Keywords: Crackdown on lawyers and activists, anti-graft campaign, Internet Security Law, Stock Market Crash, SCO, Hong Kong.

CHINA – SOCIETY

 1. Nationwide crackdown on rights lawyers

1. Chinese authorities conducted a nationwide crackdown against dozens of rights lawyers and activists since late last week. Nearly 200 have been reportedly detained, put under house arrest or questioned, of which over 30 remained under detention or are reported missing. The offices of three law practices—most notably Beijing Fengrui Law Firm—have been searched. Fengrui lawyers Wang Yu, Zhou Shifeng, Wang Quanzhang, and Huang Liqun, as well as Wang’s husband Bao Longjun and Fengrui administrative assistant Liu Sixin have all been criminally detained.
2. SCMP’s Verna Yu reports on several detentions at Beijing’s Fengrui law firm: // Fengrui’s head, Zhou Shifeng, was seen being taken away by three unidentified men early yesterday […]. Zhou had gone to a Tongzhou district detention centre to meet a client, Zhang Miao, on Thursday night, Liu wrote. Zhang, a news assistant for German weekly Die Zeit, had just been freed after nine months in custody […] another lawyer, Li Zhu-yun, was taken from her home and had her flat searched by a dozen plain-clothes police. A staff member, Liu Sixin, disappeared after calling Liu Xiaoyuan at around 8:45am and telling him, “They are coming”, before the call went dead, Liu Xiaoyuan said. […] A fifth Fengrui employee – rights lawyer Wang Yu – had gone missing early on Thursday, after sending her friends a text message saying someone was trying to force open her front door, according to rights group Chinese Human Rights Defenders. // Source: SCMP
3. Amnesty International updates a list of who has been targeted and who remains missing or under detention. Source: Amnesty International
4. Beijing is now censoring the names of those who are detained. Source: Feichangdao
5. Meanwhile, state media has laid out the case against the detainees. Xinhua explained how the alleged conspirators “severely disrupted public order” in “more than 40 controversial incidents” since July 2012: // First, it was the lawyers’ job to hype up an incident, according to Zhai Yanmin, a major organizer of the group. […] Then the job shifted to social media celebrities and petitioners. Wu Gan, known for “boldly” stirring controversial incidents, posted messages on his social media account, offering 100,000 yuan (16,106 U.S. dollars) for any video clips that have caught the “truth” of the incident. Zhai then hired “petitioners” to shout slogans, sit quietly and raise defiant signs to support the lawyers. According to one suspect surnamed Li, she was paid 600 yuan for carrying a sign onsite. There are others responsible for filming scenes of “mass incidents” and posting them on some overseas websites to manipulate public opinion. “They have been following the protocol in hyping up such incidents since 2013, when I first entered the business,” said Zhai, adding many of his peers were resentful of the Party and the government, taking pride in being detained by the police. […] The suspects, Zhai, Wu, Huang Liqun and Liu Xing have reflected on their alleged crimes and realized their harmful impact, said the statement. // Source: Xinhua
6. SCMP summed up the allegations: // In an article on Sunday headlined “Uncovering the dark story of ‘rights defence’, spanning two-thirds of its second page, People’s Daily said the Ministry of Public Security launched the operation to “smash a major criminal gang that had used the Beijing Fengrui law firm as a platform since July 2012 to draw attention to sensitive cases, seriously disturbing social order”. The article said the firm’s director Zhou Shifeng, his assistant Liu Sixin, lawyers Wang Quanzhang, Huang Liqun, Wang Yu and her husband Bao Longjun were in criminal detention for “seriously violating the law”. It did not specify a charge. On the mainland, police can detain suspects for up to 37 days before prosecutors approve their formal arrests. It said “the criminal gang” comprised Zhou, Wang Yu, Wang Quanzhang, Huang as well as Liu, Bao and high-profile activist Wu Gan, who masterminded many plots in the name of “rights defence, justice and public interest”. It accused them of “colluding with