Routledge

If you want to understand China’s reform-era growing pains you can do a lot worse than dig into the coal industry. Coal powers China’s industry, pollutes its environment, and is the site of conflict for the state and private entrepreneurs – each eager to monopolize control of a precious resource.

Tim Wright of the University of Sheffield has made the Chinese coal industry the focus for research stretching over the last few decades. Much of that research appears in his new book “The Political Economy of the Chinese Coal Industry: Black Gold and Blood Stained Coal.”

China Real Time recent caught up with Mr. Wright to discuss the challenges facing China’s coal industry — from safety to corruption to power shortages — and how long the country can count on its stores of coal to fuel its fast-burning economy. Edited excerpts:

Why is coal mining so important in China?

Coal provides around 70% of China’s energy supplies. So it has been central to China’s rapid – and energy intensive – economic growth. Coal is also one of the major causes of pollution and environmental degradation in China, as well as a large contributor to the country’s increasing carbon emissions. Finally, the industry provides employment for well over five million workers.

Coal mining is an area where there’s been a struggle between the state and the private sector?

Since the middle of the last decade, many commentators inside and outside China have seen a trend towards “the advance of the state and the retreat of the people” (or the private sector). The attempts by central and provincial governments to control myriad small mines, especially in Shanxi, has been a major example of this and, from late 2008, the Shanxi government began a policy where the large mines owned by the province took over the small private mines. This was strongly resisted by the mine owners, many of whom were inter-provincial investors particularly from Wenzhou in Zhejiang.

The attempt to control the private sector is also about controlling the social and environmental costs of mining?

Yes, it is not simply a struggle for control. There are real safety and environmental issues involved. Small private mines certainly tend to be less safe than the large mines, and also lack the resources to tackle environmental pollution – for example by washing the coal. These factors form at least the pretext for the government’s policy.

Corruption seems to be a big part of the story?

Two factors – the high profits to be made from coal, and local governments’ control over most of the licenses necessary to mine it – make corruption both inevitable and widespread. The phenomenon is known as “official-coalmine collusion” and is often exposed in the aftermath of disasters in mines operating illegally under the protection of local governments or individual officials.

But the moralistic tone used by the Chinese press to address the issue doesn’t tell the whole story. First, corruption apart, the small mines play an important part in income and employment generation for many inland areas with few other opportunities; so there is resistance to their closure beyond that just from the owners. Second, the chronic underfunding of local government in China forces local authorities to look for other sources of revenue, so it is in their institutional – as well as personal – interest to support the local mines, even against the wishes of central government.

How have workers fared in the reform process?

Coal mine workers went through a difficult period in the 1990s. They had been the aristocrats of the working class under the planned economy but the low price of coal and the mines’ economic difficulties meant that their incomes rose less than those of other workers. The boom in coal prices and coal profits in the 2000s has, however, provided the resources to increase wages, and there has been a big improvement over the past few years, even if miners still grumble that they lag behind other workers, for example in the electric power industry.

Premier Wen Jiabao spent new year 2005 underground with some miners. Has the central government been able to get to grips with safety?

There has been a spectacular improvement in China’s coal safety record over the last decade – the number of deaths has fallen by about two-thirds during a period when output has more than doubled. Although one has to remain skeptical about the details of the official statistics, at least a major part of the decline in fatalities does reflect a real improvement. This improvement has been due to a number of factors: high profits creating the resources to invest in safety; the beginnings of labor shortages allowing workers to demand better conditions; the higher priority put on social and safety issues by the Wen Jiabao – Hu Jintao government; and collaboration with foreign safety experts.

China’s economy seems to suffer from regular power shortages, what’s the reason for that?

Partly it is just the phenomenal rate of growth of the Chinese economy (which has mostly been concentrated in high energy using sectors) putting pressure on energy supplies. But beyond that it reflects a struggle between the coal and electric power industries over the price of coal supplied to the power stations. The power stations, who have to accept electricity prices fixed by the state, have argued that they cannot afford the ever-increasing price of their main fuel, coal. The state has attempted to pressure the mines to supply coal at cheaper prices, but of course this has reduced the mines’ incentive to produce, resulting in occasional shortages and power cuts.

How much coal has China got left? Any chance of a switch toward significant imports?

China has large amounts of coal left – certainly well over 100 billion tons. But at its very high level of production – not far behind the rest of the world put together – there has already been talk of the resources running out, or at least becoming increasingly expensive to mine. Already imports have increased sharply – from only around 10 million tons a year in the early 2000s to well over 150 million tons by 2010. However, because of China’s massive use of coal, it is almost inconceivable that a major part of its demand could be fulfilled by imports – 150 million tons accounts only for 2 per cent of China’s coal consumption, but close to 20 per cent of global coal trade. For the same reason, China cannot fill the gap with oil imports. So if it is to reduce its reliance on domestically-produced coal, China will have to look for other sources of energy – optimistically renewables but perhaps more likely nuclear power.

– Tom Orlik

News:

* A patrol for every village: 8,000 new police headed to Xinjiang (Associated Press)

* Efforts to contain the recent cadmium spill upstream from Liuzhou aren’t going well (Guardian)

* China’s fuel prices hit the hike threshold (Reuters)

* A fitting end: Real estate developers demolish the former home of architects famous for trying to save old Beijing (Guardian)

* Signs China’s shopping spree may be slowing down (FT)

Analysis and Commentary:

* David Bandurski examines the evolving legacy of Wukan, China’s rebel village (China Media Project)

* Veteran journalist Chang Ping offers the pragmatists’ case for democracy in China (NYRB blog)

* Boycott Apple over it’s China supply chain? Tim Worstall says the idea is based on nonsense (Forbes)

Just Because:

* Want to buy a knife in Beijing? We’ll need to see your ID (Tea Leaf Nation)

* J.R. Smith’s family making a habit of dramatic exits at Chinese basketball games (Deadspin)

Agence France-Presse/Getty Images

Customers use computers at an internet cafe in Hami, northwest China’s Xinjiang region. China now has more than 500 million people on the Internet and nearly half use weibo, microblogs similar to Twitter.

Twitter sent its digital street cred tumbling on Thursday night when it announced that it would being selectively censoring content as a way to enter countries with “different ideas” about freedom of expression. Though Twitter has never made promises along the lines of Google’s “Don’t Be Evil,” the move nevertheless comes as a surprise for a company that took pride in helping grease the wheels of last year’s Arab Spring uprisings.

In China, where Twitter is blocked but still accessible to those with the technical know-how to skirt the country’s Web filters, the revelation seems to have hit particularly hard.

Among the first to comment on the announcement was Wen Yunchao, one of many Chinese dissidents who’ve embraced Twitter as an uncensored alternative to China’s own heavily managed microblogging services:

Oh no! @Twitter says going to start censoring tweets in certain countries. Pls RT!act.demandprogress.org/act/twitter_ce… 通过 @demandprogress

— 北风 (@wenyunchao) January 27, 2012

It didn’t take long for speculation to spread that Twitter had announced the change because it planned to make a play for the China market. A number of Chinese users promptly declared their intention boycott the service. Among those leveling the boycott threat was activist artist Ai Weiwei, who wrote in a characteristically pithy post, “If Twitter starts censoring, I’ll stop tweeting”:

推若审查，我即停推。 RT @wenyunchao: @aiww 商人在商言商，道这东东，能像谷歌那样最好，不能也不能强求。 — 艾未未Ai Weiwei (@aiww) January 27, 2012

But how likely is it that Twitter’s proposed changes are aimed at earning access to the world’s largest population of Internet users?

“Unlikely” says the answer from Beijing- based investor and Internet watcher Bill Bishop.

As Mr. Bishop notes, a large part of the speculation that Twitter might be getting ready to kow-tow to China’s censors stems from Twitter co-founder Jack Dorsey’s visit to Shanghai earlier this month, during which he complained about not being able to read his tweets. That trip came almost exactly a year after the founder of another social-media site banned in China, Facebook’s Mark Zuckerberg, visited Beijing amid talk of trying to tap the Chinese market.

But for all the salivating over China’s potential in board rooms across Silicon Valley, Mr. Bishop says Twitter would have to be “incredibly naive” to think they could wedge their way into the country.

“It would be stupidity,” he says. “One, I don’t think the government would go for it. And two, the market is already saturated.”

Twitter did not immediately respond to requests for comment.

The key issue, Mr. Bishop says, is whether or not the government would be able to trust Twitter. One sign that Twitter isn’t likely to do what it takes to earn that trust is its plan to partner with Chilling Effects, an Internet freedom advocacy website, to publish government take-down notices — a problematic strategy in a country where banned keywords are treated like state secrets.

Even if Twitter were somehow able to get in Beijing’s good graces, Mr. Bishop says, it would have almost no shot at competing with home-grown “weibo” microblogging products from Sina and Tencent that are already well-established and offer more features. “Sina Weibo and Tencent Weibo are better products,” he says. “Twitter’s only competitive advantage here is freedom of speech. Once you start censoring, what do you have left to offer?”

Indeed, Mr. Dorsey himself quashed the idea of Twitter being able to break into China in an interview in Hong Kong in October in which he said his company “just can’t compete” in China “and that’s not up to us to change.”

In developing the ability to censor tweets by region, Twitter more likely has different markets in mind. The only countries mentioned by name in the blog post announcing the new policy were France and Germany, both of which, the post notes, ban pro-Nazi content. How to handle that ban is a dilemma that Yahoo, Google and Facebook have all struggled with in Germany.

Mr. Dorsey visited Germany earlier this week to announce his desire to hire a team there.

Twitter’s announcement also acknowledges there are some countries with severe restrictions on speech where the company simply cannot exist.

That’s not to say Twitter’s latest move won’t have an impact on China. Implausible as it may be for the company to establish itself in the country, Mr. Bishop notes, its embrace of content filtering could aid Beijing in making the argument that the Internet is a space in need of censorship.

– Josh Chin. Follow him on Twitter @joshchin.

Agence France-Presse/Getty Images

Customers use computers at an internet cafe in Hami, northwest China’s Xinjiang region. China now has more than 500 million people on the Internet and nearly half use weibo, microblogs similar to Twitter.

Twitter sent its digital street cred tumbling on Thursday night when it announced that it would being selectively censoring content as a way to enter countries with “different ideas” about freedom of expression. Though Twitter has never made promises along the lines of Google’s “Don’t Be Evil,” the move nevertheless comes as a surprise for a company that took pride in helping grease the wheels of last year’s Arab Spring uprisings.

In China, where Twitter is blocked but still accessible to those with the technical know-how to skirt the country’s Web filters, the revelation seems to have hit particularly hard.

Among the first to comment on the announcement was Wen Yunchao, one of many Chinese dissidents who’ve embraced Twitter as an uncensored alternative to China’s own heavily managed microblogging services:

Oh no! @Twitter says going to start censoring tweets in certain countries. Pls RT!act.demandprogress.org/act/twitter_ce… 通过 @demandprogress

— 北风 (@wenyunchao) January 27, 2012

It didn’t take long for speculation to spread that Twitter had announced the change because it planned to make a play for the China market. A number of Chinese users promptly declared their intention boycott the service. Among those leveling the boycott threat was activist artist Ai Weiwei, who wrote in a characteristically pithy post, “If Twitter starts censoring, I’ll stop tweeting”:

推若审查，我即停推。 RT @wenyunchao: @aiww 商人在商言商，道这东东，能像谷歌那样最好，不能也不能强求。 — 艾未未Ai Weiwei (@aiww) January 27, 2012

But how likely is it that Twitter’s proposed changes are aimed at earning access to the world’s largest population of Internet users?

“Unlikely” says the answer from Beijing- based investor and Internet watcher Bill Bishop.

As Mr. Bishop notes, a large part of the speculation that Twitter might be getting ready to kow-tow to China’s censors stems from Twitter co-founder Jack Dorsey’s visit to Shanghai earlier this month, during which he complained about not being able to read his tweets. That trip came almost exactly a year after the founder of another social-media site banned in China, Facebook’s Mark Zuckerberg, visited Beijing amid talk of trying to tap the Chinese market.

But for all the salivating over China’s potential in board rooms across Silicon Valley, Mr. Bishop says Twitter would have to be “incredibly naive” to think they could wedge their way into the country.

