, as well as documentation proving that the child has no alternative custodian in their hometown. Lacking such essential permits would have been the main reason these children were enrolled in migrant schools in the first place.

Source: www.weibo.com

An adult Onesie, dubbed “the ball-hold-ing costume” by Chinese netizens, was designed for performers at the opening ceremony of the Shenzhen Universiade to prevent their shirts from flapping up-wards during dance performances and revealing bare flesh. Images of people wearing these unusual garments went vi-ral overnight.

Xiao Zeng, a 20-year-old busboy from Hu-bei Province, had eight stitches removed from a sutured hand wound without an-esthetic when, after completing the stitch-ing, his surgeon discovered he couldn’t af-ford to pay his 1,830 yuan (US$286) bill.

The young man was forced to trawl the streets for a better deal, finally negotiating a bill of 800 yuan (US$125) for the same procedure at a different hospital. The in-cident has caused anger online at China’s profit-oriented healthcare system.

Very Much Almost Pah!

3,096(1.6%)191,146(97.7%)

1,413(0.7%)

“The city is trying to reduce its population by depriving migrant children of the right to an education. This is evil and foolish. In the 1920s, Beijing’s universities, churches, even police stations, would build schools for the poor, as the whole of society benefits from their education”

– Ye Kuangzheng, poet and scholar

Source: www.weibo.com

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9NEWSCHINA I October 2011 Who’s

Not?

Yu Shuhua

A Chongqing nurse saved a drowning senior’s life by giv-ing him emergency mouth-to-mouth resuscitation but van-ished before passersby could speak to her. Microbloggers later discovered her iden-tity and place of work – a nearby hospital.

Fangzheng County

The county govern-ment of this area of northeast China’s Heilongjiang Province

erected a stone monu-ment to Japanese set-tlers who died during the Empire of Japan’s World War II occupa-tion. Due to a vitriolic opposition campaign launched by netizens from the south of China, the authorities removed the monu-ment August 6.

Zhao Zijun

A government of-ficial from Chengdu, Sichuan province discharged from of-fice after flirting with a young female mi-croblogger on weibo.com, unaware that his messages were pub-licly visible.

Who’s

Hot?

Wang Keqin

An investigative jour-nalist who launched a charity fund to treat more than one million sufferers of miner’s lung in west-ern and central Chi-na, many of whom worked in mines without respirators or dust masks. With over 570,000 new cases of the disease reported every year, miner’s lung is China’s most prevalent work-related illness.

TOP BLOGGER PROFILE TOP BLOGGER PROFILE Yao ChenQueen of the Micro-blog

Top Five Search QueriesOn over the seven days to August 18

Lives of Omission: Recently aired Hong Kong TV action drama (564,906)

People’s Square Murder: A 38-year-old man killed his 30-year-old girlfriend at a restaurant in a public square in Shanghai (231,139)

1

3

5

2Chinese Valentine’s Day: Blessings for China’s day of romance (lunar July 7) (445,577)

4

Yes or No: A Thai soap opera about a lesbian affair between college roommates (452,027)

Very Much Almost Pah!

Typhoon Muifa: The super typhoon that swept East China (394,752)

Chinese actress and Internet per-sonality Yao Chen has secured more than 10 million followers on popular microblog Weibo, only two million fewer followers than Lady Gaga’s Twitter account.When the number of Yao’s followers overtook that of TV personality Oprah Winfrey in Janu-ary, webhost Sina crowned her “queen of the microblog.” Yao is the first non-Twitter-using microblog-ger among the world’s 10 most-followed celebrities, popular for her “honest” remarks, which Sina likened to “texts between old friends.”Yao is also the first honorary Chinese patron of the United Nations High Commissioner for Refugees.

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POLITICS

I n a nationally broadcast speech in com-memoration of the 90th anniversary of the Communist Party of China (CPC)

on July 1, President Hu Jintao took the op-portunity to outline what he termed “the four threats from within” currently facing the Party, namely decaying morale, regres-sion of officials’ ability, remoteness from the masses and corruption. Hu urged Party officials to “grasp the focal issues of China’s development and make new theoretical de-velopment to maintain the Party’s vitality.”

Following Hu’s speech, Party leaders in a number of major provinces and municipali-ties launched different initiatives to address the issues raised in Hu’s speech.

‘Common Prosperity’ vs ‘Social Construction’Efforts by two provincial-level leaders, Guangdong Party Secretary Wang Yang and Chongqing Party Secretary Bo Xilai, have been particularly attention-grabbing. Even before Hu’s July 1 speech, the Chongqing municipal authorities had already sponsored a well-publicized seminar entitled “com-mon prosperity and socialism with Chinese characteristics,” headed by none other than Chongqing Party secretary Bo Xilai. On July 20, the concept of “common prosperity” was officially launched during a Party meeting in Chongqing. Based on the idea, the Chongq-ing municipal government pledged to nar-row the “three different types of income gap,” those between the rich and the poor, between urban and rural residents, and between dif-ferent regions.

To achieve this, the Chongqing govern-ment pledged to implement a host of wide-ranging and seemingly ambitious initiatives, some more achievable than others, including raising the average income across all sectors,

lowering the Gini Coefficient – an income disparity index, to 0.35 from 0.42, reducing the ratio between urban and rural incomes to 2.5, limiting the income ratio between Chongqing’s economic center and peripheral areas to 2:1 and placing 30 percent of all resi-dents with mid- or low-level income in gov-ernment-subsidized housing. “If the govern-ment exclusively focuses on economic devel-opment, and is indifferent to people’s woes, we’ll run into a dead end,” said Bo upon the release of these targets, echoing Hu’s speech.

Unlike its earlier controversial drive to promote revolutionary songs, Chongqing’s initiative of “common prosperity” has won considerable support among local residents, as well as numerous experts. Income disparity is one of the most serious social problems fac-ing China. Wang Weiguan, vice-president of the Chinese Academy of Social Sciences, for example, urged that all parts of the country follow Chongqing’s example in redressing the wealth gap.

Bo’s concept of common prosperity has been developed in part from his earlier asser-tion that “fairness in sharing the cake is more important than making the cake bigger,” re-ferring to the relationship between social jus-tice and economic development.

However, Guangdong Party Secretary Wang Yang seems to have a different opinion. In a local Party meeting on July 10, Wang said that the government’s focus should re-main on “making the cake bigger.”

“How to divide the cake is not our chief concern at present,” Wang said. Instead of “common prosperity,” the Guangdong gov-ernment placed “social construction” at the center of its agenda, indicating that govern-ment powers should be largely delegated to social (non-governmental) organizations, therefore helping create a “limited govern-

ment” and in turn, a “larger society.” According to Professor Xiao Bin from the

Institute of Political and Public Adminis-tration at Sun Yat-sen University, both the Guangdong and Chongqing approaches can be traced back to ideas first put forward by Deng Xiaoping, the architect of China’s re-form and opening up. When much-needed reform of China’s economy was impeded by Leftist ideology in the late 1970s and early 1980s, Deng responded by stating that the country should allow “Some people to get rich first,” and let the wealth we generated trickle down, thereby ending the ideological wrangling that had stymied China’s attempts at reform. Deng’s ideas later became the guiding principle of the Party.

“While the Guangdong approach still fo-cuses on the first half of Deng’s assertion, the Chongqing approach focuses on the latter half,” said Professor Xiao. “Both approaches reflect efforts to initiate reform within the current political framework. Currently, the top leadership has not shown a definite pref-erence for either of the approaches. It will not be clear which approach is the most ap-proach until after the 18th Party Congress is convened in 2012.”

Xiao also told NewsChina that the policies developed in Guangdong and Chongqing are by no means surprising. In Guangdong,

Varying Agendas

Answering the CallHu Jintao’s recent call for increased Party “vitality” has been met with a varied response, with some localities more eager than othersBy Li Jingrui

“Fairness in sharing the cake is more important than making the cake bigger.”

P1-11Oct2011.indd 10 8/25/11 5:28 PM


where labor-intensive industries have come under pressure due to increasing costs and a stronger Chinese yuan, the government has struggled to maintain a healthy economy. In Chongqing, a mountain-encircled and rela-tively economically backward municipality, it remains near impossible to compete econom-ically with the country’s costal areas such as Guangdong and Shanghai. According to Pro-fessor Xiao, this has resulted in Chongqing having to choose its own unique approach in order to “stand out.”

Party ClassIn addition to Guangdong and Chongq-ing, other provinces and municipalities have also looked to develop their own responses. In Shanghai, Party Secretary Yu Zhengsheng chose to give a special “Party class” to more than 5,000 college students and faculty, who were either Party members or aspired to join,

at Shanghai Jiaotong University. In a widely reported speech, Yu offered his interpretation of the success and problems of the Party in its development over the decades while also discussing Western political systems and ad-dressing a range of sensitive topics such as the Cultural Revolution and the evaluation of the late Chairman Mao Zedong.

Although Yu’s points of view did not devi-ate too far from the Party line, the fact that he openly talked about sensitive issues indicates that the Party may have to face up to its own history in order to remain “vital.”

“The Party will have a bright future if the Party is strong and can redress its own mis-takes; if the Party is weak, it has no future,” Yu said in answering a question on the Party’s future. According to Yu, the future lies in “seeking a breakthrough in the institutional framework in which the Party is subject to the supervision of the people and society.”

Some local Party leaders, but appeared less ideology-driven, also provided their own an-swers to Hu’s call for maintaining the Party’s vitality. In Wuhan, capital of central China’s Hubei Province, for example, Party Secretary Ruan Chengfa launched an “anti-mediocrity” campaign, aimed at shaping Wuhan into the country’s “most efficient and cost-effective city with the least red-tape.” In Hunan Prov-ince, central China, 29 high-ranking officials were removed from their posts for negligence or inefficiency in an apparent effort to make the Party more accountable to the public.

According to Professor Wang Yukai, vice-president of Chinese Public Administration and Reform Society, preference for different approaches among local governments has re-lied largely on the personality of powerful lo-cal officials. “But the consensus is that reform has become imperative to prevent major up-heaval in China,” Wang told NewsChina.

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Chongqing residents line up to apply for subsidized houses on February 12, 2011

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COVER STORY

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While the repatriation of China’s number one fugitive Lai Chanxing has given anti-corruption hawks something to crow about, thousands more are absconding with billions in embezzled public funds every year. NewsChina exposes the scale of this white collar exodus, and asks if the nature of its governance means that China has already lost the war on corruption

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China’s Most Wanted

ONTHERUNLai Changxing’s repatriation to China has renewed public interest in the growing number of so-called “runaway officials,” corrupt businessmen and government officials who flee the country with millions in public funds

By Xie Ying and Yu Xiaodong

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A fter 12 years on the lam, Lai Changx-ing, China’s most infamous fugitive, was at last returned to the country of

his birth and into the hands of the Chinese authorities, after being officially repatriated by the Canadian government on July 23.

As founder and chairman of Yuanhua In-ternational Corporation, Lai presided over an elaborate economic trading network that specialized in importing restricted foreign products such as cars and cigarettes. Such was the vastness of Lai’s empire, that at its height, the company is thought to have been respon-sible for up to one-sixth of China’s national oil imports, while its profits are believed to have totaled in excess of 50 billion yuan (US$7.7bn).

Operating out of the company’s base in Xiamen, Lai, or “Fatty Lai” as he is occasion-ally known, is alleged to have avoided 30 billion yuan (US$4.6m) in tax. That sum, together with the company’s valuation, was equivalent to one-tenth of the country’s gross national revenue in 1999.

Such huge figures alone are enough to have earned Lai the title “China’s most wanted fugitive,” but the sums involved represent only part of the case. Conservative estimates put the number of those implicated in Lai’s smuggling ring as high as 600, including 70 who have fled the country. Among them are scores of high-ranking government officials.

Lai’s multi-million dollar seven-storey “Red Mansion” in the costal city of Xiamen, is so named due to its resemblance to a house in the classic Dream of the Red Chamber, and now serves as an anti-corruption educational center. Here, Lai reportedly hosted over 2,000 government officials at various times during the mid to late 90s. Upon arriving at

the mansion, guests were treated to an array of vintage wines, expensive foods and sexu-ally available hostesses: the higher an official’s title, the more extravagant the reception on offer.

It is no surprise that even today, mention of Lai’s case is liable to create a stir in certain circles, as Lai himself has said, “[if I return] many government officials will not be able to sleep. Incidents will happen.”

Yet that has not stopped the government from dubbing Lai’s return a victory for Chi-na’s anti-corruption campaign. “Lai’s arrest has conveyed the justice of law, and should ring the alarm for other economic criminals who have fled abroad,” exclaimed the Minis-try of Public Security.

Not that this is the first case of its kind. As early as 2004, another “milestone” case was met with similar fanfare, only to fade quickly into relative obscurity. In the then high-profile case, Yu Zhendong, a former Bank of China district director, was turned over to Chinese authorities by the US and later sen-tenced to 12 years in prison for embezzling hundreds of millions of US dollars.

“There is no safe harbor for fleeing offi-cials,” commented the State-owned People’s Daily on announcing the verdict.

However, despite claims to the contrary, China has witnessed a dramatic surge in the number of corrupt officials who have fled overseas during the last decade.

Endemic CorruptionIn a July report advocating increased govern-ment efforts to help combat fugitive officials, the State-owned People’s Daily cited data from the Chinese Academy of Social Sciences (CASS) and the Disciplinary Commis-Ph

oto

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Beijing

Tianjin

Hebei

Shanxi

Liaoning

Jilin

Shanghai

Jiangsu

Zhejiang

Anhui

Fujian

Jiangxi

Shandong

Henan

Hubei

Hunan

Guangdong

Guangxi

Hainan

Chongqing

Sichuan

Yunnan

Shaanxi

Xinjiang

Heilongjiang

Who’s Getting Away With What: Province-by-Province Breakdown, 1992-2007

Funds transfered (US$bn)

Provincial GDP in 2006 (US$bn)

Number of officials who have fled abroad

2.5

1.4

3.1

1.7

11.7

2.6

8.5

25

14

8.6

3

36.5

2.6

15

5

6

7

5.5

2.7

1.8

5

6

2.8

338.8

56.7

51.7

45.2

13.6

62.1

60.6

79.4

80.3

55.1

61.3

56.1

225

122

340

236

367

117

230

206

313

142

97

480

125

352

124

365

300

1,640

217

140

175

144

238

146

260

P12-23Oct2011.indd 16 8/25/11 5:31 PM


sion of the CPC, in which it was claimed that over 4,000 corrupt officials had fled abroad since 1980, taking with them a combined total of US$50 billion in public funds, or US$12.5 million per person.

The report led to widespread public anger, later leading the newspaper to issue an open apology, claiming that the data was mistak-enly drawn from an “unconfirmed online source.” However, the data was in fact widely available, having been originally revealed in 2004 in the Legal Evening newspaper, which credited the figures to the Ministry of Com-merce. The ministry denied all knowledge of the data in 2010.

The apology did little to quell the public mood, and instead acted to draw further attention to supposedly “erroneous” data, leading many to suspect that the number of fleeing officials was in fact far higher than the available data suggested.

Two months ago, a report commissioned by the People’s Bank of China (PBC) into corruption-related financial issues appeared to corroborate such doubts. According to the report, an estimated 16,000 to 18,000 cor-rupt officials have fled abroad since 1992, taking 800 billion yuan (US$123bn) in pub-lic funds. Although the writer of the report made an open apology soon after the report was issued, claiming the data was collected online and never confirmed, a research team at Peking University reached a similar conclu-sion in 2009, this time placing the estimate at 10,000 fugitive officials, with a combined to-tal of 650 billion yuan (US$100bn) in public funds since 2001.

Although the government has neither confirmed any corruption-related data nor publicized official statistics of its own, infor-mation drawn from provincial sources offers something of a glimpse into the true scale of the problem. For example, between 1992 to mid 2007, 1,640 officials absconded from prosperous Guangdong Province alone, tak-ing with them a combined total of US$155 billion, almost half of Guangdong’s GDP in 2006. In Fujian, another prosperous coastal province, 480 officials fled during the same period, taking US$36.5 billion, almost 40 percent of the province’s GDP in 2006.

The annual working reports of the Su-preme People’s Procuratorate, the country’s highest legal agency, offer further proof. Ac-cording to the reports, the annual num-

Who’s Getting Away With What: Province-by-Province Breakdown, 1992-2007

155

111.6

62.1

335.5

96.8

96.9

161

282.3

60.6

97

79.4

202.2

278.4

133

80.3

119.6

61.3

150.2

100.1

Source:Agencies

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ber of wanted officials has increased to over 1,200 in 2010 from several hundred in 2000, while stolen funds have increased from doz-ens of billion yuan from several hundred mil-lion yuan 10 years ago.

A report issued in 2008 by the US-based Chinese language newspaper, The World Jour-nal, claimed California police had revealed that China has provided US law enforce-ment agents with a list of over 1,000 corrupt Chinese officials currently in the US, most of whom had transferred more than US$10 million in assets into US accounts.

Getting “Naked”The notion of a corrupt official fleeing the country has become so commonplace that a new term, luoguan or naked official – has been coined to describe the phenomenon. The tem refers to officials whose close family members have emigrated to other countries, and whose wealth has also been transferred (often illegally) overseas.

By having their families legally emigrate to other countries and obtaining official resi-dency status, officials are able to join their families should a sudden anti-corruption investigation occur, or when they simply feel that they have obtained enough wealth.

“Faced with the lingering threat of poten-tial repercussions at home, a foreign country is a safer place for corrupt officials to enjoy their ill-gotten wealth,” said the PBC report.

Among the most high-profile corrupt of-ficials to have fled the country is Jiang Jifang, the former director of the Henan Tobacco Bureau, who along with over 200 million yuan (US$30.8m) in public funds, joined his wife and daughter in the US after being tipped off about an upcoming investigation into illegal tobacco transactions.

A more recent case is Yang Xianghong, the Party secretary of Lucheng district in Wen-zhou, Zhejiang, who refused to return to China after an official trip to France in 2008, insisting that a medical condition prevented him from flying. Similar to Jiang, Yang is a typical “naked” official, whose daughter was granted permanent French residency two years before his arrival.

In an effort to prevent naked officials from fleeing, the central government has issued sev-eral decrees over the past year, tightening travel controls for officials, and requiring certain high-ranking officials to periodically report the

whereabouts of their family members. However, few believe the measures will

prove to be effective. “For the right money, anyone can fake an

identity card or passport,” an anonymous businessman who has engaged in the sales of faked ID cards and travel certificates told NewsChina. “You can even get a real identity card or a passport under an assumed name so long as you have the right connections.”

According to the PBC report, it is not un-common among powerful Chinese officials to have several identity cards or passports. For example, Gao Yan, the former Party secretary of Yunnan Province who fled to Australia in 2002 to escape charges of corruption, was reportedly in possession of at least three dif-ferent identity cards, four passports and one certificate granting entry to Hong Kong and Macao, while Chen Liangyu, the former Shanghai mayor who was sentenced to 18 years in prison for corruption in 2008, is al-leged to have held as many as seven different Western nationalities.

Fleeing officials will typically transfer huge funds overseas through numerous illegal trade routes and underground financial or-ganizations. Xiao Yang, the former president of the Supreme People’s Court, revealed in his book Anti-Corruption Report that from 1988 to 2002, US$191 billion in public funds were transferred illegally out of China, equivalent to US$12.8 billion a year.

Research carried out by the State Adminis-tration of Foreign Currency has indicated that about US$10 billion in public funds were il-legally transferred abroad from 1997-1999, while Fan Gang, the director of the National Economy Research Institute gave a much high-er figure, estimating that in 2000 alone, China lost US$48 billion, US$7.3 billion more than the total foreign investment that year.

According to the PBC report, most fleeing officials prefer to transfer their assets via Hong Kong or Macau. In 2002, the Hong Kong Independent Commission against Corrup-tion smashed a cross-border underground money laundering group which had report-edly laundered a total of 50 billion Hong Kong dollars (US$6.2bn) in stolen or embez-zled public funds between 1996 and 2002. “China is now home to roughly 1.18 mil-lion suspected ‘naked’ officials, over 30,000 per province,” Lin Zhe, a professor of the Party School of the CPC Central Committee told Global People magazine last year. “Worse still, few provinces have worked out effective measures to supervise them,” she added.

percentage of fugative officials who work in the financial sector, State-owned or government-backed enterprises

Ideal LocationsThe destinations of choice for fleeing officials

The US, Canada, Australia and Europe:Owing to their combination of robust legal sys-tems, high standards of living, multiple investment opportunities and a lack of formally recognized ex-tradition treaties, Western countries have become the destination of choice for high-ranking officials keen to transfer large sums of money.

Africa, Latin America and Eastern Europe:Lax visa policies, loose governmental regulations and a lack of any formally recognized extradition treaties, make smaller typically less developed countries ideal safe havens for fleeing criminals. Ecuador, Ukraine and Kenya are thought to be among the most popular destinations.

Thailand, Myanmar, Singapore, Mongolia, Malaysia and Russia:Popular among low-ranking officials with smaller amounts of funds, neighboring countries offer easy access to visas and low living costs.

British Virgin Islands, Cayman, Bermuda, Samoa, Hong Kong and Macao:Considered ideal transfer locations, off shore invest-ment hubs provide feeling officials with a variety of money laundering options. Hong Kong residency offers the added advantage of lighter visa restric-tions for British Commonwealth nations.

Source: People’s Bank of China

Source: Chinese Academy of Social Sciences

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China’s Most Wanted

MISSION UNACCOMPLISHEDDespite several cases of high-profile economic criminals being successfully brought back to China to stand trial, the majority of fleeing officials, along with large sums of public money, remain at large, mostly in Western countriesBy Yu Xiaodong

M ulti-million dollar properties, unrestrained gambling and long costly lunches of fresh abalone and

shark fin soup -- such was the life of Lai Changxing during his initial few years in his adopted home of Canada. Like many of the economic criminals who have fled China in recent years, Lai’s lifestyle was extravagant to say the least. But, unlike the majority of fleeing officials and corrupt business people, Lai has been extradited back to China. Thou-sands more are still at large.

Compared with China’s neighboring countries which usually attract lower-ranking officials that are on the run due to easier and quicker access, Western countries like the US and Canada remain the preferred destination for senior officials involved in large-scale cor-ruption cases.