petitioners to disturb social order and to reach their goals with ulterior motives”. Wu, an online activist nicknamed “Super Vulgar Butcher”, was formally arrested a week ago on charges of “inciting subversion” and “provoking trouble”. He also worked at Fengrui and Wang Yu was his defence lawyer. People’s Daily said Wu was “a key player” in drawing a huge public outcry over the fatal shooting of an unarmed man, Xu Chunhe, by a policeman in Qingan, Heilongjiang , in May, offering 100,000 yuan (HK$126,000) for any footage showing the incident. Other rights lawyers were accused of involvement. “These lawyers publicly challenged the court … and mobilised troublemakers to rally petitioners … outside the court,” it said. “They are the direct pushers.”// Source: SCMP
   1. Read more about Qing’an’s deadly police shooting: SCMP Chinese
7. Huang Liqun and Zhai Yanmin, a Fengrui employee detained three weeks ago, both appeared on China Central Television to confess. // Two employees from Beijing Fengrui “confessed” on national TV. Zhai Yanmin, a “fixer” employed by Fengrui, admitted to being paid and paying others to hype up sensitive cases, including one recent case in which a policeman shot dead a man in a train station in northeast China’s Heilongjiang Province. Huang Liqun, a lawyer and former government official, said Fengrui senior partner Zhou Shifeng hires disgruntled lawyers and people who are “dissatisfied with the government” to work for him. Speaking in long, articulate and uninterrupted sentences, Huang appeared to be reading from a script.// Source: HKFP
8. Global Times blasted the alleged conspiracy:// The rule of law is meant to maintain social order and uphold justice. It should promote social harmony, but radical human rights lawyers are intentionally creating conflict between the government and the public. Through false information, they paint the government as a “protector of evil,” and law-breakers as “brave citizens.” Thus, the truth has been blurred as individual cases were portrayed as the “people’s fight against tyranny,” and promoted as “the real defender of people’s rights.” China is committed to promoting the rule of law. Yet a handful of extremists are making every effort to discredit the government, and that the radical lawyers are the “good guys.” This is no longer the rule of law, but politically-motivated provocation. It is regrettable to see a few legal professionals trying to obstruct the rule of law. If public officials are involved in a case, radical lawyers may appear to stoke public opinion. No country would encourage their lawyers to operate this way.// Source: Global Times
9. Another Xinhua report, titled 依法打擊極少數違法律師是為創造更好執業環境, interviewed government officials, scholars and lawyers and said that the detained lawyers are 极少数违法律师 and that the arrest was to create a better environment for legal practice. Note that it praised several rights lawyers whom the report saw as a constructive force: // 据了解，多年来，我国律师行业中涌现出了一大批先进典型人物。如关切社会弱势群体、长期致力于未成年人和农民工权益保护的佟丽华律师，积极发挥全国政协委员职责、为立法修法建言献策、推动法治进步的朱征夫律师，舍弃城市生活和高薪水工作、毅然选择扎根西部做法律援助志愿者的马兰律师等。“充分发挥律师在法治建设中的重要作用，塑造和维护律师良好社会形象，才能得到更广泛人民群众的信任和支持，为法治中国建设凝聚更多正能量。”北京市司法局律师业务指导和执业监管处副处长任宇平说。// Source: Xinhua
10. The U.S. State Department issued a brief statement: // Over the last few days we have noted with growing alarm reports that Chinese public security forces have systematically detained individuals who share the common attribute of peacefully defending the rights of others, including those who lawfully challenge official policies. ‎We are deeply concerned that the broad scope of the new National Security Law is being used as a legal facade to commit human rights abuses. We strongly urge China to respect the rights of all of its citizens and to release all those who have recently been detained for seeking to protect the rights of Chinese citizens. // Source: US government