“It would be stupidity,” he says. “One, I don’t think the government would go for it. And two, the market is already saturated.”

Twitter did not immediately respond to requests for comment.

The key issue, Mr. Bishop says, is whether or not the government would be able to trust Twitter. One sign that Twitter isn’t likely to do what it takes to earn that trust is its plan to partner with Chilling Effects, an Internet freedom advocacy website, to publish government take-down notices — a problematic strategy in a country where banned keywords are treated like state secrets.

Even if Twitter were somehow able to get in Beijing’s good graces, Mr. Bishop says, it would have almost no shot at competing with home-grown “weibo” microblogging products from Sina and Tencent that are already well-established and offer more features. “Sina Weibo and Tencent Weibo are better products,” he says. “Twitter’s only competitive advantage here is freedom of speech. Once you start censoring, what do you have left to offer?”

Indeed, Mr. Dorsey himself quashed the idea of Twitter being able to break into China in an interview in Hong Kong in October in which he said his company “just can’t compete” in China “and that’s not up to us to change.”

In developing the ability to censor tweets by region, Twitter more likely has different markets in mind. The only countries mentioned by name in the blog post announcing the new policy were France and Germany, both of which, the post notes, ban pro-Nazi content. How to handle that ban is a dilemma that Yahoo, Google and Facebook have all struggled with in Germany.

Mr. Dorsey visited Germany earlier this week to announce his desire to hire a team there.

Twitter’s announcement also acknowledges there are some countries with severe restrictions on speech where the company simply cannot exist.

That’s not to say Twitter’s latest move won’t have an impact on China. Implausible as it may be for the company to establish itself in the country, Mr. Bishop notes, its embrace of content filtering could aid Beijing in making the argument that the Internet is a space in need of censorship.

– Josh Chin. Follow him on Twitter @joshchin.

Agence France-Presse/Getty Images

Inflation in China slowed slightly in December with the country’s consumer price index rising 4.1% from a year earlier, down from 4.2% in November. It was the fifth month in a row that China saw moderating inflation. Analysts weigh in:

This continued moderation in price pressures is a welcome development and will increase the scope for policy to respond should growth start to weaken more sharply in coming months. For now, however, we think Beijing is reasonably comfortable with policy settings, with any shift in the near-term likely to take the form of lower bank reserve requirements rather than cuts in benchmark interest rates. – Brian Jackson, Royal Bank of Canada

The easing inflation pressure is good news and provides further room for policymakers to shift their focus towards growth concerns. We expect that the central bank will cut [the reserve requirement ratio] by 50 basis points before the Chinese New Year, most likely this week, so as to alleviate liquidity pressure due to seasonal factors (cash demand ahead of the Chinese New Year and increase in fiscal deposits in January). Looking ahead, monetary policy will be biased towards moderate easing…We expect China’s headline CPI inflation to trend down and reach below 3% in mid-2012. – Haibin Zhu, Grace Ng and Lu Jiang, JP Morgan Chase

The inflation story will move out of the limelight this year, ceding its place to growth preservation and Eurozone contagion…In theory, this should open up some more space for monetary loosening to combat slowing growth and a tumbling property market…That said, CPI was firmly lodged above the government’s 2011 target of 4% every month of the year, with full-year inflation coming in at 5.4%. With China facing a structurally higher rate of inflation, the policy space in which to loosen remains relatively narrow. – Xianfang Ren and Alistair Thornton, IHS Global Insight

Though the Chinese government will remain cautious about inflation, taming inflation is not the top priority at the moment. Policies in Beijing are increasingly shifted towards pro-growth step by step. That being said, the market should also be conservative when expecting stimulus measures, as it’s impossible for the government to introduce another big-bang stimulus package without a major external shock. – Ting Lu and Xiaojia Zhi, Bank of America-Merrill Lynch

We see the continued fall in CPI and PPI inflation as mainly a reflection of below-trend aggregate demand growth in the months prior to November 2011 and believe the low underlying inflation leaves more room for policy makers to keep policy stance accommodative. As we believe aggregate demand growth has been reaccelerating on the back of this policy loosening and resilient external demand, underlying inflationary pressures may start to rise…However, the level of aggregate demand growth was probably just slightly above trend level towards the very end of the 2011… so these pressures are still modest and given the fact that sequential inflation is already at negative territory, a major rebound in inflation is still not an immediate risk. – Yu Song, Goldman Sachs

– compiled by Josh Chin and Aaron Back

Getty Images

Li Na has made adjustments to her daily routines as her fame has risen in China.

In Australia to defend her Sydney International title and a finals appearance at the Australian Open, China’s top tennis player Li Na has a sense of purpose.

After becoming the nation’s first Grand Slam champion in Paris last June, she recorded just six wins in the remainder of 2011.

“After the French, I think I lost the concentration on the court,” Li said, adding that she feels prepared for 2012 thanks to hard work during her two-month-long off-season.

After competing in her first WTA Year-End Championships in Istanbul, the 29-year-old returned to her home in Wuhan, then traveled to Beijing for photo shoots with Chinese sponsors Taikang Life Insurance, dairy company Yili and Kunlun Mountain Mineral Water. Then she was off to a month of training in Munich, returning to Wuhan to compete in a pre-Christmas exhibition tournament called “Li Na and Friends” where she hosted Pete Sampras, Carlos Moya and Sabine Lisicki.

Li then went to Jiangmen in the south of China, where she put in hours on outdoor practice courts, before jetting off to Perth for the Hopman Cup. “In Perth, I held a baby kangaroo, but I never had this experience holding animals before — only my friend’s baby,” she said.

Despite her globetrotting, she said she won’t get to explore Sydney or Melbourne. “I feel a bit sad that there is no time to look around the cities,” she said. “For us as tennis athletes, it’s tough because every day [we] just focus on the tournament. If we have [a] day off we also have training and are not totally relaxed.”

See more on this story at Scene Asia

European Pressphoto Agency

Actor Charmaine Sheh of the Hong Kong drama “When Heaven Burns,” at an award show in Seoul in August.

A controversial Hong Kong television drama depicting scenes of cannibalism has touched the nerve in Beijing, for reasons that may go much further than a mere disapproval of its violent content.

“When Heaven Burns,” a bleak portrayal of humanity produced by broadcaster Television Broadcasts Ltd., has been banned in mainland China in what the Hong Kong media said was the first such move against a Hong Kong soap opera in more than two decades. With just four episodes to go, Chinese state censors ordered TVB’s mainland sub-licensees, online video companies Youku.com and Tudou.com and nine other website operators to remove the show from their sites, the television station said. TVB said Wednesday it is trying to seek clarification from Chinese authorities.

While the reason for the censorship remains unclear, the move is set to intensify an already heated online discussion about the show because of its unusual plot point: cannibalism.

The 30-episode series centers on a fictional tragic incident in 1992. During a mountaineering trip in the Chinese region of Xinjiang, four young, aspiring pop musicians become stranded on a snow-capped mountain. Out of desperation, three of them eat and kill the fourth. The story looks at how the three survivors and the people close to them are haunted by the experience years later. The story also laments a lack of originality in popular music and stresses the need to stay true to one’s dreams despite the suppression of society.

Those features might make it easy to see why Beijing’s censors would stop the show, given their focus on programming that steers away from controversy. But the ban also follows comments by the show’s screenwriter that might have given authorities other reasons to step in.

In an interview with Hong Kong’s Apple Daily on Monday, show screenwriter Chow Yuk-ming said that the story was inspired by the events of the Tiananmen Square crackdown in June 1989. He said he moved the date of the cannibal incident in the drama to 1992 from 1989 to avoid stirring controversy. Discussion of the 1989 failed student democracy movement remains taboo in mainland China.

His statement spurred a flurry of speculation in Hong Kong as to whether other elements of the show also allude to the Tiananmen crackdown, with some local pundits speculating that the decline of original music in Hong Kong represents the city’s forgetfulness of past events.

TVB on Wednesday acknowledged that Mr. Chow’s show nodded to Tiananmen as well as other historical events, though it said that doesn’t necessarily mean the plot of the drama is a metaphor of the June 4 crackdown.

Whatever influenced the censors’ decision, the ban on “When Heaven Burns” could attract further debate and help boost what has so far been mediocre ratings in Hong Kong. Though the drama has attracted somewhat of a cult following among younger viewers, older viewers have largely dismissed the program. Many have complained that the drama’s unique storyline– accompanied by unconventional filming techniques that include frequent scenes of the main characters gulping down pieces of near-raw steak–are hard to follow, and that the subject matter is too deep.

–Polly Hui

News:

* A city in western China seeks to banish the veil to “dilute religious consciousness” (Reuters)

* The first satellite photo of China’s aircraft carrier (MSNBC)

* And the world’s top financial center is… (GlobalPost)

* Strategic candor from a former ambassador (Economist)

* High hopes arrives with China’s new securities regulator (Caixin)

* Guangzhou moves to legalize street hawking (The Nanfang)

Analysis and Commentary:

* Kam Wing Chan on what geography has to say about the China infrastructure bubble (East Asia Forum)

Just Because:

* The challenges of being an olfactory discriminator in China (China Daily)

*  ”Tiger Mother” Amy Chua’s got nothing on China’s “Wolf Dad” (NPR)

Evan-Amos via Wikimedia Commons

A Chinese fugitive has redefined the term “hiding in plain sight.”

In a story so improbable it likely wouldn’t fly even with China’s famously credulous TV viewers, state-run Xinhua news agency reported on Wednesday that police in northeastern China’s Heilongjiang province have arrested a well-known character actor after identifying him as a suspect in an attack on a police officer that took place 13 years ago.

The actor, Zhang Guofeng (née Ji Siguang), was arrested on Dec. 8 in the southern city of Jinhua while playing a Buddhist monk in a costume drama, Xinhua said.

Prior to that, according to the report, Mr. Ji had performed in more than 30 TV dramas, including a turn as an intelligence officer in the 2009 spy show “Lurk” (潜伏), one of the most popular Chinese TV series in recent memory.

Mr. Ji is accused of participating in an assault on a police officer in the Heilongjiang city of Qiqihar in 1998 during which the officer’s gun was stolen. Three other suspects in the assault were arrested years ago, Xinhua says, but Mr. Ji went on the lam in southern China.

The Chinese version of the Xinhua report, with photos of Mr. Ji in “Lurk” and after his arrest, can be seen here.

Police were reportedly alerted to Mr. Ji’s identity by an anonymous tip. We’re guessing he’s going to have a hard time figuring out who the rat was.

– Josh Chin. Follow him on Twitter @joshchin

Reuters

It appears China’s government offices won’t be running legitimate software by the end of 2011 after all.

The prevalence of pirated software on Chinese government computers has for years served as damning evidence of China’s lax enforcement of intellectual property rights. In an effort to address that embarrassment, China’s Vice Commerce Minister Jiang Zengwei last year announced that the State Council, China’s cabinet, would launch inspections—to be completed by October 2011—to ensure that central and local government bureaus and businesses are using legitimate software.

But on the sidelines of a news briefing Tuesday, Mr. Jiang said the government has pushed back its timetable for getting government offices nationwide to use legitimate software.

“We originally said the legalization of government departments’ software could be completed by the end of this year, but based on the current situation we have adjusted the working plan. We are saying work on software legalization for prefecture-level governments and above will be fully implemented in 2012,” Mr. Jiang said.

When asked why the plan was delayed, Mr. Jiang noted large economic disparities within China. “Better areas like Beijing and Shanghai can compare with Washington or New York, but the poor areas I think are not very different from certain places in Africa, so arrangements for fiscal revenue in local areas must be budgeted,” he said.

The Business Software Alliance, an industry advocacy group whose members include tech giants like Apple and Microsoft, estimated that 78% of the PC software installed in China last year was pirated, a small drop from 82% in 2006. U.S. Ambassador to China Gary Locke last month said legitimate sales of software in Vietnam exceed such sales in China — a nation, he noted, with “over 15 times the population of Vietnam.”

China does appear to be stepping up its efforts on intellectual property. Mr. Jiang on Tuesday confirmed that one of the country’s top officials, Vice Premier Wang Qishan, will heading up a new government office overseeing work to combat low-quality goods, counterfeiting and intellectual property violations. Oversight by such a senior official could help the office make a bigger mark.

