The China Thread

[jimmy olsen]

Malaysia recently refused a HK pro-democracy legislator and student leader from entering its borders to participate in a seminar about 1989 Tian An Men, citing concerns about the diplomatic relationship with China.

Australian politician Nick Xenophon was denied entry on national security grounds after he took part in an anti-government rally earlier.

I am of course quoting a famed news anchor

https://www.youtube.com/watch?v=7KYS6xeoBnc

Awesome name for that Australian.

Don't really get the story though. He participated in an anti-government rally, I'm assuming against the Australian government? Is he an actually elected member of the opposition in parliament? If so, barring him from the country likely offended the Australian government.

[HisMajestyBOB]

I have absolutely no idea about these stereotypes but I laugh nonetheless.
South Chinese girls vs North Chinese girls

https://www.youtube.com/watch?v=LbiIu_EzuWk

Most of my coworkers in Shanghai fit the southern stereotype.
My wife is southern, most of those fit.
Cooking is the exception. She cooks enough to feed an army. Spicy, too

[Monoriu]

I have absolutely no idea about these stereotypes but I laugh nonetheless.
South Chinese girls vs North Chinese girls

https://www.youtube.com/watch?v=LbiIu_EzuWk

Most of my coworkers in Shanghai fit the southern stereotype.
My wife is southern, most of those fit.
Cooking is the exception. She cooks enough to feed an army. Spicy, too

The Yangzi river is usually considered the divider between north and south.  Shanghai is located right at the mouth of the river.  It is on the northern side, but that is essentially meaningless as it sits right next to the river, so it is hard to say if it is north or south. 

[jimmy olsen]

 

http://www.bloomberg.com/news/articles/2015-06-11/china-security-chief-s-secret-trial-exposes-limits-of-xi-s-power

China Security Head's Secret Trial Shows Limits of Xi's Push

by Ting Shi and Brendan Scott
June 12, 2015 — 1:00 AM JST
Updated on June 12, 2015 — 12:30 PM JST

The conviction of China's former security chief in a secret one-day trial laid bare the limits of President Xi Jinping's campaign against corruption and undercut his pledge to enforce the rule of law.

After suggesting as recently as March that at least part of Zhou Yongkang's hearing would be public, authorities announced Thursday he'd been sentenced to life in prison after closed-door proceedings last month in Tianjin. Zhou pleaded guilty to three charges including bribery, abuse of power and leaking state secrets, the official Xinhua News Agency said.

The prosecution of one of China's most powerful politicians represented a once-in-a-generation chance for the Communist Party to showcase the development of its legal system. In the end, Xi chose the safer path of a secret trial over the risk of giving Zhou, 72, a public platform to air the party's dirty laundry.




"He knows too much," said Zhang Lifan, a Beijing-based historian and former researcher at the Chinese Academy of Social Sciences. "Xi is dealing with someone who has extensive and deep connections in a corrupt system, the exposure of which would shake the entire structure. This puts on display the strength of the resistance against Xi's anti-corruption campaign."

Zhou, who until 2012 oversaw China's vast security apparatus, including police, prosecutors and the courts, is the highest-level official to face corruption charges in the party's history. He held sway over a network of proteges and former aides scattered across the oil industry, the state broadcaster and the southwestern Sichuan province.

Standing Committee

He served on the Communist Party's ruling Standing Committee with Xi before he retired and the latter was elevated to general secretary in 2012. Zhou is the first Standing Committee member ever to be charged with corruption.

The fact that such a high-ranking official was taken down, "shows the Communist Party's commitment to the rule of law," Xinhua said.

Zhou also ordered unauthorized spying on top leaders including Xi, two people familiar with the investigation of him have said previously.

Xi's detention of a former top Zhou aide just weeks after taking power kicked off an anti-graft campaign that would ensnare more than 100,000 "tigers" and "flies" -- high and lower-ranking cadres. The president put legal reforms at the top of his agenda at the party's fourth plenum last year, seeking to institutionalize the anti-corruption push and solidify party rule.