11. Experts explain rationales behind the crackdown: // New York University law professor Jerome Cohen, one of the first American lawyers to work in China after the country opened up in the late 1970s, described the sweep as “insane.” China’s leaders “must be in desperate straits to engage in this extraordinary, coordinated attack on human-rights lawyers,” he said. Frustration with China’s Communist Party-controlled courts has given rise to a coterie of self-described “die-hard” lawyers who use confrontational tactics in and outside the courtroom in defense of clients whose cases are considered politically sensitive. Such lawyers have sometimes had run-ins with local authorities, but William Nee, China researcher at Amnesty International, said the orders for this week’s sweep likely came from Beijing. […] President Xi has made rule of law a cornerstone of his public agenda, but has also escalated restrictions on civil-society groups since coming to power. “The crackdown over the last two years has been so systematic that the attack on human-rights lawyers is the next logical step for authorities—but that’s especially worrying as they are the last gatekeeper of civil society for China,” said Maya Wang of Human Rights Watch. “Of course, if human-rights lawyers can be neutralized, then the party will have the ideal situation: laws that look good on their face, but are never applied in ways that will interfere with government politics,” Mr. Cohen said.// Source: WSJ
    i. WSJ’s Outlook: // The real reason for this crackdown is a rising rights consciousness among ordinary Chinese. Though they know the legal system offers scant protection, many Chinese citizens are willing to file a lawsuit when their civil or property rights are violated. And though they know the result could be prison or worse, they often make a fuss using the Internet and every other means at their disposal. The stubborn lawyers who defend these stubborn clients represent a challenge to the Party’s claim to stand above the rule of law. And that is why extralegal methods are used against them. Most of the families of the detained lawyers have not even been notified, also in violation of Chinese law. They have simply disappeared into secret prisons. This mistreatment of legal professionals is one more escalation by supreme leader Xi Jinping in his crackdown on all political dissent. It reveals to the world again that the rule of law in China is simply whatever the Communist Party says it is. // Source: WSJ
    ii. Conversation: China’s ‘Rule by Law’ Takes an Ugly Turn. //Nancy Tang: […] One consequence of the recent detentions is likely to be the continued brain drain of young, justice-minded Chinese abroad. As a young feminist and aspiring advocate for Chinese civil rights, I find 2015 an ominous year to begin pursuing my Juris Doctorate (J.D.) at an American law school. While I’m not aware of statistics on the number of Chinese nationals going overseas to pursue J.D.s, I sense I’m part of a growing trend. Will our legal training in the United States impact the future of the Chinese legal landscape? Will young legal talents become interested in the separation of power, possible redistribution of power in the Chinese context, and perhaps even civil rights? Or will they just become yet another elite, depoliticized Chinese circle, collaborating with the state for personal status and material gain?
    Eva Pils: […] The ongoing crackdown is unprecedented in terms of its scope and methods. Earlier crackdowns happened much less in the public eye. But this time around, authorities denounced human rights lawyers all over national media. In being so public and assertive, the authorities have signaled to a broad swath of society, including the wider legal profession, that they want to stop effective human rights advocacy. They have also shown themselves brazenly unconcerned about the illegality of some of their methods. Besides repeated use of forced disappearances, they even held a 16-year-old child for two days with no legal justification when his parents—Fengrui Law Firm employees Wang Yu and her husband Bao Longjun—were swept up in the current crackdown. […] It is difficult to tell what longer-term consequences might be. One likely consequence is greater disapproval for the government’s actions and more support for human rights lawyers within the liberal-leaning legal academic establishment, such as recent comments by such widely respected figures as Chen Guangzhong and Jiang Ping. China’s rights lawyers are not the only ones who understand that Xi’s political vision is wholly incompatible with genuine rule of law.//Source: ChinaFile