Mr. Jiang also said China will take steps such as upgrading certain judicial guidelines into formal laws or regulations, researching changes to its criminal law and boosting fines for rights infringements.

The central government will hold local governments accountable for protection of intellectual property rights, he said, adding that IPR protection will be added to performance evaluations for government bodies and that government leaders could face disciplinary action, and possibly even criminal penalties, for neglecting their duty to protect those rights.

– Owen Fletcher. Follow him on Twitter @owenfletcher

Jiong Sheng via Wikimedia Commons

By Russell Leigh Moses

How should the Communist Party handle growing disquiet in Chinese society?

This question is troubling Chinese policy-makers recently, especially with outrage and discontent stemming from everything from persistent pollution in the nation’s capital and how to measure it to the death of a 10 year-old girl in Xian, struck by a speeding construction truck.

Concerns about public anxiety had already prompted the leadership to look at restlessness earlier this year through the idea of “social management,” which has come to mean different things for different political factions. Leftists have looked to cultural reform or engineering “the moral maturity of each citizen” to stave off rebellion. On the other end of the political spectrum, small-government advocates have hoped for a supervisory role for the public that would lend legitimacy to the Party.

For a while, the debate looked to be gridlocked. But now an alternative for promoting social harmony is being tried in Ningbo, in Zhejiang province. Its approach is far more sophisticated than some might expect: That social discontent might be best managed, not by tightening or loosening the reigns of control, but by cadres going out to talk to people directly about grievances they have filed.

The Ningbo prototype focuses on setting up listening offices for cadres to read petitions, and to hear cases and complaints about anything from waste water discharges to the conditions of replacement housing. Officials at different levels of government are tasked to follow claims of distress from the outset, and to visit the people or local communities that file complaints. Dispute mediation centers, as well as administrative service offices, are staffed to prevent small problems from escalating into social confrontations with Party and government officials.

“Going to the grass roots” and “engaging in research to find out that true conditions”—two major precepts of social stability as advanced by Hu Jintao—are applied here through dialogue, instead of denial or cracking down.

Ningbo’s experiment bypasses arguments about ideology, or where injustice comes from, or whether a new concept of neighborhood is necessary. Instead, “deep-seated contradictions” are simply seen as gaining in strength, and if unaddressed, will impede future economic and social progress. The approach assumes that even the sort of local affluence enjoyed in Ningbo, a coastal city grown wealthy on textile and electronics exports, creates social challenges that are better addressed by a new system of interaction between cadres and the masses.

The Ningbo strategy passed a major test this past week when an advocate of harmony-through-hardline politics, Politburo member and security car Zhou Yongkang, sounded impressed by a fact-finding visit there. According to an account of his visit by the state-run Xinhua news agency, Zhou said that the pilot project had “unique advantages”—heady stuff from someone better known for addressing social ills through the security forces, instead of through public services.

Zhou is not alone in signaling satisfaction with a softer approach. On Sunday, the Party’s main media outlet, the People’s Daily, highlighted a new policy implemented in the city of Zhenjiang in nearby Jiangsu province of not deleting posts critical of the government but instead using them as a means of gauging public perceptions of shortcomings by officials. “We can’t dodge problems,”the paper quoted Bao Jianguo, director of the city’s Internet Information Office, as saying. “If the problems raised by Internet users really exist, then relevant departments must solve them quickly.”

Such experiments in cities around Shanghai may be a prototype for what former Shanghai Party chief Xi Jingping is planning next year, assuming he succeeds Hu Jintao as China’s president.

Whether these attempts represent a model or just a moment will depend on precisely that sort of political backing from the top. In the midst of a leadership transition, that’s not easy to sustain. After all, we’ve seen these sorts of efforts to be bold and different before, and they usually get filed away or fade away on their own, unrepeated and left to molder. Ningbo might turn out to be one of those experiments that never get quite enough political support to be tried in other places.

But one matter is certain: Some in the Party hierarchy are as nervous about China’s future as the society they’re struggling to govern—and at least a few of them are not waiting for the formal leadership changeover next year to do something about it.

Russell Leigh Moses is a Beijing-based analyst and professor who writes on Chinese politics. He is writing a book on the changing role of power in the Chinese political system.

Jiong Sheng via Wikimedia Commons

By Russell Leigh Moses

How should the Communist Party handle growing disquiet in Chinese society?

This question is troubling Chinese policy-makers recently, especially with outrage and discontent stemming from everything from persistent pollution in the nation’s capital and how to measure it to the death of a 10 year-old girl in Xian, struck by a speeding construction truck.

Concerns about public anxiety had already prompted the leadership to look at restlessness earlier this year through the idea of “social management,” which has come to mean different things for different political factions. Leftists have looked to cultural reform or engineering “the moral maturity of each citizen” to stave off rebellion. On the other end of the political spectrum, small-government advocates have hoped for a supervisory role for the public that would lend legitimacy to the Party.

For a while, the debate looked to be gridlocked. But now an alternative for promoting social harmony is being tried in Ningbo, in Zhejiang province. Its approach is far more sophisticated than some might expect: That social discontent might be best managed, not by tightening or loosening the reigns of control, but by cadres going out to talk to people directly about grievances they have filed.

The Ningbo prototype focuses on setting up listening offices for cadres to read petitions, and to hear cases and complaints about anything from waste water discharges to the conditions of replacement housing. Officials at different levels of government are tasked to follow claims of distress from the outset, and to visit the people or local communities that file complaints. Dispute mediation centers, as well as administrative service offices, are staffed to prevent small problems from escalating into social confrontations with Party and government officials.

“Going to the grass roots” and “engaging in research to find out that true conditions”—two major precepts of social stability as advanced by Hu Jintao—are applied here through dialogue, instead of denial or cracking down.

Ningbo’s experiment bypasses arguments about ideology, or where injustice comes from, or whether a new concept of neighborhood is necessary. Instead, “deep-seated contradictions” are simply seen as gaining in strength, and if unaddressed, will impede future economic and social progress. The approach assumes that even the sort of local affluence enjoyed in Ningbo, a coastal city grown wealthy on textile and electronics exports, creates social challenges that are better addressed by a new system of interaction between cadres and the masses.

The Ningbo strategy passed a major test this past week when an advocate of harmony-through-hardline politics, Politburo member and security czar Zhou Yongkang, sounded impressed by a fact-finding visit there. According to an account of his visit by the state-run Xinhua news agency, Zhou said that the pilot project had “unique advantages”—heady stuff from someone better known for addressing social ills through the security forces, instead of through public services.

Zhou is not alone in signaling satisfaction with a softer approach. On Sunday, the Party’s main media outlet, the People’s Daily, highlighted a new policy implemented in the city of Zhenjiang in nearby Jiangsu province of not deleting posts critical of the government but instead using them as a means of gauging public perceptions of shortcomings by officials. “We can’t dodge problems,”the paper quoted Bao Jianguo, director of the city’s Internet Information Office, as saying. “If the problems raised by Internet users really exist, then relevant departments must solve them quickly.”

Such experiments in cities around Shanghai may be a prototype for what former Shanghai Party chief Xi Jingping is planning next year, assuming he succeeds Hu Jintao as China’s president.

Whether these attempts represent a model or just a moment will depend on precisely that sort of political backing from the top. In the midst of a leadership transition, that’s not easy to sustain. After all, we’ve seen these sorts of efforts to be bold and different before, and they usually get filed away or fade away on their own, unrepeated and left to molder. Ningbo might turn out to be one of those experiments that never get quite enough political support to be tried in other places.

But one matter is certain: Some in the Party hierarchy are as nervous about China’s future as the society they’re struggling to govern—and at least a few of them are not waiting for the formal leadership changeover next year to do something about it.

Russell Leigh Moses is a Beijing-based analyst and professor who writes on Chinese politics. He is writing a book on the changing role of power in the Chinese political system.

56.com

A screenshot taken from the video in question shows police walking next to a wedding caravan.

Police in the central province of Hunan detained two men for online rumor-spreading after they said 5,000 police were guarding a wedding convoy in the provincial capital of Changsha, the latest in a string of detentions as part of a growing government campaign to manage information online.

The state-run Xinhua news agency says the two men posted video showing the crowd of police walking alongside the wedding convoy. Xinhua quoted local investigators as saying the police happened to be returning from a training drill just as the wedding vehicles made their way through the city’s streets.

Xinhua said the incident occurred Dec. 6 and the men were detained Sunday. They will be held for five days, Xinhua said. Even as the government condemned the video as rumor spreading, it remained available on the Weibo microblogging service Monday afternoon.

The government earlier this year embarked on a nationwide campaign to limit online information it rendered as false. Leading Internet companies including Sina Corp. and Tencent Holdings have come under increasing pressure from government public security and censorship officials.

Leaders worry in particular about the pace information travels online, where tens of thousands of Internet users can coalesce around a particular concern within hours. Chinese Internet executives have attempted to assuage government worries by demonstrating for local officials how social networking can serve as a public relations platform as well. The Beijing municipal government is among the latest to launch an official Weibo account.

Earlier in December, the Communist Party’s mouthpiece People’s Daily newspaper in a commentary compared online rumors to heroin. Internet users can “irresponsibly and unscrupulously produce and spread rumors,” the commentary said. “Such ‘Internet psychological drugs’ are very easily addictive, and make people want to know more and learn more while reading.”

On Saturday, state media quoted Wang Chen, head of the State Internet Information Office, as calling for “more forceful and effective measures to strengthen the construction and management of cyber culture,” according to Agence France-Presse.

Many Internet users see “rumors” as a code word for information the Communist Party disagrees with — though China’s Internet, like the Internet everywhere, does play host to plenty of gossip and speculation.

At a conference on government use of Twitter-like microblogging services held in Beijing on Monday, a spokesman for the Beijing police noted how rumors spread earlier this year that a man who had fallen to his death from the top floor of a local shopping mall was a foreigner who had been shot first. The man turned out to be a pensioner from Shandong province who had jumped over the railing in an apparent suicide bid.

The men’s detention in Changsha on Sunday isn’t the first time Chinese Internet users have been detained and accused of spreading rumors online. Earlier in December, state-run media reported several people were detained after saying HIV and AIDS patients from the northwest Xinjiang Uyghur Autonomous Region had been infecting food with their blood. Local investigators later deemed those claims untrue.

– Brian Spegele and Josh Chin

Beijing New Picture Film Co.

Leading Chinese filmmaker Zhang Yimou is hoping to hit it big in China and globally with his new film, “The Flowers of the War” (金陵十三钗). The question is, can he do it?

Featuring Hollywood star Christian Bale, “The Flowers of the War” is China’s Academy Award entry for best foreign language film and tackles subject matter familiar within China: Japan’s brutal occupation of China’s southern city of Nanjing in 1937.

Chinese audiences may be drawn to the film for that reason, but it’s also sumptuously shot, rolling out Hollywood-like special effects with a plot that pulls no emotional punches.

The movie, which opens on Friday in China and a week later in the U.S., centers on a character named John Miller, played by Mr. Bale, who is a dissolute American mortician arrived in Nanjing to bury the town’s catholic priest. He finds salvation attempting to rescue an unlikely assortment of Chinese schoolgirls and local prostitutes sheltering in the cathedral from the horror of the Japanese occupation.

Mr. Zhang’s portrayal of the Japanese brutality leaves little to the imagination. Nuanced treatment of the Chinese characters is in stark contrast with portrayal of the Japanese as monochrome monsters. At one point, a Japanese soldier chasing the Chinese schoolgirls through the cathedral shouts: ‘Lieutenant come up here, we’ve got virgins!”

That might play well with the home crowd. But playing to nationalist sentiment in China risks alienating the wider foreign audience that Zhang is presumably angling for by placing an American at the center of the action. Chinese director Jiang Wen’s critically acclaimed “Devils on the Doorstep” was presented mainly in black and white, but still brought more nuanced color to its treatment of the Japanese occupation.

When asked if the story may come across as a nationalistic piece propping up China, Mr. Bale said he has never viewed it as such. “That would be a bit of a knee-jerk reaction,” Mr. Bale said. “This is a historical piece.”

Mr. Zhang’s film, which jumps nimbly between English, the Nanjing dialect of Chinese, and occasional barks of Japanese, clearly attempts to appeal to global audiences and is part of a global push from China to create a homegrown film industry that can rival Hollywood’s.