In cities such New York, Los Angeles, Van-couver and Toronto, the number of disgraced Chinese officials and economic fugitives is so large that many have formed their own com-munities, heaving with well-heeled wives, mistresses, friends and family members.

“I am surprised that there are so many rich Chinese children around me – they’re noticeable because they change their car each year,” Liu Juan, a Chinese student in Toron-to told NewsChina. “I know many of them are from government families, though I have no clear idea whether or not their wealth was obtained legally.”

“Boasting developed economies and total-ly different legal systems, Western countries provide a high-standard of living and su-Lai Changxing is taken into custody after being repatriated from Canada, July 23, 2011

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COVER STORY

superior consume options,” explained Huang Feng, an expert on international criminal law from Beijing Normal University.

However, for China’s rich fugitives, one im-portant reason to seek sanctuary in the West is their lack of formal extradition agreements with China.

“Western countries have considerable mis-understandings, prejudice and distrust when it comes to China’s legal system,” said Professor Feng.

The result is that these fugitives often por-tray themselves as victims of an allegedly un-just legal system to win sympathy from West-ern governments.

The situation is perhaps best encapsulated by Lai, who after entering Canada on a tour-ist visa in 2000, applied for political asylum. Although the Canadian authorities denied his application and identified him as an illegal immigrant, Lai claimed that he would face torture and execution in China, and made repeated appeals for over a decade. In the pro-cess, the case became undeniably politicized, with neither side willing to back down.

Death Penalty One major obstacle to any future extradi-tion agreements between China and Western countries is the existence of the death penalty in China. Currently, all 27 EU member states as well as Canada, Australia and New Zealand do not practice capital punishment.

To deal with this problem, China has long pledged to refrain from executing fugitives who are repatriated. In a high-profile case in 2004, Yu Zhendong, a former Bank of China branch director, was repatriated from the US on the understanding that China would not apply the death penalty. Yu was later given a jail term of 12 years, a rather light sentence by Chinese standards, given the sums of money involved (US$480m). Under China’s criminal law, an occupational crime involving amounts over 100,000 yuan (US$15,600) is subject to a minimum jail term of 10 years.

Being one of the first repatriated fugitives from a Western country, it is believed that Yu’s case was intended to set a precedent, in order to help ease concerns in the West over the is-sue of capital punishment.

In 2007, China signed an extradition deal with Spain, the first of its kind with a West-ern country, followed by later agreements with

ILL-GOTTEN GAINS

LaiChangxing FounderandchairmanofYuanhuaGroup,Xiamen 53 Canada repatriated 7,700

YangRong PresidentoftheState-ownedHuachenGroup, 46 US atlarge 1,076

Shanghai

XiaoHongbin PresidentoftheState-ownedDadongjiang 43 Australia repatriated,sentenced 760

IndustrialCo.,Ltd.,Shanghai to15yearsinprison

YuZhendong PresidentofaGuangdongbranchunderthe 38 US repatriated,sentenced 483

BankofChina to12yearsinprison

HuangQingzhou VicegeneralmanageroftheHongKongbranch 47 Thailand repatriated 166

underGuangdongInternationalInvestmentCorp.

GaoShan PresidentofaHelongjiangbranchunderthe 43 Canada atlarge 129

BankofChina

QianHong PresidentoftheState-ownedKangtaiGroup, 46 Panama arrestedoverseas 76

Shanghai

ZhongWujian PresidentofthewholsalemarketofHainan 46 Canada atlarge 76

RubberCenter

XuXiaoxuan ManageroftheState-ownedBaminEelectric 40 Australia repatriated 70

EquipmentforCommunicationsCo.,Ltd.,Fujian

ChenManxiong GeneralmanageroftheState-ownedZhongshan 40 Thailand repatriated,sentenced 64

IndustrialDevelopmentCorp.,Guangdong tolifeimprisonment

YangXiuzhu Vice-directorofZhejiangConstructionAgency 58 US atlarge 31

JiangJifang DirectorofHenanTobaccoMonopolyAdministration 59 US atlarge 31

DingLan DirectorofaBeijingbranchunderthe 36 Thailand arrestedinThailand, 30

BankofChina alreadyexectuted

YuZhi’an PresidentoftheState-ownedChinaChangJiang 63 “Philippines” atlarge 15

EnergyCorp.

LiuZuoqing GeneralmanageroftheState-ownedpetroleum 49 US atlarge 15

companyofHeilongjiangProvince

LuHaiying GeneralmanagerofState-ownedYunnan 49 US atlarge 12

SecurityAgency

Fleeing Chinese Officials, by Numbers

Name Formerposition Age Fledto Currentstatus Fund(US$m)

P12-23Oct2011.indd 20 8/26/11 12:23 PM


ILL-GOTTEN GAINS

Source: Chinese Academy of Social Sciences

LaiChangxing FounderandchairmanofYuanhuaGroup,Xiamen 53 Canada repatriated 7,700

YangRong PresidentoftheState-ownedHuachenGroup, 46 US atlarge 1,076

Shanghai

XiaoHongbin presidentoftheState-ownedDadongjiang 43 Australia repatriated,sentenced 760

IndustrialCo.,Ltd.,Shanghai to15yearsinprison

YuZhendong PresidentofaGuangdongbranchunderthe 38 US repatriated,sentenced 483

BankofChina to12yearsinprison

HuangQingzhou VicegeneralmanageroftheHongKongbranch 47 Thailand repatriated 166

underGuangdongInternationalInvestmentCorp.

GaoShan PresidentofaHelongjiangbranchunderthe 43 Canada atlarge 129

BankofChina

QianHong PresidentoftheState-ownedKangtaiGroup, 46 Panama arrestedoverseas 76

Shanghai

ZhongWujian PresidentofthewholsalemarketofHainan 46 Canada atlarge 76

RubberCenter

XuXiaoxuan ManageroftheState-ownedBaminEelectric 40 Australia repatriated 70

EquipmentforCommunicationsCo.,Ltd.,Fujian

ChenManxiong GeneralmanageroftheState-ownedZhongshan 40 Thailand repatriated,sentenced 64

IndustrialDevelopmentCorp.,Guangdong tolifeimprisonment

YangXiuzhu Vice-directorofZhejiangConstructionAgency 58 US atlarge 31

JiangJifang DirectorofHenanTobaccoMonopolyAdministration 59 US atlarge 31

DingLan DirectorofaBeijingbranchunderthe 36 Thailand arrestedinThailand, 30

BankofChina alreadyexectuted

YuZhi’an PresidentoftheState-ownedChinaChangJiang 63 “Philippines” atlarge 15

EnergyCorp.

LiuZuoqing GeneralmanageroftheState-ownedpetroleum 49 US atlarge 15

companyofHeilongjiangProvince

LuHaiying GeneralmanagerofState-ownedYunnan 49 US atlarge 12

SecurityAgency

Name Formerposition Age Fledto Currentstatus Fund(US$m)

Embezzled

Lai Changxing

Gao Shan

Yu Zhendong

Yang Rong

Jiang Jifang

Yang Xiuzhu

Portugal, France, and Australia. In all the agreements, China has either pledged not to seek death penalty during trial, or not to ap-ply it if one is metered out.

However, these measures are controver-sial within China, with some arguing that unequal treatment between those caught at home and those repatriated not only violates the principle of equality under law, but may also encourage corrupt officials to flee abroad.

Maintaining that priority should be given to bringing fugitives to justice, the authorities have further moved to reduce the number of executions at home.

Last year, China moved to remove 13 crimes from the capital offense list, a move considered to pave the way towards dropping white-collar crimes from the list, a prospect public opinion remains overwhelmingly against.

Low Catch RateAccording to Zhu Wenqi, a professor with Renmin University and a former prosecutor at the International Criminal Tribunal for the Former Yugoslavia, China has also tried to promote other strategies in bringing them to justice, such as suing fugitives in their host countries via judicial cooperation with for-eign governments.

In May 2009, two of China’s most wanted, former Bank of China executives Xu Chao-fan and Xu Guojun, were convicted in the US of organized corruption and sentenced to 25 and 22 years in prison, respectively. They were also required to pay the Bank of China US$482 million in losses, while their wives were also sentenced to 8 years in prison.

It is the first case in which China has asked for judicial assistance since the two countries signed an agreement on Mutual Legal Assis-tance on Criminal Matters in 2000. China also signed the United Nations Convention Against Corruption (UNCAC) in 2003 and strengthened its cooperation with Interpol. According to Professor Zhu, several major repatriation cases have been made possible through cooperation with Interpol.

However, these occasional successes pale in comparison with the number of futigives currently on the run.

There is no official data available relating to the number of crime suspects repatriated from foreign countries. The nearest to an of-ficial figure comes in the form of a report

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COVER STORY

from the State-run media outlet, Xinhua, which claims that a total of 90 economic fu-gitives were repatriated from 2005 to 2006. However, not only is this number a tiny frac-tion of the identified fugitives (see graph on page 20-21), most of them listed were not repatriated from Western countries.

In the past decade, around a dozen suc-cessful repatriation cases have been reported. Following Lai’s arrest, details of two more repatriation cases this year also emerged this year. One includes a former executive of a State-owned enterprise repatriated from Ger-many over allegations of embezzling upwards of US$235,000. The other, who is reported to have turned himself in after running out of money in an unspecified European coun-try, is the driver of Yang Xiuzhu, a senior of-ficial, who was arrested by Dutch authorities in 2005. The small-fry status of both suspects betrays the weakness of the ongoing cam-paign.

Moreover, if bringing fugitives back has proved difficult, returning assets and funds

to China has been even harder. In Lai’s case, for example, little is known about the where-abouts of his wealth, alleged to total over 3 billion yuan (US$4.7 bn).

“Fleeing officials will generally bring huge funds with them, which for their destination country means new investment. That’s part of the reason why these countries would rath-er turn a blind eye,” said Professor Huang.

According to Professor Zhu, China is re-luctant to file a civil lawsuit in foreign coun-tries in the name of the Chinese government, as this would effectively mean abandoning the immunity granted to sovereign states and put China in the dock.

Domestic Measures the KeyGiven China’s low success rate in both locat-ing and securing the return of fleeing officials, many are now calling on the government to focus on more preventative-style measures.

According to a 2003 Xinhua report, be-tween September 30 and October 1 2003, a total of 51 fleeing officials were intercepted at

customs. In the following five days, an addi-tional 64 fleeing officials were also intercept-ed, many of whom were carrying large sums of money. The result was achieved through temporarily swapping customs agents be-tween different localities, suggesting that of-ficial corruption extends deep into the border control authorities.

Professor Huang told NewsChina that he recently checked information relating to more than 200 economic fugitives from a single province. Only 10 of them are known to have left the country via an official border crossing, the whereabouts of the rest remain unknown. Huang suspects that many of them have fled the country. “The real num-ber of fled officials is beyond comprehen-sion,” said Huang.

In recent years, the Chinese government has repeatedly stressed that it has been work-ing on a network to prevent economic crimi-nals from absconding. But in the absence of related statistics, the results of these efforts remain unclear.

P12-23Oct2011.indd 22 8/25/11 5:34 PM


“I thought it was a car accident,” re�re�marked Wang Wenhai, a resident of Kashgar in the far west of �in�far west of �in�

jiang. On July 30, he told our reporter he saw a truck smash into a real estate company’s sales office. “I realized it was something else when people started screaming for help and fleeing the scene.”

According to State media, two Uyghur men hijacked a truck waiting at the lights and killed the driver. They then drove the truck into a crowd on the street, climbed out of the wrecked vehicles and began hacking at the survivors with knives. Six people were killed and 28 were injured in the attack. As police

and passersby attempted to subdue the at�tackers, one was killed and the other arrested.

Located in the far�flung western region of �injiang, and close to the border with �aki� and close to the border with �aki�stan, Kashgar, an ancient outpost of the Silk Road, has become a flashpoint for violence between Uyghurs, �injiang’s largest ethnic group, and Han, China’s dominant ethnic group.

�olice investigators connected the attack with the explosion of a minivan two hours before which had taken place five miles away from the scene of the knife attack. State media only briefly reported the explosion, providing no details. But according to a report by Hong

Kong�based newspaper Ming Pao, explosives were found inside the minivan along with the body of a young Uyghur killed in the explo� a young Uyghur killed in the explo� Uyghur killed in the explo� killed in the explo�sion. Two additional suspects had reportedly fled the scene, and were later named as co�assailants in the knife attack.

It is now believed that the attackers had originally planned a car bombing, but their explosives had detonated prematurely, lead�s had detonated prematurely, lead� detonated prematurely, lead�tonated prematurely, lead�nated prematurely, lead�, lead�ing to the ill�conceived knife attack.

While details of the knife attack were still emerging, local media reported another at�, local media reported another at�tack in the same city the following day, July 31. This time, the target was a small barbecue restaurant in downtown Kashgar, which

POLITICS

Xinjiang Attacks

The Bloody WeekendTwo gruesome attacks on civilians in Kashgar spread further unease in volatile Xinjiang By Cheng Yongsun in Kashgar and Yu Xiaodong

Phot

o by

Cao

Zhi

heng

/Xin

hua

The burned-out remains of a Hotian police station, Xinjiang after the attack, July 18, 2011

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was attacked by a group of men armed with knives at around 4:30 PM. When our News-China reporter arrived at the scene� b�ood�reporter arrived at the scene� b�ood�arrived at the scene� b�ood�b�ood�stains on the ground cou�d sti�� be seen behind the po�ice cordon.

Fan Chuncheng� a �oca� storekeeper� wit��oca� storekeeper� wit�� wit�nessed the attack. “Every one of them wie�ded knives and they stabbed and hacked at every� and they stabbed and hacked at every�at every�every�one they cou�d get ho�d of�” he to�d News-China.

State news agency Xinhua �ater reported that the attack had invo�ved 12 �yghur sus� the attack had invo�ved 12 �yghur sus�had invo�ved 12 �yghur sus�invo�ved 12 �yghur sus�pects� who first hur�ed an exp�osive device into the restaurant before attacking staff� customers and passersby. Six peop�e were reported ki��ed and 12 were injured. Po�ice then arrived at the scene and shot four of the attackers dead and arrested four others. The remaining four men fled the scene� and two were shot dead by pur�suing po�ice the next day. The two surviving men remain at �arge.

According to Xinhua� three po�ice officers were reported�y injured in the attack. It was �ater announced that one of the detained sus� detained sus� sus�pects had died in hospita�.

Serial Attacks?After the second attack on Ju�y 31� the Xin�jiang authorities officia��y c�assified both in�cidents as “terrorist attacks.” An officia� state�ment c�aimed that the assai�ants invo�ved in the first attack had been trained in Is�amist extremist camps in neighboring Pakistan.

According to State media� in an ear�ier at�an ear�ier at� ear�ier at�tack on a po�ice station in Hotan� 300 mi�es to the southeast of Kashgar on Ju�y 18� 18 attack�ers raided a �oca� po�ice station. After hur�ing exp�osives at the officers on duty� ki��ing three and severe�y injuring two others� the suspects took six po�icemen and a group of �oca� civi��a group of �oca� civi��oca� civi��ians hostage� refusing to surrender when se�refusing to surrender when se�curity forces arrived. Armed po�ice �ater shot dead 14 attackers and captured the remaining

four. One po�ice officer was ki��ed in the cross�ross�fire and two more were injured.

“By random�y ki��ing innocent peop�e� their purpose was to terrorize the �oca� community�” said Pan Zhiping� director of the Institute of Centra� Asian Studies of the Xinjiang Acad�emy of Socia� Sciences. In Pan’s view� the twin Kashgar stabbings and the raid on the Hotan po�ice station were masterminded by �yghur separatists.

Pan be�ieves these attacks are the continua� these attacks are the continua�tion of attacks carried out by mi�itant groups in the �ast three decades which cu�minated in rioting in the provincia� capita� �rumqi on Ju�y 5� 2009� in which more than 200 peop�e were ki��ed� most�y Han Chinese.

Despite ongoing tensions between ethnic Han and �yghur Mus�im communities in the region� �oca� �yghurs have tried to distance themse�ves from vio�ent extremism. “Th e ac�vio�ent extremism. “Th e ac�“Th e ac�The ac�tions of radica�s do not represent Kashgar’s residents� nor do they represent the �yghur peop�e� and these acts are into�erab�e�” 60�year�o�d Mehmet Petimem to�d NewsChina.

After Soviet troops withdrew from Afghani� withdrew from Afghani� Afghani�stan in 1987 and with the independence of severa� former Centra� Asian Soviet repub�ics in the fo��owing years� Xinjiang witnessed a spate of bombings and attacks �aunched by ex�ex�tremists seeking independence from Chinese ru�e. It is estimated that more than 200 attacks on both civi�ian and mi�itary targets occurred in Xinjiang between 1990 and 2001� resu�ting in 162 deaths and hundreds of injuries.

A crackdown on extremism by the provin�cia� government �ed to a �u�� in attacks between 2003 and 2006� but extremism resurfaced in the run�up to the Beijing O�ympics in 2008. On August 4 of that year� a bomb attack on a border patro� unit of the armed po�ice force ki��ed 16 po�ice officers and wounded another 16.

Compared to the attacks in the 1990s� which usua��y targeted �aw enforcement and individua� officia� fami�ies� recent attacks have been conscious�y aimed at both po�ice and ci�vi�ians. “It may mark a change of strategy�” Pan Zhiping to�d NewsChina.

Ethnic TensionA change of strategy has a�so been seen in the response of security forces to such attacks. During the Ju�y 5 riot in 2009� security forces were wide�y criticized for their s�ow and hesi�tant reaction in the initia� phase of the rioting. Fo��owing the dead�y Ju�y 5 riot came a bizarre spate of syringe stabbings targeting a tota� of 531 �oca� residents� again most�y Han Chi��oca� residents� again most�y Han Chi�� again most�y Han Chi�nese. This further enraged Han residents and �ed to �arge�sca�e demonstrations that fina��y forced �rumqi’s po�ice chief Chen Zhuangwei and Party Secretary Zhu Lun to step down.

The most recent attacks have seen a much more heavy�handed response from security forces� who are reported to have shot dead a tota� of 21 suspected terrorists. Fo��owing the recent attacks� security has been tightened in both Kashgar and Hotan� as we�� as in the

POLITICS

“The actions of radicals do not represent Kashgar’s residents, nor do they represent the Uyghur people, and these acts are intolerable.”

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Policemen confront assaillants inside the police station, Hotian, Xinjiang, July 18, 2011

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capital Urumqi. Law enforcement personnel were seen posted at checkpoints checking IDs while police vehicles patrolled the streets, urg�ing residents to return home before dark.

Few believe, however, that a show of force by security personnel will solve the ethnic problem at the heart of Xinjiang�s urban com��s urban com�munities. Despite the rapid growth of Xin�. Despite the rapid growth of Xin� Despite the rapid growth of Xin�jiang�s GDP in the last decade, the income gap between Han Chinese and ethnic Uy�ghurs has also widened. Many Uyghurs feel their traditional culture is being displaced by Han migration, and those without Chinese language skills are finding it increasingly diffi�cult to find work. A minority separatist move�ment, inspired in part by similar extremist cells in neighboring Pakistan and Afghanistan, has remained active in Xinjiang.

According to Li Wei, an expert on terror�ism studies with the China Academy of Con�the China Academy of Con�China Academy of Con�temporary International Relations, China has adopted a two�pronged strategy to combat extremism, attempting to tilt local economic policy in favor of the Uyghur majority and maintain pressure on known extremists. How�ever, there is no evidence as yet to show this strategy is working.

New ApproachesThe bulk of economic development in Xin�Xin�jiang, particularly the expansion of mining and oil drilling, has benefited China�s east coast more than the local economy, with many Uyghurs alienated by the perceived exploita� exploita�

tion of their local resources, the increasing im�ir local resources, the increasing im� local resources, the increasing im�migration of Han Chinese into Xinjiang, and the widening income gap between impover�ished Uyghurs and generally more affluent Han Chinese.

Following the 2009 Urumqi riots, which forced the resignation of Party Secretary and de facto governor Wang Lequan in April 2000 after a 1��year tenure, the Chinese govern� 1��year tenure, the Chinese govern�ment has made various efforts to redress these grievances through economics. A resource tax, for example, has been levied on the consumers of resources from Xinjiang, raising local gov�ernment oil revenues.

In 2010, the Xinjiang government spent over 100 billion yuan (US$15.6bn) or 60 percent of its expenditure on establishing an effective welfare system, including unemploy�ment and pensions benefit, as well as a scheme to provide free medical care to local residents with middle� and low�level income. Accord�Accord�ing to official statistics, in 2010, the average personal income of rural Xinjiang residents increased by 15.9 percent, 5 percent above the national average.

However, the Chinese government still has a long way to go to placate this restive region. Turvjan Tursun, associate professor at the Xin�the Xin�Xin�jiang Academy of Social Sciences, for example, is critical of the so�called “high pressure” policy on extremists. “The policy tends to alienate common Uyghur people,” he told Caijing magazine, adding that the “mishandling of religious issues,” which often sees officials

equate Islam with extremism in anti�terrorism campaigns, may help recruit extremists to the separatist cause.

Even with the government�s modifications to wealth distribution, many Uyghurs resent having to rely on handouts instead of being involved in the economic and political deci�sion�making in Xinjiang, which is officially one of China�s Autonomous Regions. Many academics, both Uyghur and Han, have ad�, both Uyghur and Han, have ad� both Uyghur and Han, have ad� Uyghur and Han, have ad�and Han, have ad�Han, have ad�have ad�vocated greater involvement of ethnic Uy�ghurs in cultural and political policy, to give the region�s ethnic majority a meaningful role in society.

Several such initiatives are underway. It is reported that the Xinjiang government has started to appoint ethnic Uyghur officials as township chiefs, with the next step said to be allowing Uyghur officials to become county chiefs. In addition, the Xinjiang government will sponsor more religious schools, addressing a major complaint of Muslim communities.

“Many of Xinjiang problems, despite being magnified by the region�s particular religious and ethnic diversity, echo throughout China, such as the redistribution of wealth and po�litical power, and the treatment of traditional values,” commented the Caijing report.