 2. China Supreme Court judge probed by graft agency

1. Bloomberg reports that the Communist Party’s Central Commission for Discipline Inspection (CCDI) is investigating Xi Xiaoming, a senior judge on China’s Supreme People’s Court, for “severe discipline and law violations”, who is the latest among dozens of senior government officials to caught in the ongoing (but slowing) anti-corruption campaign. // China’s top disciplinary watchdog is investigating Xi Xiaoming, a vice president of the country’s top court, as the ruling Communist Party presses ahead with a nationwide graft crackdown now in its third year. Xi is suspected of “severe discipline and law violations,” China’s Central Commission for Discipline Inspection said in a short statement on its website Sunday night. The fourth-ranked judge on China’s Supreme People’s Court, Xi had been associated with company law reforms and led a panel that ruled on China’s first antitrust case. He’s the highest-level party official whose investigation has been announced since former security csar Zhou Yongkang’s life sentence was disclosed June 11. President Xi Jinping has vowed to tackle corruption by both high-ranking “tigers” and “flies” since taking power in November 2012.// Source: Bloomberg
2. The investigation is reportedly linked to Xi Xiaoming’s involvement in a multi-million dollar lawsuit over coal mine shares filed by an energy tycoon in Shanxi. // Mainland news portal Caixin reported yesterday that Xi, who has expertise in civil and commercial jurisdictions, and is leading a new group on China’s civil code, is connected to a tycoon in Shanxi, which has been hit by a series of corruption scandals. It said that Xi had interfered in court proceedings on behalf of the province’s former richest tycoon. “Xi Xiaoming well understood the civil and commercial laws and would take different techniques to flip cases to help others gain illicit benefits,” Caixin quoted a source as saying. One of the most controversial cases, according to Caixin, involved coal mine owner Zhang Xinming. In March 2004, Zhang had spent 18 million yuan (HK$23 million) to acquire a 60 per cent stake of the 53-sq-km Daning Jinhai coal mine, which was estimated to have more than 400 million tonnes of reserves. […] Caixin cited an anonymous source saying that although Xi wasn’t the judge of the case, he arranged to have his law school classmate act as Zhang’s lawyer and helped in other ways, too.// Source: SCMP

3. 20 British and South African tourists arrested for ‘watching terrorist propaganda videos’

1. // China has formally detained nine foreigners – South Africans, Britons and an Indian national – for suspected ties to a “terror group” after authorities accused them of watching banned videos, according to the foreign ministry and a South African charity. The ministry said on Wednesday that 11 others would be deported and the nine were “criminally detained” – meaning they have likely been charged and could be prosecuted. All were suspected of violating the law, it said, without specifying what they had done. […] The group was on a 47-day historical tour of the country when they were detained at an airport in Erdos. Their tour operator received no word from Chinese authorities and sought them out two days later, Sooliman said, when he had not heard from the group and realised something had gone “horribly wrong”. // Source: SCMP
2. Guardian has more details on the case: // As the Foreign Office demanded an explanation from the Chinese authorities, a charity involved in the group’s 47-day tour of ancient China said police had accused the tourists of links to a terror group and of watching banned videos in their hotel room. Imtiaz Sooliman, founder of Gift of the Givers, the South African faith-based charity working to secure the tourists’ release, said they had probably been watching videos of Islamic prayers during Ramadan. He denied any terror links. The Pietermaritzburg aid group describes itself as “the largest disaster response NGO of African origin on the African continent”. Its website says it was founded in 1992 and is inspired by Muhammed Saffer Effendi al-Jerrahi, a master of Sufism, a mystical form of Islam. // Source: Guardian

CHINA – INTERNET

 Proposed Internet Security Law

1. The Chinese government has issued a draft law on Internet security, which is open for public review until August. Like the draft Foreign NGO Management Law and the recently passed National Security Law, this proposal has been criticized for being excessively vague and for its potential to impose harsh restrictions on Internet expression. // The National People’s Congress, the country’s highest legislative body, released the text of the proposed law on Wednesday. It said a legislative panel gave the proposal its first reading in June and that it is seeking public comment until Aug. 5. China’s government considers cybersecurity to be crucial to national security, and espouses the concept of Internet sovereignty, treating its portion of cyberspace as its territory. The proposed law says Internet operators must take necessary steps to close security loopholes to prevent possible cyberattacks. It also criminalizes any hacking activity. // Source: AP
2. Adam Segal sums up the key points of the law:
   //   Government will establish national security standards for technical systems and networks. Real name registration to be enforced more strictly, especially with messaging apps where enforcement has been lax. Internet operators must provide “support and assistance” to the government for dealing with criminal investigations and national security. Nicholas Bequelin, East Asia Director at Amnesty International, tells Reuters that Article 50 gives authorities the legal power to cut Internet access in to maintain order as Beijing did in Xinjiang in 2009. “Timely warning and notification” system for cybersecurity incidents. Greater investment in cybersecurity (including subsidies for cybersecurity companies, internet operators, etc.) and cybersecurity education. The Cyberspace Administration of China (CAC) will review cybersecurity practices of key telecommunication operators, conduct regular emergency drills, and provide help in implementing the law. Employees must undergo background checks, and the CAC will review procurement. User data for the key operators must be stored in China (if there’s a business imperative to store data overseas, they can apply for exceptions). Collection and use of user data must “comply with the principles of legality, justice, and necessity” (遵循合法、正当、必要的原则) and operators must secure users’ agreement to have their data used. Data collected must be related to the service the Internet operator is providing. Collected user data must have adequate protections and data breaches must be responded to in a timely manner. // Source: Council on Foreign Relations 网络安全法（草案）全文