China’s film industry , ranking ninth in international box-office revenues, generated ticket sales totaling 10.17 billion yuan (roughly $1.5 billion) in 2010, up from 6.2 billion yuan in 2009. The U.S. topped the global market at $9.87 billion.

China wants to create production and distribution companies big enough to compete with U.S. film giants like Warner Bros. and Sony Pictures. The government believes that if China becomes a major player in the global film industry it will help to export the country’s culture and soften its image overseas.

With a budget nearing $100 million, “Flowers of War” is the most expensive Chinese movie ever made.

Mr. Bale said he’s not attempting to bridge the divide between the Chinese film market and America’s. “Leave it up to the businessmen to decide if China and Hollywood can become a single market in the future,” Mr. Bale said. “I just thought this would be a good opportunity.”

Mr. Zhang and Mr. Bale both say they are not focused on the business side of movie-making and are artists who are more focused on the craft of fine story-telling and the art of cinematography.

But with one of the most sensitive episodes in recent Chinese history at its center, and with a first screening taking place in a government building in the center of Beijing, it is the politics, rather than the cinematography, that will draw the most attention.

Zhang, the director who choreographed the opening ceremony of the Beijing Olympics, has already come under fire for cozying up to the communist regime and their partial view of China’s troubled history. “The Flowers of War” will likely do little to alter that reputation.

– Laurie Burkitt and Tom Orlik

Getty Images

Fresh from scoring another record grain harvest this year, China now plans to get the weather to heel as well.

Rainmaking has now become part of the government’s five-year-term goals, the state-run China Daily reported Friday. Over the next four years, Beijing wants five regional weather control programs to increase artificial rain by 10 percent, it says.

The plan marks a major expansion of China’s “weather modification” efforts, deployed for years in Beijing to sometimes mixed results. Cloud-seeding – accomplished by shooting shells or rockets filled with silver iodide particles into promising puffs of white – was instrumental in clearing the smog out of the skies during the 2008 Olympics and has helped relieve the capital from chronic water shortages. But the effort has occasionally gone horribly, and expensively, awry.

Existing weather modification operations in Beijing and the northeastern province of Jilin currently produce 50 billion cubic meters of artificial precipitation, the China Daily said, citing the China Meteorological Administration (CMA). The number could read 280 billion cubic meters if “more effective weather intervention measures are taken,” the paper said.

“Because clouds are boundless, weather control is boundless,” CMA official Zheng Jiangping was quoted by China Daily as saying.

The paper said the new rainmaking programs would be established in the northwest, south, southwest and north but added that specifics of the plan had yet to be set. The program was expected to cost roughly 1 billion yuan ($157 million) according to an earlier China Daily report.

Although the techniques used to marshal the weather are modern, the ambition itself is as old as, well, the Mandate of Heaven. One of Beijing’s most famous landmarks, the Temple of Heaven, was built so that Qing Dynasty emperors would have a place to beseech higher powers for plentiful rain and good harvests.

Appropriately, the latest goals for rainmaking are linked to Beijing’s aim of maintaining annual grain yield at about 550 million tons through 2020.

While poor harvests as a result of dry weather were often the political death-knell for emperors of yore, the current rulers have been luckier. They just posted a bumper harvest for an eighth year running, breaking all manner of convention in an industry that usually sees one bad year alternate with two or three successive bumpers.

Amid questions over how long China can keep up that level of grain production, the Communist Party doesn’t appear to be taking any chances with its own mandate.

– Chuin-Wei Yap and Josh Chin

Getty Images

Fresh from scoring another record grain harvest this year, China now plans to get the weather to heel as well.

Rainmaking has now become part of the government’s five-year-term goals, the state-run China Daily reported Friday. Over the next four years, Beijing wants five regional weather control programs to increase artificial rain by 10 percent, it says.

The plan marks a major expansion of China’s “weather modification” efforts, deployed for years in Beijing to sometimes mixed results. Cloud-seeding – accomplished by shooting shells or rockets filled with silver iodide particles into promising puffs of white – was instrumental in clearing the smog out of the skies during the 2008 Olympics and has helped relieve the capital from chronic water shortages. But the effort has occasionally gone horribly, and expensively, awry.

Existing weather modification operations in Beijing and the northeastern province of Jilin currently produce 50 billion cubic meters of artificial precipitation, the China Daily said, citing the China Meteorological Administration (CMA). The number could read 280 billion cubic meters if “more effective weather intervention measures are taken,” the paper said.

“Because clouds are boundless, weather control is boundless,” CMA official Zheng Jiangping was quoted by China Daily as saying.

The paper said the new rainmaking programs would be established in the northwest, south, southwest and north but added that specifics of the plan had yet to be set. The program was expected to cost roughly 1 billion yuan ($157 million) according to an earlier China Daily report.

Although the techniques used to marshal the weather are modern, the ambition itself is as old as, well, the Mandate of Heaven. One of Beijing’s most famous landmarks, the Temple of Heaven, was built so that Qing Dynasty emperors would have a place to beseech higher powers for plentiful rain and good harvests.

Appropriately, the latest goals for rainmaking are linked to Beijing’s aim of maintaining annual grain yield at about 550 million tons through 2020.

While poor harvests as a result of dry weather were often the political death-knell for emperors of yore, the current rulers have been luckier. They just posted a bumper harvest for an eighth year running, breaking all manner of convention in an industry that usually sees one bad year alternate with two or three successive bumpers.

Amid questions over how long China can keep up that level of grain production, the Communist Party doesn’t appear to be taking any chances with its own mandate.

– Chuin-Wei Yap and Josh Chin

Associated Press

Security video camera footage shows 2-year-old Wang Yue after she was run over by a van in Foshan.

By Stanley Lubman

Why do passersby in China ignore accident victims?

Why do some accident victims in China demand damages from their rescuers?

Would a law change this behavior?

These are questions that confront some Chinese who have begun to debate whether the role of the Good Samaritan should be introduced into China ’s changing society.

The Good Samaritan first appeared in the New Testament as a man who rescued a crime victim lying by a road, even though religious officials walking past him had ignored him. Since then, “Good Samaritan” denotes an unselfish and sometimes heroic person who rescues another who has been harmed either through an accident or a crime.

The latest debate over scant legal protections offered Good Samaritans in China flared up last week after a legal team in Guangzhou announced that it would be taking up the case of Wu Sundong, a young man in Zhejiang province who was ordered by a local court to pay roughly 70,000 yuan ($11,000) in compensation to an elderly couple he had taken to the hospital after discovering they had fallen off their electric bicycle (story in Chinese). While police said there was no evidence to show Wu was at fault, the court appeared to accept the argument of the elderly couple’s family members that Wu wouldn’t have taken the couple to the hospital if he hadn’t been at fault because, as they said, “people that good don’t exist.”

Even more controversial, however, was a grim hit-and-run accident in October in the southern city of Foshan . In that case, caught by security cameras, a two-year old child was run over by two separate trucks over the course of seventeen minutes while eighteen people walked or cycled past her without helping. The child, Wang Yue, was finally rescued by a scrap collector but died of her injuries a few days later, launching a nationwide round of soul searching about the state of Chinese society.

In November, officials in the city of Shenzhen drafted a regulation that would protect rescuers from legal liability for harm suffered by a rescued victim of crime or accident and published it to invite public comment. If such a law were adopted to protect rescuers of victims of accidents or crimes from extortion, would that change the behavior of Chinese passersby?

An opinion poll in Beijing found that 87 percent of respondents said that when people do not help old people who have fallen, it is because “they want to avoid trouble.”

What is the cause of such behavior? Some have suggested that one factor is the influence of traditional culture. As Dorothy Solinger of the University of California, Irvine told the Christian Science Monitor in October: ”Chinese people are so concerned with being part of a network of personal relationships that that is all that matters… What goes on with a stranger is not their business.”

A more specific reason for not wanting to intervene is a concern that the victim might claim damages from the rescuer. The most famous such case occurred in Nanjing in 2007, when a young man named Peng Yu was sued after he escorted an elderly woman who had fallen and broken her leg to the hospital. As happened with Wu Sundong, the court ordered Peng Yu to pay 40% of the woman’s medical bills, explaining that “according to common sense” he wouldn’t have helped her if he weren’t in some way responsible for her fall.

UCLA anthropologist Yunxiang Yan, who wrote on Chinese cases of extortion by victims of their rescuers for the journal Social Anthropology in 2009, places such conduct in a larger perspective. He reminds readers that “rapidly transforming societies” experience “radical changes” and speculates that perhaps there has been a shift from the somberness of communist society to “consumerist hedonism.” Chinese are now dealing more with strangers, he notes, and their pursuit of self-interest interest can result in extreme antisocial behavior.

Yan concludes by commenting on the challenge that Chinese face in cultivating trust beyond the personal networks that have been the traditional basis for significant personal relationships. At the same time, Yan cites studies that show a continuity of traditional values, and he finds a strong social reaction to victims attempting to extort money from their rescuers. He also finds signs that values are changing , and writes that Chinese who do aid victims do so entirely out of “free will.”

Issues over the failure to rescue and the duty to rescue are not unique to China, and have been debated for centuries in the West. The complex legal and moral questions related to the Good Samaritan have long been the subject of litigation and law-making in the West, where legal systems have addressed them very differently.

Some European civil law countries such as Germany and France have adopted laws creating a duty to rescue persons in need of assistance. In contrast, in common law countries such as the U.S. and the UK, in principle there is no duty to rescue, although a few American states have enacted statutes creating such a duty and a number of others impose it when crime victims are involved. Even in common law countries a duty will be found by a court if a “special relationship” exists, such as parent-child or employer-employee, just to name several. (The common law doctrine is succinctly discussed in Melvin A. Eisenberg’s “The Duty to Rescue in Contract Law.”)

While common-law jurisdictions have been hesitant about legislating a duty to rescue, many have adopted rules that protect rescuers from civil liability for injuries caused by the rescuers’ negligence. Typically, too, such rules do not protect rescuers whose conduct is “grossly negligent” or “reckless.”

Opinion is divided over whether rules forcing passersby to help should be imposed in China. In its report on the draft regulation issued in Shenzhen, the South China Morning post notes that the tragedy in Foshan “prompted intense debate about whether the government should introduce a legal responsibility to rescue,” and a lawyer is quoted as favoring such a duty because “apathy had become a problem endangering society.”

It is clear, as Professor Yan concludes, that “China is currently undergoing a rapid transition without a clear direction.” Laws could provide some direction otherwise lacking in a confusing new social order. The Shenzhen draft regulation suggests that even without imposing a duty to rescue, a law protecting rescuers from extortion would serve a useful social purpose in China these days.

Stanley Lubman, a long-time specialist on Chinese law, is a Distinguished Lecturer in Residence at the University of California, Berkeley, School of Law and is the author of “Bird in a Cage: Legal Reform in China After Mao,” (Stanford University Press, 1999).

What transpired at the conference is likely to add to Beijing’s annoyance.

The first Global Buddhist Congregation, which concluded Wednesday in New Delhi, with the Dalai Lama in attendance, decided to set up a new international Buddhist organization based in India.

That’s stepping on Beijing’s toes as China, since 2006, has backed the World Buddhist Forum to show it is serious about sponsoring Buddhism. The forum’s  meeting in Zhejiang province five years ago was attended by over 1,000 monks.

Of course, the Dalai Lama, regarded as a separatist by Chinese authorities, was not invited to attend that meeting or subsequent events under its umbrella.

The new body will be headquartered in India and attempt to bring together the main schools of Buddhism, said the Delhi-based Asoka Mission, which organized the meeting.

Unlike Catholicism, Buddhism has no organizing center. Most Chinese and North Asians practice the Mahayana school of the faith, while Theravada Buddhism thrives in Southeast Asia. Tibetan Buddhism, of which the Dalai Lama is the spiritual leader, is a third major school.

See more on this story from India Real Time

What transpired at the conference is likely to add to Beijing’s annoyance.

The first Global Buddhist Congregation, which concluded Wednesday in New Delhi, with the Dalai Lama in attendance, decided to set up a new international Buddhist organization based in India.

That’s stepping on Beijing’s toes as China, since 2006, has backed the World Buddhist Forum to show it is serious about sponsoring Buddhism. The forum’s  meeting in Zhejiang province five years ago was attended by over 1,000 monks.