However, according to Pan �hiping, Xin�according to Pan �hiping, Xin�Xin�jiang remains volatile for the time being. “In the foreseeable future, large�scale attacks are unlikely, but smaller ones, like the recent at�, like the recent at� like the recent at�tacks, remain highly possible,” he told our re�, remain highly possible,” he told our re� remain highly possible,” he told our re�remain highly possible,” he told our re�highly possible,” he told our re�porter.

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The police station after the attack, July 18, 2011

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SOCIETY

H u Litian has yet to enjoy a quiet retire-ment. Her name has been drawn as a “citizens’ representative” for public

hearings, a highly stage-managed government “listening exercise” that debates minor policy changes, a total of 18 times in seven years, casting doubt on the fairness of the “lottery” used to select candidates.

These public doubts, coupled with Hu’s belligerent, pro-government hectoring at prominent public hearings, has swiftly drawn the ire of Internet critics. Called “a blatant stunt” and “a government con artist,” Hu is hardly a paragon of social justice. As one ne-tizen wrote, “we don’t want to be represented by her,” adding that Hu’s frequent appear-ances are notable for her almost universally pro-government stance.

Born in the late 1940s, Hu has known nothing but a Communist government, and is candid about subscribing to the view of Mao’s first generation that “people should fol-low the government because the government provides for them.”

Hu claims to have been present at 23 hear-ings, also claiming neutrality in her views. “I absolutely do not ‘blindly’ support the gov-ernment,” she said.

AddictHu remembers the details of each public hear-ing she has attended with remarkable clarity. She first heard of public hearings in January 2002, when the Chinese government called a national-level “listening exercise” to debate the price of railroad tickets.

“It is interesting that ordinary people can argue with government officials over such af-fairs,” she said. She then applied to attend a local hearing on the cost of bus passes sched-uled for the following year, but failed to be selected in the lottery.

The next opportunity presented itself in 2004 when an organizer of public hearings found her personal information in the gov-ernment database and invited her to attend a local hearing for a discussion over a ticket price rise for two local tourist sights. Since then, hearings have become Hu’s hobby. So far, she has applied to participate in more than 40 hearings and, rather surprisingly, been “randomly” selected to attend 23. “I love debate. I love everything that makes winners and losers,” she explained to NewsChina.

Her time outside the debating hall is spent scouring the local media for details of future hearings. Initially, Hu did not own a cellphone and she stayed at home for days afraid she would miss any call notifying her of a hear-ing. She would watch the lottery draws closely, claiming her intention was to “ensure fairness.”

“I won’t attend any hearing concerning an issue I know nothing about,” she told News-China. Once selected, Hu takes her home-work seriously by reading local newspapers and noting down the quoted opinions of ex-perts and local residents relating to whatever issue is up for discussion. When she fails to be chosen as an official representative, she ap-proaches those selected beforehand, asking them to convey her opinions to the panel.

Hu talks about hearings like a college stu-dent discussing varsity debating. “It is really thrilling for me to confer with the other rep-resentatives and launch counterattacks against the opposing side,” she told NewsChina.

National LevelDespite being a fixture at local public hear-ings, Hu’s sights were set much higher. In 2007, she applied online for a seat at a na-tional hearing held in Beijing concerning an adjustment to the rate of compulsory insur-ance for traffic accidents.

Selected as an observer only, she had to spend three month’s State pension, 3,000 yuan(US$462), in order to travel to the venue in Beijing. “It was a high-level hearing,” she told NewsChina. “The debate was more in-tense than in Chengdu.”

Having gained a high profile with the State media for both her tenacity and her pro-gov-ernment stance, Hu was interviewed by over 10 reporters after the hearing finished, giving her a further chance to express her opinion. “I felt like a celebrity,” she said.

Hu puts her disciplined conservatism down to a “Red” education – even in the sweltering summer heat, her spotless blouse was but-toned up to the throat while the hearing was in session. After it had concluded, she did not embark on a sightseeing tour of the capital for fear this would embarrass the organizers of the hearing. She sets her own parameters for each debate – unlike younger representatives, she doesn’t use strong language and limits her ad-dresses to five minutes or less, carefully timing her speeches in advance.

“Only strict self-discipline can ensure that I will have more chances to attend hearings in the future,” she said.

Hu complains that the government does not organize enough hearings. She kept a close eye, for example, on recent personal income tax reforms, and believes the govern-ment should have held a national hearing about this highly controversial issue, only to find the government finally chose to solicit public opinion through a highly restricted on-line forum. She is now planning to improve her computer skills in order to take her voice onto the Internet, where the bulk of her pub-lic critics are currently based.

ControversyChina introduced its first official public hear-

Public Hearings

Familiar Farce, Familiar Face 64-year-old Chengdu resident Hu Litian, whose prominent presence at a total of 23 public hearings as a “public representative” has already seen her labeled a government plant, has continued to frustrate netizens with her outspoken support of unpopular policies

By Pang Qinghui in Chengdu

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ings as early as 1996. The Law on Adminis-trative Punishment stated that anyone heavily fined or that has had his or her driving license revoked for a traffic violation may apply for a public hearing if they do not accept the pen-alty. Two years later, the Law on Pricing added a public hearing clause, requiring the govern-ment to hold a hearing prior to the pricing of public services and State monopoly goods.

Official statistics show that over 2,000 hearings had been held in China by the end of 2005, including debates on education fees, a ban on fireworks, the price of plane tickets, and compensation for homeowners whose houses were forcibly demolished as part of State development plans.

However, the fact that most all public hear-ings fail to have any impact at all on the poli-cies they claim to be debating, they have been largely dismissed as a government publicity stunt, with the number of people applying to be public representatives experiencing a seem-ingly irreversible decline.

Hu told the reporter many hearings now

have to select 8 public representatives from a pool of 9 or 10. Lower-level hearings have even fewer numbers of applicants. A recent hearing in Chengdu on traffic restrictions only drew 7 people. In contrast, online fo-rums saw a surge of 265,000 posts discussing the same issue.

“Public representatives used to be appoint-ed or recommended by the local Consumer Commission (CC), and people complained that they often saw the same faces at different hearings,” a former director of the CC, who chose to remain anonymous, told NewsChi-na. “Now, the hearings are organized by other authorities, which select the representatives by lottery, but still we see the same familiar faces.”

It is no surprise that Hu Litian, one of the most familiar, regularly comes under fire, es-pecially when people know that she regularly sides with the government on issues as sensi-tive as price rises, which are almost uniformly opposed by the general public.

“How could the organizers, in many cases

also the masterminds behind these bills, allow any real opposition?” questioned Beijing News critic Sheng Dali.

Hu recalls voting in favor of commodities price rises five times. However, she claims her opinion is carefully considered. “For example, I agreed to increase the price of tickets to the Du Fu Memorial Hall as the price is far lower than those of Beijing’s historical sites,” Hu ex-plained.

“I know that people do not want to vent their resentment at me so much as towards the public hearings system,” she added.

Liao Binghong, another “familiar face” who has attended 17 hearings, also claims that the opinions of public representatives are independently formed, but admits they lack public support. “Most people would rather post their comments online than spend time and energy attending a useless hearing,” he said.

“Some hearings are, of course, a mere for-mality, but we shouldn’t abandon them just because of this,” he added.

Hu Litian at a local hearing, Chengdu, April 13, 2010

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E ighty-seven years have passed since the departure of the imperial household and the opening of the Forbidden City,

their vast, 600-year-old Beijing residence, to the public. For the Chinese, who refer to the ancient structure simply as the Old Pal-ace rather than its rebranded title “The Palace Museum,” the Forbidden City is both a potent symbol of Chinese civilization and a show-room for the excesses of its imperial past.

While the complex’s vast collections have enjoyed almost a century of unrivaled prestige, the Palace Museum has recently been tainted by a series of embarrassing scandals concern-ing the security and care of its artifacts (see: Steal of the Century, August edition). These highly publicized incidents have raised a se-ries of tough questions for the authorities. Is the once-forbidden palace complex really as “open” as it claims to be?

Robbery, Carelessness and ProfiteeringIn May, an opportunistic thief broke into an exhibition hall and stole a few items of jewelry

on display, despite earlier boasting by museum authorities that their collections were pro-tected by state-of-the-art security systems. As a mark of appreciation for the police’s efficiency in apprehending the suspect a few days later, the museum’s management presented the Bei-jing police with a banner. However, their con-fusion of two words with the same pronun-ciation changed the goodwill of “Defending the Country’s Prosperity” into “Shaking the Country’s Prosperity.” The literacy of those in charge of China’s most prestigious cultural in-stitution was questioned by a scornful public.

A few days later, it was disclosed that the Ji-anfu Palace in the Museum was to be opened as an exclusive “millionaire’s club” charging millions of yuan for a membership. The ap-propriation of a public building to make pri-vate profits triggered a further bout of public outcry.

Two months later, State television reported that a priceless porcelain dish, fired in the Song Dynasty royal kilns between the 8th and 11th centuries AD, was accidentally broken by a

museum conservationist, with the incident withheld from the Palace Museum’s overseer, the Ministry of Culture. Again, museum of-ficials were hauled before the press to face an angry public.

Particularly notable was the way in which these scandals were broken - media or micro-blogs would broadcast initial reports; Palace Museum officials would deny them before be-ing forced into a humiliating retreat through public pressure, issuing apology after apology for “negligence.” These unpopular and old-fashioned stonewalling tactics, according to analysts, are rooted in the Palace Museum’s traditional mode of operations.

Who Cares? The Palace Museum, holding vice-Ministry-level political status, has seen its staff team bloated from 9 divisions in the 1960s to 31, now comprising 3,000 members. However, that has failed to improve efficiency. Gao He, a retired museum official formerly in charge of artifact storage, told NewsChina that all mu-

Forbidden City Scandals

Open Gates, Closed Books A lack of managerial transparency keeps the Forbidden City’s most

potent secrets away from public scrutiny. But how long can it remain impenetrable?

By Kong Lingyu, Wang Qiusi and Li Jia

Paramilitary police patrol the Forbidden City, Beijing, May 18, 2011

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SOCIETY

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seum officials are directly appointed by and thus answerable only to higher authorities, with their career prospect unrelated to either their contribution to profitability or their con-servation work.

According to Gao, this model of “respon-sibility to superiors alone” means museum officials are unaware of their responsibility to the public. Rules exist only on paper when obeying them might conflict with “friend-ships” or the wishes of the higher ups. Gao still recalls the embarrassment he caused by insisting that visiting leaders refrain from touching any antiques. The museum also at-tributed the recent destruction of the Song Dynasty porcelain to a simple failure by con-servation staff to follow procedure when han-dling ancient artifacts.

The massive revenue from the Palace Mu-seum’s ticket sales is funneled directly into China’s treasury and, consequently, this gigan-tic institution’s budget, including administra-tive and maintenance costs, comes from the public purse. But salaries here are far below the average income for Beijingers, while “Tens of millions of yuan are needed to pay for just a single minor maintenance project in this mega-complex and nothing can be done if we only rely on government funding,” said former curator Zhen Yuansen.

Consequently, the management team gave some thought to putting the unique resources at their disposal to good use. A company affili-ated with the museum was established in 1998 to run the complex’s commercial services, in-cluding food, advertising and retail. This com-mercial wing of the Palace Museum has come under attack for placing profit ahead of good taste, with a Starbucks opened in the Forbid-den City in 2000 lasting just 7 years before

it was forced to close under public protest. In 2006, two souvenir stores within the complex refused entry to Chinese tourists in order to overcharge foreign visitors, further embarrass-ing the company. Despite these well-known scandals, however, the accounts of the muse-um’s commercial activities remain undisclosed.

All is ForbiddenThe Palace Museum “remains a ‘Forbid-den City’” said Chen Youhong, an associate professor of public management policy at Renmin University of China. The museum’s inscrutable bureaucracy has so far show little interest in engaging with the public it claims to serve. Analysts believe the Palace Museum needs to look overseas for examples of how to run such a prestigious institution. London’s British Museum, for example, is also publicly funded, but its curators are not government-appointed, instead they are hand-picked by the Board of Trustees, a body of academics and dignitaries who assign top priority to the museum’s collections and its visitors. Cao Jie, a Chinese journalist based in London, is an advocate for a similar body at the Palace Museum, believing that only an independent governing body can ensure the museum’s col-lections are properly cared for.

In Europe, public museums and cultural heritage sites also receive donations from char-itable organizations, enterprises and individu-als, as well as offering prestigious commercial spaces to paying clients. Before working for China’s Palace Museum, Zhen Ni worked for a cultural company in France that sometimes arranged private banquets or performances at famous chateaus. The accusations of “bad taste” which surface when similar events are staged in protected historic buildings in China

are, in Zhen’s view, the result of their conceal-ment from the general public, making com-mercial use of public spaces appear a dirty little secret of the ruling elite. The failure of the Ministry of Culture to respond to recent scan-dals has further antagonized critics, many of whom believe it is protecting its own officials rather than the public interest.

Transparency in accounting has become a favorite bugbear of the Palace Museum’s crit-ics. On May 25, three doctorate law students at Peking University filed applications to the Ministry of Finance and the Palace Museum for full information disclosure of the museum’s tickets sales revenue and subsequent spending between 2008 and 2010. So far, the museum has not responded, but its book shows that total ticket sales revenue in 2010 exceeded US$92 million.

While the government drags its feet over reforming China’s most famous museum, the private sector has stepped in to offer solutions. The Foundation for Relics Protection in the Palace Museum, a non-profit foundation, was established this year by eight business heavy-weights to provide support for the museum’s academic research and public services. How-ever, it remains unclear if the Ministry of Cul-ture will welcome greater involvement of pri-vate individuals in the running of a prestigious public institution.

Finally, in an interview with State media on August 19, Zheng Xinmiao, director of the Palace Museum, divulged details of recent scandals, adding that “some officials have been disciplined.” He also pledged to “restore and improve the image of the museum” through greater transparency. Perhaps the Forbidden City may yet open its account books to the public as willingly as it has opened its doors.

“The Palace Museum remains a ‘Forbidden City’.”

Left: the broken porcelain dish on the museum website; Right: the broken dish as shown on CCTV

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SOCIETY

I n June this year, celebrations broke out among workers at the Nanhai Honda plant in Foshan, Guangdong Province, af-

ter news was received that all employees would be entitled to a pay rise of 611 yuan (US$95). Not much, but a triumph nonetheless. For over 12 months, workers at the plant had been involved in a protracted pay dispute with com-pany bosses.

The Strike Twenty-one-year-old Li Xiaojuan, who acted as a workers’ representative during the negotia-tions, is now one of 13 newly installed trade union committee members at the Nanhai Honda plant, which specializes in manufac-turing transmissions. As she explained during a recent interview with NewsChina, low pay was the chief factor behind the workers’ decision to begin strike action in May last year.

“Most workers in the automobile produc-tion industry can make on average 3,500 yuan (US$548) per month, yet workers on the pro-duction lines in Nanhai were making no more than 1,500 yuan (US$235) per month. While the interns (technical school students hired by the factory as cheap labor), who made up one- quarter of the work force, were making a mere 800 yuan (US$125),” explained Li. “Honda officials continually turned a deaf ear to our ap-peals for a pay rise, so we started a strike.”

At around 8AM on May 17, 2010, several workers in the transmission workshop depart-ment pressed the button halting the manufac-turing line, marking the beginning of the strike.

One week into the strike, the Japanese em-

ployer proposed increasing workers’ monthly food subsidies from 60 yuan to 155 yuan (US$9 to 23), a significant reduction on the 800 yuan figure demanded by the striking workers.

Frustration soon spread, and more workers joined the strike. This led to the involvement of the local government and the government-sponsored trade union. On May 31, around 200 people wearing Shishan Township Trade Union badges arrived at the factory. The strik-ing workers gathered in a workshop to listen to a man who alleged to be Nanhai Honda’s legal consultant. “Your strike is against the law,” he claimed. Another man, who looked like an of-ficial, followed up the threat by declaring that: “If you still want to work here, you should end the strike immediately.”

Angered by the humiliating tone of the speakers, some workers tried to break out of

the workshop but were stopped by the men wearing trade-union badges. A skirmish erupt-ed in which at least two workers were injured.

The workers, however, were not so easily in-timidated, and the strike escalated. In addition to the salary increase, they now also demanded an apology from the officials and compensa-tion for those injured.

Legal AssistanceUnsurprisingly, the Shishan Township trade union soon lost the trust of the striking work-ers. However, without the benefit of official representation, the strike continued unabated, causing the entire Chinese Honda manufac-turing chain to cease production. This lead to a total financial loss of over 2.5 billion yuan (US$390m) for the company.

The lack of a potential resolution led to a change in tact. Realizing that an unobstructed

Union Reform

Trading Places Through a combination of strike action and careful negotiation, workers at the Nanhai Honda plant have secured a pay rise and better working conditions. Can other workers follow suit?

By Xu Zhihui in Guangdong

Workers on the Nanhai Honda production line, Foshan, Guangdong Province

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channel of negotiation was of equal impor-tance to the issue itself, several workers put forward the idea of reforming the plant’s trade union.

“Whenever labor-management disputes oc-cur, the trade union will unfailingly stand on the side of the employer instead of the work-ers. All the members of the local union are ei-ther government officials or enterprise leaders. We have no idea how they were elected to rep-resent the workers. We need a trade union that really takes cares for our wellbeing,” explained Li Xiaojuan.

Li was introduced to Chang Kai, a profes-sor from Renmin University and an expert on China’s Labor Contract Law. Li phoned Professor Chang and asked him to be the legal counsel for the workers in Nanhai. Chang Kai accepted the invitation and on June 4, he flew to Nanhai from Beijing to participate in the

negotiations. Chang told the workers that their strike ac-

tion had been entirely justified, and that their demands should not be regarded as “illegal.” Having put many of the workers at ease, he then suggested that the 1,800 workers elect a small team of representatives to negotiate di-rectly with company bosses. “When a thou-sand people speak all at once, nobody is able to make out what they are saying,” he told the workers. Thirty representatives were picked from among the 1,800 workers. “This was the first formal election I have experienced,” a worker representative later said.

On the afternoon of June 4, 30 represen-tatives met with five Honda executives in an attempt to resolve the dispute. Also present were Chang Kai, who served as the workers’ legal consultant, and Zeng Qinghong, general manager of Guangzhou Honda, who acted as notary.

After six hours of negotiations, 25 out of the 30 workers’ representatives agreed with the 500 yuan (US$72) per month salary increase proposed by the company executives.

After adding a clause stating that “the em-ployer should not fire or retaliate against strik-ing workers,” which was insisted on by Chang Kai, the first agreement was signed by the two sides. In Chang’s opinion, the agreement marked an important milestone in the history of workers’ rights in China. For the first time in the modern era, workers had organized independently of official channels, and in doing so forced their employer to meet their demands.

However, one very important factor should not be ignored – the part played by Wang Yang, Party secretary of Guangdong Province, in resolving the disputes. “Maintenance of so-cial stability” is very high on the government agenda, and strikes are regarded as a highly destabilizing factor in this context. However, Wang Yang, saw the event as a purely labor-management dispute. Free of political conno-tations, the local trade union, which had origi-nally planned to force the workers to resume work, backed down, allowing the workers to press ahead with their demands.

Through ongoing negotiations, the workers have since received a pay rise of 611 yuan, a 32 percent increase on previous wage levels, in addition, they have also secured a promise that by 2013, employees who have worked at the factory for over three years will receive

a monthly salary of 3,500 yuan, the average national salary level among workers in the au-tomobile industry.

Calls for Legislation Professor Chang believes the Nanhai Honda strike reflects the urgent need for a revision of the country’s Constitution. In 1982, the revised Constitution removed an article guar-anteeing the right to strike, ignoring interna-tional conventions. According to Professor Chang, with China becoming an increasingly important part of the global production chain, the notion that striking is somehow “illegal” is itself unlawful, and lags behind international standards.

“In 2010, there were a total of 300 strikes throughout China, but in not one of these cases, did local trade unions represent the in-terests or rights of the striking workers,” ex-plained Professor Chang. Statistics from the Labor Resources and Social Security Ministry reveal that labor-management disputes have increased by 11 percent annually in the period between 2001 and 2008.

During an interview with NewsChina, Lee Cheuk-yan, General Secretary of the Hong Kong Confederation of Trade Unions, said: “On the Chinese mainland, trade unions are made up of political figures and operate within the government system. This makes it hard for them to really represent workers. In order to safeguard workers’ rights, the trade unions need to make the transition toward political and economical independence.”

Li Xiaojuan was lucky enough to have wit-nessed what may yet be the beginnings of such a transition. She has been now been admitted into Nanhua Business College, where she will specialize in labor relations this September. “Violation of workers’ rights is a common oc-currence, but workers only begin to unite and resist such violations when they have exhaust-ed all other options. We need organizations that really protect our rights.”

“When a thousand people speak all at once, nobody is able to make out what they are saying.”

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O n July 23, two high-speed trains stopped at Yongjia station, a county under the jurisdiction of Wenzhou, a flourish-

ing business center in Zhejiang Province. The D3115 coming from Hangzhou arrived at 7:51 PM and was scheduled to stop at the platform for one minute before continuing its journey. Instead, it departed 24 minutes late. The D301 from Beijing, another train not scheduled to stop in Yongjia, was also stranded on the platform next to the D3115.

Bao Yongyuan was seated in the 10th car of the D3115. He glanced at the D301 standing in the rain outside the car window. This would not be the last time he saw it.

Not long after the departure of the D3115, the other train also resumed its journey. Both were heading to Fuzhou, capital of Fujian Prov-ince, traveling on the same track. According to passengers, even after its delay in Yongjia, the D3115 was inexplicably crawling along at under 20 kilometers (12 miles) per hour, way below its top speed, while the D301 was traveling at a more usual 170 kilometers (106 miles) per hour.

“The train seemed to be listing to one side,” Bao Yongyuan heard one fellow passenger say as the train crossed a viaduct at approximately 8:35 PM. Moments later, Bao was thrown from his seat to the floor. People panicked and screamed as the car rocked violently. Zhang Mingjie, a 20-year-old woman seated in the 6th car of the D3115, felt three impacts juddering through her seat.

