CHINA – POLITICS
1. China seizes $14.5 billion assets from the Zhou Yongkang family
- On Sunday (March 30), Reuters cited sources saying that “Chinese authorities have seized assets worth at least 90 billion yuan ($14.5 billion) from family members and associates of Zhou Yongkang”, a size that makes it China’s biggest corruption scandal in more than six decades”. The sources, who have been briefed on the investigation, also said that “more than 300 of Zhou’s relatives, political allies, proteges and staff have also been taken into custody or questioned in the past four months”. Meanwhile, a third source with ties to the leadership said Zhou had refused to cooperate with investigators, insisting he was the victim of a power struggle.
- Kerry Brown offered insights on the political dimensions of the probe into Zhou:
– Xi Jinping may be mandating this because, for him, Zhou Yongkang and his allies are first of all expendable. … For Xi, who has long said that officials should not seek vast fortunes, Zhou is the unvarnished enemy, someone who has evidently used the Party to create his own power base to protect the riches accrued by his network. Symbolically, decapitating Zhou is good domestic politics. It shows, against a largely helpless antagonist, that Xi is serious. Politically too it makes the world around Xi a little less complicated.
– As Wang Xiaofang’s novel makes clear, these battles are usually ones of attrition. It is likely there will be many moves in the days and months ahead, and it is possible that Zhou himself will be left alone, albeit isolated and largely under an informal type of house arrest. His fate rests on the calculations in the head of one man – Xi. Xi must decide if the value of finally reining Zhou in, and humiliating and prosecuting him, is worth it. If Xi thinks it is, then there is no reason to doubt that Zhou will be thrown to the dogs as ruthlessly as Bo Xilai was. Chinese politics is not a place for the sentimental. And Xi may well choose Zhou to make clear that he is no softy. - Meanwhile Xi Jinping continued the corruption crackdown campaign. Each member of the ruling Communist Party’s elite inner core, the Politburo Standing Committee, has been allocated a county where they oversee anti-graft efforts, and Xi has been given Lankao (蘭考) of Henan Province, Xinhua said. In a visit to Lankao in mid-March, Xi urged rural officials to make “spicy” efforts to “sweat” corruption out of their systems (要用好批評和自我批評武器，有一點“辣味”，讓 每個黨員幹部都能紅紅臉、出出汗). The Xinhua report also quoted Xi for saying that “Party officials are required to check and report their own problems and mistakes while summarizing the flaws of their colleagues to disciplinary supervisors”. He also urged officials to “reduce unnecessary social activities and keep healthy work and life styles”. A few days later, the Party’s Mass Line Education and Implementation Leading Small Group (群眾路線教育實踐活動領導小 組) published a memorandum about Xi’s teaching on mass line in Lankao.
2. Bloomberg Editor Quits Over ‘Mishandling’ of Unpublished China Article
- In the most recent episode of the ongoing self-censorship saga that has earned Bloomberg much criticism, a veteran Bloomberg editor, Ben Richardson, has resigned from his post after 13 years. In an email explaining his decision to leave the company, he said that “I left Bloomberg because of the way the story was mishandled, and because of how the company made misleading statements in the global press and senior executives disparaged the team that worked so hard to execute an incredibly demanding story. …Throughout the process, the threat of legal action has hung over our heads if we talked — and still does. That has meant that senior management have had an open field to spin their own version of events. Suffice to say, what you read in the NYT and FT [both stories linked above] was a fair summation”
- “[Mr. Richardson] is the third reporter or editor to leave the organization since several news organizations reported last November that Bloomberg had declined to publish an investigative article that explored financial ties between one of the wealthiest men in China and the families of top Chinese leaders.”
- This adds weight to the accusation that Bloomberg self-censored the unpublished report, which led to the departure of journalist Michael Forsythe. On March 20, Peter T. Grauer, the chairman of Bloomberg, said in response to questions after a speech at the Asia Society : “We have about 50 journalists in the market, primarily writing stories about the local business and economic environment…You’re all aware that every once in a while we wander a little bit away from that and write stories that we probably may have kind of rethought — should have rethought.” Presumably, Grauer’s response was to address the sharp decline in sales of Bloomberg terminals in China after the company published an article in June 2012 on the family wealth of Xi Jinping. Following its publication, officials ordered state enterprises not to subscribe to the service.
