A Chinese City is Asking Its Companies to Pay Public Sector Salaries Because It Can’t Afford Them

Jake Maxwell Watts
Quartz
Local government debt is now so unwieldy in China that some desperate city governments, such as that of western Ordos, have turned to the private sector for help to pay their employees. 

Reports

07.09.13

Prospects for U.S.-China Trade in Meat Products and Associated Investment Opportunities

Dermot Hayes
Paulson Institute
The rapid growth rate in per capita disposable income in China, coupled with a continued migration of hundreds of millions of new consumers to urban areas, has created challenges for the Chinese crop and livestock sectors. Faced with an increase in...

Caixin Media

07.08.13

Central Bank Raises the Red Flag over P2P Lending Risks

A recent report by the central bank about peer-to-peer (P2P) lending websites in China has shed light on some severe problems in the business for which there is, as yet, little regulation.The original idea for P2P lending websites was that they were...

Ping An of China Said to Buy Lloyds of London Building

Bonnie Cao
Bloomberg
 Ping An Insurance Group Co., China’s second-largest insurer, agreed to buy the Lloyd’s of London building from a Commerz Real AG-managed fund, two people with knowledge of the transaction said.

For Chinese Families, a Journey Cut Short, and With It Their Dreams

Vivian Yee
New York Times
On their way to Bible camp in America, two Chinese teenagers from Zhejiang Province flew through South Korea and into San Francisco International Airport, where their plane skidded and burst into flames. Both died, the only fatalities in the crash...

China Second Quarter GDP to Test Reformers’ Stomach for Slower Growth

Langi Chiang and Koh Gui Qing
Reuters
China's resolve to revamp its economy for the long-term good will be tested this month when a slew of data show growth is grinding towards a 23-year low, with no recovery in sight...

Inside China’s Bank-Rate Missteps

Lingling Wei and Bob Davis
Wall Street Journal
A rare peek into the actions of China’s leaders in a month when a Chinese cash crunch spooked global investors shows a leadership falling short in its struggle to redirect China's economy and also faltering in its efforts to convey its...

Excerpts

07.02.13

Rejuvenation (复兴)

Orville Schell & John Delury
If any of the makers of modern China who agonized over their country’s enfeebled state and dreamed of better times during the past century and a half could have visited Beijing’s Pangu Plaza today, they would hardly believe their eyes. Pangu’s...

Books

07.02.13

Wealth and Power

Orville Schell and John Delury
Through a series of lively and absorbing portraits of iconic modern Chinese leaders and thinkers, two of today’s foremost specialists on China provide a panoramic narrative of this country’s rise to preeminence that is at once analytical and personal. How did a nation, after a long and painful period of dynastic decline, intellectual upheaval, foreign occupation, civil war, and revolution, manage to burst forth onto the world stage with such an impressive run of hyperdevelopment and wealth creation—culminating in the extraordinary dynamism of China today?Wealth and Power answers this question by examining the lives of eleven influential officials, writers, activists, and leaders whose contributions helped create modern China. This fascinating survey begins in the lead-up to the first Opium War with Wei Yuan, the nineteenth-century scholar and reformer who was one of the first to urge China to borrow ideas from the West. It concludes in our time with human-rights advocate and Nobel Peace Prize laureate Liu Xiaobo, an outspoken opponent of single-party rule. Along the way, we meet such titans of Chinese history as the Empress Dowager Cixi, public intellectuals Feng Guifen, Liang Qichao, and Chen Duxiu, Nationalist stalwarts Sun Yat-sen and Chiang Kai-shek, and Communist Party leaders Mao Zedong, Deng Xiaoping, and Zhu Rongji.{node, 3592}The common goal that unites all of these disparate figures is their determined pursuit of fuqiang, “wealth and power.” This abiding quest for a restoration of national greatness in the face of a “century of humiliation” at the hands of the Great Powers came to define the modern Chinese character. It’s what drove both Mao and Deng to embark on root-and-branch transformations of Chinese society, first by means of Marxism-Leninism, then by authoritarian capitalism. And this determined quest remains the key to understanding many of China’s actions today.By unwrapping the intellectual antecedents of today’s resurgent China, Orville Schell and John Delury supply much-needed insight into the country’s tortured progression from nineteenth-century decline to twenty-first-century boom. By looking backward into the past to understand forces at work for hundreds of years, they help us understand China today and the future that this singular country is helping shape for all of us. —Random House

Caixin Media

07.01.13

Renewed Growth on the New Third Board

The State Council announced on June 19 that it would expand the New Third Board, an over-the-counter (OTC) market for non-listed companies’ shares, to include all small and medium-sized enterprises (SMEs) nationwide.One of the experts estimated the...