Bao and Zhang, though shaken, were unaware of the scale of the disaster. According to subse-quent media reports, the D301 had rammed into the rear of the slow-moving D3115 at over 100 kilometers (62 miles) per hour. The 16th car of the D3115 bore the brunt of the impact. Eyewitnesses described how the car’s rear half was so badly flattened that it “looked like a piece of paper.” Both the 15th and 16th cars had been

derailed, while the front section of the D301, after crushing the rear of the D3115, plunged from the viaduct into the ravine below, leaving a fourth car hanging in mid-air.

There were 1,630 passengers and crew on the two trains when the accident happened. Early figures indicated more than 30 dead, with the official toll as of July 29 given as 40, with nearly 200 injured, though unconfirmed reports from independent media have suggested a much higher death toll. Regardless of the final figure, the disaster marks the worst loss of life on China’s railroads in years, and also the first major acci-dent involving China’s trademark “Harmony Electric Multiple Units” (EMU) bullet trains first launched on April 18, 2007. As more details emerged, it became clear that serious operational failings played a major role in the catastrophe.

Volunteer HelpHigh-speed trains pass by Shuang’ao village in Wenzhou every day. Villager Cai Changzhong was chatting with his neighbors at the door of his house on the evening of July 23 as the thunder-storm raged outside. While watching the lights of the D3115 creeping cross the viaduct, Cai and the villagers were stunned by a noise far louder than a thunderclap, followed by an explosion on the viaduct.

“A train accident!” came the cry as villagers poured from their homes and headed for the tracks. Thick silt beneath the viaduct forced them to wade towards the wrecked train cars. Cai was among the first batch of villagers to arrive at the scene. With other villagers, they started to rescue the injured. The quagmire below the via-duct was awash with twisted metal. Soon, wail-ing fire engines and ambulances started to flock around the crash site.

In the city of Wenzhou 6 miles away, news of the accident soon spread. When Huang Xue-min, a prominent local blogger, heard the news

Speed KillsWenzhou Crash

Despite efforts to downplay the disaster, the deadly Wenzhou crash on July 23 has put rail safety squarely on the public agenda

By Yang Di, Han Yong, Wu Fan and Yuan Ye

Regardless of the final figure, the disaster marks the worst loss of life on China’s railroads in years, and also the first major accident involving China’s trademark bullet trains launched on April 18, 2007

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barely minutes after the crash, he decided to go to the scene himself. One hour later, his car was stuck in a jam of fire engines, ambulances and private cars also rushing to the scene. Not being able to get in, Huang headed instead to the clos-est hospital, where the injured were being taken. In the hospital, dozens of beds had been set up in the lobby. Doctors and nurses were busy going about their business, many calling for plasma as supplies were running low.

Huang visited two further hospitals, all of them swamped with injured passengers and all

running low on plasma. Family members who were separated in the accident were also looking for their relatives. In response, Huang posted a request for blood donations on the Internet. His posts began circulating instantly, leading hun-dreds of locals to rush to the city’s hospitals to donate blood.

DoubtsOn the morning of July 24, the second day of the train crash, many Chinese woke up to blog postings and Internet reports about the deadly

accident, and were able to follow the botched rescue attempts through amateur video, most of it captured on locals’ cell phones. By contrast, State media attempted to play down the disaster, which only served to transform public sorrow to indignation and, eventually, outright anger, most of it directed at the Ministry of Railway (MOR), whose mishandled rescue attempt and refusal to issue an apology soon escalated into a national scandal.

This disaster cut deep in a country whose peo-ple depend on the railroads to get around.

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Despite worries that the rapid expansion of China’s new high-speed railroad (HSR) network placed speed over safety, media blackouts and the convenience of faster interprovincial travel meant that the public, by and large, retained their faith in the national network. This confidence was shattered on July 23, as horrific images of the disaster and details of the attempted cover-up spread through China’s powerful and all-perva-sive blogosphere.

Microblogs supplemented with amateur foot-age of the disaster, much of it contradicting in-formation contained within official reports by State media, soon swamped cyberspace, out-pacing State news agency Xinhua at every turn. The public outrage soon forced the MOR to acknowledge the scale of the disaster and pledge to uncover the reasons behind it. A major target of public rage was the MOR’s attempt to ma-nipulate casualty figures and censor news reports, further tarnishing the image of a powerful insti-tution which has long remained immune from criticism by State media.

The earliest official explanation came from Shanghai’s regional MOR bureau on the night of July 23, which claimed that before the acci-dent the D3115 lost power and stopped on the viaduct after being hit by lightning, causing the speeding D301 to ram it. However, witness ac-counts swiftly contradicted this statement. Both surviving passengers on the D3115, as well as nearby villagers, confirmed that the train was still running when it was struck. On July 27, the Southern Weekly ran a front-page story quot-ing a passenger on the D3115 who claimed he had heard the train’s engineer say that he “wasn’t responsible for the accident,” adding that he’d “been ordered to stop the train.”

This report led to speculation that the accident had been caused by human error, perhaps by a signal engineer. Subsequent media reports began to pile up, claiming that there had been a fun-

damental breakdown in the command structure. One “dispatch record” circulated on the Internet detailed how when the D3115 left Yongjia sta-tion, dispatch instructed the train’s engineer to switch to manual controls and slow the train to 20 kilometers (12.4 miles) per hour if he saw a red light ahead. Lu Qingxiang, head conductor of Wenzhou South Railway Station told News-China that though the master control room could monitor the approximate positions of the trains, it wasn’t able to monitor their speed. One station staff member suggested that repairs being carried out due to a lightning strike could have led the engineer to slow the train down.

Han Baoming, a professor at the School of Traffic and Transportation at Beijing Jiaotong University, told NewsChina that whatever the cause, the probability of such a crash occuring was “extremely low.” Several experts including Han pointed out that such an accident could only happen when a slew of accident prevention measures were violated or ignored, meaning the Wenzhou crash could only have been caused by a breakdown in communications at all levels.

The Chinese railroad network has a three-tier operational safety mechanism, involving CTCS (Chinese Train Control System), LKJ (Train Operation Control and Monitor Device) and manual dispatch. CTCS allows the railway control center to monitor train positions, the distances between them and their approximate speed. Each train is also installed with an ATP (Auto Train Protection) system that will auto-

matically calculate the distance between it and the train ahead and work out a safe speed, upon receiving instructions from the control center. At the same time, the train ahead will also create a “closed area” the train behind is not allowed to enter. The “closed area” is marked by red lights on the tracks. The ATP system can automatically adjust the distance between the two trains and even stop or slow them down if there is a danger of a collision. The LKJ system is an automated brake, activated if an engineer fails to respond to such an emergency.

Manual dispatch is the final operational safety net, with observers ready to respond to problems detected by CTCS or ATP and inform engineers of any potential danger. Consequently, for the Wenzhou crash to occur, “there is only one pos-sibility. All systems failed simultaneously,” a se-nior railroad employee, speaking on condition of anonymity, told NewsChina.

The official investigation into the cause of the crash, supervised by the State Council, is still ongoing. However, calls for an independent in-vestigation have been largely brushed aside by the powerful MOR, which, barely a week after the crash, instituted a State media blackout in order to keep further negative coverage of the disaster off the front pages and State television. Despite the silencing of mainstream voices, the wide reach of China’s blogosphere has shaken a nation’s confidence in the safety of a trans-port network previously held up as the pride of China.

Left to right: A man lifts a picture of one of the crash victims to express his anger, South Railway Station,

Wenzhou, July 27; A woman cries for the loss of her relative in a funeral parlor, Wenzhou, July 25;

Two-year old survivor Xiang Weiyi recovers in hospital having lost her parents in the accident

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W hen Minister of Railways Sheng Guangzu arrived at the scene of the horrific July 23 train crash in Wen-

zhou, he may have felt a certain sense of vindi-cation. Since replacing his disgraced predecessor in February, Sheng has been an advocate for an overhaul of China’s antiquated railroad adminis-tration. However, the closed-door nature of top-level decision making in the Ministry of Railroads (MOR) meant that Sheng’s call for change was only heard by a select group of officials. And, un-til the scale of public anger in the aftermath of the Wenzhou crash became apparent, few were listening.

Sheng Guangzu took office when the mas-termind behind China’s vast high-speed railroad (HSR) network and minister of railways since 2003, Liu Zhijun, was deposed and arrested on corruption charges in February. The central gov-ernment hoped that Sheng would be the man to reform China’s railroads, weeding out corrup-tion and corner-cutting. A source close to the

MOR told NewsChina that Sheng had expressed his intention to separate government from the enterprise aspect of transportation during a mid-March summit for top railroad officials. In a videoconference on May 17, Sheng further underlined the focal points of planned reforms, introducing a new accounts settlement model, abandoning a strict top-down administrative structure maintained for over 60 years. Neither of these meetings received much attention from the media, as the cloak of silence surrounding one of China’s most State institutions stayed firmly in place.

What was visible to the public, however, were a series of glitches and accidents in the following months that seemed to have wrong-footed the MOR’s planned reforms. The Beijing-Shanghai HSR line, officially launched on June 30 as the poster child for the modernization of China’s rail-road network at a rumored cost exceeding that of the Three Gorges Dam, encountered at least five serious operational mishaps in one month.

Electrical faults would bring trains to a complete halt and leave thousands of passengers stranded in darkness for hours, causing major delays. Then, on July 23, 40 people were killed and over 200 injured when a high-speed bullet train ploughed into the back of another near Wenzhou, Zhejiang Province. Attempts by State media to play down the disaster were swept aside by a hyperactive blogosphere and amateur coverage that fed public anger and forced the MOR to publicly acknowl-edge the scale of the tragedy.

On June 24, Sheng Guangzu announced a comprehensive safety inspection of China’s entire railroad network, the second such investigation he has launched since taking office after a similar inquiry in February. Observers have speculated that major institutional reforms are unlikely while this investigation is in progress. However, the pos-sibility of breaking up the ministry and establish-ing a supervisory body remain under discussion.

“How can longer-term reform be carried out when the railroad system is confronted with

Wenzhou Crash

Derailing ChangeThe failure of China’s heavily centralized railroad administration to take institutional reform seriously is now being translated into catastrophe on the tracksBy Zhou Zhenghua

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urgent safety problems?” argued Yang Hong-nian, ex-chief researcher from the Institute of Comprehensive Transportation (ICT) of the National Development and Reform Com-mission (NDRC). Yang told NewsChina that China’s railroad system, which enjoys dual status as an arm of government and a State-owned en-terprise, must change, but that any such reform would need to be meticulously planned.

LiquidationSheng Guangzu’s speech in May indicated that reform might begin with the revision of profit sharing between the MOR and its local rail-road bureaus. The Chinese railroad system has maintained a highly centralized management mode inherited from the planned economy era, concentrating absolute power over personnel, train dispatch and finance in the hands of the MOR. The ministry directly oversees the op-eration of 18 railroad bureaus whose operational areas combine to cover the whole country and two official railroad companies. These nominally “independent” companies, created to give a sem-blance of free enterprise, are in reality entirely subordinate to the MOR.

Currently, only two of China’s hundreds of railroad lines – Datong-Qinhuangdao and Guangzhou-Shenzhen, are listed on the Shang-hai Securities Exchange and are run as enterpris-es. A handful of other lines jointly invested by the MOR and local governments are also partly run on market principles.

The remaining 90 percent of Chinese railroad lines still operate as they did under a planned economy, taking their orders directly from the ministry with no responsibility to the market. Local railroad bureaus turn all their income over to the MOR, which redistributes funding according to business volume and “managerial performance” in much the same way the central government redistributes tax revenue.

This method, which uses profits from popular routes to subsidize smaller, less-efficient opera-tions, is widely blamed for “dampening enthusi-asm” for the development and reform of China’s most heavily-trafficked HSR routes as they fail to reap the financial benefits of their costly and labor-intensive operations. With little incentive to adhere to strict safety standards and operate ef-ficiently, China’s most cutting-edge railroad lines are potentially the most dangerous. For this rea-son, among other things, the application of mar-ket principles to the construction and operation of new railroad lines has long been advocated by

academics. However, such calls have been largely ignored by the MOR, perhaps because such a liquidation would remove the ministry’s primary function – the reallocation of profits.

Among the unanswered questions of market reform is what would happen to railroad bu-reaus with smaller transportation volume and lower income once independent settlement is introduced. Would these bureaus go bankrupt? Would their bankruptcy disrupt the wider rail network?

While similar reforms in China’s aviation in-dustry in the 1990s were largely successful, Chi-na’s economy is far more dependent on the coun-try’s extensive rail network than on aviation, with trains used both for freight and interprovincial travel by most of the population. With the im-mense financial interests of the powerful MOR directly threatened by greater liberalization, its hesitance is understandable. Any reform, there-fore, is likely to be enacted on a micro level at best – sources at the MOR hinted that perhaps a small percentage of bureau income might be retained at a local level, with the rest turned over to the MOR as per traditional policy.

Special Interests SnowballingThe MOR’s highly centralized mode that merges government and enterprise makes it an unusu-ally powerful institution in modern China, with its power and wealth augmented by considerable autonomy from the central government.

As early as the late 1980s, the MOR experi-mented with a contract system alloweinglocal bureaus to take responsibility for their own fi-nances. However, the central authorities forbade the MOR from allowing local bureaus to vary ticket prices which led to huge financial losses and the abandonment of the experiment.

Between 1998 and 2003, the MOR rolled out a reform plan that allowed local bureaus to estab-lish passenger transportation companies. While the reform was intended to introduce competi-tion into the market, it failed because local bu-reaus could not gain recognition in law as legal entities. The ill-defined roles of these passenger transportation firms soon led to conflicts be-tween the companies and railroad stations, with feuding spilling into the bureaus themselves. Af-ter 18 months, the scheme was abandoned.

Other schemes were more successful. In 1998, for instance, to coincide with the govern-ment’s three-year reform of State-owned enter-prises (SOEs), the MOR jettisoned the schools, hospitals and other redundant institutions affili-

ated to the railroad system. In 2000, five com-panies with monopolies in engineering projects, construction, rolling stock manufacture, com-munications and signaling equipment, and civil engineering, were delinked from the MOR. However, these partial reforms, while lucrative, did little to address the issue of centralization of power, and the failure to enact institutional change has proven the major stumbling block to reformers.

According to figures from the MOR, the gross income of China’s railroad system in 2010 reached 685.7 billion yuan (US$106.8bn), sur-passing that of State giants China Mobile and PetroChina. Besides, the MOR enjoys a mam-moth capital-construction budget of hundreds of billions of yuan, most of which comes directly from State coffers. With astronomical sums of money under the control of a handful of officials, graft has become commonplace.

Since 2010, eight top railroad officials, includ-ing former minister Liu Zhijun, deputy chief engineer Zhang Shuguang, director of Nan-chang Railroad Bureau Shao Liping, director Lin Fenqiang and vice director Ma Junfei of the MOR’s Hohhot bureau, have been arrested on corruption charges. Unconfirmed reports allege that Zhang Shuguang alone maintains overseas bank accounts containing assets of some US$2.8 billion.

Economist Xu Xiaonian calls the MOR a “gigantic special interest group” that “will try to block any reform” it perceives as harmful to its interests. The MOR’s immunity from 2008 reforms merging government departments into “super ministries” is, according to Xu, proof of this. In that year, the former Civil Aviation Ad-ministration and State Post Bureau were merged into a new Ministry of Transportation. Ironically the MOR, controller of China’s most vital trans-portation network, managed to escape reform, citing the “particularity of the management and construction of railroads in China.”

“It’s too difficult to ask a special interest group to perform surgery on itself.”

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“It’s too difficult to ask a special interest group to perform surgery on itself,” commented sourc-es at the ministry. The inability to separate the functions of government from those of enter-prise in the railroad system can only increase as business booms.

SplitThe MOR has never been blind to the antago-nism directed toward its privileged status, and around 2000, during the tenure of former min-ister of railways Fu Zhihuan, the debate over its potential future reorganization began to crystal-lize.

Zhao Jian, an economics professor from Bei-jing Jiaotong University, proposed a “regrouping” plan in 2002 which would divide the network “vertically and horizontally” into three regional railroad companies: Northern, Southern and Central. These would be supported “vertically” by a number of passenger and freight transpor-tation companies created in order to introduce

competition among authorities.“Reform was already an imperative back

then,” Zhao Jian told NewsChina, adding that he never imagined that, over a decade later, in-stitutional reform would still be at the debate stage. Counterarguments from opponents of liquidation, such as warnings that any split of the MOR would lead to a lack of coordination and a breakdown of the network have kept top officials from attempting to effect change. Researcher Yang Hongnian told our reporter that nobody would have the courage to take responsibility if a reform failed.

In the meantime, accidents continue to hap-pen in spite of rigid centralization. Since 2008, three serious crashes in Shandong, Chenzhou and Wenzhou have left 115 people dead and almost a thousand injured. The MOR has effec-tively silenced domestic media criticism, and im-provements in both profitability and efficiency have failed to materialize.

In 2010, China’s entire railroad network only

posted net profits of 15 million yuan (US$2.3m), compared to registered debts of 2 trillion yuan (US$310bn). Also, by the end of 2010, the total number of employees working directly under the MOR stood at nearly 2 million, yet turnover vol-ume per capita was barely 5 percent that of the average US railroad employee, indicating wide-spread inefficiency.

Wang Qingyun, former director-general of the Department of Transportation of the NDRC, said in a speech in 2005 that the un-derlying factor that blocked the development of China’s railroad system was its reluctance to reform. Like most critics, Wang sees separating the government and enterprise functions of the MOR, introducing market mechanisms and set-ting up a well-designed supervisory body as key to its future success as an institution. However, as with the mounting criticism that has followed in the wake of June’s deadly crash, it remains to be seen if this immensely powerful institution is of a mind to change its ways.

MOR spokesperson Wang Yongping is surrounded by reporters during a press conference, July 24, 2011

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Amulti-billion-dollar mega-project to develop the sleepy southern Nepalese border town of Lumbini, a UNES-

CO World Heritage Site, has provoked heated debate in the small Himalayan state.

The involvement of transnational, par-ticularly Chinese players in the commercial project, which aims to raise US$3 billion to transform the town where Siddhartha Gautama, the founder of Buddhism was born some 2,600 years ago into an inter-national tourist hub, has caused significant controversy, with some commentators ques-tioning the developers’ true motivation.

The original plan is believed to have been initiated by the Nepalese Ministry of Tourism and Civil Aviation, which in June signed a memorandum of understanding with the Hong Kong-registered private in-vestment group the Asia Pacific Exchange and Cooperation Foundation (APECF), to transform the area into a “special devel-opment zone” complete with highways, hotels, tourist centers, power projects and even an airport. In mid-August, News-China accompanied representatives from APECF and paid a formal visit to Lumbini.

APECF has since refuted allegations that it is directly backed by the Chinese govern-ment. However, a string of unanswered is-sues and complexities surrounding APECF,

particularly its history, business interests, and the manner in which it seems to op-erate, have combined to fuel suspicions.

The Master Plan According to Xiao Wunan, APECF’s ex-ecutive vice-chairman and vice-president of the World Buddhist Peace Founda-tion, “The foundation is willing to work under the guidance of not just the Nep-alese government, but also any and all agencies striving to rejuvenate Lumbini.”

His statement came as a response to what some Nepalese media reports say are an overlap of interests between the existing master plan for Lumbini and the one proposed by the foundation.

The UN and the Nepalese monarchy commissioned Japanese architect Kenzo Tange to design Lumbini’s current mas-ter plan, which covers 3 square miles of land, in 1972. Tange completed the plan six years later, and Lumbini was designated a UNESCO World Heritage Site in 1997.

The construction of the master plan was meant to be completed in 1995. But very little work has so far been done. Acknowl-edging this, Majhilal Tharuthanaitha, trea-surer of the region’s governing body, the Lumbini Development Trust, said in July: “We have to accept failure on our part in the proper utilization of available funds.”

Local newspaper The Kathmandu Post said the Trust had been indulging in “exces-sive spending on hospitality and unworthy foreign trips.” It cited a recent 15-day US tour by the Trust’s vice chairman and Mod Raj Dotel, the newly resigned Nepalese cultural secretary, which cost US$21,000.

Meanwhile, Dip Kumar Upadhyay, former president of the Trust, said a limited bud-get was the primary problem. Based on the

Nepalese government’s current financial plan for Lumbini, he said the master plan “would take at least another 60 years to complete.”

Colin Heseltine, a former Australian diplo-mat and joint chairman of APECF, told report-ers in Lumbini that investment promotion is needed to make things happen in the town.

“In one respect, it is a cultural, reli-gious project; at the same time, it is also an economic development project. I think where the foundation can play an impor-tant role is to work on the economic, in-frastructure development aspect of (the Lumbini project),” commented Heseltine.

Amid the Political ReshuffleThe site of Buddha’s alleged birthplace in Lumbini sits 327 km southwest of Kath-mandu and is at its closest point, just 4 km north of the Indian border. It is a relatively affluent part of Nepal, a landlocked nation of 30 million people that is among the world’s least developed countries. According to the World Bank, Nepal’s GDP was US$15 bil-lion in 2010.

Nepal is caught between its two vast neighbors, China and India. It shares 1,400 km of mountainous border with the Tibet Autonomous Region and has been a hot-bed for anti-China demonstrations by pro-Tibetan independence supporters. Mean-while, India is home to five million Nepalese and exerts an enormous cultural, histori-cal and political influence on the country.

The founder of Nepal’s last monarchy, Prith-vi Narayan Shah, described the Himalayan nation as “a yam between two boulders” in the 1700s, an assertion many locals still uphold.

For years, India was, as a routine, the des-tination of every Nepalese prime minister’s first visit after taking office. This changed with the election of former rebel leader and

Lumbini Project

Buying Buddha?Plans by a Hong Kong-registered private group to build a US$3bn “special development zone” to transform the Nepalese town of Lumbini, the birthplace of Buddhism, into a major religious and cultural site are generating controversy throughout the region

By Hu Yinan in Nepal

WORLD

“In one respect, it is a cultural, religious project; at the same time, it is also an economic development project.”

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chairman of Nepal’s Maoist party, Pushpa Kamal Dahal – better known as Prachanda – who became premier in 2008 and vis-ited China a month before he visited India.

Prachanda resigned from the post of premier in May 2009, amid political infighting. He has since resurfaced as joint chairman of APECF.