- At the Atlantic, James Fallows provides a detailed timeline of the Bloomberg self-censorship story, relays a personal interview with Ben Richardson, and offers information from inside Bloomberg that helps to explain the company’s sensitivity about its China presence. “[A] Bloomberg employee said: There is a bigger contradiction for the company than most people perceive. Outsiders think the worst explanation for this controversy is that it’s concern about selling terminals within China. It’s bigger than that. Really it’s about continuing sales all around the world, if Bloomberg can’t promise having the fastest inside info from China. Everyone knows that it’s a company that exists on the terminals. But now that they have saturated the US market, all of the growth will come from areas with these deep contradictions between the company’s financial- business interests and its journalistic aspirations.”
3. Michelle Obama visit to China
- At the invitation of China’s First Lady Peng Liyuan, Michelle Obama visited China from March 19 to 26, during which she visited Beijing, Xian and Chengdu together with her two daughters. The White House said the trip would focus on education and cultural ties between the two countries. The trip, as expected, largely steered clear of politics.
- Experts see Michelle Obama’s visit as a trip that may “serve as a rebalance to her husband’s rebalance”. It was announced after Barack Obama announced his trip to Asia in April, on which he will visit Japan South Korea, Malaysia and the Philippines, which was partly to make up for his absence in last year’s APEC when Obama had to deal with the fiscal cliff at home. Wei Zongyou, professor at the Shanghai International Studies University, pointed out that US wishes to deliver a clear message to China that US’s rebalance to Asia is not aimed at encircling China. It also makes up for Michelle Obama’s absence last year when Xi and Peng made an unofficial visit to California at the invitation of the US President, which analyst saw as an incident that “underscores that the U.S. still does not place the necessarily level of importance on its relationship with China”. The Diplomat’s Shannon Tiezzi saw that “having the First Lady write effusive blog entries about China’s history and culture was an easy way for the White House to try to drum up some goodwill in China”
- During her visit, Michelle Obama visited Chinese schools and hosted a roundtable on education. Tiezzi observed that “many of Mrs. Obama’s comments focused on her goal of promoting equal access to education for all. In this regard, the First Lady’s theme fits well with the passions of Peng Liyuan, who was herself just named a UNESCO Special Envoy for the Advancement of Girls’ and Women’s Education”.
- Speaking to an audience of Chinese and U.S. students at the Stanford Center of Peking University, Obama said that “[w]hen it comes to expressing yourself freely, and worshipping as you choose, and having open access to information – we believe those are universal rights that are the birthright of every person on this planet.” But this part of her speech was not relayed by Chinese media, but did stir up some controversy on social media. Tiezzi reported that “Professor Kong Qingdong (famous as an outspoken pro-Communist Party, anti- American voice on China’s microblog) posted a fake story rebutting Mrs. Obama’s praise of U.S. freedoms. According to Tea Leaf Nation, Kong posted: “A female student stood up and asked [Obama], ‘Isn’t the United States strong because its intelligence agency is listening to the voice of its people? What exactly is the difference between listening and monitoring?’” Though the rumor was easily debunked (and a number of responding netizens did so), many of Kong’s supporters said the logic of the question remained valid, and demonstrated the hypocrisy of U.S. support for human rights.
- In the States, Washington Post saw Obama’s speech at Peking University as an illustration of a “decidedly soft-diplomacy approach […], sending gentle messages on a few thorny issues while avoiding any hint of lecturing”. New York Times compared Obama’s visit to earlier trips by U.S. First Ladies, and argue that Michelle Obama’s visit to China was designed to be politically tame. “In 1995, Hillary Clinton famously used a speech on women’s rights to denounce China’s human rights record. In 2008, Laura Bush visited a refugee camp in Thailand for citizens who had fled political oppression in Myanmar—a visit China condemned, partly because of its own support for the Myanmar regime.”
- In addition to the first lady diplomacy, President Obama will meet Xi Jinping in the coming Nuclear Security Summit in Hague, where the leaders will be expected to “exchange views on bilateral relations and issues of common interest”, according to China’s vice foreign minister. Ukraine and tense relations between Russia and the West are expected to be on the table
- When visiting France, Xi told an audience that included French President Francois Hollande: “Today, the lion has woken up. But it is peaceful, pleasant and civilised”, a response to what Napoleon said two centuries ago: “China is a sleeping lion. Let her sleep, for when she wakes she will shake the world.”
- Xi Jinping met Angela Merkel last Friday in Berlin during his Europe trip. Merkel presented Xi with a map of China from the 18th century at the Chancellor’s Office. She said that it is a precise map of China in 1735. The map looks like this. Sadly, the gift was not reported in the Chinese media. Discussion on Baidu was later censored.