 CHINA – MUSIC

New song: Grandpa Xi is our big friend

1. // 陝西省人民政府官方微博發布一首新兒歌：由延安育才紅軍小學的學生合唱的《習爺爺是我們的大朋友》，歌詞形容國家主席習近平「親切的問候比那春天還溫暖，就像是個大朋友一點不疏遠」，又提到習近平掛在嘴邊的中國夢：「期待實現中國夢英雄出少年」。// Source: The Paper

CHINA – ECONOMY

 China’s stock market crash

1. A Guardian primer on the crisis: // What is happening in China? Stock markets in China are tumbling. A three-week plunge has knocked about 30% off Chinese shares since mid-June. China’s securities regulator has warned of “panic sentiment” gripping investors, many of whom are individuals that have borrowed heavily to play the stock market. Hundreds of Chinese companies have suspended dealings in their shares in a bid to arrest a frenzy of selling. The authorities have stepped in with various measures, including a surprise interest rate cut. […] How could so many people afford to buy shares? At the centre of the dramatic stock market slide are individual investors borrowing from a broker to buy securities. There has been an explosion in so-called margin lending. Under that system, the broker can make a demand for more cash or other collateral if the price of the securities has fallen – known as a margin call. […] What are the Chinese authorities doing? Beijing has supported a series of market operations to halt the sharp decline, but each one has been criticised for failing to restore market confidence. China has arranged a curb on new share issues and enlisted sshares, helped by China’s state-backed margin finance company, the China Securities Finance Corporation (CSFC), which in turn has a direct line of liquidity from the central bank. The central bank, the People’s Bank of China, said it would continue to work with the CSFC to steady the stock market. The CSFC also said it would purchase more shares of small and medium-size listed companies – the firms that have suffered the biggest losses in the rout.// Source: Guardian
2. Will stock market crash lead to an economic collapse? The Economist argues no. // The first mistake—often made by China pessimists—is to think that the market crash presages an economic collapse. That is most unlikely. True, the stockmarket is down by a third in a few weeks, but it has fallen back only to March levels; it is still up by 75% in a year. Lost in the drama is the fact that the stockmarket still plays a small role in China. The free-float value of Chinese markets—the amount available for trading—is just about a third of GDP, compared with more than 100% in developed economies. Less than 15% of household financial assets are invested in the stockmarket, which is why soaring shares did little to boost consumption and their crash should do little to hurt it. Many stocks were bought with debt, and the unwinding of these loans helps explain why the government has been unable to stop the rout. But such financing is not a systemic risk; the loans are about 1.5% of total assets in the banking system. The economy is solid. Growth, though slowing, has stabilised. The property market, long becalmed, is picking up. Money-market rates are low and steady, suggesting banks are stable.// Source: Economist
3. The same article points to two causes of instability: the structure of markets and China’s brittle politics. // From mid-2014 until early June, ChiNext, a market for start-ups, more than tripled. China’s mania derived partly from the way the market functioned. Regulators act as gatekeepers over initial public offerings, in effect deciding which firms list, when and at what price. Because the government was initially slow to approve new IPOs, those firms already lucky enough to have ChiNext listings became financing vehicles. Investors pumped their shares higher, knowing that the capital could buy firms waiting in the long queue to list. Hence the wooden-flooring company that remade itself as an online-gaming developer and the fireworks-maker that became a peer-to-peer lender, among dozens of similar mutations. Before long, the ChiNext price-to-earnings ratio had reached 147, putting it in the same league as NASDAQ during the dotcom era. China’s repressed financial system helped inflate the bubble by pumping money into the stockmarket. Banks pay interest rates well below the level that would be expected without regulatory caps, and China has yet to develop alternatives for savers looking to park their cash elsewhere. The hunt for good returns has over the past decade sparked investment frenzies in property, stamps, mung beans, garlic and tea. Steps to give investors better access to foreign markets and to free up bank rates all aim in the right direction but progress has been halting. Equities were as ripe for a bubble in 2015 as they were in 2007, the last time China experienced a stock frenzy. If economic stability is not in peril, the best explanation for the interventions is politics. When the stockmarket was soaring, the press cheered the bull run as an endorsement of the economic reforms of the Xi-Li team. Now that it is falling, regulators want to shore up the leadership’s reputation. It is not just the motive that is dodgy; the nature of the intervention is also unwise. Cutting interest rates as support for the economy when inflation is so low is fair enough. But regulators capped short-selling; pension funds pledged to buy more stocks; the government suspended initial public offerings; and brokers created a fund to buy shares, backed by central-bank cash. Just as the Communist Party distrusts market forces, so it misunderstands them. Botched attempts to save stocks suggest it is losing control, while a successful rescue would have made buying shares a one-way bet—inflating the bubble still further. One of the persistent illusions about China’s governance is that, whatever its other shortcomings, eminently capable technocrats are in control. Their haplessness in the face of the market turmoil points to a more disconcerting reality. // Source: Economist