With his party – already Nepal’s largest – tak-ing the lead in forming the next government, Prachanda, who for years criticized Chinese governance as “revisionist,” is now tagged “pro-China” by opposition parties in the country, a view bolstered by his new role inside APECF.

Prachanda, in response, said: “It is wrong to label me pro-China simply because I was supposed to attend the meeting of the Asia Pacific Exchange and Cooperation Foun-dation for the development of Lumbini.”

“I had proposed to construct an East-West railway line in Nepal as prime minister... It would be wrong to label me as pro-India on that basis,” he said. The India-based RITES Ltd is responsible for the construction of the railway.

“Nepal has to develop friendly relations with China as well as India,” said Prachanda, while stressing that he is “against inclining to-wards one or the other neighbor politically.”

Unexpected ComplexitySpeculation on the foundation’s background, coupled with rumors that Nepalese authori-ties were left in the dark about the project, has led to sovereignty concerns within the young republic.

Nepal’s Cultural Secretary Mod Raj Dotel resigned in early August over differences with Cultural Minister Khagendra Prasad Prasai on the project. Dotel claimed that he had no knowledge of the project and opposed its ideas.

While Nepal’s Ministry of Culture is re-sponsible for the development of Lumbini, the foundation says its plans are still at “a very ear-ly stage” and the final proposal will be submit-ted to the Nepalese government for approval.

Apart from the resignation of the secretary of Nepal’s Cultural Ministry, the Vienna-

headquartered United Nations Industrial Development Organization (UNIDO), feel-ing uneasy at having been labeled a partner in the Lumbini project at this sensitive mo-ment, terminated the implementation of its consultancy service on August 19, accord-ing to an inside source at the foundation.

That same day, UNIDO sent Nepal’s Dep-uty Prime Minister and Foreign Minister Up-endra Yadav a statement clarifying the issue.

In its statement, later obtained by the re-porter, UNIDO said it “has not entered into any valid contractual agreement with the foundation” and “therefore is not in-volved in any activity related to the Lum-bini Special Development Zone in Nepal.”

However, in mid-July, UNIDO’s in-vestment and technology promotion of-fice for China signed a memorandum in Beijing with APECF, saying it would offer technical consultancy for a frame-work design for the Lumbini project.

Far-reaching media speculation about

Foundation co-chair Colin Heseltine (left) takes questions from the press in Lumbini

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the effort have collided with an evolv-ing political deadlock in Nepal that led to the premier’s resignation on August 14.

Such is the political uncertainty in Nepal that on August 19, Prasai, the Nepalese cultural minister, went so far as to suggest that there is no record of APECF officials touring Lumbini.

However, in an exclusive interview with NewsChina, the foundation’s mem-bers claim to have been wrong-foot-ed by the political and media storm.

“We significantly underestimated the com-plexity of this project. We did anticipate difficul-ties, but not of this magnitude,” said Ge Chen, the foundation’s deputy secretary-general.

The extent of local guesswork was high-lighted by a report in Nepal’s Annapurn Post on August 8, which said a delegation scheduled to meet with co-chairman of the foundation, Prachanda, in the capi-tal city, Kathmandu, on the 10th to dis-cuss the project was “led by senior Chi-nese leader Zhou Yongkang, as a special envoy of Chinese President Hu Jintao.”

Zhou’s three-day visit to Nepal began on August 16. It had no formal links with the

APECF delegation, which was led by Hesel-tine, a former executive director of the Asia-Pacific Economic Cooperation Secretariat and a joint chairman of the foundation, and Xiao Wunan, the executive vice-chairman, ac-cording to a copy of the handbook prepared for its members and obtained by NewsChina.

The project’s top priority is to “fully respect the national sovereignty and territorial in-tegrity of Nepal and the will of the people,” said Andy Yok-Lam Tang, a Hong Kong banker and vice-chairman of the foundation.

The “completely commercial” en-deavor will follow a principle of “who-ever invests, benefits,” Tang added.

So far, a Dubai-based foundation has ex-pressed interest in helping develop Lum-bini’s tourism resources, and another in the US is enthusiastic about its infra-structure upgrades, according to Xiao. He is expected to lead a delegation to visit the Middle East and the US in this fall.

On August 11, Xiao’s foundation signed two memorandums for cooperation in Kathmandu with Taiwan-based Tai Tung Communication and Chinese mainland-

based Vanion Investment Group. The for-mer agreement vows to deliver telecoms and public broadband services to Lumbini.

“We’re not here to step on other peo-ple’s toes or struggle for interests. As de-voted Buddhists, we’re here to do some-thing for our sacred site,” Xiao said.

Yang Houlan, China’s ambassador to Nepal, endorsed the foundation’s efforts in a meeting with its members on August 10. “The foun-dation has merely expressed its intentions. These expressions are aimed at inheriting and strengthening mutual cultural traditions,” he said, citing historical respective visits to Nepal by Chinese Buddhists Fa Hsein and Hsuan Tsang in the fifth and seventh centuries.

“There’s no other motive. As a cultural center of Buddhism, Lumbini has enormous development potential. The foundation, an-swering the call of the Nepalese government, came to take part in the project,” Yang said.

“But in order to participate in devel-oping Lumbini, full consultation must be made with the Nepalese govern-ment. Their understanding, assistance and support are crucial,” he said.

The birthplace of

Buddha, Lumbini

as it appears today

WORLD

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MILITARY

O n July 27, China’s Defense Ministry finally unveiled its worst-kept secret, the country’s first aircraft carrier,

which, despite a new paint-job, still tempo-rarily retained its Soviet name, Varyag. Two weeks later, this mammoth vessel started its first sea trials. According to a source inside the military, the Varyag is a year away from an official launch and still lacks operational weapons systems and combat aircraft. Pun-dits anticipate its official launch to coincide with China’s Army Day on August 1, 2012. Despite the vessel’s age and relatively small size, much international attention has been focused on its reconstruction, and the world media is now speculating as to what role it will play, both in the context of China’s naval hierarchy and in relations with its neighbors.

In late 1991 and early 1992, following the disintegration of the Soviet Union, Chinese military officials began to eye former Eastern Bloc states as a potential source of their hoped-for carrier. According to military sources, a representative from one of China’s military academies on a visit to Ukraine was told by his Ukrainian counterparts that the Varyag, for-merly named the Riga, an Admiral Kuznetsov-class multi-role carrier, sat 60 percent complete in dry dock due to Moscow having had its funding cut. A cursory inspection eventually led to the purchase of the vessel a few years later.

The Varyag’s keel was laid in the Soviet Union in 1985. In 1998, the unfinished ship was put up for auction and was bought by a Macau-based company for US$20 million, which in-

tended to convert the mega ship into a float-ing entertainment center and casino. However, after departing Ukraine, the vessel was spotted in 2004 at a shipyard in Dalian, a major port city in the northeastern province of Liaoning. Workers had already sandblasted the immense hull and repainted it in the grey livery of the Chinese Navy.

Photos and unconfirmed news reports about

the aircraft carrier’s retrofitting were soon leaked on the Internet, fueling speculation in the for-eign media and in China’s blogosphere. A State media blackout concerning the carrier within China was finally lifted this summer, though any information about the Varyag’s military ca-pabilities remains under lockdown.

Deal or no Deal

China’s First Carrier

PurchasingPOWERPossible active deployment of the retrofitted aircraft carrier Varyag looks set to strengthen China’s naval muscle

By Han Yong and Tang Lei

Smoke rises from the Varyag during a test of its main engine, August 4, 2011

P38-47Oct2011.indd 42 8/25/11 5:49 PM


After China’s first research taskforce charged with designing a homegrown Chinese carrier was disbanded in 1971 amid the chaos of the Cultural Revolution, the project was not re-sumed until 1980. Although the Chinese Navy was convinced that a blue-water navy was the key to securing its interests in the Pacific, lim-ited technology and funding were major prob-lems. A naval commander, speaking on condi-

tion of anonymity, told NewsChina that a lack of funding in particular seemed an insurmount-able barrier to building an aircraft carrier in the 1980s, when economic development overrode everything else, including China’s defense bud-get. In 1985, total Chinese military expenditure stood at US$19.2 billion, less than one-tenth that of the United States or the Soviet Union. Consequently, plans to build an aircraft carrier

were postponed until the beginning of the 21st century.

When information that Ukraine might be willing to sell decommissioned carriers was passed on to the Chinese military in 1992, the Politburo dispatched a delegation of Chinese military advisors and ship builders in March 1992 to inspect potentially convertible vessels. They found the Varyag.

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MILITARY

Rear Admiral Zheng Ming, ex-director of Chinese Naval Ordnance, was one of the del-egates. He told NewsChina his primary task was to evaluate the Varyag’s seaworthiness and ap-propriateness for retrofitting, as well as to deter-mine whether the Ukrainian authorities would be willing to sell. Ukraine was eager to find a buyer and the Varyag, its hull already close to completion, looked promising.

Former deputy naval commander Zhang Xusan said the Chinese personnel made a to-tal of five inspections of the Varyag while she remained in dry dock before reporting back to their superiors that they had found China’s first carrier. The response was less than encouraging. It was estimated that a total of 70 billion yuan (around US$6bn) would be needed to retrofit the Varyag. As in 1980, the funds weren’t there. Consequently, purchase plans were officially scuppered.

After the deal with the Chinese navy fell through, the Varyag’s Ukrainian owners put the vessel up for auction in 1998. It was purchased by the Chong Lot Travel Agency from Macau, whose official claim was that they planned to convert the ship into a floating leisure complex. Upon delivery, the vessel’s interior was stripped of weapons systems and onboard power sourc-es.

The purchase of the Varyag by a Macanese company led to speculation that Chong Lot was a front company for the Chinese govern-ment, who wished to obtain the carrier covertly at a cut price. Rear Admiral Zheng Ming has officially denied these rumors, claiming that a direct purchase would have meant the Chinese Navy would have benefited from the ship’s ex-isting hardware. In Zheng’s words, “we’d have gotten a better ship at a lower price.”

While being towed through the Bosporus Straits, the Varyag was stopped by the Turk-ish Navy, who objected to its presence on the grounds it could be a danger to other ship-ping as well as present a military threat, as its 300-meter deck could still be used for aircraft. The dispute was later solved when the Chinese government promised to allow approximately 2 million Chinese tourists per year to travel to Turkey. Meanwhile, China’s central bank inval-idated the loan that Chong Lot had obtained from its State-controlled subsidiary Huaxia Bank, insisting that it “had not been legally ap-proved.” This allowed the Chinese government to insist on immediate repayment. Chong Lot was unable to repay the full amount, and the

Chinese government promptly claimed the ves-sel as State property, redirecting it to Dalian in 2002.

On arrival in Dalian, disputes over the dis-posal of the Varyag began to rage in the corri-dors of power. The Ministry of Foreign Affairs saw the carrier as a diplomatic risk, with some officials calling for it to be dismantled. The Chi-nese Navy, desperate not to lose its first putative carrier, requested retrofitting into a training ves-sel, rather than scrapping the Varyag. The gov-ernment sided with the Navy, and the Varyag was approved for retrofitting in 2006.

All Aboard On April 26, 2005, when the Varyag was towed by six tugboats into the largest dock at the Da-lian Shipyard, three years had passed since its arrival in China. A thick crust of marine life as well as its fading Ukrainian paint had to be sandblasted from the hull, while its massive

propellers and rudder were cleaned and re-paired. The part of the hull above the waterline was painted in the colors of the Chinese navy, with the rest coated with rust-resistant chemical paint. The whole process took half a year.

In the following three years, work moved to the interior of the ship under tight security. At the end of 2008, fresh photos of the Varyag started circulating on the Internet. Obvious refitting work on the deck could be spotted in these photos. The front part of the flight deck had been reconstructed, and the 12 ship-to-ship missile silos which were a feature of the Admiral Kuznetsov-class of carriers had been removed.

In May 2009, a Soviet navy air force crest was removed from the stern, and its Russian name-plates discarded. On May 19, 2010, the Varyag was moved to the outfitting quay, an action seen as the Chinese Navy’s official unveiling of the vessel to the world.

The Varyag’s military capabilities remain

67,000

31

50

302m

70.5m

long

wide

tons

knots

aircraft

Vital Statistics

P38-47Oct2011.indd 44 8/25/11 5:49 PM


closely-guarded State secrets, but its vital statis-tics have now been made public. At 302 meters long and 70.5 meters wide, the Varyag weighs in at 67,000 tons, has a top speed of 31 knots, and could potentially carry 50 aircraft. With no catapults or arrestor cables visible on the Varyag’s flight deck, it is presumed aircraft will launch from a ski-jump ramp at the bow.

The Chinese Navy’s choice of aircraft also remains undisclosed. Foreign media reports have speculated that the J-15 Flying Shark, a Chinese adaptation of the Soviet Sukhoi-33, might form the backbone of the carrier’s future complement of jet fighters, though military authorities have neither confirmed nor denied these reports.

The carrier’s potential escort is also a subject of speculation. In order to be considered com-plete, China’s first aircraft carrier battle group would likely consist of two 052C missile de-stroyers, four 054A corvettes and two nuclear

attack submarines in addition to the carrier itself.

Sea PowerWhen the People’s Republic of China was founded in 1949, the Navy for decades consist-ed merely of small gunboats and torpedo boats. In the 1960s, the Navy proposed to develop de-stroyers, but the proposal was harshly criticized by the then top military authorities. “Offshore defense” was the core of the naval strategy at the time, particularly in the face of the overwhelm-ing naval superiority of the US, with ordnance largely confined to shore batteries protecting ports and overlooking the Taiwan Strait.

Following the death of Mao and the acces-sion of Deng Xiaoping as paramount leader in 1979, Beijing began to attach greater impor-tance to China’s naval capabilities, issuing a di-rective to construct “a highly capable and mod-ernized navy.” Former director of the political

department of the National Bureau of Ocean-ography Zhang Haifeng believes that one rea-son for this change was the country’s increasing demand for foreign oil to fuel its burgeoning economy. This thirst for fuel has, in turn, led to confrontation between China and the other claimants to potentially oil-rich regions of the South China Sea. Zhang told NewsChina that reserves of “combustible ice” (frozen meth-ane and water that constitutes a potential fuel source) in the South China Sea are almost equal to the area’s oil and gas reserves.

According to Zhang, nearly half of the 3 million square kilometers of marine territory claimed by China is under dispute, with island chains in the South China Sea a particular stick-ing point. In Zhang’s opinion, the discovery of vast maritime resources has made the military importance of the oceans secondary to their economic importance, making China’s naval expansion more an economic strategy than a military one.

China’s neighbors are unlikely to welcome the inauguration of the country’s first aircraft carrier. Indeed, even China’s officials seem to be under no illusions about international attitudes to the expansion of Beijing’s naval capabilities. A naval commander speaking on condition of anonymity said the Ministry of National De-fense’s attempts to separate discourse on the Varyag from the South China Sea disputes “would not sound convincing to others.”

The potential deployment of the Varyag, while small fry compared to the US fleet of 11 active supercarriers, shows a major leap forward for China in terms of military reach. A defensive white paper issued by the central government in December 2006 stated that the Chinese Navy had “gradually expanded the strategic depth of its offshore defenses and enhanced its capabil-ity for comprehensive maritime operations and nuclear counterstrike.” Such terminology will provide little comfort to the regional pow-ers challenging China’s territorial claims in the South China Sea.

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Top left: A helicopter takes off from Varyag’s flight deck, August 4; Above: The Varyag undergoes retrofitting

P38-47Oct2011.indd 45 8/25/11 5:49 PM


S tandard & Poor’s decision to down-grade the US government’s sovereign credit rating from AAA to AA+ was a

wake-up call for China’s economic policymak-ers who had long placed their faith in the safe haven of US Treasury bonds. That the US came perilously close to default after several weeks of partisan squabbling in the House of Representatives left China speculating on what it might mean for China if the US were to find itself unable to square its debts.

With China the largest overseas holder of US Treasury bonds since 2006, a litany of fears over-shadowed the international relief at President Obama’s 11th-hour deal with the Republicans. The potential for further devaluation of the dol-lar and a double-dip recession have been cause for particular alarm in China, which owes its bullish GDP growth in no small part to the proclivity for Made in China products in developed econo-mies.

As of June 2011, about 70 percent of China’s total US$3.2 trillion foreign exchange reserves were in dollar-denominated assets. As of the end of May, 55 percent, or US$1.2 trillion, of these dollar holdings were tied up in US Treasury secu-rities. China’s stake in US government solvency is 30 percent higher than the second-largest holder of US debt, Japan, and triple that of the third-largest, the UK.

Despite the reiteration by the Chinese cen-tral bank of a pledge to “diversify investment in China’s foreign exchange reserves” immediately following Congress’ decision to raise the debt ceil-ing, there was little sign that such a shift would be forthcoming.

Crisis of ConfidenceBefore attempting to calculate the future value

of the greenback, creditors should perhaps ask if the US will consistently be able to meet its finan-cial obligations. The answer, financial commen-tator Ma Guangyuan said in a recent article, is: “God knows!”

With Federal debt now above 90 percent of GDP, an unprecedented high since the 1950s, this raising of the debt ceiling provides little cause for comfort, with pessimism starting to set in among investors, including China’s central bank. “The budget outlook, for both the coming de-cade and beyond, is daunting,” warned the US Congressional Budget Office’s 2011 Long-term Budget Outlook issued in June. This document highlighted the need to “increase revenue sub-stantially as a percentage of GDP, decrease spend-ing significantly from projected levels, or adopt some combination of those two approaches”.

Neither path is smooth. US GDP growth for the first half of the year was lower than expected. At the end of June, the Fed revised down its eco-nomic growth forecast for 2011 and 2012 and raised projected unemployment figures. Howev-er, at least in the view of S&P, it was the political pantomime over what should have been a rou-tine raising of the debt ceiling that resulted in the rating downgrade, as the Obama administration failed to secure its preferred deal and was forced to reduce Federal spending without ending Bush-

era tax cuts for the wealthiest Americans.China’s current strategy also puts its total in-

ternational reserves - a mix of gold, foreign cur-rency and IMF assets - at risk. Statistics from the World Gold Council show that gold accounts for only 1.6 percent of China’s international reserves, compared with 75 percent for the US and 63 per-cent for the Eurozone. US Treasury bonds are the Achilles heel of China’s State reserves.

This burden is shouldered almost entirely by the Chinese government. Unlike European and American economies, foreign currency in China is concentrated in State hands, meaning that any devaluation in one currency affects the national reserve and State-owned enterprises far more than private individuals and companies. According to China’s State media, only US$1 trillion of Japan’s US$9 trillion foreign holdings are held by the Japanese government, meaning losses in case of a US default will be far less likely to severely dam-age the national economy.

Indecision“You don’t have to be an international financial

ECONOMY

Fatal Flaws

A Creditor’s CrisisThe US sovereign debt crisis has put its largest foreign creditor at unprecedented risk, exposing the frailties of China’s export-driven, dollar-backed economy. Is the situation grave enough to spark a shift towards diversification? NewsChina investigatesBy Li Jia

China’s US Treasury Holdings 2000 – June 2011China’s Holdings (US$bn)Rest of World (%)

US$bn

60.32000 222.9

2004

477.62007

1,165.52011*

262011*

242008

192006

9.62002

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011** up to June

% of global share

1200

1000

800

600

400

200

0

30

25

20

15

10

5

0

Source: US Treasury Department / Federal Reserve Board

P38-47Oct2011.indd 46 8/26/11 12:51 PM


“You don’t have to be an international financial expert to ask why China hasn’t made real progress.”

expert to ask why China hasn’t made real prog-ress,” said Professor Zheng Jianming of China’s University of International Business and Eco-nomics (UIBE). The reason, he explained, is that there is no market equivalent to US Treasury bonds which could absorb China’s huge offi-cial foreign exchange holdings. As the Eurozone struggles with an arguably more severe sovereign debt crisis, with Italy now joining the growing list of economies in need of a bailout, the aggressive purchase of euro-denominated bonds is not an option for China’s central bank. With more se-cure currencies such as the Swiss franc and Japa-nese yen subject to limited supply, for the time being China must put its faith in the greenback.

Zheng Jianming’s research has revealed that US stocks have offered a better rate of return over the years. Zheng, along with other prominent econo-mists, are now calling for China to widen invest-ment into gold, or even foreign stocks. The price of gold in particular soared after the S&P down-grade as investors sought to hedge against the risk of a possible devaluation of the dollar. However, Chinese policymakers seem reluctant to act de-cisively to realign the country’s longstanding dependence on Treasury bonds. Commodities investment is unpopular with the State Admin-istration of Foreign Exchange (SAFE), an institu-tion wary of the market turbulence that could be unleashed by the entry of a buyer as vast as the Chinese government. “It’s too expensive to get into the international gold market, and the stock market is too volatile,” Li Xiangyang of the Chi-nese Academy of Social Sciences told NewsChina.

In the corridors of power at least, the most contentious, and widely discussed, alternative to diversification seems to be a loosening of State control over China’s foreign currency reserves. According to economist Li Yining, the risk inher-ent in the purchase of foreign currency could be diversified among citizens and private investors, who traditionally respond with greater speed and flexibility to fluctuations on the international fi-nancial market.

SAFE opposes such an idea on the grounds that there is a popular “reluctance to purchase US dollar assets due to the strong expectation of de-valuation.” Ye Tan, a well-known financial com-mentator, criticizes this claim as “irresponsible” in a recent article.

According to Ye, what undermines people’s willingness to purchase dollar-denominated assets are the incredibly limited dollar investment chan-nels open to private citizens. Zheng Jianming agrees, adding that this “diversification of inves-tors” is of more pressing urgency than a diversifi-cation of government-held assets.

The relaxation of capital controls, allowing China to merge into the international financial market, is “too big a step to be realistic in the short term,” said Li Xiangyang. “Not least when nobody knows how the S&P downgrade will re-

shape the market.” Most economists seem to agree that time is

running out for China to create reliable buffers against further economic turmoil in the US. As long as the State has a monopoly on investment, its billions of people will be doomed to bear the brunt of its fiscal losses, meaning that, in many ways, China’s growth can only endure as long as the US can remain solvent.