Of course, the Dalai Lama, regarded as a separatist by Chinese authorities, was not invited to attend that meeting or subsequent events under its umbrella.

The new body will be headquartered in India and attempt to bring together the main schools of Buddhism, said the Delhi-based Asoka Mission, which organized the meeting.

Unlike Catholicism, Buddhism has no organizing center. Most Chinese and North Asians practice the Mahayana school of the faith, while Theravada Buddhism thrives in Southeast Asia. Tibetan Buddhism, of which the Dalai Lama is the spiritual leader, is a third major school.

See more on this story from India Real Time

Associated Press

Microwaving low-grade coal so it can be burnt to produce electricity doesn’t sound very environmentally friendly.

But environmental consciousness is core to a plan by a small Massachusetts-based company, CoalTek Inc., now pushing into China.

CoalTek this week said in a statement that it had won government approval to build an industrial-scale facility deploying its microwave-coal technology in Inner Mongolia. The company estimated the project would cost more than $350 million and have a capacity of 10 million metric tons annually.

Zapping coal with microwaves dries it, the company says. That makes coal burn easier, raising the efficiency of producing electricity with it. Turning lower grade brown coal into something better – and more valuable – is environmentally friendly, the company says.

“Microwaving the coal allows China to extract more energy from the coal it mines,” a spokesman said by email. Approval of such a deal isn’t surprising in China.

The country has been a tear securing not only natural resources, but also fund newfangled technology associated with saving and producing energy, minerals and food.

China National Offshore Oil Corp., for instance, has invested in U.S. shale oil projects and Canadian oil sand. Air China Ltd. recently tested a biofuel-powered aircraft. In Guangzhou, a cigarette maker built a skyscraper that will be cooled by wind.

The microwave coal drying technology has used elsewhere, including with something called the DryCol Process developed in Australia (pdf).

CoalTek, which says its technology is proprietary, has operated a coal-microwaving facility in Kentucky since 2007.

In China, the plan is to zap low-grade lignite and sub-bituminous coal with microwaves to evaporate water inside it. The process could as much as double the value of low-grade coal to $60 per metric ton or $70 per ton, the company claims.

“After clearing the energy and environmental hurdles, CoalTek also had to demonstrate the project’s financial viability and overall positive economic impact on the Inner Mongolia Autonomous Region,” a CoalTek statement said, noting that all central and regional government approvals have been now been received.

Plans to enter China by venture capital-backed CoalTek were announced last year, though its local partner wasn’t known. The company says it has other partnerships in the country.

The deal in Inner Mongolia is a 50-50 venture with a Guangdong-based Yijian Group Co., a construction business with a range of interests. Cynergy-Global LLC advised the U.S. company.

Yang Shaolin, Managing Director of Yijian, described the CoalTek venture as the first Sino-U.S. venture in China’s clean coal industry. She noted clean coal was a primary goal of a U.S.-China Strategic Partnership Agreement signed almost two years ago by China’s president, Hu Jintao, and Barack Obama of the U.S.

– James T. Areddy. Follow him on Twitter @jamestareddy

Agence France-Presse/Getty Images

Back by popular demand, a list of what the Wall Street Journal’s reporters in China are reading and watching online. (NOTE: WSJ has not verified items in the ‘News’ section and does not vouch for their accuracy.)

News:

* How does China win over Tibetans? How about pensions for monks and nuns? (AFP)

* China watchers waiting for signs of Beijing loosening the reins on its economy are pouncing on announcements like these. But China’s central bank says the move isn’t a loosening at all. (Businessweek and Reuters)

* Chinese naval exercises in the Pacific are not, repeat not, aimed at any particular country. (BBC)

* CCTV gets a new boss. (AFP)

* Embedded, undercover, with China’s Internet Water Army. (MIT’s technology review)

* State sponsored slavery? A long, dramatic look at China’s labor camps. (Al Jazeera)

Commentary:

* Why China’s government likes the term “leftover women.” (Ms Magazine)

* Supersize Them? A National Economic Research Institute researcher argues massive cities aren’t necessarily the answer to China’s urbanization problems. (East Asia Forum)

Just Because:

* Chinese Internet users call the country’s angel of death back home. (China Digital Times)

Associated Press

Former Denver Nugget J.R. Smith

The Chinese Basketball Association has started its season off with a bang—thanks in part to high-scoring NBA stars—but still ended its first night on a low note with J.R. Smith, formerly of the Denver Nuggets, suffering a knee injury.

Mr. Smith, known as “J.R. Shimisi” in China, scored 20 points on Sunday night before getting injured in the fourth quarter, according to local media, and is now in a disagreement with his new team over the injury. The team, the Zhejiang Golden Bulls, fell to the Guangdong Southern Tigers, 111-78.

It’s unclear how severe Mr. Smith’s injury is. Zhao Bing, the Golden Bulls’ general manager, said the player repeatedly declined medical treatment from the team and arranged his own treatment in Beijing instead. “We warned him that he’s not allowed to go to Beijing without a proper medical check,” Mr. Zhao said, expressing his displeasure at Mr. Smith’s disobedience. “He just wouldn’t listen.”

Mr. Smith is “an experienced basketball player and a big name in NBA,” Mr. Zhao said. But “I think he should have been aware that CBA is not an easy game to play either.”

Mr. Smith is one of a number of NBA players who have gone overseas to play in the wake of disagreements with the American league over issues including revenue sharing that resulted in lockout on July 1. But while in other leagues, players have been able to negotiate opt-out clauses in their contracts, the CBA has required that NBA players complete a full season in China.

China has many basketball fans—300 million, according to the NBA—but was not known for attracting star players to its own league before this year, in part because of formerly low salary caps and quality of play.

There have been some exceptions. Last year, Stephon Marbury became the biggest name in American basketball to join the CBA when he signed with Shanxi Zhongyu for the end of the 2009-10 season. Known as“Ma Bu Li” in Chinese, Mr. Marbury defied expectations that he wouldn’t enjoy his time in China. He is now in his third season in China and thrived in the CBA in term of his popularity.

Mr. Marbury was named MVP of the CBA all-star game in 2010, and has nearly 143,000 followers on Twitter-like microblogging service Sina Weibo, where he posts messages in English declaring his affections for China and his fans respond with professions of love and gratitude. He is playing this season with the Beijing Jinyu Ducks, the team to which Steve Francis was signed for just two weeks in the 2010-11 season before his contract was terminated.

Mr. Marbury scored 29 points for the Jingyu Ducks, which won 103-90 over the Jilin Northeastern Tigers on Sunday night.

Other NBA players who’ve arrived in the CBA this season due to the lockout include Wilson Chandler, formerly of the Denver Nuggets and New York Knicks, who scored 43 points for his new team the Zhejiang Lions, leading them to a 118-115 victory. Kenyon “Kenyang Mading” Martin has joined the Xinjiang Flying Tigers, which didn’t play on Sunday, and Aaron “Bulu Kesi” Brooks is expected to play for the Southern Tigers. Former Washington Wizards forward Yi Jianlian, who is from China, scored 17 points for the Southern Tigers in their victory over Zhejiang.

The Golden Bulls are likely hoping Mr. Smith follows Mr. Marbury in embracing the Chinese game, though the conflict over his injury is more reminiscent of Mr. Francis’s tenure in Beijing.

“We would like to improve ourselves through learning from the NBA players,” Zhejiang’s Mr. Zhao said of his star player’s refusal to heed the team’s medical protocols. “That was just the first game of the season. He really didn’t have to behave like this.”

Mr. Zhao posted a warning to Mr. Smith on Sina Weibo on Monday afternoon, saying the player should return to team as soon as possible “or face the consequences.” Mr. Smith responded in English less than an hour later, “My main goal is to get healthy! If you can’t understand that then maybe you should pick another profession!”

He added that his goal is “not to leave! My goal is to win!”

– Loretta Chao with contributions from Yang Jie

Reuters

A man talks on his mobile phone as he walks past an advertising billboard outside the Greentown residential construction site in Hangzhou, Zhejiang province September 23, 2011.

Property developer Greentown China Holdings has grabbed headlines in recent days, in a time when Chinese real-estate companies would probably rather keep a low profile.

First, Song Weiping, founder of Greentown, last week directly disputed rumors that the company is on the verge of bankruptcy amid the chorus of pessimism over the sector.

Then over the weekend, local media said Mr. Song was getting a boost from Jack Ma, chairman of Chinese e-commerce giant Alibaba Group Holding, which like Greentown is based in Hangzhou. According to those reports, Mr. Ma encouraged his employees to buy property from Greentown. The company disputes those reports as well.

The flurry of attention comes as the company, like others in the sector, grapples with Beijing’s efforts to tame the property market. On Monday, Greentown said it is considering disposing of some of its property projects to boost cash flow.

On the bankruptcy rumors, Mr. Song decided to address them head-on. In an essay on the company’s website last week (in Chinese), he disputed the rumors but also took the opportunity to imagine the scenario that might unfold should any of Greentown’s peers collapse.

“On Nov. 1, a reporter called to ask me if Greentown is applying for bankruptcy… this is a cold joke,” wrote Mr. Song, whose firm develops high-end property. “Currently everything is within our control and we have confidence to pass this winter together with our peers. Greentown still has a long way to go before it declares bankruptcy.”

Concerns over the company’s fiscal health have mounted since September, when China’s banking regulator asked trust companies, key players in the nation’s shadow banking system, to submit details on how much they had lent to the Hong Kong-listed property developer.

The property market is showing signs of distress as Beijing’s nearly two-year-long property tightening campaign continue to bite. Sales are slowing and property prices are falling in some cities, intensifying pressure on property developers. Many luxury property developers such as Greentown have been hit.

With declining sales and tightened credit, some firms might collapse in the next couple of months, he wrote. “When that time comes, some developers will close down, some developers may run away, or perhaps, something even more tragic could happen,” said Mr. Song, adding that one should also consider what would happen to “our brothers in the downstream industry chain, from building material firms, construction worker and migrant workers waiting to bring money home for the lunar new year.”

He stopped short of criticizing the government’s stance on property tightening, and said that he is confident that the government will be able to “grasp the overall situation.”

On the Alibaba situation, both the e-commerce company and the property developer disputed the idea that Mr. Ma was trying to help Mr. Song.

An Alibaba spokesman said it sent a generic human-resource email to selected employees offering discounts of about 8% on Greentown apartments as a benefit for employees. He added that there was no language in it about saving Greentown, it didn’t come from Mr. Ma and it didn’t encourage employees to accept.

Greentown Chief Financial Officer Simon Fung said that the company is offering the discount to Alibaba employees but declined to reveal the minimum transaction volume.

“We have offered similar discounts on bulk purchases to other industrial associations as well,” Mr. Fung said, noting that one discounted project is priced at 18,000 yuan ($2,834) a square meter.

– Esther Fung

Reuters

Is Chinese central bank governor Zhou Xiaochuan (above) more powerful than U.S. Secretary of State Hillary Clinton (below)?

How do you rank power brokers in a political system where major decisions are typically made by consensus and behind closed doors?

That’s one of a number of questions raised by China’s showing on the latest Forbes’s list of the world’s most powerful people, recently unveiled on the magazine’s website.

A counterpart to Forbes’s annual ranking of the world’s wealthiest people, the power list attempts to identify the individuals “that matter” based on (among other things) the number of people and amount of financial resources they have power over. Despite rumors of its impending demise, the U.S. thoroughly dominates this year’s list, accounting for 26 of the 70 spots.

China comes in second with seven people making the list, up from six last year, though the country’s most powerful man, president Hu Jintao, has been knocked out of the top spot he held last year. Mr. Hu now ranks No. 3, behind Barack Obama and Russia’s Vladimir Putin, a fall the magazine attributes to China’s impending leadership transfer.

While there’s plenty to say about where Mr. Hu should rank vis-à-vis Messrs. Obama and Putin, the arguably more noteworthy ranking is that of Chinese central bank governor Zhou Xiaochuan, whom Forbes lists as the world’s 15th most powerful person, one spot ahead of Hillary Clinton.