State Secrets

"It makes those of us who argue that the fourth plenum and rule of law is an ongoing process look out of step," said David Zweig, professor of political science at the Hong Kong University of Science and Technology. "It suggests it's two steps forward and one step back."

Zhou's trial was closed because he faced charges of disclosing state secrets, Xinhua said. Supreme Court President Zhou Qiang was cited in March as saying Zhou's hearing would be open "in accordance with the law," suggesting some areas would be public.

"This demonstrates that there is no rule of law nor transparency in Xi's China," said Jean-Pierre Cabestan, director of government and international studies at Hong Kong Baptist University. "It also underscores that the Zhou trial has been a 100 percent political trial in which Chinese citizens and outside observers are reduced to believing the few little drops of information that the propaganda machine has deigned to offer."

White Hair

Xinhua reported that Zhou leaked six secret documents, without "serious consequences," to Cao Yongzheng, a fortune teller and tycoon. State television yesterday broadcast images of Zhou, his once jet-black hair now snowy white, admitting his guilt and saying he wouldn't appeal.

"The handling of my case in accordance with party rules and the law reflects the authorities' determination to govern the party strictly and advance the rule of law," Zhou said.

Zhou's secret trial contrasts with the decision to release live transcripts from the 2013 graft trial of Zhou's ally, disgraced former Politburo member Bo Xilai.

"Bo Xilai revealed what could go wrong in a show trial," said Rosita Dellios, an associate international relations professor at Bond University on Australia's Gold Coast.

During his hearing Bo told the court he received orders from Zhou's central committee of political and legal affairs on how to handle the February 2012 defection of Bo's one-time police chief to the U.S. consulate in Chengdu, Sichuan.

More awkward moments could've unfolded if Zhou's trial was public, said Zhang, the Beijing-based historian. Xi couldn't afford having Zhou drag in more senior officials, further undermining the party after an anti-corruption campaign that has struck the upper echelons of power.

"Here's a strong indication that Xi's big-tiger hunting campaign is drawing to a close," Zhang said.

[The Minsky Moment]

China Econ Post 1:

Talking the Talk:

At the outset of his presidency, Xi Jinping billed himself as a transformative leader in the mould of Deng Xiaoping, the Chinese strongman who set the country's economic rise in motion in the 1980s. Now Mr Xi is turning to two more political giants of that decade — Ronald Reagan and Margaret Thatcher — for inspiration as he seeks a "supply side" revolution for China's economy

Like the late US president and UK prime minister before them, Mr Xi and his premier, Li Keqiang, want to reduce taxes and red tape for businesses as they seek to cushion the decline of heavy industry with the rise of the consumer and service sectors

http://www.ft.com/cms/s/0/6b1c30f8-be77-11e5-846f-79b0e3d20eaf.html#ixzz3xo5luuT4

BUT not walking the walk:

Chinese President Xi Jinping unexpectedly announced in September that he would cut troop numbers by 300,000, or some 13 percent of the world's biggest military, currently 2.3-million strong.
. . .
The official People's Liberation Army Daily, in a story on Tuesday, said the state-owned Assets Supervision and Administration Commission and Civil Affairs Ministry had ordered state-owned firms to help find jobs for demobbed troops.

http://af.reuters.com/article/worldNews/idAFKBN0UC08C20151229

[The Minsky Moment]

China Econ Post 2:

From the China law blog at http://www.chinalawblog.com/2016/01/getting-money-out-of-china-what-the-heck-is-happening.html
(Great blog BTW)

Regular readers of our blog probably know that our basic mantra about getting money out of China is that if you have consistently follow all of China's laws, it ought to be no problem. Not true lately.

In the last week or so, our China lawyers have probably received more "money problem" calls than in the year before that. And unlike most of these sorts of calls, the problems are brand new to us.

. . .  if there is a common theme, it is that China banks seem to be doing whatever they can to avoid paying anyone in dollars. We are hearing the following:

1. Chinese investors that have secured all necessary approvals to invest in American companies are not being allowed to actually make that investment. I mentioned this to a China attorney friend who says he has been hearing the same thing. Never heard this one until this month.