4. Arthur R. Kroeber on Making Sense of China’s Market Mess Source: //Given this record, it is plausible to interpret the stock market’s wild ride over the past year as a diversionary tactic by a government facing economic growth that ground ever lower and reforms that seemed ever more stuck in the mud. First Beijing tried to pump things up by encouraging retail investors to return to a stock market they had abandoned after the last bubble burst in 2007, and let brokers extend huge amounts of credit to enable investors to double their bets on margin. By early July, margin credit stood at Rmb 2 trillion, four times as much as a year earlier. That figure equaled 18% of the “free float” value of the market (i.e. the value of all freely tradable shares, exluding those locked up in the hands of strategic long-term shareholders). Even after a recent decline, margin credit is nearly 14% of Shanghai’s free-float market capitalization, compared to less than 6% in New York and under 1% in Tokyo.
   The Chinese government also tried to entice foreign investors by permitting them to invest in the Shanghai market via brokers in Hong Kong. And for a while it seemed possible that domestic A-shares would be included in the MSCI Emerging Markets Index, which would have forced global institutions to move billions of dollars of equity investments to Shanghai in order to ensure their funds matched their index benchmarks. (In early June, MSCI deferred that decision for at least another year.) Amid a dearth of good economic news, the government could point to a buoyant stock market as evidence that it was doing something right. And after a couple of years spent cracking down on wealth-making activities through a fierce anti-corruption campaign, Beijing could also reassure business and financial elites that it had their interests at heart.
   […]Little evidence suggests that the stock market lay anywhere near the center of policy makers’ concerns, during either the boom or the crash. The main aims of macroeconomic policy over the last nine months have been to support investment growth by a cautious monetary easing, and to stabilize a weakening property market (important because construction is the key source of demand for heavy industry). The stock market was a sideshow: an accidental beneficiary of easier money, and the fortuitous recipient of funds from investors fleeing the weak property market and seeking higher returns in equities. There was good reason for policy makers not to pay much attention to the stock market. China’s market is essentially a casino detached from fundamentals. It neither contributed much to economic growth while it was rising, nor threatened the economy when it collapsed.  […] China is different: less than 7% of urban Chinese have any money in the market, and their equity holdings are dwarfed by their far larger investments in property, wealth management products, and bank deposits. Equity-raising accounts for less than 5% of total corporate fund-raising; bank loans and retained earnings remain by far the biggest sources of investment funds. [….]But hold on—if the market were really so economically irrelevant, then why did the government panic and try to prop it up with such extreme measures? It’s a fair question. One plausible answer is that the China Securities Regulatory Commission (CSRC), which oversees the market, got worried by the chaos and begged the State Council to mobilize support so that it could gain time to deal with the underlying problems, such as excessive margin borrowing. This explanation certainly seems to be the one the State Council wants people to believe. Despite its strong actions, the Council and its leader, Premier Li Keqiang, have stayed studiously silent on the stock market. The implied message is: “Okay, CSRC, we’ve stopped the bleeding and bought you some time. Now it is up to you to fix the mess and return the market to proper working order. If you fail, the blame will fall on you, not us.” If this interpretation is right, we can expect restrictions on trading and IPOs to be gradually lifted over the next several months, and rules on margin finance tightened to ensure that the next rally rests on a firmer foundation. […] The episode highlights the contradictions in China’s present economic policies. Based on numerous statements and policy moves over the last 15 years, there can be no doubt that influential financial reformers want bigger and more robust capital markets—including a vibrant stock market—in order to reduce the economy’s reliance on politically-driven bank lending. Moreover, the success of proposed “mixed ownership” plan for SOE reform likely depends on having a healthy stock market, in which the state shareholding in big companies can be gradually diluted by selling off stakes to private investors. But the financial reformers are not the only game in town. As analysts like me should have taken more care to emphasize when it was released, the Third Plenum Decision is no Thatcherite free-market manifesto. In addition to assigning a “decisive role” to market forces, it reaffirms the “dominant role” of the state sector. Like all big policy pronouncements during China’s four decades of economic reform, it is less a grand vision than an ungainly compromise between competing interests. One interest group is the financial technocrats who want a bigger role for markets in the name of more efficient and sustainable economic growth. Another consists of politicians and planners who insist on a large state role in the economy so as to maintain the Party’s grip on power, protect strategically important industries and assets, and provide a mechanism for coordination of macro-economic policies.// Source: ChinaFile