On the surface, ranking Mr. Zhou ahead of the U.S. Secretary of State makes a certain amount of sense. After all, he’s the head of a bank that boasts more than $3.2 trillion in foreign-exchange reserves and is estimated to own a whopping $1.2 trillion in U.S. Treasurys.

But unlike his U.S. counterpart, Fed chairman Ben Bernanke (No. 8 on the list), Mr. Zhou does not determine his own country’s monetary policy. That power resides with the nine-member Politburo Standing Committee, China’s highest decision-making body, which issues orders on the basis of internal debates. The details of those talks are almost never disclosed.

In this system, analysts say, Mr. Zhou’s role is akin to that of an economic adviser – a position not exactly on par with Ms. Clinton’s.

The way the Standing Committee and the rest of the Chinese government do business means similar doubts can be raised about virtually any of the Chinese people who appear on the list, possibly even premier Wen Jiabao (No. 14), whose many public calls for political reform this year have produced little in the way of visible reform.

It’s an issue that Michael Noer, one of the Forbes editors responsible for putting together the power list, acknowledges is problematic.

“Power is measured in very different ways in different systems,” Mr. Noer told China Real Time after the rankings were released late last week. “[Ranking the most powerful people] is really hard to do…The Chinese in particular have been difficult.”

To compile the rankings, Mr. Noer said, he and another editor started with a list of 230 initial candidates, which they whittled down to 104. They then asked Forbes’s editors around the world to give each candidate a numerical score based on a handful of criteria.

The difficulty in determining who controls what in China had “complicated” the rankings process, Mr. Noer said, but he argued that the list still offered insights into the nature of power in China.

“China has more government officials on the list than any other country and almost all of the people on the China list come from government,” he said, adding most of the Chinese people who appeared on the magazine’s rich list this year were also candidates for the power list.

The only mainland Chinese person to be ranked on the power list who doesn’t come from government is Baidu founder and CEO Robin Li (No. 42). Hong Kong shipping magnate Li Ka-shing also makes the list (No. 44).

“I think that’s an indication that the state is still very much in charge, even if it’s somewhat murky how that power is exercised,” Mr. Noer said.

Nor is does that seem likely to change in the near future with Xi Jinping, the likely successor to Hu Jintao, sliding in at No. 69 this year.

– Josh Chin. Follow him on Twitter @joshchin

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Chinese Vice President Xi Jinping (right) and Chinese Vice Premier Li Keqiang (Center) react as they chat with Li Changchun (Left), a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee,at the Great Hall of the People in Beijing. Xi Jingping and Li Keqiang are widely expected to be named China’s president and premier, respectively, in 2012.

From a man who helped explain China’s policy of “three represents” now comes a theory called the “three blurs.”

Robert Lawrence Kuhn, an American businessman who has written as a confidant of Chinese officials like former President Jiang Zemin, says the generation of Communist Party leaders who are expected take power in next year’s once-per-decade personnel shuffle will struggle with overlapping interests and constituencies. He dubs their challenge the “three blurs.”

The twin motivations for Chinese leaders, he told members of the Shanghai Foreign Correspondents Club on Thursday, are “a desire to raise the standard of living of the people” and “the concept of pride.”

“In every sphere,” he said, referring to the pride issue, “China wants to be among the world’s leaders.” For instance, Mr. Kuhn said, Mr. Jiang decided in 1992 that China would pursue manned space missions, which Mr. Kuhn said was unaffordable and “absurd” at the time. The episode well reflects China’s ambition as a world power, he said.

Mr. Kuhn is best known for his authorized 2005 biography of the former president Mr. Jiang, “The Man Who Changed China.” The book got unfavorable reviews in the West for lacking criticism of the former leader, but access to the country’s most powerful official made Mr. Kuhn a star in China. Today, he has consulting interests related to China and is a partner in a sports management business with Chinese broadcaster CCTV.

He said he was shaken in July when rumors spread across the Chinese Internet and on Hong Kong TV suggesting – wrongly – that the 85-year-old former president had died. On Thursday, Mr. Kuhn said, “Jiang, I know, is well,”

During the coming transition, Mr. Kuhn said he anticipates a more independent minded group of leaders to emerge, led by presumptive president-to-be Xi Jinping. Mr. Kuhn referred to Mr. Xi as someone with “a personality, a spark.” He said leadership sources tell him that Mr. Xi, currently a vice president, has recently spoken up in support of China’s small business owners.

In coming months, Mr. Kuhn said he expects pretransition nervousness in Beijing to translate into tougher media controls and detention of dissidents.

A more permanent strategy, he said, will be to emphasize culture as a “pillar industry” that contributes to China’s gross domestic product growth, generates a consumer economy, provides a richer standard of living to the country’s people and provides for their broader participation.

Chinese leaders came out of the annual meeting of the Communist Party’s Central Committee last month trumpeting the need for cultural reform that, in the words of current top leader Hu Jintao, “significantly improves the nation’s ideological and moral qualities.” State media have been hammering away at the cultural reform theme ever since.

Back to the blur theory.

No more, Mr. Kuhn said in explaining the first “blur,” will China’s leaders be able to draw clear lines between domestic and international policymaking. Also, governing portfolios will overlap, as areas like security crowd into economics. The Internet represents the third leg of his theory, with the virtual world blurring into the real one.

“Chinese leaders cannot make decisions in a vacuum any more. They need to recognize public opinion,” Mr Kuhn said. He described top level Party decision-making as “more democratic” than the U.S. executive branch, given the requirement for consensus in the nine-member Politburo Standing Committee.

Catch-phrase political theories about China tend to sound fuzzy and vacuous. Perhaps the best example was former President Jiang’s “three represents,” which later became enshrined in the country’s constitution.

China’s new leaders will have training in law, mathematics and other areas that will create a more diverse base than the engineering-heavy backgrounds of the current leadership, Mr. Kuhn said, adding that the line up of the next generation of top leaders is widely considered to be set give or take a couple spots.”

He quipped that a mix of officials with diverse backgrounds might work better with Washington, which tends to be run by former lawyers. “Maybe the reason is that lawyers and engineers can’t talk to each other, not Chinese and American’s can’t talk to each other,” he said.

– James T. Areddy. Follow him on Twitter @jamestareddy

Correction: A previous version of this item incorrectly said Xi Jinping was a vice premier.

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Alibaba Group chairman and CEO Ma Yun speaks during a press conference on October 17, 2011 in Hangzhou, Zhejiang Provinceo of China. The value of transactions on Alibaba’s Taobao retail platforms doubled last year to hit $63 billion.

Alibaba Group’s Taobao websites are virtually synonymous with online shopping in China, but one venture capitalist with experience navigating the Chinese Internet says that may not always be the case.

In China e-commerce is all about discount shopping, said Hurst Lin, general partner at venture capital firm DCM and former COO of Chinese web portal and microblog operator Sina, but that won’t last. Mr. Lin believes that in several years, Chinese consumers will have more discerning taste and that online retailers with the best design and branding will challenge the dominance of Alibaba Group’s Taobao websites.

DCM has investments in several e-commerce companies focused on China, including online lingerie retailer La Miu and health and beauty seller Lumi. “Today, what you’re looking at is discount,” Mr. Lin said. “That’s what Taobao is all about—the cheapest stuff, comparison shopping.” What Taobao websites offer is similar to what eBay offered to online shoppers in the 90s, he said. “When I was in the U.S. in the 90s, I would go on eBay and check on the price first.”

Taobao Marketplace, a website for consumers to sell to other consumers, and Taobao Mall, where larger retailers can open online storefronts to sell their products to consumers, are currently the largest online shopping sites in China. But growing competition has recently begun to erode Taobao’s market share. Its share of online purchases in China slipped to 71% by value in the second quarter from 75% a year earlier, according to Analysys International.

But Mr. Lin said that “eBay is declining” in the U.S. and though Taobao is still on an upswing, its dominance will eventually decline as well. He and other venture capitalists are now looking for trends that will pick up two or three years down the line. Taobao “will have their heyday for another four to five years, then eventually consumers” will go to online retailers that specialize in specific product categories, Mr. Lin said, adding: “Taobao better go public.”

Alibaba chairman Jack Ma has said the company doesn’t have plans for an initial public offering of Taobao, but that he wouldn’t rule out an IPO for Alibaba Group. The value of transactions on Taobao had doubled last year to hit 400 billion yuan ($63 billion). Taobao sites didn’t disclose transaction numbers this year, but Mr. Ma said he expects the number to reach a trillion yuan in 2012.

Mr. Lin believes e-commerce companies, rather than simply competing on price, will eventually have to differentiate themselves by offering better design, more entertainment value and services that increase margins. For examples, he cited flash sales websites that add a sense of urgency by setting time limits for people to keep purchases in their virtual shopping carts or a website that offers buyers the ability to do swaps with other buyers if they have a last-minute change of heart after placing an order.

Mr. Lin said 360buy.com, also known as Jingdong Mall, another Taobao challenger, has done well to attract consumers with low prices and fast delivery service. “It’s fantastic,” he said, but it’s still unclear how the company will make money given its low profit margins. He said he believes 360buy “needs to go one step further,” adding “it’s not all about discounting. It’s about information, it’s about entertainment, it’s about social” and “when those things come you can charge incremental value.”

An Alibaba Group spokesman said the company is addressing the changing tastes of Chinese consumers with Taobao Mall, which “is focusing on service quality” and with its shopping search engine eTao which “provides info other than pricing,” including “product guarantees, user reviews, shipping options etc.”

– Loretta Chao. Follow her on Twitter @lorettac

Craig T. Mathew

China Lion Chairman Greg Coote, AMC President of Programming Robert J. Lenihan, China Lion President Jiang Yanming and China Lion CEO Milt Barlow

Huayi Brothers Media Corp. and Bona Film Group Ltd., two of China’s largest film production companies, said Sunday they were each acquiring up to 20% of start-up distribution company China Lion Film Distribution, with the goal of introducing more of their films to the U.S. market. The terms of the deal were not disclosed.

China Lion, a joint venture between Beijing-based President Jiang Yanming and Auckland-based Chief Executive Milt Barlow, currently has a deal with AMC Entertainment to distribute up to 15 Chinese movies annually in North America. The releases are often day-and-date with each film’s Chinese release.

China Lion’s first film under the deal was Huayi Bros’s “Aftershock,” a drama about the 1976 Tangshan earthquake in China. The film, which was directed by Feng Xiaogang, grossed over $100 million in China but only $62,962 in the U.S., according to the website boxofficemojo.com.

Read more on this at Speakeasy

ichenguangcheng.blogspot.com

A screenshot shows photos of participants in the online “Dark Glasses. Portrait” protest staged by supporters of Chinese blind activist lawyer Chen Guangcheng.

Police in China’s eastern Shandong province have allowed the six-year-old daughter of a prominent blind activist to go to school, according to his supporters, in an apparent victory for Chinese Internet activists that comes even as Beijing considers stricter online controls.

Chen Guangcheng, who has campaigned against forced abortions due to China’s one-child policy, was released from prison in September 2010 after a more than four-year sentence on charges of disturbing public order. But since then he and his family have been confined to his home by authorities without charge in what’s known in Chin as soft detention.

The case has prompted an unusual outpouring of support from China’s increasingly feisty Internet community, which has called for the release of the 39-year-old Mr. Chen, a self-trained legal expert who has suffered from blindness since childhood. On Sina Corp.’s Weibo microblogging service, users have posted photos of Mr. Chen as well as photos of themselves wearing dark sunglasses as he does.

In some cases, in addition to wearing sun glasses, supporters have photographed themselves holding signs saying “We need to have light, we need to have honesty” (要有光，要有诚), a reference to the two Chinese characters that make up Mr. Chen’s given name.

Authorities have blocked searches for Mr. Chen’s name on Weibo, though posts about him and his case can be easily found. A number of his supporters have tried to visit him, with some saying they have been beaten by thugs surrounding his house.

“To obtain this type of progress, Chinese web users and Guangcheng’s supporters have paid a huge price,” said Zeng Jinyan, a human rights activist.

She says she received confirmation this week that Mr. Chen’s daughter, Chen Kesi, was allowed to begin attending school recently, but has been escorted by security guards to and from the family’s home in the village of Dongshigu, near the city of Linyi, about halfway between Beijing and Shanghai on China’s east coast. While the family was under house arrest last year, authorities had previously prevented the girl from attending school, Ms. Zeng said.