Shadow Banking Threatens China's Economy. But What is it, Exactly?

Ryan Perkins
Atlantic
Last week, the Shanghai interbank offered rate (Shibor), made news around the world when it suddenly spiked at all time high. Expected to lower this rate by injecting cash into struggling Chinese banks, the People's Bank of China instead did...

Crunch Time

Michael Pettis
Foreign Policy
In the months leading up to last week's liquidity crunch, in which the cost of short-term loans in China spiked and roiled global markets, most financial institutions had been lowering their growth forecasts for China. In mid-June, the...

Conversation

06.27.13

Is Xi Jinping’s Fight Against Corruption For Real?

Roderick MacFarquhar, Winston Lord & more
Roderick MacFarquhar:Xi Jinping’s overriding aim is the preservation of Communist party rule in China, as he made clear in speeches shortly after his elevation to be China’s senior leader.  Like his predecessors, he is obsessed with the...

China's Banking Mess: It's the Politics, Stupid

Minxin Pei
Fortune
After the People's Bank of China (PBOC), issued a reassuring statement on June 25 that dispelled investors' worries about the lack of liquidity in China's interbank loan market, Chinese stock markets halted their plunge, and the rates...

Credit Warnings Offer World a Peek Into China’s Secretive Banks

David Barboza
New York Times
Most economists say China’s financial system is not facing huge systemic risks, and that growth could even come in at 7 percent, which would still make it the world’s fastest-growing major economy. But there are mounting concerns here that the good...

Caixin Media

06.25.13

Legal, Economic Reforms Important At Coming Party Session

China’s blueprint for economic reform is finally taking shape. The government has appointed a taskforce to draft the plans, ahead of the third plenary meeting of the 18th Central Committee. With the country’s economy at the crossroads, these plans...

China Stock Market Plunges 5.3%

Julie Makinen
Los Angeles Times
The Shanghai Composite Index fell 5.3% Monday, notching its largest single day drop since August 2009 and hitting its lowest level since December, amid fears that some Chinese banks are facing a liquidity crunch and the overall economy is slowing.

Conversation

06.21.13

How Should the World Prepare for a Slower China?

Arthur R. Kroeber & Patrick Chovanec
Get Ready for a Slower ChinaThe recent gyrations on the Chinese interbank market underscore that the chief risk to global growth now comes from China. Make no mistake: credit policy will tighten substantially in the coming months, as the government...

Books

06.21.13

Why Has China Grown So Fast For So Long?

Khalid Malik
For analysts China presents a conundrum. It is clear that China has made rapid progress, and the landscape of the world is changing due to China’s unique position. Yet for decades, many have questioned this phenomenon, showing concern about cooked data, asset bubbles about to burst, and so on. Yet the Chinese economy has kept growing at a blistering pace, 9-10 per cent annually, and more at times, over a span of almost three decades.Analysing the last 30 years of reforms, this book helps us understand the Chinese growth success, the factors that made this possible, and the lessons that can be distilled from this experience for other developing countries. Arguing that traditional explanations are inadequate, the author applies the “development as transformation” thesis to provide answers to a wide range of questions: Why has China grown so rapidly over such a long time, and what are the country’s prospects in the future? Will it keep growing? Will it in the next few decades actually overtake the US as the largest economy in the world, as some observers have been forecasting, or will it implode as the many contradictions in the economy and society grind it to a halt? This is a unique book in that it is based on years of close interaction with the Chinese leadership, institutions, and society, as well as international organizations in the development community, when the author was posted in China.   —Oxford University Press

Markets Slump Over Fed Exit Plan and China Credit Squeeze

David Jolly
New York Times
Just a day after the Federal Reserve hinted that it could soon begin winding down its bond-purchasing program, investors were unnerved by reports that Chinese banks had become reluctant to lend to one another, causing interest rates in the...

Why India Trails China

Amartya Sen
New York Times
India’s underperformance can be traced to a failure to learn from the examples of so-called Asian economic development, in which rapid expansion of human capability is both a goal in itself and an integral element in achieving rapid growth.

The Chimerica Dream

Pepe Escobar
TomDispatch
Whatever the confusions and difficulties the Chinese leadership faces, Beijing seems to understand the realities behind Washington’s strategic intentions. One wonders whether the reverse applies.