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ECONOMY

F or Chang Zhichao, a courier at Shen-tong Express in Beijing, delivery speeds are largely dependent on how fast in-

tended recipients can spot him. Like the ma-jority of couriers that hustle through the city’s busy network of streets, Chang sends out his location via SMS message, before waiting pa-tiently by the side of his electric tricycle for the recipient to arrive and claim their package.

For businesses such as privately-owned Shentong Express, delivering packages door-to-door has been near impossible since last year, when increasing operating costs forced the company to reduce its number of couriers.

Like many similar companies, Shentong has been reluctant to raise its delivery prices. The country’s express market is so fragmented that any sign of a price increase is likely to re-sult in an immediate loss of business. On av-erage, profit margins across the express deliv-ery market dropped from 35 percent in 2005 to a mere 10 percent in 2010, or 1-1.5 yuan (US¢16-23) per parcel delivered.

More worrying for businesses such as Shen-tong, however, is the threat of a new govern-ment policy that would see small express companies forced to pay a subsidy to help fund China’s state post service. According to a report by China Business News in late July, the State Post Bureau, the country’s express industry regulator, is drafting a policy intend-ing to charge express companies 0.5 yuan (US¢8) for each parcel delivered, as a means of subsidizing universal post services offered by the State Post Group, including snail mail and postcards.

Subsidy and Privilege “As a public service, the universal post service should be fully funded by the government, instead of by private express companies that do not benefit from it,” said Liu Jianxin, an express specialist with the Beijing-based Chi-na Communications and Transportation As-sociation.

“The government is rich and the subsidy

Courier Tax

Return to SenderA prospective new policy to make overstretched private courier companies pay a subsidy to State giant China Post, a Fortune 500 player, has proved controversial among small business ownersBy Sun Zhe

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Express delivery is a cutthroat market in China

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“As a public service, the universal post service should be fully funded by the government, instead of by private express companies that do not benefit from it.”

needs only one drop of water from the fiscal bucket,” said Liu.

The central government’s revenue stream totaled 8.3 trillion yuan (US$1,290bn) in 2010, up more than 21 percent from the previous year, a growth rate double that of China’s national GDP.

The government has been subsidizing the universal post service since reform in 2006 saw the State Post Bureau downgraded to the role of industry regulator, and its busi-ness functions were transferred to the newly-founded State-owned China Post Group. However, the size of the government subsidy for universal services has been dwindling year on year, according to the Ministry of Finance, although specific numbers have yet to be dis-closed. In the meantime, China Post Group, whose services include banking, stamp print-ing and sales, express delivery and insurance, is gaining a foothold in the market and has begun to record profits.

This year, China Post Group was listed for the first time as a Fortune 500 company, with its 2010 revenue totaling US$28 billion and net profits hitting US$1.3 billion.

“The revenue generated by the China Post Group only adds to the absurdity of this new scheme,” said Xu Yong, president of cecss.com, a courier consulting website based in Shang-hai. According to Xu, the universal post ser-vice, monopolized by the China Post Group, has given the company’s express arm, EMS, a huge edge over its privately-owned counter-parts.

The blurred boundaries between China Post’s universal and courier service enables EMS to run at much lower costs than private competitors, many of whom are teetering on the brink of closure, warned Liu Jianxin of the China Communications and Transportation Association.

Another Way to DeliverEvery morning, 21-year-old Chang moves more than 100 parcels from Shentong’s distri-

bution terminal to his “patch” near the city’s Beihang University. An open space in the cen-ter of the campus has become a rendezvous for couriers from various express services, and Chang, a relative veteran in the express indus-try having worked in the field for over three years, has secured a shady spot in the shadow of a dormitory building, a favorable location in the sweltering summer heat.

On arrival, Chang sorts parcels into alpha-betical order according to the recipients’ sur-names, before stacking them on the ground. The job is rather time consuming as in the meantime he needs to input all the recipients’ cell phone numbers into his touch-pad hand-set in order to send out notices to them via text message.

He routinely works 8 AM to 8 PM Mon-day to Saturday, with only half a day off on Sunday morning. He takes home a monthly salary of 2,000 yuan (US$310), with board and lodging provided by his employer, a Shentong distribution terminal franchise owner in west Beijing.

By franchising their distribution termi-nals, big express brands are able to penetrate the market at a relatively low cost, and gain a foothold across the country.

The country’s top five express brands, in-cluding EMS, Shunfeng, Shentong, Yuan-tong and Yunda are unknown outside China, yet together share an estimated 60 percent of the domestic market, with the remaining 40 percent split between more than 10,000 smaller or regional companies, according to the China Express Consulting website.

For these companies, price is the chief means of competition.

“There are some companies willing to de-liver at prices so low that you can’t help won-dering if they want to close down tomorrow,” said Chang. Dressed in flip-flops, denim cut-offs and a black T-shirt occasionally pulled up above his stomach, he is nothing like the smil-ing couriers in well-cut uniforms in UPS or DHL advertisements.

In contrast to their international counter-parts, such as UPS, FedEx and DHL, who own their own aircraft, the majority of Chi-nese express services do not even have their own independent logistics chains, with pack-ages mostly transported between cities by commercial trucks, increasing the probability of parcels being damaged or lost.

Express delivery has drawn more consumer complaints than any other businesses in re-cent years, yet what they lack in profession-alism, private companies make up for in low price.

A one kilogram parcel delivered by Shen-tong from Beijing to Shanghai, costs just 12 yuan (US$1.9), compared with 20 yuan (US$3.1) with EMS or more than 100 yuan (US$15.6) with DHL, which has pulled out of China’s domestic market due to the gov-ernment’s ban on foreign companies’ involve-ment in delivery of express documents, which accounts for more than 30 percent of DHL’s global revenue.

China is a market yet to mature for interna-tional service-oriented express giants, said Liu of the China Communications and Trans-portation Association, though the market has seen an annual growth of more than 20 per-cent in recent years.

Last year, domestic couriers delivered a re-cord total of 2.8 billion parcels, or about two parcels per capita, a ratio far lower, however, than the European or the US annual average of around 20 parcels per person.

The courier industry is expected to see fast growth in the upcoming 15 years, in line with the country’s transformation from an export-oriented economy to one based on around domestic consumption and e-commerce, said Liu.

Shentong courier Chang also wants to be part of the anticipated boom in e-commerce. After working as a courier for three years, he is tired of waiting all day in the shadow of a dormitory building. He is saving every penny he earns to open his own online store.

P48-59Oct2011.indd 49 8/25/11 5:53 PM


ECONOMY

A lthough responsible for manufactur-ing the majority of the world’s solar panels, China has been slow to em-

brace solar energy. Apart from a small num-ber of private water heaters and the occasion-al village street light, solar power in China re-mains a largely export-oriented industry. All this, however, could be set to change, as the country prepares to set its first unified solar plant power tariff to help open the domestic market.

The proposed feed-in tariff – the subsi-dized electricity price as set between solar plants and the State Grid, is 1 yuan (US¢16) per kilowatt-hour, or 1.15 yuan (US¢18), ac-cording to a statement released on August 1 by the National Development and Reform Commission (NDRC).

The country is eager to add a larger green component to its energy portfolio in order to help reduce its carbon emissions and depen-dence on coal-fired power. Already the world’s largest wind farm developer, its next aim is to raise its solar capacity by as much as 10 times its current amount by 2015.

At the end of 2010, China’s solar power capacity totaled 700 megawatts, equivalent to two large coal-fired power plants. The government has since vowed to raise its solar capacity to 10 gigawatts by the end of 2015, with a further increase by 2020.

For Chinese solar panel manufacturers, who make more than half of the world’s solar cells but sell only 3 percent to the domestic market, the tariff policy comes at just the right time. Global demand has slowed in re-cent years as big markets, such as Germany and Italy, have moved to reduce their feed-in power tariffs for solar plants.

Government support will see China be-come the world’s biggest solar panel market over the course of the next decade, said Zhang Jianmin, spokesman for Jiangsu Province-based Suntech Power, China’s largest solar panel producer.

With more than two thirds of Suntech’s products sold to Europe, the domestic mar-ket accounted for just 5 percent of its 2010 sales. This figure is expected to climb three-fold to 20 percent in 2011, thanks to the new subsidy policy, explained Zhang.

“Solar plant developers have been offered a clearer market perspective when making investment decisions,” said Professor Lin Bo-qiang, of the China Energy Research Group, at Xiamen University.

“Now it comes down to a simple choice – if they can see a margin for profit they will carry on, if not, they will simply pull out.”

A Lesson Not Learned The unified feed-in tariff was better news for solar plant developers in West China than their counterparts in the East, as the sunshine duration is longer in western areas.

Under the set feed-in tariffs, only solar developers in Tibet, Qinghai, Ningxia and

Gansu, the four areas that boast the best so-lar resources in the country, could expect to make a profit, and this would guide investors west towards the Gobi desert, an area ripe for further development, explained Lin.

However, big and intensive does not nec-essarily mean productive, as Meng Xian’gan, deputy chairperson of the China Renewable Energy Society explained. “If there is a lesson to be learned from wind power development, it is not to make the plants too big and too centralized.”

A total of seven 10-gigawatt wind power bases, dubbed “wind-power Three-Gorges,” were outlined in 2007’s renewable energy blueprint, leading to the country’s wind power capacity being doubled year on year to its current total of 45 gigawatts, the largest in the world.

Impressive as such increases are, the econo-my and rationality of high-intensity develop-ment remains open to question, said Meng.

Solar Power

Surface HeatThe world’s largest solar panel manufacturer is renewing attempts to open up the domestic market, but is the domestic market ready? By Sun Zhe

Renewable energy is a boom market in China

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BYNUMBERSCHINA

The majority of wind turbines were in-stalled in the northern hinterlands, such as Inner Mongolia, Ningxia and Gansu. How-ever, these so-called mega wind plants are thousands of miles away from China’s main power consumers in the south and east of the country

Given the costs involved in transporting energy such great distances, not to mention the investment needed for grid construction and upgrading, intensive wind power bases, as well as the large utility-scale solar plants, might not be economically sound, argued Lin.

To the grid operator, the power generated from wind farms and solar panels is infinitely less preferable to more traditional forms of energy, due to the unstable nature of wind strength and solar illumination intensity. Such variables, critics argue, could lead to large-scale grid instability. More than one-tenth of the total wind capacity has yet to be connected to the grid, due in part to unwill-ingness from grid operators to receive “too much” wind-generated electricity.

For solar power, distributive schemes such as rooftop solar plants should be granted higher feed-in tariffs to enable users to profit, and thereby motivate consumers to diversify their energy sources. “Without more diversi-fied options, the proposed mega solar plants in the West, like the country’s unconnected wind turbines, will become little more than shiny decorations in the desert,” said Lin.

“Now it comes down to a simple choice – if they can see a margin for profit they will carry on, if not, they will simply pull out.”

56.6%

Total market share held by foreign auto brands in China, an increase of 3.05% in the first 7 months of 2011.

Source: China Association of Automobile Manufacturers

Japan18.49%

Germany16.24%

US11.32%South Korea

18.49%

France2.73%

US$3.42bn

The average asset value of China’s 40 richest people, 70 percent higher the average for the world’s richest 241 ethnic Chinese.

Source: Huaqiao University, Overseas Chinese Affairs Office of the State Council

14%

The growth rate in the total number of overseas mergers and acquisitions by Chinese compa-nies in the first half of the year, taking the total figure to 107. This comes despite increased economic uncer-tainty and a down-turn in the market.

Source: PricewaterhouseCoopers

156,000The total number of registered cases of IPR infringe-ment uncovered during a nationwide State Council crackdown from October 2010 to June 2011.

Source: Ministry of Commerce

19.17% 2011 year-on-year de-cline of US-led invest-ment in China, marking a departure from 2010, when US-led investment rose 13.31%.

Source: Ministry of Commerce

50

40

30

20

Jan43.37%(265m)

Feb27.91%(520m)

May24.12%(1.29bn)

Jul 19.17%(1.94bn)

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S et amid the grounds of a newly built luxurious five-star hotel complex, a Louvre-like glass pyramid rises from

the deserts of Inner Mongolia. Yet, in this world of shimmering mirages, all is not as it seems. The French-inspired pyramid is not only the area’s glittering centerpiece, it is also a source of solar energy. The project is part of a several-billion-yuan investment by Elion Resources Group, a private Chinese com-pany that hopes to turn the barren deserts of northern China into an oasis of wealth and opportunity.

However, despite the company’s obvious ambition, Wang Wenbiao, the founder and chairman of Elion Resources Group, remains uncertain as to when he will break even on his company’s investment. The hope of see-ing an immediate return now lies in a vast 130,000-hectare liquorice plantation. The company has since estimated that the culti-vation of this traditional Chinese medicinal herb could deliver as much as 3 billion yuan (US$460m) in annual sales revenue. “Al-though I believe it is worth more than that,” said Wang in a recent interview.

Through the exploitation of sunlight, and efficient usage of water, desert agriculture has been encouraged in China in recent years as a means to help ease dwindling land resourc-es and combat severe desertification.

Faced with the task of feeding 20 percent of the world’s total population, China has begun to seek out new ways to expand its supply of farmland. The country currently has an estimated 120 million hectares of arable land – 60 percent below the interna-tional average per capita. However, this too is being threatened by rapid urbanization, a threat that was outlined in a report by the Agriculture and Rural Affairs Committee of the National People’s Congress in February 2011.

As State Councillor Liu Yandong declared at an El-ion sponsored conference in early July, in order to com-bat such issues, China’s anti-desertification strategy is to undergo a shift from its pre-vious approach of “focusing only on ecological benefits,” to one of “combining eco-logic, economic and social benefits,” or in other words, using environmental proj-ects to generate wealth. But is it possible?

According to professor Sun Baoping of Beijing Forestry University, “At least 100 million hectares of desert land has the potential to be tapped.” This may be true, but deserts are extremely fragile, meaning they are highly vulnerable to external changes. That is why the prospect of massive human intervention, no matter how well intended, has aroused serious concern among a growing number of scientists.

Golden Desert?Traditionally, the majority of China’s desert-area has been located in the north and mid-west, and, as a result, these areas have come to rely on grain imports from the more fer-tile south. However, research done in 2009 by Zhang Zhengbin and Duan Ziyuan, agriculture experts from the Chinese Acad-emy of Sciences, reveals a marked increase in grain production in these formally unpro-ductive areas. Indeed, Inner Mongolia has become the largest grain producer in China’s northwest. Meanwhile, grain production in southern China has steadily declined in re-cent years, due to industrialization.

Exploration into the desert has already

begun. Yulin, an area in Northwest China’s Shaanxi Province, has made progress in “turn-ing vast tracts of desert into granaries,” accord-ing to the local media. Local farmers are re-ported to have benefited from growing grapes, potatoes, dates, as well as other fruits and crops in desert areas. Private investment has also been welcomed. Elion, for example, has been praised for having “greened 5,000 square kilo-meters of desert” while simultaneously build-ing its own commercial presence there.

More is to come. In a circular issued ear-lier this year, the State Forestry Administra-tion urged more fiscal and credit support for businesses engaged in farming and animal husbandry in desert areas. The Ningxia Au-tonomous Region, for example, where 23 percent of all land is covered by desert, boasts 130,000 indigenous desert herbs and is plan-ning to further boost agriculture, renewable energy and tourism in its desert areas in the next five years.

Risk Water shortages stand at the very core of the desertification issue anywhere in the world,

ENVIRONMENT

Desert Agriculture

Turning Sand into GoldSupporters of desert exploitation claim it promises to both fight desertification and generate wealth. But can large-scale human intervention in fragile ecosystems really prove sustainable?

By Li Jia

A solar-paneled botanic garden, Inner Mongolia

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“Making the landscape green at the cost of the environment must be avoided.”

and China is no exception. China’s per cap-ita water resources stand at merely 28 per-cent of the world average. At the same time, its water efficiency remains poor. The GDP output produced by 1 cubic meter of wa-ter is one-third of the world’s average. The northern part of the country holds only 19 percent of China’s total water resources but has 60 percent of its arable land and 46 per-cent of the population, according to a re-cent report by the State-run Xinhua News Agency.

Agriculture is the biggest water-consumer sector in China. A survey by the Ministry of Water Resources shows that in 2008 water consumption by the agricultural sector ac-counted for 62 percent of the national to-tal. The figure rises as high as 75 percent in desert areas in Xinjiang, Inner Mongolia and Gansu.

The shift in grain production toward the north and west is a major concern for Pro-fessor Hu Yuegao, director of the Center for Desertification Control at China Agri-cultural University. “Farming on desertified land has driven the quest for land and un-

derground water in ecologically fragile areas, leading to desertification there.” The under-ground water level is dropping by 0.5 to 1 meter a year in many areas, and by as much as 8 meters in parts of the north and south-west. Hu believes that this is partially caused by increasing agricultural activity. “Theo-retically at least, desert agriculture has the potential to further threaten underground water resources and biodiversity,” he warned; urging those involved “to control the scale of desert exploitation,” no matter how water-efficient their operations claim to be.

Others go even further. Professor Fan Shengyue from Minzu University of China, a veteran expert on ecological economics, is outright opposed to any further exploration into the desert. “Desert is a natural, solid, underground reservoir. We should preserve some desert, particularly the mobile desert, rather than destroying it through these so-called efforts to ‘green’ it,” he said. Fan insists that all existing desertified land that can be exploited for farming has already been devel-oped and the focus now should be on raising productivity and ensuring water efficiency in

existing areas.Bitter lessons of short-term gains turn-

ing to disaster are by no means rare. Along the “Green Great Wall,” the world’s largest forestry project running across the north of China, many poplar trees withered due to their massive water consumption, while fail-ing to stave off the encroaching sands. The same plants have also been found on Elion’s land. “Making the landscape green at the cost of the environment must be avoided,” Fan cautioned.

What people want from the desert goes far beyond crops or herbs. The National Tour-ism Administration, for example, is talking about the possibility of having “desert golf courses,” notoriously unsustainable and thirsty enterprises.

The so-called “win-win” situation, much loved by developers, where economic bene-fits are drawn from the process of combating desertification, is often more blind optimism than sound practice. Whether that notion can be realized depends largely on whether ecological concerns are really at the heart of new efforts to “green the deserts.”

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People plant trees in the Kubuqi Desert, China’s seventh-largest desert, Inner Mongolia, 2010

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FEATURE

Conservationist Monk

A lifelong birdwatcher, ethnic Tibetan lama Tashi Samge has spearheaded conservationist initiatives inhis home province of Qinghai

A Sacred Responsibility

By Wang Yan

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H itching up his crimson robe, Tashi Samge begins his precipitous climb. There is a biting minus four chill atop

Northwest China’s Qinghai plateau, 13,000 feet above sea level.

The dangerously thin air and steep path-way soon leave the 41 year-old monk out of breath, but he struggles onward, aiming for his favorite spot. Thirty minutes later, he’s ensconced behind a rock near the nest of a female Tibetan griffon vulture, peering in at a newly-hatched fledgling, a pair of glittering eyes looking curiously back at him from a mess of fluffy white feathers.

Sacred BirdsTashi Samge holds the senior rank of Khy-enpo in the Palyul Datang Monastery in Jiu-zhi County, Qinghai. The son of a Tibetan herdsman, raised by the side of a lake at the foot of Nypanpo Yutse mountain in Jiuzhi, he enrolled in Palyul Monastery when he was 13 years old. His keen interest in birds began in childhood and remained unabated even after he became a monk. Tashi claims to have observed a total of 400 bird species in their natural habitats, including 183 in a single prefecture.

“Without vultures, the sky is empty,” is a Tibetan folk saying. The Himalayan griffon vulture is regarded by ethnic Tibetans as the sacred bird of the plateau’s patron goddess, a creature that serves as the envoy between the earthly world and the afterlife. Like the buz-zard, the Himalayan griffon vulture is a car-rion bird that largely feeds on dead and dy-ing domestic animals such as yak and sheep, consuming little food outside the breeding season. This winter, Tashi discovered it was becoming increasingly difficult for the moth-er bird to get enough food for its offspring. “In the past, the adult vulture would fly out of the nest every day and return in four to five hours with its beak stuffed with meat. This winter, more often than not, the mother bird comes home ‘empty-handed,’ with little more than saliva to feed its lone chick.”

In traditional Tibetan Buddhist lore, a certain number of sick or aging yaks would be let loose, and dead domestic animals left in the open for predation by wild birds as a sacrifice to the mountain goddess. In recent years, Tashi has noticed this tradition fading away, with a rising demand for Tibetan yak meat leading ethnic Tibetans to con-

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serve every scrap for the marketplace. Con-sequently, a once-reliable winter food source for the vultures has begun to dwindle, posing a serious threat to these birds’ very survival. “Where else can they find food? Their num-bers will definitely decline,” Tashi told News-China. “The only way to keep the species alive is to provide enough carrion during the breeding season.”

Now, Tashi has taken it upon himself to meticulously record the time when the vul-tures mate, lay and hatch eggs, when and what they eat, when the young fledglings start to change their feathers and when they finally fly the nest. In the winter of 2010, Tashi suc-cessfully persuaded some local Tibetans to leave the meat of dead yaks to vultures.

Tashi and his friend Zhou Jie, another monk from the Palyul Temple, have jointly shot a documentary film on Himalayan grif-fons which was released this April. The film depicts Tibetans making offerings of carrion near vulture colonies in order to save the birds from starvation.

However, vultures are not only one of the bird species that fascinate this unusual monk. At his home studio, our reporter spotted an artificial nest made by Tashi’s family to house a pair of red-billed choughs. Tashi told our reporter, “This kind of bird is very special and locals hold them in awe. A local saying goes, ‘If you wound or kill a red-billed chough, one of your family’s yaks will die.’”

Tashi‘s devotion to his homeland’s birdlife soon earned him the nickname “the bird-watching lama,” with others joking that he was a reincarnated sparrow. Whenever fellow monks spot a rare bird or even hear a bird-related anecdote, Tashi will be the man they share it with.

ArtistryIn the early 1990s, Tashi began sketching his beloved wild birds, drawing and creat-ing his own distinctive style in the process. So far, he has completed detailed studies of all 400 birds he claims to have observed at close range.

With no specialist equipment on the mountainside, Tashi would whisper observa-tions into a tape recorder. At home, he would transcribe his oral description and sketch the birds he had observed, taking the resulting drawings back to the nest the following day for comparison and correction.