The family is kept out of communication and couldn’t be reached. A woman who answered the phone on Thursday at a local police station in Linyi said she had never heard of Mr. Chen.

Unlike many cases involving imprisoned or detained rights activists in China, domestic outrage appears to outweigh international attention. “The fundamental unfairness of that really strikes a chord with many Chinese citizens,” said Phelim Kine, a researcher with the advocacy group Human Rights Watch in Hong Kong.

That dissatisfaction has been manifested online in unusual ways. In one case, a newly arrived U.S. embassy official in Beijing created a Weibo account. Within days of his first message last week, a simple greeting and introduction of himself, the post was overrun with nearly 2,000 comments, many of which expressed support for Mr. Chen and criticized the Chinese government’s handling of the case. Hundreds more comments in which users responded by writing “Hello, I am Chen Guangcheng” were deleted shortly after being posted.

Growing online activism for Mr. Chen and his family came as the Communist Party’s Central Committee met this week in Beijing. Managing culture and society were main topics, according to state-run media. China is likely to continue tightening Internet controls in the lead-up to its once-a-decade leadership transition in 2012, analysts say.

Weibo, which has more than 200 million users, already limits searches for sensitive keywords and deletes some posts altogether, according to users. The head of China’s Internet watchdog last week called for a strengthening of regulations over microblogs so they can “serve the works of the party and the people,” according to the state-run Xinhua news agency.

Beijing on Thursday responded to criticism earlier this week by the U.S. ambassador to the World Trade Organization, Michael Punke, that U.S. Internet companies in China faced challenges in China resulting from its national firewall.

The purpose of China’s Internet management “is to safeguard public interests and to promote the Internet’s sound development,” said Foreign Ministry spokeswoman Jiang Yu at daily press briefing. “This is also international practice.”

Note: An earlier version of this article said Mr. Chen’s daughter began attending school this week.

–Brian Spegele. Follow him on Twitter @bspegele.

While China was still in a holiday mood last week, Beijing gave local governments something to really cheer about, announcing through state media that they will soon be able to raise money by selling bonds directly. For more than 17 years, this was a closely guarded privilege of Beijing, which sometimes issued debt on behalf of local governments but never let them charge ahead on their own.

China’s local governments have a reputation for problematic bank borrowings from investments that often don’t work out. Much of their investment is in real estate and now that the property market looks like it might be in trouble, the issue is even more acute. Major credit rating firms are warning of risks to the banking system.

Letting some of the better managed local governments issue bonds directly has long been a subject of debate. Local governments want more access to funds but Beijing sees a need to keep a tight leash on their borrowing. Some economists contend there are local governments up to the task.

Former Premier Zhu Rongji, known as Boss Zhu prior to his retirement in 2003, knows the Beijing dilemma. In 1998, it was Mr. Zhu who took on the task of cleaning up the financial mess from the collapse of Guangdong International Trust and Investment Corp, better known as GITIC and effectively the borrowing arm of the Guangdong provincial government. When GITIC was unable to repay its loans, many of them from big foreign banks, Zhu surprised foreign creditors by saying that Beijing would not stand behind the company.

Mr. Zhu’s message to GITIC and its nervous bankers: China has the money to pay but shouldn’t get stuck with this bill. Creditors eventually received 12.5% for GITIC and 11.5% to 28% for its main subsidiaries.

Things are a bit different today. For one, the stakes are much higher as local governments have much bigger appetites. While local governments are not supposed to be borrowing from banks they have been able to get around restrictions through special financing vehicles — companies that have been set up to back specific projects. Local government financing soared under a massive government stimulus program after the 2008 global financial crisis, and it reached 10.7 trillion yuan by the end of 2010, according to the National Audit Office. Not all of that has — or will — go bad, but the sums are enough to raise eyebrows.

Zhejiang province will be the first to tap the market, selling 8 billion yuan ($1.25 billion) worth of three- and five-year paper as part of a trial program that will let wealthier provinces and cities tap domestic bond markets, according to the state-run Xinhua news agency.

Ratings firm Moody’s Investors Service has given a thumbs up to the idea of letting some local governments sell bonds.

“Such a program is credit positive as it will enhance local administrations’ discipline and transparency in managing their debt, and more importantly, will expand their sources of funding, which to date have relied on bank loans to so-called ‘local government financing vehicles,” Moody’s wrote in a recent report.

There is also plenty of support for the idea in other quarters.

Lu Ting, economist at Bank of America Merrill Lynch, agrees, arguing that not all local government borrowing is bad and that Zhejiang will use the funds for infrastructure and badly needed social housing. These types of investments don’t produce much cash flow to repay debt anyway, he wrote in a recent report,, and should not be classified as standalone projects.

Moreover, keeping the debt at the provincial level rather than in local government financing vehicles will improve financial transparency. Lu notes that Zhejiang alone has 759 such local government financing vehicles.

Zhejiang has impressive economic muscle. According to Mr. Lu’s report, the province’s GDP in 2010 was 2.7 trillion yuan with growth of 11.9% and a per capita GDP that ranked behind only Beijing, Shanghai and Tianjin. But some critics are still worried. They maintain that Guangdong’s economic prowess didn’t prevent GITIC from misusing funds and going bust. Moreover, Beijing needs to ensure that provincial level debt actually replaces other less transparent borrowings – and does not just open up a new funding channel.

If Beijing’s current political leaders can find a way to sort out local government financing without creating a fresh round of spending abuses, they will have solved a longstanding problem. Though there would be a debt of another kind – one of gratitude to Boss Zhu.

– William Kazer

Sina Weibo

A screenshot shows a series of photos of Huaxi’s landmark replicas posted to the Sina Weibo microblogging site, where they prompted a criticisms of China’s culture of duplication.

Huaxi Village – long considered China’s richest village – showcased its plus-size replicas of landmarks like Paris’ Arc de Triomphe, the U.S. Capitol and the Tiananmen Rostrum last week as a way to draw attention from tourists.

Instead, the village has found itself in the middle of an ongoing debate about China’s penchant for duplication and whether it stymies innovation.

Huaxi, a village of more than 1,500 people a less than three-hour drive from Shanghai that has long been touted as a model of China’s version of capitalism, looking to further boost its business from tourism.

Sun Haiyan, a spokesman for Huaxi Village, said on Thursday that the village’s economy took in 200 million yuan (US$31 million) from tourism-related business last year.

The replicas of global landmarks are intended to boost that business. Though they are a couple of years old, they received renewed attention last week, during the National Day weeklong holiday, when the village celebrated the 50th anniversary of its establishment.

“In 2010, more than two million people visited our village,” Mr. Sun said in an interview. “The figure will surely be bigger this year.”

But the replicas have drawn a heated discussion on China’s Internet, which has been buzzing about issues surrounding innovation since the death last week of Apple Inc. co-founder Steve Jobs.

“Tiananmen should apply for a patent. Otherwise the replicas of Tiananmen will come out constantly,” Shao Lianxiang, vice president of Chinese property developer Zhongyi Holding Co., wrote on the Sina Weibo. One internet poster with the online pseudonym Jiangdong Dahu said on Sina Weibo: “This is plainly the work of uneducated, uncultured villagers.”

In a commentary published Thursday, the Beijing Morning Post said the replicas proved that the village’s success hasn’t engendered a distinctive cultural identity. Rather, it has provided a vivid example that illustrates the Chinese people’s psychological state.

It also brought up a replica of Beijing National Stadium, or the Bird’s Nest, being built in a suburb of Nanjing. “In recent days, the Chinese public has hotly debated the topic of why doesn’t China have a lifelong innovator like [Steve] Jobs. If Jobs could see the Capitol Hill in China’s No. 1 village, what would he think? How many replicas of the White House and Bird’s Nest will we see before a Chinese Jobs is born?”

Duplication in China, long a gripe among trade partners, has grabbed even more headlines of late, including a fake Apple Store selling real iPads and iPhones in a setting remarkably similar to Apple’s trademark retail outlets. In Changzhou, Jiangsu Global Digital Cultural Theme Park Co. has opened a park called Global Animation Joyland, which bloggers have called attention to because it includes a section that appears to be based on Activision Blizzard Inc.’s World of Warcraft online game.

– Rose Yu

Sina Weibo

A screenshot shows a series of photos of Huaxi’s landmark replicas posted to the Sina Weibo microblogging site, where they prompted a criticisms of China’s culture of duplication.

Huaxi Village – long considered China’s richest village – showcased its plus-size replicas of landmarks like Paris’ Arc de Triomphe, the U.S. Capitol and the Tiananmen Rostrum last week as a way to draw attention from tourists.

Instead, the village has found itself in the middle of an ongoing debate about China’s penchant for duplication and whether it stymies innovation.

Huaxi, a village of more than 1,500 people a less than three-hour drive from Shanghai that has long been touted as a model of China’s version of capitalism, looking to further boost its business from tourism.

Sun Haiyan, a spokesman for Huaxi Village, said on Thursday that the village’s economy took in 200 million yuan (US$31 million) from tourism-related business last year.

The replicas of global landmarks are intended to boost that business. Though they are a couple of years old, they received renewed attention last week, during the National Day weeklong holiday, when the village celebrated the 50th anniversary of its establishment.

“In 2010, more than two million people visited our village,” Mr. Sun said in an interview. “The figure will surely be bigger this year.”

But the replicas have drawn a heated discussion on China’s Internet, which has been buzzing about issues surrounding innovation since the death last week of Apple Inc. co-founder Steve Jobs.

“Tiananmen should apply for a patent. Otherwise the replicas of Tiananmen will come out constantly,” Shao Lianxiang, vice president of Chinese property developer Zhongyi Holding Co., wrote on the Sina Weibo. One internet poster with the online pseudonym Jiangdong Dahu said on Sina Weibo: “This is plainly the work of uneducated, uncultured villagers.”

In a commentary published Thursday, the Beijing Morning Post said the replicas proved that the village’s success hasn’t engendered a distinctive cultural identity. Rather, it has provided a vivid example that illustrates the Chinese people’s psychological state.

It also brought up a replica of Beijing National Stadium, or the Bird’s Nest, being built in a suburb of Nanjing. “In recent days, the Chinese public has hotly debated the topic of why doesn’t China have a lifelong innovator like [Steve] Jobs. If Jobs could see the Capitol Hill in China’s No. 1 village, what would he think? How many replicas of the White House and Bird’s Nest will we see before a Chinese Jobs is born?”

Duplication in China, long a gripe among trade partners, has grabbed even more headlines of late, including a fake Apple Store selling real iPads and iPhones in a setting remarkably similar to Apple’s trademark retail outlets. In Changzhou, Jiangsu Global Digital Cultural Theme Park Co. has opened a park called Global Animation Joyland, which bloggers have called attention to because it includes a section that appears to be based on Activision Blizzard Inc.’s World of Warcraft online game.