Rupert Murdoch's Split: Divorcing Wendi, China Or Both?

Doug Young
Forbes
News Corp’s recent China pullback could be partly linked to Rupert Murdoch’s divorce, with few major new investments likely in the next 2 years.

What Paintbrush Makers Know About How to Beat China

Adam Davidson
New York Times
Chinese manufacturers long ago wreaked havoc on the U.S. textile, apparel, toy and electronics industries, but the disruption came slowly to the brush business. Companies have employed two strategies to stave off Chinese competition: 1)...

Caixin Media

06.18.13

Will Bond Market Tidying Trigger Clean Sweep?

China’s financial regulators are rewriting rules for the interbank bond market after criminal investigations early this year led to the arrests of several well-known bond traders and exposed serious flaws in the market’s supervision system.The...

China’s Strength Could Become Its Weakness

John W. Schoen
NBC News
The heavy reliance on state investment produced unintended consequences. Overbuilding of housing created a real estate bubble. The investment a capacity to produce that overshot demand in a variety of areas. 

Sinica Podcast

06.07.13

What China is Getting Right

Kaiser Kuo, Jeremy Goldkorn & more from Sinica Podcast
Complain as we might about life in China, the last thirty-four years or so haven’t been all bad: we have seen three decades of roughly ten percent GDP growth, a whole lot of people eating a whole lot better than they did, and impressive progress...

China’s Economic Empire

Heriberto Araujo and Juan Pablo Cardenal
New York Times
 Beijing’s essentially unlimited financial resources allow the country to be a force in both the developed and developing world, one that threatens to obliterate the competitive edge of Western firms and kill jobs in Europe and America...

The Role of Trust Companies in China’s Recent Credit Growth

Nicholas Borst
Peterson Institute for International Economics
If any institutions fit the classic definition of shadow banking in China, it’s trust companies. Trust companies take money from institutional investors and individuals and make loans and investments to a wide variety of projects. 

Reports

06.03.13

Obama’s Meeting with China’s Communist Party General Secretary Xi Jinping

Dean Cheng, Derek Scissors
The Heritage Foundation
President Obama and the general secretary of the Chinese Communist Party, Xi Jinping, will meet June 7–8 in California. The meeting has been characterized as a way for the two to establish a personal relationship and build trust. This would all be...

Reports

06.01.13

Inequality in China

John Knight
Sara Segal-Williams
World Bank
This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons...

Africa’s Malaria Battle: Fake Drug Pipeline Undercuts Progress

Benoit Faucon, Colum Murphy, and Jeanne...
Wall Street Journal
A flourishing counterfeit drug trade is collateral damage from the fast-expanding ties that have turned China into Africa’s largest trading partner. The fakes’ place of origin is in Guangzhou, though the source is unknown.  &...

Chinese Lead World in Economic Optimism

Zachary Keck
Diplomat
China also topped the list in terms of the percentage of respondents saying their country is headed in the right direction, with 85 percent of Chinese expressing this sentiment. 

Tamping Down Expectations on China’s Growth

Bill Bishop
Deal Book
Mr. Xi also said “China will not sacrifice the environment for temporary economic growth” and that officials will be held responsible for pollution “for life.”  

Media

05.29.13

The Graffiti Seen ‘Round the World

It’s tourist season the world over: let the shenanigans begin. After a young Chinese tourist’s defacement of an ancient Egyptian temple was photographed and shared online, the harsh backlash has gone viral in China’s blogosphere. Tea Leaf Nation...

Books

05.28.13

Stumbling Giant

Timothy Beardson
While dozens of recent books and articles have predicted the near-certainty of China’s rise to global supremacy, this book boldly counters such widely-held assumptions. Timothy Beardson brings to light the daunting array of challenges that today confront China, as well as the inadequacy of the policy responses. Threats to China come on many fronts, Beardson shows, and by their number and sheer weight these problems will thwart any ambition to become the world’s “Number One Power.”Drawing on extensive research and experience living and working in Asia over the last 35 years, the author spells out China’s situation: an inexorable demographic future of a shrinking labor force, relentless aging, extreme gender disparity, and even a falling population. Also, the nation faces social instability, a devastated environment, a predominantly low-tech economy with inadequate innovation, the absence of an effective welfare safety net, an ossified governance structure, and radical Islam lurking at the borders. Beardson’s nuanced, first-hand look at China acknowledges its historic achievements while tempering predictions of its imminent hegemony with a no-nonsense dose of reality. —Yale University Press

Wang Tells Donilon China Must Coordinate Its Policies With U.S.