4. Tan Zuoren released from prison, but his whereabouts remained unknown
- Activist Tan Zuoren, who was jailed for five years after investigating the deaths of thousands of children in the 2008 Sichuan earthquake, was released last week. Pu Zhiqiang, Tan’s lawyer, is quoted as saying Tan was reunited with his wife Thursday and sent home to the Sichuan capital, Chengdu. However, his whereabouts remained unknown. Previously, Pu Zhiqiang said Tan’s imprisonment was more related to the “oil faction” than his investigation on the Sichuan earthquake. In an interview with Hong Kong’s cable TV, Pu said that the real reason had to do with Zhou Yongkang’s faction. Tan opposed Sinopec to build an oil refinery in Pengzhou, Sichuan, and this angered the former Chengdu mayor Li Chuncheng, an associate of Zhou Yongkang, and Zhou Bin, the son of Zhou Yongkang, who had both fallen out of grace.
- According to Ming Pao, Tan was brought away by the police to Chongqing once he was released from prison. His whereabouts is still unknown.
- Two connected to human rights activism died last month. One was the Beijing-based Cao Shunli, who had been in police custody since September last year and was suffering from various medical conditions. Police said Cao died of natural causes in the hospital, but denied her family access to her body. Her family suspected that Cao died from malnutrition, a problem that would have been easy to be fixed. Another was Xue Fushun, the father of the 24 year old Xue Mingkai, a member of China Democratic Party and weiquan activist. The elder Xue was said by the police to have said jumped from the roof of the district prosecutorate where he was seeking refuge. Xue’s wife was allowed to take a glimpse at the body, was too denied third party autopsy.
5. China’s urbanization plan
- China’s leadership has put much energy into renewed urbanization efforts that will have 60% of the country’s population living in cities by 2020. Two weeks ago, details of the new “people-centered” urbanization plan surfaced: shantytowns are to be redeveloped, transportation infrastructure overhauled to ease relocation, and the controversial hukou system to be liberalized.
i. Link to the National New-type Urbanization Plan [國家新型城 鎮化規劃 (2014-2020年)]
- CBS News: “According to Citi Research, a division of Citgroup, a fully implemented version of that plan would mean about 110 million new jobs in China’s urban areas. Meanwhile, another 150 million of the nation’s migrant workers, many of whom have previously been excluded from urban education, health and welfare programs due to their non-permanent “floating” status, would be settled permanently in cities with “hukou,” or legal city residency permits. Altogether, 260 million people are expected to be relocated from China’s countryside to one of 21 “mega regions” within the next seven years.”
- Bloomberg Businessweek reports on the price of China’s new urbanization plan, which is up to some 42 trillion yuan ($6.8 trillion), and rounds up comments on the new strategy from high in Beijing’s bureaucracy. The report quoted high level officials saying that the new plan was to fix the previous model, which is unsustainable because “urban construction mostly relied on land sales and fiscal revenue”. It also quoted Lou Jiwei, the Minister of Finance, who sees urbanization as “a powerful engine for China’s sustained and healthy economic growth”. Lou said that “we need to accelerate reform of the fiscal and tax system as well as investment and financing mechanisms,” also citing the need for private investment into public infrastructure projects using the public-private partnership model. The report, on the other hand, draws attention on a report issued by the World Bank and the Development Research Center of the State Council which provides suggestions as to how to pay the big bill.
i. This World Bank report is called “Urban China: Toward Efficient, Inclusive, and Sustainable Urbanization”. It listed six priority areas for a new model of urbanization: 1) Reforming land management and institutions; 2) Reforming the hukou household-registration system to provide equal access to quality services for all citizens and create a more mobile and versatile labor force; 3) Placing urban finances on a more sustainable footing, while creating financial discipline for local governments; 4) Reforming urban planning and design; 5) Managing environmental pressures; 6) Improving local governance.
- At the Diplomat, Zachary Keck argues that large-scale urbanization is a political risk for the CCP. It will strain central-local relations, because it “will have to allocate larger budgets to China’s local governments—or empower them to raise greater revenues on their own—to allow them to fund the expansion of social services to current and future rural migrant workers. [L]arger budgets will mean greater power for local governments”. This is further “compounded by the envisioned design of urbanization”, as “Chinese leaders have said they want to concentrate on building up second and third-tier cities, which are predominately located along the Yangtze River”. This may create more “potential local strongmen that the PBSC will have to control”. The inaccessibility also makes them harder to be controlled. On the other hand, urbanization will also increase the potential for mass unrest in China because conditions that make rural unrest manageable for the CCP are not present in large cities. “High population density and large media presences—both traditional media and tech savvy citizens—will make it a lot more likely that protests could spiral out of control quickly”.