Concerned that his student might be pre-occupied with less-than-spiritual pursuits, Tashi’s Buddhist master at the monastery once asked him, “Why do you draw birds? For money, or for fame?” When Tashi re-plied, “For nothing,” his master was obvi-ously relieved and gave him permission to continue with his hobby.

“For me, there is no purpose in improv-ing my drawing skill. I’m drawing the crea-tures purely out of love for them,” Tashi told NewsChina, adding that his dream is to paint a complete Tangka, an elaborate Buddhist scroll-painting, depicting a bodhisattva sur-rounded by regional bird species.

ConservationistTashi’s passion soon attracted a wide circle of friends. In the summer of 2005, when Tashi and a friend from the Shenzhen Ornithologi-cal Society were outside the Palyul Temple, they caught a glimpse of a plain-looking bird with a scarlet back and dark-ringed eyes. Ac-cording to Tashi, his friend “went wild with excitement,” telling him it was a Tibetan bun-ting, a rare species unique to Qinghai which was on the International Union for Conserva-tion of Nature and Natural Resources (IUCN) Red List of Threatened Species.

Tashi, long-familiar with the species, had never known of its vulnerable status. Locally, the bunting was nicknamed “dzi bead bird” because the shadow surrounding its eyes re-sembles the etched agate beadwork treasured by ethnic Tibetans. Due to destruction of the bunting’s nests, which it makes on the ground, by humans and grazing yaks, the population has been in a constant state of de-cline for decades.

Upon discovering the plight of a bird he had formerly regarded as rather commonplace, Tashi started painting the bunting and also investigated the range of its territory in the re-gion. Finally, in 2007, he set up the Nypanpo Yutse Ecological Protection Association, draft-ing a detailed plan to protect the wild bunting. With grants from the WWF and Beijing’s Shanshui Conservation Center, the associa-tion was able to initiate the first comprehen-sive conservation program in the region.

Tashi’s initiatives, among other things, cover distribution of images of the species captioned “buntings are like sacred birds, they are a good species and must be protected” in the Tibetan language to each household in the region. As

a result of this campaign, locals began to pay more attention to the bunting. Now, locals habitually cover bunting nests with grass as a means of protection, and herdsmen are in-creasingly choosing to graze their yaks away from the bunting’s breeding grounds.

“Our work is paying off,” Tashi told our reporter. “I see my conservation work as a kind of Buddhist practice, since the purpose of Buddhism is to help others, animals as well as humans.

“If I just chant mantras inside the temple rather than make a genuine effort to protect the creatures outside, I am not helping,” he added.

Terminal Decline?As the leader of the Nypanpo Yutse Eco-logical Protection Association, Tashi has re-ceived numerous titles and accolades such as the biannual ecological awards issued by China’s SEE (Society of Entrepreneurs and Ecology)Ecological Association and The Nature Conservancy (TNC) in early June. He has involved himself in the shooting of nature documentaries and published two bird books. When it comes to the challenges facing environmentalists and conservation-ists on the Qinghai-Tibetan Plateau, Tashi is remarkably candid.

In our interview, Tashi explained how envi-ronmental protection, particularly the conser-vation of wild animals, is almost nonexistent in the area surrounding Nypanpo Yutse. So-called game animals such as the musk deer and blueskin goat were randomly hunted until re-ceiving basic State protection in the 1990s, but still teeter on the brink of extinction.

Even more alarming to Tashi is the rapid erosion of the plateau’s grassland caused by poisons used to kill infestations of pikas, a native species of rat. Some 5.1 billion yuan (US$730m) worth of poison has been dis-seminated throughout the local food chain since the 1950s when the local government endorsed a mass campaign to eradicate the

“The best protection is not to change the rule of nature but to follow it.”

FEATURE

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pika from the plateau. “Pika have existed for thousands of years and they have their natural predators, such as foxes, badgers and weasels. But the poisoned rats, if eaten, poison their predators,” Tashi told our reporter.

The high reproduction rate among rats means their numbers quickly bounce back. “However, it takes years or even decades to restore the original numbers of predators killed by poison,” he continued.

The decline in wild animal populations also poses a threat to the existence of other indigenous animals such as the snow leop-ard, a highly endangered species which lives among the mountain peaks. With no musk deer or blueskin goats, snow leopards turn their attention to the flocks of sheep tended by local herdsmen, who regularly shoot predators.

Tashi’s solution to the clash between hu-man and animal is simple. “The best pro-tection is not to change the rule of nature but to follow it.”

AwarenessThe work done by the Nypanpo Yutse Eco-logical Protection Association has paid off over the last four years. The association now has a total of over 60 members including gov-ernment officials, students, monks, herds-men, farmers and teachers. As well as pro-tecting and monitoring local bird and animal populations, the association also records fluc-tuations in the size of the region’s mountain glaciers and lakes, as well as keeping a record of local plant and insect life.

The association has also organized con-servation clubs in local schools, encouraging young people to take an active interest in regional biodiversity. “If I know you, I will care more about you than I would a stranger,” Tashi said, “once children know animals and plants better, they start loving and protecting them.”

“In promoting animal protection in local communities, we feel certain there is not a single person in Jiuzhi County who would

willingly kill a single wild animal,” Tashi con-tinued.

However, hunting and poaching are only one way in which humans are destroying Ti-betan wildlife. Another issue the association has been working on is promoting systematic garbage collection promotion among local Tibetans. Discarded plastic is proving a seri-ous threat to regional wildlife, choking and smothering birds and animals alike. “Since there are no recycling or garbage treatment facilities in the area, and no one bothers to collect garbage for transfer to bigger cities for treatment, all we can do is to promote local awareness,” Tashi told NewsChina.

In theory, Buddhism does not discrimi-nate between human and animal rights. While China as a nation has its own lists of protected animals, which divides species into those meriting first- and second-class protec-tion, the country’s Buddhists make no such demarcation. “We cannot kill one species for the sake of protecting another,” said Tashi.

In the spectacular Nypanpo Yutse Nature Reserve, diverse bird species and other wildlife, including endangered snow leopards, roam freely

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CULTURE

W hen the Great Proletarian Cultural Revolution swept across China in 1966, Jin Dalu was a teenager liv-

ing in Shanghai. Due to his family’s “ques-tionable background,” he was excluded from the privileged ranks of the Red Guards. Out in the cold, Jin watched the revolution unfold from the sidelines, and bore witness to the ex-cesses of “revolutionary activities.”

“In the beginning I was a fervent believer in the theory of ‘continued revolution under the dictatorship of the proletariat,’” Jin told our reporter. “Later, growing up, my ideas turned against the Cultural Revolution and its theories.”

Jin’s change of heart came in 1971 when Lin Biao, Chairman Mao Zedong’s anointed successor, died in a plane crash in Mongolia attempting to defect to the Soviet Union af-ter a failed coup d’état. Hearing the news, he recalled that he started trembling all over – it was as if all his convictions had been shak-en to their very foundations. He began to have doubts about the Cultural Revolution, doubts which later crystallized into a resolve to probe into the political catastrophe that wrought havoc across China and led to the torture and murder of countless people.

Thirty-five years later, Jin, as a researcher at the History Institute of the Shanghai Academy of Social Sciences, completed his 670,000-word book Abnormal vs Normal: Social Life in Shanghai During the Cultural Revolution.

Abnormal vs Normal is split into two parts. The first deals with the political campaigns and their influence on ordinary people. Voices include some of the millions of “edu-cated youths,” mostly junior high graduates, who were sent to the countryside to perform farm work; those who engaged in iconoclastic vandalism during the “Smash the Four Olds” campaign targeting “old ideas, old culture, old customs and old habits;” and also details the Red Guard raids on the homes of “unde-sirable elements,” typically intellectuals, and the confiscation of their property.

The second part of the book gives an ac-count of people’s daily lives in Shanghai during the Cultural Revolution, describing marriages and divorces, ongoing corruption including cynical profiteering from the sale of Chairman Mao badges to people desperate to cultivate an image of loyalty.

“The sins we see today - the abuse of power

for personal gain, embezzlement and under-cover prostitution - all existed in those years, contrary to assertions of those nostalgic for the ‘revolutionary purity’ of the time,” Jin added.

While Party archives detailing top-level decision-making during the Cultural Revolu-tion remain classified, researchers such as Jin have ceaselessly probed into unofficial records in search of an explanation for the madness that gripped China in the 60s and 70s. His new book is an attempt at approaching a pe-riod China has officially tried to forget from a fresh angle - the daily lives of ordinary people, lived out under the fearful shadow of unprec-

edented political persecution.Jin intends Abnormal vs Normal to be the

first part of a trilogy dealing with this period, with a subsequent two tomes focusing on the persecution of “counterrevolutionaries,” sex crimes and suicide, all topics which are skirt-ed around in the official histories.

“At the mention of the Cultural Revolu-tion, the younger generation tends to imag-ine youthful revolutionary zeal and rebellion against the ‘capitalist roaders,’” said Jin. “But in reality, people still had their lives to live and various pedestrian undercurrents flowed be-neath a revolutionary crust.”

By Yang Shiyang in Shanghai

Jin Dalu

Life Goes On Historian Jin Dalu’s new book, Abnormal vs Normal: Social Life in Shanghai During the Cultural Revolution, approaches one of China’s darkest hours through eyewitness accounts, offering a human window on a historical period known universally for its inhumanity. In this interview, Jin explains why his interest in the period has become inextricable from the features of daily life

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NewsChina: Why do you choose daily life as the point of departure for your writing, rather than the political movement itself?Jin: I personally experienced the Cultural Revolution and have long had the urge to have it recorded. Normally, the political his-tory of a certain historical period is placed above its social history. At present, it is tough to write about controversial events like the Cultural Revolution. Furthermore, the top archives have yet to be opened. So, instead, I wrote the first social history of the Cul-tural Revolution. Some people criticize me as not going far enough in my criticism, but I reached my conclusion through research of historical records, and I do not want to tie ideology to academic research.

NewsChina: You also explored differences between “revolutionary zeal” in Beijing and Shanghai, claiming the latter was the only place in the country where no gun violence between rival revolutionary fac-tions was recorded. Why was that?Jin: At the start of the movement, the Shang-hai Garrison Command issued an order to seal up all caches of firearms in the city, de-nying access to feuding Red Guard factions. Shanghai was also the support base of Zhang Chunqiao and Yao Wenyuan, two mem-bers of the Gang of Four and ringleaders of the Cultural Revolution, who went to great lengths to seal Shanghai off from the worst of the violence. There were indeed fights be-tween rival factions but they involved sticks

and spears, not guns. The situation in Beijing was different. Ac-

cording to statistics, by September 30, 1966, a total of 1,772 people were beaten to death by Red Guards over a period of twelve days during the forced confiscation of goods be-longing to “undesirables.” The figures for Shanghai showed a mere 11 deaths.

NewsChina: Romantic love became taboo during the movement. But according to your statistics, the marriage rate in Shang-hai remained unchanged. Jin: People still managed to live their lives and make the best of harsh circumstances. However, the divorce rate was abnormally low - only 6,489 couples divorced in 10 years, barely two cases per day. This wasn’t so much an indication of revo-lutionary zeal holding marriages together as an outward sign of inward fears. Contemporary propaganda equated a high divorce rate with decadent lifestyles, and the children of divorced couples became politically tainted. Those who did get divorced were largely driven by political considerations – for example, divorcing a spouse with a “bad background,” rather than as a result of a breakdown in a relationship.

NewsChina: The revolution served to dam people’s emotions. Did these pent-up feel-ings still find an outlet?Jin: For any action, there is an equal reaction. In August 1966, the Red Guards set about cutting “fashionable” hairstyles or repudiat-ing “fancy” clothes, attempts at attaining

“revolutionary purity.” However, the hair-styles and fancy clothes quickly reappeared. Underground sexual transactions never dis-appeared. Red Guards checked under young girls’ skirts at the entrance to cinemas to see if they were wearing panties, supposedly to pre-vent prostitution. Sexual harassment and vio-lence became a hallmark of the period. Dur-ing the National Day celebrations in 1972, gangs of young men forcibly stripped girls on the street. At least one girl was stripped completely naked. Although one ringleader subsequently received a death sentence, such instances of sexual harassment kept cropping up in Shanghai throughout the mid-1970s.

NewsChina: Now some people say they “miss” the Cultural Revolution, saying there was no corruption at the time because no officials dared to commit crimes. But your research shows this belief to be false. Jin: A group of cadres at a grocery market in Hongkou District were caught embezzling tens of thousands of yuan. Many officials made fat profits by making and selling Chair-man Mao badges, taking advantage of the social necessity of demonstrating love and re-spect for the Chairman. They formed a com-plete chain of production, from the purchase of aluminum ingots to polishing and selling.

NewsChina: Different schools of thought have different points of view about the Cultural Rev-olution. How did you decide on your angle?Jin: I have always stressed that historians should base their research on historical material and ad-here to the principle of academic supremacy. To-day, we see many Cultural Revolution research-ers swayed by their preset ideologies or preju-dices. Some whitewash the whole affair while others pour their emotions into the research. I try not to let my emotions stand in the way of my research.

“The sins we see today - the abuse of power for personal gain, embezzlement and undercover prostitution - all existed in those years.”

Jin Dalu

Daily photographs of ordinary Chinese during the Cultural Revolution

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VISUAL REPORT

Last Look BackThe central phase of China’s great South-to-North water diversion project was launched in August 2010, forcing the relocation of 63,000 residents from the mountainous area scheduled to become the Danjiangkou reservoir. Already touted as China’s largest ever forced migration from a single region, the plan is set to be completed by September 30. Locals chose the auspicious date of August 11 to begin the great exodus, with over 500 vehicles transporting people and belongings from rambling mountain villages to new housing in various counties of Hubei Province. In less than a year, their former homes will be underwater.

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VISUAL REPORT

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Clockwise from left: Xiang Shuangmei and her two-year-old son Wu Xianghao take one last look at

their hometown of Guanmenyan village through a bus window, August 19; The family of 76-year-old

Zhu Zide take a last photo in front of their former home in Erfangyuan village, Danjiangkou, August

19; Buses transport Erfangyuan villagers out of the mountains, August 21; Villagers’ belongings are

moved by trucks, August 20; Huang Li, 64, has lived in Erfangyuan for about 30 years, August 19; Zhai

Yunbang pays a last visit to the graves of his ancestors, August 21

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OUTSIDEINperspectives from within china

C hina travelers can easily become cyni-cal when it comes to visiting temples. More often than not, a little back-

ground reading reveals that countless revered and “ancient” edifices were reconstructed from the ground up in the last twenty years. The ability of a fresh-faced tour guide to point out a gleaming ten-year-old temple and describe it as “ancient” with a straight face never ceases to amaze. Even China’s scat-tering of UNESCO World Heritage Sites often fall victim to encroaching Walt Disney commercialism.

Consequently, Mount Wutai’s status as a UNESCO World Heritage Site, complete with a brand-new highway, failed to fill me with hope. On arrival in Taihuai Village, the confluence of a dozen prominent monaster-ies in this, the most sacred of China’s major Buddhist sites, the swarming tour groups, hollering salespeople and drone of traffic seemed to justify my misgivings.

Indeed, Taihuai Village itself cannot be described as a peaceful Buddhist refuge any-more than many of China’s extant temples can be described as “ancient.” The village is well and truly fixed on the tourist trail, and hundreds of thousands of Buddhists, non-Buddhists and Buddha-curious visitors make their way here each year. However, while the tourist buck may yet eviscerate this holy

place, right now it has done little to shatter the overwhelming power of the genuinely ancient vermilion edifices sprinkled among Mount Wutai’s five peaks with their romantic names such as the Peak of Flourishing Leaves and Hanging Moon Peak. Many temples date back to the Ming and Tang dynasties and beyond, and for every gaggle of vacation-ers, there is a contemplative pilgrim climb-ing step-by-step up one of the interminable staircases to a hilltop shrine, kowtowing with each pace, their foreheads scarred from being pounded into countless stone steps.

Wutai’s religious buildings vary wildly in both scale and atmosphere. The tourist-centered “must-see” Tayuan and Nanshan temples in Taihuai Village, where pilgrims elbow one another out of the way to pitch a bundle of incense into a burner, are gor-geous buildings with intricate woodcarving and gleaming Buddha icons galore, but re-main so rammed with tourists that any sense of spirituality is often yelled and jostled out of existence. The same is true of the terraced Da Xiantong Temple with its awe-inspiring gilded pagodas, though an impressive 400 rooms means it’s easy enough to dodge the crowds. However, there are so many con-cealed and remote temples to explore that a little wandering can lead you to an ancient hermitage tended by a wrinkled monk or

two where you can be alone with the circling crows and the sound of the wind. As with so many of China’s hotspots, it pays to wander off the beaten track and explore the dozens of trails leading off the main drag.

Well worth seeking out is a place to lunch in one of the temples. I was lucky enough to be invited to lunch at the newly-built Foxue Yuan (seminary), closed to ordinary tourists, its vast structure standing silent and contem-plative on the mountainside, its many impos-ing halls terraced into natural ridges. A per-son I took to be a monk – shaven headed and clad in a grey robe – made their way towards

By Jack Smith

Mount Wutai

A Taste of the SpiritualAlive with the clamor of the business side of Buddhism, the sheer number of Mount Wutai’s monasteries means that those in search of spiritual fulfillment need to shop around. Our reporter unexpectedly found inner peace over lunch

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our group at the gate, and it was only when this imposing figure began to speak that I re-alized she was a woman. Devoid of the false friendliness characteristic of Chinese service personnel, she ordered the small group of tourists around like a Dickensian schoolmis-tress, soon scaring us into silence and glaring at any person who dared to utter a laugh or allow their cell phone to ring. As we stood in line outside the cavernous dining hall, this nun drilled us in the seminary’s dining hall decorum. No talking, chew quietly, hold out your bowl if you want more, cover it if you don’t want a particular dish, keep your eyes

on your own food… the list was too exhaus-tive to relate, and I wondered if I would re-member it all. As she spoke, immense snak-ing lines of shaven-headed nuns filed silently into the hall, each holding her own dinner service of one wooden and one enamel bowl, iron spoon, wooden chopsticks and cleaning cloth. The nuns were seated first, and then our small group was hurriedly accommodat-ed, with more than a few tart remarks from our chief warden directed at several local visi-tors who continued to chatter.

We sat, were issued with identical eat-ing implements, a long Sanskrit incantation

was read, and the meal began. The food, all vegetarian temple cuisine known as zhaifan prepared without the “stimulating” spices prohibited in Buddhism – in other words, no chili pepper, no Sichuan pepper and no ginger – was uniformly delicious. I later

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discovered the hefty quantity of food was the result of most of the nuns only eating one meal a day. A steaming broth of Chinese rad-ish was accompanied with stewed yam and onions, fried pancakes, potato and cabbage stir-fry and ample fluffy white rice, all ladled out by serene-faced nuns in complete silence. I ate my fill, carefully observing the warden’s rules and keeping my eyes to myself. In a flash of realization it dawned on me that this was by far the quietest meal I had ever en-joyed in China.

All I could hear was the wind, the foot-falls of the serving nuns, and the sound of my own chewing. Once I had adjusted to this tranquility, I found I could focus on the taste of the food and the sensation of chew-ing and swallowing. Consequently, despite being ravenous, I instinctively slowed down to savor every mouthful. Soon, my mind wandered into deeper thoughts about the incongruity of my presence in this silent, reverent world.

As the meal ended and the nuns wiped down their dishes and departed, I sat back on my hard bench and looked around. All my fellow tourists had been struck equally dumb by this experience, and as we emerged blinking into the January sunlight of the seminary courtyard, we remained silent and contemplative. Here, then, was the reason so many former residents of China’s over-crowded cities had chosen to escape to this serene place – here, nothing interrupts your thoughts, leaving you free to settle into your own mind. In the space of one lunch, com-mitted atheists had experienced the spiritual power of silence.

themselves personally or professionally, making mai meng a de-rogatory term similar to “phony.” This expression has even spilled into mainstream parlance, with a recent online critique of 3D movie The Smurfs using the term to mock the film as a whole as mai meng. The author accused the filmmakers of pandering to sen-timentality, suggesting that young Chinese people who grew up watching the Smurfs on television could only appreciate the film on a nostalgic level, slamming its lackluster plot and characteriza-tion. As with many Chinese words, meng is a double-edged sword, easily transformed from a compliment into an insult, and as such should be handled with care.

Originally popularized in Japanese cartoons, meng, a character which typically pops up next to big-eyed preadolescent female characters has connotations of innocent cuteness. In traditional Chinese, meng is both a noun and a verb mean-ing “sprout” or “germinate.”

As a noun, meng signifies the initial phase of something, while the verb form means “growing up.” The new, popular usage is as an adjective, as in “he or she is really meng” – cute, adorable or irresistible. The closest literal meaning is broodi-ness felt by adults towards babies and young children.

As with many Internet buzzwords, meng has been seized upon and modified to suit specific contexts. Mai meng, literally “to sell cuteness” is used to describe people, particularly girls, who affect innocence and cuteness in order to advance

meng

Cute as a Button

real chinese

travel

Getting There

Daily express trains to Taiyuan leave from Beijing West train station, as well as flights from Guangzhou, Shanghai and Beijing. From Taiyuan’s main bus station you can take a bus directly to Taihuai Village, a pic-turesque but grueling five-hour journey. Don’t forget to factor in the mandatory 168 yuan (US$26) entry fee at the gate of Tai-huai Village – if you’re going with a driver, they’ll also have to pay this. The more in-trepid traveler can take a train from Taiyuan Station to Wutai Shan Station, which lies 50km from Taihuai Village, however tickets are scarce, trains are crowded with local farmers and hawkers, and timetables sub-ject to change without warning. Once in-side Taihuai Village, a hop-on, hop-off tour bus runs to all five peaks, allowing you to explore at your leisure so long as you keep a hold of your ticket.

Accommodation

While there are new resort hotels opening all the time on the drive in to the World Heritage Site, it is also possible to secure a bed at Tayuan, Xiantong and Kuangren temples for about 20 yuan (US$3) per person. Where beds are available, you will also be able to dine alongside the resi-dent monks for a small fee – remember to keep silent. Otherwise, food is available from the restaurants in Taihuai Village as well as in hotels – specialties such as wild mushrooms, salt beef and tomato and egg noodles are all good bets – and remember to help yourself to the famously rich Shanxi vinegar.