Bloomberg
China and the U.S. should “strengthen macroeconomic policy coordination, and jointly promote world economic recovery and growth,” Wang told Donilon today, according to a statement on the Chinese Foreign Ministry’s website. 

Why China’s Riches Won’t Bring It Freedom

Pankaj Mishra
Bloomberg
China poses a challenge to the Anglo-American faith in the global march of liberalism and democracy. It has achieved spectacular growth without embracing electoral democracy.  

Conversation

05.23.13

China and the Other Asian Giant: Where are Relations with India Headed?

Michael Kulma, Mark Frazier & more
Mike Kulma:Earlier this week at an Asia Society forum on U.S.-China economic relations, Dr. Henry Kissinger remarked that when the U.S. first started down the path of normalizing relations with China in the early 1970s, the economic relationship and...

China Granted Access to Arctic Club as Resource Race Heats Up

Nicole Gaouette and Niklas Magnusson
Bloomberg
China has identified the Arctic as a strategically and geopolitically valuable region and having a seat at the table, albeit only as a permanent observer, has long been an essential part of the country’s regional strategy. 

Chinese Leaders Warn Against ‘Dangerous’ Western Values

Chris Buckley
New York Times
The demands for ideological conformity show that Mr. Xi and other leaders want to inoculate the public from expectations of major political liberalization, even as they explore loosening some state controls over the economy. 

As China’s Economy Stumbles, Government Eyes Reform

Bill Bishop
Deal Book
Urbanization and comprehensive economic reform are among the main hopes for supporting and improving the quality of China’s growth, as well as for commodity producers and investors globally. 

Conversation

05.21.13

U.S.-China Economic Relations—What Will the Next Decade Bring?

Orville Schell & Patrick Chovanec
On Monday, within hours of the announcement that Chinese President Xi Jinping will meet U.S. President Barack Obama on a visit to California on June 7-8, Tung Chee-hwa, the former Chief Executive and President of the Executive Council of Hong Kong,...

China Export Gains Spur Renewed Skepticism of Figures

Bloomberg
The 14.7% increase, reported by the General Administration of Customs in Beijing today, was led by a 57.2% jump in shipments to Hong Kong that highlighted suspicions of false transactions used to mask capital flows into China.&...

Stocks Rally on China, German Data, Euro Gains

Herbert Lash
Reuters
Global equity markets and the euro rose on Wednesday as strong Chinese trade data and signs that Germany may escape a sharp slowdown pushed shares to five-year highs worldwide, with U.S. benchmarks climbing to all-time records. 

Media

05.17.13

Chinese Anxiety—In Debate About Overwork, a Glimpse of Shifting Expectations

Almost half of all Chinese report feeling “more anxiety” now than they did five years ago. What, exactly, is driving these concerns, or increasing reports of these concerns? Avid followers of China-related news might immediately think of censorship...

Bank of China Closes Account of Key North Korean Bank

Reuters
The closure is the first significant, publicly announced step taken by a Chinese entity to curb its dealings with North Korea in the wake of international pressure to punish Pyongyang over its banned nuclear and ballistic missile programs.&nbsp...

Palestinian Leader Seeks Chinese Support

Chris Buckley
New York Times
China has tried to maintain firm ties with both Israel and the Palestinian Authority while supporting Palestinian demands for statehood and occasionally chiding the Israeli government for its policies toward the Palestinians.&...

Books

05.15.13

China Dreams

William A. Callahan
After celebrating their country’s three decades of fantastic economic success, many Chinese now are asking, “What comes next?” How can China convert its growing economic power into political and cultural influence around the globe? William A. Callahan's China Dreams gives voice to China’s many different futures by exploring the grand aspirations and deep anxieties of a broad group of public intellectuals. Stepping outside the narrow politics of officials vs. dissidents, Callahan examines what a third group—“citizen intellectuals”—think about China’s future. China Dreams eavesdrops on fascinating conversations between officials, scholars, soldiers, bloggers, novelists, filmmakers and artists to see how they describe China’s different political, strategic, economic, social and cultural futures. Callahan also examines how the P.R.C.’s new generation of twenty- and thirty-somethings is creatively questioning “The China Model” of economic development. The personal stories of these citizen intellectuals illustrate China’s zeitgeist and a complicated mix of hopes and fears about “The Chinese Century,” providing a clearer sense of how the PRC’s dramatic economic and cultural transitions will affect the rest of the world. China Dreams explores the transnational connections between American and Chinese people, providing a new approach to Sino-American relations. While many assume that 21st century global politics will be a battle of Confucian China vs. the democratic west, Callahan weaves Chinese and American ideals together to describe a new “Chimerican dream.”  —Oxford University Press