- According to the urbanization plan, China will liberalize its hukou, or household registration, system to allow 45% of its population to have full urban hukou. The Economist discusses two main weaknesses of the hukou reform efforts29:
i. “First, the hukou liberalisation focuses on cities with under 5m people. Yet most new jobs are being created in the 16 big cities with populations of more than 5m, and most of the dodgy government debt seems to be concentrated in the smaller cities whose officials are therefore unwilling to fork out for benefits for new urbanites. Large cities can give urban hukou, but only on a complicated points-based system which tends to favour the prosperous, giving graduates and skilled workers a better chance. When tried elsewhere, that ends up allowing mainly the elite to migrate. The points- based system should be scrapped and the door opened faster and wider.”
ii. “The second problem is bigger. Though migrants hate the way they are discriminated against in cities, many are nervous about accepting an urban hukou, even if offered, as they do not see it as a reliable source of security. Urban welfare systems are so new and so imperfect that migrants doubt, with good reason, that they will be able to draw on unemployment benefits or a promised pension, especially if they move to another city. So they keep one foot in the countryside, holding onto their tiny patch of land and never making the break. Even if they want to sell their land, they are still not allowed to do so. The plan thus needs two other important strands: more cash for public services in the cities, and allowing the establishment of a rural land market, so that the buying and selling of land could help enrich farmers just as it has enriched urbanites.” And this does not mean the hukou barrier will be scrapped altogether. Another Economist report pointed out:
i. “It still allows bigger cities, which migrants prefer, to continue using hukou barriers as a way of trying to limit population growth. In the 16 cities with more than 5m people, officials will be allowed to give hukou only to migrants who gain a certain number of points (in cities that have experimented with this, points are awarded on the basis of educational qualifications, property ownership and other factors that rule out most migrants). Even in the smallest cities only migrants with “legal and stable” work and accommodation—which many do not have—will be able to get urban hukou.
ii. In addition, “local governments are likely to interpret this as strictly as they can. They are fearful of having to spend a lot more on public services such as health care, education and subsidised housing, which barely reach most non-urban hukou holders. The new plan gives few details of how beefing up these services will be paid for, an omission that suggests much bickering remains to be done. It sets a modest target for urbanisation of 60% in 2020, up from nearly 54% today. This would imply a slowing down of the growth rate; that is not a bad signal to send given how local governments have been using high urbanisation targets as a pretext to continue grabbing land from farmers and engaging in an orgy of often wasteful construction”.WSJ China Real Time reported that obtaining hukou in large cities like Beijing and Shanghai remains prohibitively difficult despite efforts at reform. It quoted a vice minister of Public Security saying that hukou is necessary due to practical considerations. Cities like Beijing, Shanghai and Guangzhou are already seeing huge strains on their resources and the environment. Their populations need to be slimmed down.
CHINA – DIPLOMACY
1. What does the missing flight MH 370 mean politically for China?
- Hundreds of MH370 passengers’ relatives marched on Malaysian embassy in Beijing last week to protest against what they call cover- up and mishandling of the disaster by Malaysian authorities. Beijing authorities had to call in reinforcement of paramilitary soldiers and plainclothes security agents to guard the embassy as protesters breached police lines set up several streets away. This raised the question: To what extent will China tolerate the protest?
i. BBC: “If anger continues to build against the Chinese leadership, the families could be entering very dangerous territory… Chinese police are now preventing journalists from meeting family members inside the Beijing hotel where the relatives receive their daily briefings – an ominous sign that the government will not accept any more public protests.” - This will also impact tourism. Bloomberg Businessweek: “The reaction in the Chinese media and in cyberspace will no doubt hurt the Malaysian tourist industry, which has been seeking to attract a growing number of big-spending travelers from China. (In another example of unfortunate timing, 2014 not only is supposed to be “China-Malaysia Friendship Year,” it is also supposed to be “Visit Malaysia Year.”)
- Diplomatically, the MH370 incident may be a setback to what Xi Jinping described six months ago as a “‘new era’ in Sino- Malaysian relations” when the two countries agreed to increase trade and cooperate on everything from agriculture to energy.