2. Chinese citizens who are supposed to be allowed to send up to $50,000 a year out of China, pretty much on questions asked, are not getting that money sent. I feel like every realtor in the United States has called us on this one. The Wall Street Journal wrote on this yesterday. Never heard this one until this month

. . . .etc.

So Donald Trump is right that China is manipulating its currency.  But he is wrong that is undervalued by "15% to 40%.". It isn't undervalued at all.  It is OVER-valued.   The government is defending the yuan by the kinds of shadow capital controls alluded to in the quoted blog post. 

If the PRC government released the capital controls and let the Yuan free float down a likely consequence would be chaos in other Asian markets and the return of a big current account surplus (as the flip side to a massive capital outflow) -- right in the middle of US presidential election campaign with heavy populist undertones.  But keeping the currency high just adds more headwind to China's deteriorating macro position.

[mongers]

China Econ Post 2:

From the China law blog at http://www.chinalawblog.com/2016/01/getting-money-out-of-china-what-the-heck-is-happening.html
(Great blog BTW)

Regular readers of our blog probably know that our basic mantra about getting money out of China is that if you have consistently follow all of China's laws, it ought to be no problem. Not true lately.

In the last week or so, our China lawyers have probably received more "money problem" calls than in the year before that. And unlike most of these sorts of calls, the problems are brand new to us.

. . .  if there is a common theme, it is that China banks seem to be doing whatever they can to avoid paying anyone in dollars. We are hearing the following:

1. Chinese investors that have secured all necessary approvals to invest in American companies are not being allowed to actually make that investment. I mentioned this to a China attorney friend who says he has been hearing the same thing. Never heard this one until this month.

2. Chinese citizens who are supposed to be allowed to send up to $50,000 a year out of China, pretty much on questions asked, are not getting that money sent. I feel like every realtor in the United States has called us on this one. The Wall Street Journal wrote on this yesterday. Never heard this one until this month

. . . .etc.

So Donald Trump is right that China is manipulating its currency.  But he is wrong that is undervalued by "15% to 40%.". It isn't undervalued at all.  It is OVER-valued.   The government is defending the yuan by the kinds of shadow capital controls alluded to in the quoted blog post. 

If the PRC government released the capital controls and let the Yuan free float down a likely consequence would be chaos in other Asian markets and the return of a big current account surplus (as the flip side to a massive capital outflow) -- right in the middle of US presidential election campaign with heavy populist undertones.  But keeping the currency high just adds more headwind to China's deteriorating macro position.

Barack Obama must be a doozy a ChiCom agent to warrant that amount of sacrifice.   


More seriously, JR why not spin this out into a new 2016 global economy thread?

[MadImmortalMan]

One of the things I've heard about is Chinese citizens putting up a pile of yuan as collateral in Hong Kong banks to get loans to buy US real estate.

[Jacob]

That kind of sucks

My in-laws are back in China to sell their place so they can buy something in Vancouver. That could put a stop to that.

On the upside, we'll get a chance to see whether Chinese cash really is the driving force behind the Vancouver property prices.

[Josquius]

In light of the recent bad economic news from Europe and Japan too..... doom?

[Jacob]

BTW, just noticed the Northern vs Southern girlfriend thing... seems pretty accurate (as broad stereotypes go), except the cooking one.

[derspiess]

PLA recruiting video.  Better than expected.

https://www.youtube.com/watch?v=rTdOnDSPZ_Q

[Monoriu]

PLA recruiting video.  Better than expected.

https://www.youtube.com/watch?v=rTdOnDSPZ_Q

A little surprised that they need to make this.  Government jobs are very sought after in China.  Granted, this is the army, so it is no where as good as the civil service jobs.  But still. 

[Valmy]

The military is rarely a popular career option.

'Come live in a barracks where we order you to!'

[Tonitrus]

Ahsopalling.

But seriously...I'm somewhat surprised China has let the game play as long as it has.  Probably just to avoid market/financial shock, as there was no upside in pushing too hard, too fast.

http://www.wsj.com/articles/an-era-in-hong-kong-is-ending-thanks-to-chinas-tight-embrace-1474647072