China Likely To Challenge U.S. Supremacy In East Asia

Martin Fackler
New York Times
Despite growing military might, China’s economic interdependence with the United States and the rest of Asia would probably prevent a full-blown military or even Cold War-style conflict.

China’s Baffling G.D.P. Figures

Yueran Zhang
Atlantic
After Q1 2013, no single province claimed a real GDP growth rate lower than the nationwide number. The contradiction between the national and provincial data is nothing more than a continuation of a long-time trend. 

China Is Plundering The World’s Seas

Gwynn Guilford
Quartz
China’s unabated market for pricey fish parts like shark fin and endangered fish bladders is not only hurting the ecosystem, but will also have a negative impact on the world economy.

Conversation

05.10.13

What’s China’s Game in the Middle East?

Rachel Beitarie, Massoud Hayoun & more
Rachel Beitarie:Xi Jinping’s four point proposal for a Palestinian-Israeli peace agreement is interesting not so much for its content, as for its source. While China has maintained the appearance of being involved in Middle East politics for years,...

China Top Leaders Warn On Financial Risks As Rebound Falters

Nerys Avery, Xin Zhou and Liu Li
Bloomberg
Macro-economic policies should be stabilized and micro controls in some sectors should be loosened, the Politburo Standing Committee said after what Xinhua said was a “special session” on the economy.

Books

05.03.13

China’s Superbank

Henry Sanderson, Michael Forsythe
Anyone wanting a primer on the secret of China’s economic success need look no further than China Development Bank (CDB)—which has displaced the World Bank as the world’s biggest development bank, lending billions to countries around the globe to further Chinese policy goals. In China’s Superbank, Bloomberg authors Michael Forsythe and Henry Sanderson outline how the bank is at the center of China’s domestic economic growth and how it is helping to expand China’s influence in strategically important overseas markets.100 percent owned by the Chinese government, the CDB holds the key to understanding the inner workings of China’s state-led economic development model, and its most glaring flaws. The bank is at the center of the country’s efforts to build a world-class network of highways, railroads, and power grids, pioneering a lending scheme to local governments that threatens to spawn trillions of yuan in bad loans. It is doling out credit lines by the billions to Chinese solar and wind power makers, threatening to bury global competitors with a flood of cheap products. Another $45 billion in credit has been given to the country’s two biggest telecom equipment makers who are using the money to win contracts around the globe, helping fulfill the goal of China’s leaders for its leading companies to “go global.”Bringing the story of China Development Bank to life by crisscrossing China to investigate the quality of its loans, China’s Superbank travels the globe, from Africa, where its China-Africa fund is displacing Western lenders in a battle for influence, to the oil fields of Venezuela. As China’s influence continues to grow around the world, many people are asking how far it will extend. China’s Superbank addresses these vital questions, looking at the institution at the heart of this growth.  —Bloomberg Press 

Agricultural Merger Shows China Is Worried About Feeding Itself

Jake Maxwell Watts
Quartz
China conditionally approved the $5.6 billion purchase of US grain supplier Gavilon by the Japanese trading house Marubeni Corp. Without imports, China would need to devote about a quarter of its total arable land to soybeans in...

Media

05.01.13

The Wall Street Journal: Covering China Past and Present

The Wall Street Journal was one of the first American publications to set up a bureau in Beijing. Since its establishment, scores of the Journal’s correspondents have traveled in and out of the country to cover China’s economic and political...

Reports

05.01.13

A Changing China: Implications for Developing Countries

Philip Schellekens
World Bank
Three decades of rapid growth and structural change have transformed China into an upper-middle-income country and global economic powerhouse. China's transformations over this period wielded increasing influence over the development path of...

Alibaba Joins China In Antipiracy Fight

Juro Osawa
Wall Street Journal
Alibaba announced its partnership with five agencies at a news conference Tuesday. On the same day, Xinhua reported that China’s top legislature is considering amending the country’s consumer-rights law to protect online shoppers.