- Bloomberg Businessweek added: “China has something to lose, too. An ongoing squabble with Malaysia would set back China’s efforts to expand its influence in Southeast Asia. Like other Asian nations, including Japan, Vietnam, and the Philippines, Malaysia has claims to islands that China says are Chinese territory, but until now the Chinese leadership has tried to avoid straining its Southeast Asian ties and focused instead on disputes with the Philippines and Japan. […] Any freeze in Sino-Malaysian ties could open a door to China’s major rival, Japan. Prime Minister Shinzo Abe spent much of his first year in office courting leaders in Southeast Asia, traveling to Malaysia and all the other ASEAN countries. Notably, the Japanese government is now taking a much more conciliatory position toward Malaysia’s handling of the Flight 370 crisis.”
TAIWAN – POLITICS
1. Taiwan students protest against service agreement with China
- Since Tuesday evening (March 18), hundreds of students and activists occupied the Legislative Yuan, Taiwan’s unicameral legislative assembly, to voice opposition to the trade pact with Mainland China.
- The Cross-Strait Service Trade Agreement (CSSTA), which drops barriers on service trades, was signed by semi-official organizations from China and Taiwan in June of 2013, and Taiwan’s legislature agreed to a clause-by-clause review along with 16 public hearings— half overseen by the Kuomintang, the other half by the opposing Democratic Progressive Party.
- It is a “follow-up accord” to the 2010 Economic Cooperation Framework Agreement between Beijing and Taipei. The services agreement has raised concerns in Taiwan that it will harm local businesses. Under the agreement the two sides would lower barriers on cross-strait investment in dozens of fields including health care, finance and insurance. The D.P.P. said it would fight approval of the deal, but it lacked the votes to thwart the Kuomintang, which holds 65 of 113 legislative seats, versus 40 for the D.P.P. Opinion poll released by Taiwan Indicators Survey Research found that 44.5% of respondents opposed the trade deal, while 32.8% supported it and 22.9 percent did not respond. A majority, 73.7%, said they endorsed a line-item review of the agreement.”
i. Wu Jieh-min wrote about mainland-Taiwan business alliances and the double helix structure that exert Mainland China’s power on Taiwan local politics. The Diplomat’s J. Michael Cole describes the political situation leading up to the ongoing occupation
- A number of scholars wrote about their reasons opposing the service agreement
i. “The KMT held its eight hearings within the space of a week, with several members of social groups and NGOs complaining about lack of access”…
ii. “Following completion of the hearings and substantial input by academics and the business sector, KMT Legislator Chang Ching-chung, the presiding chair of the legislature’s Internal Administrative Committee, said the agreement could not be amended and had to be adopted as is”…
iii. “Negotiations […] resumed in the legislature in March 2014, when DPP Legislator Chen Chi-mai secured the right to plan the agenda for a clause-by-clause review as agreed earlier. However, KMT legislators blocked the process.”… - A number of scholars wrote about their reasons opposing the service agreement
i. Wu Jieh-min wrote about mainland-Taiwan business alliances and the double helix structure that exert Mainland China’s power on Taiwan local politicsii. Hsu Szu-chien had a similar view but focused more on China’s political economy structure, its party-state-driven capitalism dominated by SOE
iii. A number of articles on University of Nottingham’s China policy institute blog are also worth reading. - Updates: 500,000 protesters rally around the Presidential Office on Sunday. Student leader and protest organizer Lin Feifan said the reason why the protesters occupied the Legislative Yuan was because the administration has lost its legitimacy. Lin reiterated the
protesters’ four demands of the Ma administration, which are rejection of the Cross-Strait Trade in Services Agreement, introduction of the Bill on Pacts between Taiwan and China — a draft bill proposed to supervise the signing of agreements with China — urging the government to hold a “public constitutional meeting,” and demanding all lawmakers listen and stand by people’s side. On Saturday, Ma Yingjeou said that the government cannot retract the agreement. He said, however, that the ruling party
is willing to review the agreement article-by-article in cross- committee deliberations at the Legislative Yuan. Student leaders said Ma failed to understand their request despite two weeks of occupation. - China Digital Times provides more about the background on the protest: Last month, China and Taiwan held their first formal government-level talks. While the meeting was largely seen as symbolic, the two sides agreed to continue deepening economic ties. According to press freedom advocacy groups, Mainland China— already Taiwan’s largest trading partner—has been using its economic clout for media influence in Hong Kong and Taiwan.