Conduct

While Chinese tour groups may stampede in and out of temples as if they’re on fire, it

is worth remembering that your conduct is being observed and it pays to be respect-ful. Don’t photograph monks without per-mission and also keep your camera away from Buddhas – this is often painful for vet-eran photographers who catch a glimpse of that perfect Lonely Planet snap, but it is considered highly disrespectful. Don’t rub against or touch icons, murals or statuary, regardless of how many Chinese tourists are doing this – it contributes to the ero-sion painfully apparent in the faded fres-coes and sunken, blackened reliefs in some older temples. Also, beware of monks of-fering to read your fortune or personally escort you to hidden sanctuaries – there are plenty who are not above scamming tourists out of large sums of money.

High-five afresco for good luck.

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flavor of the month

S treet foods at night markets are quint-essentially Chinese. And the red lan-terns dotting the Wangfujing snack

street in Beijing invite the hungry and bold to experience chow from all over China, in smaller portions. The one-stop street food emporium has over 30 stands, many pro-claiming to serve regional specialties like Tianjin steamed buns, hunks of lamb, Mon-golian-style, and my least favorite, the south’s stinky tofu dishes.

Customers fork over 10-20 Yuan (US$2-3) in exchange for most snacks, so it’s wise to wait and see what’s offered before getting stuffed on the first few stalls.

Many stroll with chuan’r, the pirate-sounding skewered lamb kebab, in hand. Others prefer sweet over salty. Candied red hawthorn, or bingtang hulu, resembling bulbous abacus counters, are a favorite with Beijingers. The initial bite breaks through the caramelized sugar, before yielding to a teeth-ruining chew. The outer core is almost runny, and the sweetness becomes very tart.

The night market is located on Beijing’s east side, in the greater Wangfujing area in Dongcheng District. During the Qing Dy-nasty, royal residences were erected on the land after the discovery of a natural well, giving the area its eventual name – wangfu meaning princely residence, and jing mean-ing well.

Today, Wangfujing is a symbol of Beijing’s commerce and growing prosperity. Its wide streets are closed to traffic, flashy jumbo screens are fixed onto tall, modern buildings, and there are an obscene number of interna-tional retailers.

Most tourists, however, seem more drawn to the adventure of gnawing on centipede extremities than shopping at the Gap. The chaotic atmosphere, buzzing with hungry sightseers, the majority Chinese, carries a palpable sense of excitement.

An empty stomach and an open mind are essential when visiting the market. Here, land meets sea. Fried grasshoppers, with no hop left in them lay pierced in straight rows next to immobile starfish. Leggy dung bee-

tles seem to taunt tubular fried silk worms, while the most daring gourmands chew on cow hearts and lamb testicles encased in sea mushrooms.

Squid and octopi tentacles are wrung like mops and then dangled off sterile tin trays. Snakes and seahorses are easy to pick out, save for their graying color, but other meats are harder to differentiate. Many are rolled in various spices and sauces, threaded kebab-style, and then grilled over charcoal.

Due to the many snap-happy foreign tour groups that frequent the street, the major-ity of the red apron-wearing vendors have acquired enough English to shout out the names and body parts of the mysterious red, white, and pink masses.

The most widely available snack is the scor-pion, no doubt because its pincers invoke the most fear. There are two intimidating va-rieties of scorpions. One is the hulk, a fero-cious ready-to-attack, shiny black specimen, about 5 inches in length, and 1 to 2 inches at its widest part. Then there’s the smaller,

yellowish, friendlier looking variant. Some find it thrilling, others grizzly, either way, its difficult not to watch as live scorpions are se-lected from a pot, skewered, and deep fried. Unable to select my own scorpion, I allowed the vendor to pick for me. Fortunately he chose a tired, weary looking medium-sized one, who I like to imagine, had led a long and fulfilling life. I tried to keep this thought in mind as I bit into what tasted like an over-cooked, tasteless French fry.

For those less enthused by creepy crawlers, there’s plenty to choose from. The jianbing, a Chinese crepe, is made on the spot. Bat-ter is first ladled onto a hot griddle, and just as it spreads, an egg is cracked and swirled through the mixture. A thin-crepe like body begins to take shape. Various sweet and salty sauces are then smeared on, and a heap of fried veggies are stuffed into it along with a crispy sheet of fried dough. A pinch of ci-lantro and spring onion are then sprinkled over the stuffing, and the whole ensemble is wrapped and ready to eat.

Wriggling Eats and Candied Treats By Stephy Chung

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The other day I tried to cross the road, a rudimentary act, requiring minimal delib-eration, especially when there’s little or no traffic. Or so you’d think. As with almost every road in Beijing, attempts to cross are blocked by row after row of white fencing, of the idiot-proof picket variety. However, as I attempted to climb this particular stretch of aforementioned fence, a lone policeman sud-denly appeared. He didn’t seem to be hav-ing it, for whatever reason, and as I began to de-clamber from the intersection, the lights changed and suddenly I was left stranded as traffic roared on both sides.

I had, I soon realized, committed some form of jaywalking infringement, although was unsure of what the charge would be in Chinese road law (if there even is such a law). I suspect all I’d merely done was something most Beijingers don’t do publicly: step off “the line,” however slightly, in plain view and this was enough to ignite something in this lawman’s heart. In other words, I’d been caught.

Around the Beijing Olympics a whole net-work of white fences was suddenly flung up across the city, presumably with some kind of traffic planning in mind. Unlike the other facelifts the city enjoyed in the 2008 lead-up, when the Olympic road show moved on and the rest of Beijing’s grinning fixtures sagged back with exhausted relief, the barriers stayed put.

I can see why they would: they look safe, protective, official. All’s well, they proclaim: our roads are law-abiding and under control.

In fact, these fences are largely point-less, certainly ugly and definitely annoying. Pointless because any car that drove into them would knock them over immediately and arguably cause more chaos. If they were intended as a crash barrier, a solid concrete buffer at below-knee height would be far more effective (for everyone).

Ugly and annoying, because they are just one more barrier in a litany of obstructions to pedestrian freedom in the capital – especially, if like me, you enjoying running. The roads

are wide enough, at six lanes, that running across them, even when in the dead of night, feels like attempting to sprint through a lion’s den – so why add obstacles? And if you are going to, why not make it really tricky: lit-ter the zebra crossing with banana skins and buzz people with low-flying model aircraft, for example?

“Not a single nationality in this world is as enthusiastic as the Chinese in the construc-tion of walls” noted Chinese blogger Zhang Lifan. He wrote that China has historically barricaded itself, from the Emperor Qin Shi-huang’s unifying anti-Mongol fortifications to the Ming Dynasty’s coastal walls. The dregs of these constructions were then mis-takenly codified by foreigners into a single, epic entity – the Great Wall of China – and now this mythical construction is the coun-try’s most famous symbol.

And whether it’s the Forbidden City or the siheyuan enclosures that still conceal vast courtyards from common eyes, building walls, physical or metaphorical, to outsiders is a Chinese tradition, even within the coun-try. Perhaps these traffic barriers form part of that mindset.

Clearly, as they occasionally taper off to an-kle-height, they are intended to provide some form of designated crossing zone but, frankly, the epic stretches between such places mean they’re just another irritant to being on foot.

Beijing is a massive, grid-like place but trying to get from A to B as the crow flies or thereabouts is constantly thwarted by un-necessary impediments. I’ve lost count of the amount of times I’ve jogged through a par-ticular district only to spend the next hour, running around trying to find an obvious exit from an apparent cul-de-sac, only to find myself surrounded on all sides by barriers, barbed wire, diffident security guards and eternally locked gates.

There’s not much sense to all this corralling, other than to make one feel like an enraged steer in a permanent cattle drive. Beijing is, looks-wise, not the cutest of places – adding a whole bunch of street furniture and iron-

mongery doesn’t help. The same anti-aesthetic happens in a lot in European towns – bollards, signage and fencing are constantly used to seg-regate – even ghettoize – neighborhoods and roads by local councils whose mindset is in-fluenced by road safety and risk management.

But a new mindset is suggesting the oppo-site is true: the town of Christianfield in Den-mark is famous for a 2004 experiment which removed all traffic signs and signals from its major intersections and saw its annual ac-cidents rate drop to zero (admittedly, from three). “Psychological traffic calming” experi-ments in the US have suggested that constant shepherding signs and barriers provide makes drivers lazy rather than alert and that drivers without such “center-line” guidance drove better. Areas that employed it saw a 35 per-cent decrease in accidents.

Driving standards, still in their infancy in China, would probably have to improve tenfold to see such methods work, of course. People here often laugh at the driving but in truth, speed isn’t the main problem, though probably out of concern for pranging a be-loved private car rather than a regard for sanc-tity of human life. But more effective, cheaper and attractive alternatives exist, which is why I call on the Beijing government: tear down these walls, let’s build a better future, and can I please just cross the road?

Safety, a Barrier to Logic?By Robert Foyle-Hunwick

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The view from Beijing has never looked so good. True, it’s hard to make out the tops of buildings in the smog-smeared gloam-ing, but the economy is still chuntering on, growing at 9.5 percent last quarter and providing wastrels like me with an ocean of opportunities.

Meanwhile, plumes of smoke drift aim-lessly over London as equally aimless youth set about burning and looting in a spree of violence.

In New York, it’s the steam rising from the napes and ears of Wall Street traders that chokes the city’s streets, as stocks suffer their worst sell-off since the 2008 crisis and the Treasury fumes at Standard & Poor’s deci-sion to downgrade the rating of US govern-ment debt. A sad lot, that of a ratings agency chief; subjected to vitriol and derision for failing to spot the mortgage securities cri-sis, and then dealt more of the same when making what appears a fair call on the US government’s woeful fiscal position.

When all’s said and done, then, Beijing is not a bad place to be right now, nor has it been since I fled the dissolution of the West in late 2007.

At the time, I had no intention of stay-ing for any prolonged period, and my stock reply if asked when I would be returning to London involved mumbling something about waiting for economic conditions to improve before quickly changing the sub-ject.

That was four years ago, and if anything

those conditions have deteriorated to such an extent as to render plotting a return to the motherland without a cast-iron career job unthinkable.

In Beijing, however, it is possible to live cheaply and indulge in what a drama-teaching friend of mine refers to as “The Yes Game.” This he plays with school children in an attempt to spark their imaginations, simply by affirming any wacky idea they have and asking the next kid to continue a story based on that assumption. In the lon-ger term, it might be hoped the game will give the next generation the drive and con-fidence to fulfill their ambitions, while fore-going the urge to don a mask, rush outside and crack shop windows with baseball bats.

In Beijing the game is much the same, though rather than the wacky idea being, say, a man made entirely of banana milk, it might be starting your own company or contemplating a career change.

While the city is yet to emerge as a hive of entrepreneurialism, it does offer a com-fortable redoubt in which to shelter from the economic turmoil engulfing the rest of the world, consider one’s options and pos-sibly even put them into effect at a fraction of the bureaucratic cost attached to similar ventures back home.

However, in what long-term expats have come to regard as typically Chinese fashion, the city does do its level best to impede these dreams, most obviously by implementing a strict visa regime designed to prevent lay-about idealists from passing time here with-out gainful employment.

Then there are more locally-aimed ini-tiatives, such as the public security bureau’s recent move to force some café owners to install software that monitors the identity of internet users, thereby instantly ruining their business and your pleasure in one fell swoop.

Other obstacles include the oft-recount-ed ordeals of drinking excess amounts of Chinese liquor with various officials, but let’s be honest, worse things can happen

than getting roundly inebriated with people you may not necessarily like.

All these issues can be overcome with a modicum of dedication and hard work, but a further word of warning is in order before manning the lifeboats and paddling desper-ately in an easterly direction.

A Chinese friend of mine of moderate views recently invoked the specter of over-immigration, the very issue that is often up-held in Britain as an excuse for the kind of violence ongoing in London.

“Chinese people think there are too many foreigners in Beijing now,” he said pointedly over a drink last weekend, before clarifying his view by saying that foreigners should not be coming to Beijing to take jobs that could just as well be held by a Chinese national.

His examples were bartending and serv-ing tables, and it is hard to argue with his point. Yet before I leave myself open to ac-cusations of hypocrisy, his views and those recounted above are not necessarily mutu-ally exclusive. I am endorsing Beijing as a haven for the dilettante dreamers who may just require a safe-haven from which to plan the launch of job-creating schemes and money-spinning enterprises, not as a source of abundant employment for those without skills or ambition.

Never Looked so GoodBy David Green

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When all’s said and done, then, Beijing is not a bad place to be right now, nor has it been since I fled the dissolution of the West in late 2007.

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A retrospective of works by director Wang Quan’an was held in Beijing’s MOMA Broadway Contemporary Film Center in August. Titled Vanishing China – On Wang Quan’an’s Film, the event was the first system-atic review of Wang’s works in a decade. At 46, Wang is one of China’s so-called Sixth Generation directors who were singled out for their creative vision. Wang’s works, while concentrating on depicting social realities, have also earned praise for their dramatic punch. From his debut with Lunar Eclipse (1999), through the Ber-lin Film Festival Golden Bear-winning Tuya’s Marriage (2006) all the way to his current production, White Deer Plain, Wang is one of few directors attempting to preserve China’s vanishing past in the face of modern development.

A recent deal was signed between Baidu and OSC (One Stop China), a joint-venture compa-ny that represents the Universal Music Group, Warner Brothers and Sony Music’s record busi-ness in China. Through the deal, Baidu, which is one of the larg-est search engines in China and features free mp3 search and download services as one of its most important branches, will be authorized to upload legal copies from the three companies, including both Chinese albums and those in other languages. Us-ers of Baidu can stream songs on-line before paying to download them to their computers. Indus-try observers view the agreement as a milestone compelling Baidu, as well as other Chinese Internet companies, to combat piracy and repair strained relations with international music companies, who have continued to see a de-cline in album sales as a result of the online exchange of music.

A long season of art exhibitions devoted to the work of young artists was launched in Chengdu, Sichuan Province, in June. Titled Youth Artist Experimental Season, the event, hosted by the A4 Contemporary Arts Center in Chengdu, comprises three sessions and will last for three months, closing mid-September. Without a State-sponsored support system, young artists in China often face heavy pressure from their families and schools to seek conventional employment over creative endeavor. Consequently, this art season provides a platform for young and talented artists re-gardless of style or background. Greater participation in creative industries by the young has been on the rise in China in recent years, with many school graduates looking to distinguish themselves through creative output.

Art

Cinema

Reality CheckMusic

Young, Creative and Unknown

Book

A Private Album of Wang GuangmeiBy Luo Haiyan

Pay to Play

CULTURAL LISTINGS

When Wang Guang-mei was jailed in 1967, she was 46. Two years later, when her hus-band Liu Shaoqi, the disgraced for-mer president of the People’s Republic of China, was tortured to death during the Cultural Revolution (1966-1976), Wang wasn’t even informed. Born into wealth and privilege in 1921, Wang became the first Chinese citizen to earn a master’s degree in atomic physics. She gave up the op-portunity for further study in the USA to join the Communist Party in the late 1940s, marrying Party up-and-comer Liu Shaoqi in 1948. At the time, Wang was 27 and Liu 50. The Private Album of Wang Guangmei, compiled by Xin-hua News Agency’s veteran editor Luo Haiyan, selectively narrates Wang’s pri-vate and public life through more than 400 photos provided by her surviving family members.

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Beijing International Studies University (BISU) was founded in response to remarks by former Premier Zhou Enlai, who stated that China needed more foreign language undergraduates in order to gain prestige abroad. Renowned nationwide, BISU has developed into a multi-disciplinary educational establishment that offers courses in foreign languages, tourism management, liberal arts, management, economics, law and philosophy. BISU endeavors to educate and train its students into internationally-minded professionals proficient in foreign affairs, tourism, economics, business and trade. For decades, BISU has been a popular choice among foreign nationals wishing to study Mandarin to a high level – its location away from Beijing’s expat enclaves guarantees an immersive language environment, and once a certain level of proficiency in Mandarin language is achieved, the rest of the institution’s excellent courses in contemporary disciplines are opened up.

COMMERCIAL LISTINGS

Beijing International Studies University (BISU)

The Knigge Akademie, named after German nobleman and pioneer of polite protocol and good behavior Adolph Freiherr von Knigge, is the world’s foremost etiquette training company offering classes in business etiquette, table manners, dress code, interview training, wine connoisseurship and more. The Knigge Akademie has become world-renowned as the only company authorized by the German government to certify etiquette training courses, etiquette trainers, and new etiquette-related start-ups. As a result, the Akademie already has an outstanding reputation in the business thanks to their work with many prominent business figures, Fortune 500 companies, different governmental institutes, and countless celebrities around the world. In March 2011, the Knigge Akademie entered the Chinese market, opening its first overseas branch in Beijing. Since July of this year, the Knigge

Akademie has been working closely with many mainstream Chinese media outlets. Media sources like CCTV, BTV, CRI, and NetFM, are all willing to bring Western etiquette into everyday Chinese life. This August, 260 employees from winery Chateau Changyu AFIP Global in Miyun will take part in a one-week etiquette training course offered by the Knigge Akademie. The goal is to train all of their employees in Western standards of etiquette. At the end of August, Dr Hans-Michael Klein, CEO of Knigge Akademie, will travel to Beijing to attend the awards ceremony and personally deliver Knigge Etiquette Certification to Chateau Changyu AFIP Global, thus making them the first certified Asian hotel to meet international Knigge standards of etiquette. A Knigge Akademie spokesperson said, “We look forward to a booming market of etiquette training in China.” For more information, check out the website at: www.knigge-akademie.cn

At Mediterranean-themed Bar Code, the emphasis is on wine, with some nibbles – or pinchos - on the side. Jamon iberico and smoked salmon on toast and the roasted piquillo peppers with sardines are great flavor combos and you get a lot for your money. The same goes for the more substantial tapas such as beef tenderloin with blue cheese sauce, garlic prawns and tortilla Espanola. The boss, a wine importer, has sourced an impressive list of Spanish rosé, aperitif and sweet wines, and also stocks selections devoted to Spanish “new wave” wines, as well as the classics, with the Riojas firmly in charge. The food may once have been an afterthought, but now there’s a full, varied and delectable menu to satisfy patrons looking for a late bite, and wine enthusiasts will be in seventh heaven.

Opening hours: 11.30am-11.30pm Phone: 8590 7855Address: Bar Code, World City (north of The Place), 10 Dongdaqiao Lu, Chaoyang District

Maximum Manners

Taste of Beijing A Long Spanish Summer

The Hutong offers a wide variety of cultural programs: Culinary Events, Healthy Habits, Tea Journey, Creative Pursuit and Youth Education.

Beijing Cultural Heritage Protection Center (CHP) and The Hutong present ‘Taste of Beijing,’ an exciting culinary journey through the capital.

Learn how to cook three classic Beijing dishes using fresh and seasonal local ingredients, and hear the story behind the recipes.

DetailsAdmission: 240RMB, 200RMB (CHP & The Hutong members)

Contact: (86) 159-0104-6127Address: 1 Zhongxiang Hutong, Jiudaowan, Dongcheng District

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A fter two years of turbulence in the world’s financial markets, China’s global role has undergone a massive transformation. Not only has China evaded the global financial crisis more

effectively than most, its continued rapid growth has dwarfed its closest competitors. China is increasingly seen as a capital export-ing country, with countries ranging from the richest to the poorest hankering after Chinese investment. As the G7 gives ground to the G20, unthinkable a decade ago, China has become a world heavyweight.

However, China’s investment in other countries is receiving an increasingly frosty reception. In the US, one adver-tisement on major TV networks features an arrogant-sounding Chinese national crowing about China’s vast purchases of American government bonds. “It is how an empire declines,” warns a doom-laden voice-over. China’s rise is not a source of relief – it remains, particularly in the world’s number one economy, a source of fear.

This fear is not restricted to developed economies threatened by China’s growth. Whenever I attend international conferences, I run into criticism of China. In one meeting held in an emerging country, a local export official berated me, saying China had “stolen” jobs. This was fol-lowed by complaints over currency exchange rates and intellectual property protection. But in reality, the country’s economy could have greatly benefited from China, as it is its biggest single export destination.

During another conference in another developing country, this time one which does little business with China, senior officials blamed Beijing for their economic difficulties. In their eyes, ever since China joined the World Trade Organization in 2001, their products have been forced out of the world market.

China’s investment in Africa is also a major source of criticism. While European leaders voice concern that China now exports more industrial products than raw materials, these same leaders also criticize China’s large-scale purchase of natural resources in Af-rica, forcing African nations to become dependent on this revenue stream and preventing them from developing homegrown indus-

try. Efforts to build infrastructure do little to allay criticism that China is simply pillaging an entire continent of its mineral wealth with no view to developing long-term, sustainable prosperity.

Intellectual property and consumer rights protection, corporate governance and governmental transparency are all in their infancy in China. Corruption continues to erode public confidence in its leadership. China’s demand for resources is taking an ever-heavier toll on the environment - for example, Chinese demand for soy-beans has resulted in deforestation in Brazil to clear land for farm-ing, just as the Amazon basin had begun to recover from the devas-

tation of the 1980s and 90s.The primary reason other countries fear China is the sheer speed

of its emergence. The economic growth China has enjoyed in the last 30 years took over a century to achieve in the US and in Europe. While the rise of Western countries had similar negative impacts on world politics, economics and ecology, it spanned a much longer period and was driven by smaller populations. China’s negative im-pact in all these areas has become clearly visible in a matter of years. Such rapid change is bound to spread fear – especially when it ac-companies economic decline in the world’s former powerhouses.

This country’s leadership needs to understand these concerns and abandon the misguided assumption that economic prosperity will allow China to bask in a spontaneous outpouring of gratitude to-wards its leaders. This has failed to work at home, and it is folly to believe it will work abroad.

(The author is an economist of the International Monetary Fund.)

China’s rise is not a source of relief – it remains, particularly in the world’s number one economy, a source of fear.

By Guo Kai

Why Does the World Fear us?

COMMENTARY

China needs to understand that its enhanced role in the world economy will not automatically earn its leaders political goodwill.

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October 2011

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