– Rose Yu

Reuters

Chinese inflation slowed slightly in September as the consumer price index fell to 6.1% from 6.2% in August, data from the National Bureau of Statistics showed Friday. Meanwhile, September’s producer price index, a measure of upstream inflation pressures, was up 6.5% from a year earlier, down from 7.3% in August. Analysts weigh in:

Beijing will take some comfort from the fall in the main headline measures of inflation in September, suggesting that tightening measures put [into] place over the last 12 months are continuing to have the intended impact of reducing demand pressures on consumer and producer prices… Nevertheless, though inflation is slightly lower over the last two month, it remains at uncomfortably high levels, and senior officials, including Premier Wen, have continued to indicate in recent weeks that the need to curb price pressures remains the key near-term priority for economic policy. – Brian Jackson, Royal Bank of Canada

September’s inflation continued to ease as expected, confirming our view that inflation peaked in July and should continue slowing in the months ahead…. That said, the pace of slowdown will be gradual, not least because of the sticky food prices… The State Council’s recent decision to provide more credit and fiscal support to small enterprises, coupled with earlier measures to ease funding constraints on public housing construction, signals a beginning of targeted policy easing. This, in turn, is designed to strike a better balance between inflation and growth. However, we don’t expect this to turn into a full-blown easing any time soon. – Qu Hongbin and Sun Jiwei, HSBC

Inflation has stayed above 6% for four months, and inflation expectations are still high. Average inflation this year will likely be significantly higher than the official target of 4%. Therefore, we expect monetary policy to remain prudent with money and credit growth kept below PBOC’s targets. The government has adopted targeted easing to alleviate the difficulties facing small enterprises. Fiscal policy may become more proactive in the months ahead, within the boundary of budgeted deficit of 2% of GDP. We do not expect any major policy shift before the central economic work conference in later November or early December. – Shuang Ding, Minggao Shen, Daxue Wang and Serena Wang, Citigroup

We think the current growth and inflation mix is unlikely to lead to a rate or across-the board [reserve requirement ratio] cuts before the Central Economic Work Conference (CEWC, usually held in early December) when the government makes a comprehensive judgment of the macro risks and sets the policy tone. Export growth and labor market conditions are key to watch for the likelihood of more broad-based easing, in our view. – Jiang Chang, Yiping Huang and Lingxiu Yang, Barclays Capital

[T]he smaller inflation risk, coupled with global weakness, means that China is unlikely step up monetary tightening in the rest of the year, and it should also allow the government some room to support [fixed-asset investment] growth with higher fiscal spending. We should also point out that if the global economy continues to worsen, inflation risk could fall much further, giving Beijing the opportunity to step up fiscal stimulus. Still, it’s too early to expect major monetary easing in the near term, such as a broad [reserve requirement ratio] cut, an interest rate cut or a loosening of the annual loan quota. – Ting Lu, Xiaojia Zhi, Weijun Hu and TJ Bond, Bank of America-Merill Lynch

– compiled by Josh Chin. Follow him on Twitter @joshchin

Xinhua/Photoshot/Newscom

Taiwanese writer Lung Ying-tai speaking in Macau last year.

The anniversary of the Xinhai Revolution of Oct. 10, 1911 – which marked the end of Qing imperial rule in China and created China’s first republic – is an occasion for celebration across Greater China, which includes Hong Kong and Taiwan. But how the event will be remembered is proving to be politically sensitive for leaders on both sides of the Taiwan Strait.

Mainland tributes included a public ceremony Sunday attended by former Chinese President Jiang Zemin, breaking months of speculation over the state of his health. Cinema-goers on the mainland and Hong Kong can relive the revolution in an epic movie starring Jackie Chan about the revolution. Still, as Taiwanese writer and cultural critic Lung Ying-tai points out, the anniversary holds complexities in the mainland and elsewhere.

Isabella Steger sat down in Hong Kong with Ms. Lung, author of “Big River, Big Sea – Untold Stories of 1949,” a book detailing the stories of the Chinese families who were split up during the civil war. The book is banned on the mainland.

The following interview has been edited.

WSJ: What does Oct. 10, 1911, mean to all the disparate parts of Greater China?

Ms. Lung: [It] means very different things to all three parties. It’s particularly interesting to observe the anniversary this time. When it was the 50th anniversary, the only place memorializing it was Taiwan. At that time, Hong Kong was under British rule, so the revolution didn’t mean much. China was in the middle of its own traumatic Cultural Revolution. And now, on the 100th anniversary, China and Taiwan are just beginning to warm up to each other.

Oct. 10th has never been anything to Beijing before, but now all of a sudden it’s become something. It’s very embarrassing actually, even awkward, for China to come up with a proper narrative about Oct. 10th. It is a national day for the Republic of China, which is a status that China has totally denied. So the Chinese focus is on the revolution itself. Somehow they have to maintain a delicate balance between saluting the revolution, and yet the result of the revolution is the establishment of the republic…They’re walking a very delicate line.

What about Taiwan?

In Taiwan, there is another sort of awkwardness – the conflict between the so-called blue camp (led by the ruling Kuomintang, which favors an eventual one-China policy) and the green camp (led by the opposition Democratic Progressive Party, which favors independence) … The blue camp is taking the chance to uphold this grand day of the republic. However, originally the government used the slogan “jian guo bai nian” (建國百年, a hundred years of the republic) to mark this day. They changed it and replaced the word “jian guo” (建國, nation-building) to “jing cai” (精彩, splendid). The reason? They are trying not to step on the toes of Beijing. They’re trying to steer away from stressing the establishment of the nation.

It is politically incorrect to really go all out to embrace Oct. 10th. Everything that occurred in the revolution happened in China. A larger and larger percentage of Taiwanese have come to think, well, that’s not my history, it’s their history. So the government is trying to keep it non-political by making it just a big party … without really touching on the essence of the event. There’s no debate on the constitution, for example – the most important thing coming out of the revolution is the constitution of a modern state.

And Hong Kong?

Hong Kong is also in an awkward position. In 1911, Hong Kong played a very, very important role in the revolution. If we say that the success of the revolution was a feast, then Hong Kong was the only kitchen. Sun Yat-sen claimed in 1923 in his speech at Hong Kong University that all his revolutionary ideas and concept of modernity came from Hong Kong. So Hong Kongers are on the one hand very proud of this compatriot, for his contribution, yet at the same time they don’t feel quite comfortable with it as they are now part of a grand China.

Although the existence of the Republic of China is officially denied by Beijing, are there any signs that there’s growing interest in revisiting this period of history?

A lot of historians and intellectuals are writing books and articles probing the meaning of the Xinhai Revolution, with the purpose to revise history. For example, all Chinese have been taught that the Manchu rule was corrupt, incompetent, that it was all bad and all dark. So for me, the most striking revisionist view is how more and more historians are coming out to say that the last decade of Qing rule was actually where China’s search for modernity and the foundation for a modern state originated. It was a very promising time. If this revolution had not taken place, China might have reached modernity more smoothly and earlier, and probably would not even have gone so far as to reach the Communist takeover of 1949. I think that this event of Oct. 10th, at least as it occurs in China, is giving rise to a lot of soul-searching among intellectuals in China.

There seem to be contesting versions of who Sun Yat-sen was and how Chinese people should remember him. For example, an opera about his life was recently banned in Beijing, although it’s allowed to show in Hong Kong. How do you personally assess his legacy?

When the revolution broke out in Wuchang, Sun had no idea there was a revolution taking place. Nobody consulted him, because he wasn’t accepted by all the factions. He was supposedly in Denver, Colo., working as a waiter in a restaurant … but the revolutionary leaders decided Sun was someone who had an international reputation and who could raise money, so they wanted to get him back. It’s funny to see that both Taipei and Beijing are still immortalizing him as a God-like figure, but with new evidence and discoveries about him, I think he steps down from the pedestal. Still, he had charisma, and you could also laugh that he was a madman. In 1912, he was crouching on a big map of China and drawing the huge railroad network he wanted to build, which after a 100 years is still not fulfilled! He was a mad man, but you can admire him for his vision. In extraordinary times, an extraordinary package of traits make you stand out. But if he really [remained as] president of the country it might have been a disaster.

Do you think Taiwan has a role to play in promoting the idea of a democratic China?

I definitely hope so…it’s a feeling shared by many intellectuals in China. There is a working model of democracy in Taiwan, with all its defects and imperfections, but it’s telling you it is workable. The Taiwanese have a duty as world citizens to contribute to the progress of China, not just in terms of its economic prosperity, but also in how to help China become an open and civilized society … But I have a worry, of what happens when instead of winning China over in that direction, Taiwan becomes economically so dependent [on China], that it actually becomes a powerless satellite?

How far do you think present-day China has come from those last days of the Qing dynasty?

In terms of the reality of the past 60 years compared to the aspirations of the last 10 years of Qing rule, it’s a regression. There’s a huge discrepancy. Of course, in the past 10 years tremendous improvement has been made in China. But 100 years ago, there was already the stock exchange in Shanghai; you already had shareholder ownership of railroad investments; people owned private property; the constitution was being laid … and if you look at just how many political parties there were in existence at that time compared to today, then it is a regression.

AFP/Getty Images

Former China President Jiang Zemin at the Great Hall of the People on Sunday.

Jiang Zemin, the former Chinese president and Communist party chief, made a surprise appearance in public Sunday for the first time since he was reported to be seriously ill–and possibly dead–three months ago.

Mr. Jiang, who is 85 years old, took a seat on stage among other Chinese leaders at the Great Hall of the People in Beijing during a ceremony to mark the 100th anniversary of the revolution that overthrew the Qing dynasty imperial government in 1911.

State-run China Central Television showed Mr. Jiang, who retired as party chief in 2002 and as president in 2003, waving and listening to speeches during the ceremony, although his hair seemed to have thinned and at one moment he appeared to be falling asleep.

Mr. Jiang, who came to power after the military crackdown on pro-democracy protests around Tiananmen Square in 1989, failed to appear at a similar ceremony in July to mark the 90th anniversary of the ruling Communist Party’s founding, sparking widespread rumors that he was either dead or at the point of death.

The Chinese government is extremely secretive about the health of its leaders, not least because the deaths or funerals of previous party chiefs have often been triggers for political unrest, including the Tiananmen demonstrations in 1989.

Chinese censors suppressed the rumors about Mr. Jiang’s health online and forbade state media from reporting them, but at least one media outlet in Hong Kong–a former British colony which is allowed greater media freedom–reported that he had actually died in early July.

The state-run Xinhua news agency eventually published a rare denial, quoting “authoritative sources” saying the reports were “pure rumor.”

Although Mr. Jiang hasn’t played an active role in day-to-day decision-making since his retirement, he has still been consulted on major party decisions, copied in on many important internal documents, and permitted to write notes alongside them, according to Chinese and Western political analysts.

Those observers say he and other retired leaders also have a say in the selection of the next Party Politburo Standing Committee – the top decision-making body – which is due to see seven of its nine members retire next year in the biggest shakeup in a decade.

Vice President Xi Jinping, 58, has already been anointed as the next party chief and president through his promotion to a key military post last year, but other seats on the Standing Committee are up for grabs and will be decided through horse-trading and maneuvering between various interest groups.

Mr. Jiang helped to promote several key allies to the 25-person Politburo and the Standing Committee to preserve his political influence after he was succeeded as party chief by Hu Jintao in 2002, according to political analysts.

– Jeremy Page

AFP/Getty Images

Former China President Jiang Zemin at the Great Hall of the People on Sunday.

Jiang Zemin, the former Chinese president and Communist party chief, made a surprise appearance in public Sunday for the first time since he was reported to be seriously ill–and possibly dead–three months ago.

Mr. Jiang, who is 85 years old, took a seat on stage among other Chinese leaders at the Great Hall of the People in Beijing during a ceremony to mark the 100th anniversary of the revolution that overthrew the Qing dynasty imperial government in 1911.

State-run China Central Television showed Mr. Jiang, who retired as party chief in 2002 and as president in 2003, waving and listening to speeches during the ceremony, although his hair seemed to have thinned and at one moment he appeared to be falling asleep.

Mr. Jiang, who came to power after the military crackdown on pro-democracy protests around Tiananmen Square in 1989, failed to appear at a similar ceremony in July to mark the 90th anniversary of the ruling Communist Party’s founding, sparking widespread rumors that he was either dead or at the point of death.

The Chinese government is extremely secretive about the health of its leaders, not least because the deaths or funerals of previous party chiefs have often been triggers for political unrest, including the Tiananmen demonstrations in 1989.

Chinese censors suppressed the rumors about Mr. Jiang’s health online and forbade state media from reporting them, but at least one media outlet in Hong Kong–a former British colony which is allowed greater media freedom–reported that he had actually died in early July.

The state-run Xinhua news agency eventually published a rare denial, quoting “authoritative sources” saying the reports were “pure rumor.”

Although Mr. Jiang hasn’t played an active role in day-to-day decision-making since his retirement, he has still been consulted on major party decisions, copied in on many important internal documents, and permitted to write notes alongside them, according to Chinese and Western political analysts.

Those observers say he and other retired leaders also have a say in the selection of the next Party Politburo Standing Committee – the top decision-making body – which is due to see seven of its nine members retire next year in the biggest shakeup in a decade.

Vice President Xi Jinping, 58, has already been anointed as the next party chief and president through his promotion to a key military post last year, but other seats on the Standing Committee are up for grabs and will be decided through horse-trading and maneuvering between various interest groups.

Mr. Jiang helped to promote several key allies to the 25-person Politburo and the Standing Committee to preserve his political influence after he was succeeded as party chief by Hu Jintao in 2002, according to political analysts.

– Jeremy Page