CHINA -DIPLOMACY

 India and Pakistan invited to join China and Russia in SCO security group

1. // India and Pakistan began accession to a regional security group led by China and Russia on Friday after two days of summits that Russian President Vladimir Putin held up as evidence Moscow is not isolated in the world. The Shanghai Cooperation Organisation (SCO), meeting in the Russian city of Ufa a day after the BRICS emerging economies held a summit there, said the invitation to the two Asian nations showed a “multipolar” world was now emerging. Those words will have pleased Putin, who says the United States has an outdated vision of a “unipolar” world dominated by Washington and wants to show Russia has not been weakened by Western sanctions over its role in the Ukraine crisis. // Source: SCMP
2. China and Russia Lay Foundation for Massive Economic Cooperation: // In the past decade, Beijing and Moscow have been more competitors than partners. But that relationship may now be changing as Russian and Chinese leaders are considering combining their two countries’ regional economic projects — the Eurasian Economic Union and the Silk Road Economic Belt, respectively. While meeting at a two-day summit of the Shanghai Cooperation Organization in Ufa, Russia, Russian President Vladimir Putin and Chinese President Xi Jinping are reportedly discussing a framework that would merge China’s multi-billion dollar network of roads, railways, and pipelines through Central Asia with the Eurasian Union, the post-Soviet economic bloc that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The two projects would be combined under the auspices of the Shanghai Cooperation Organization, and if the proposal is completed, it would make the opaque organization the preeminent economic body from Shanghai to St. Petersburg.// Source: Foreign Policy

HONG KONG – POLITICS

 1. Hong Kong government’s performance rating slips 18 per cent among young people

1. // Young people have become far less satisfied with the government’s performance in the past year, according to a survey on quality of life in the city. Researchers at Chinese University surveyed 1,008 Cantonese-speaking Hongkongers between the ages of 15 and 24 and combined the results with government statistics to form a picture of the lives of young people. Issues covered ranged from how satisfied young people were with where they were living, what they thought of the government, how happy they were with their education, and youth crime and unemployment rates. The government’s performance came in for the most criticism, scoring 3.29 out of 10 points – 18 per cent lower than the 4.61 recorded a year earlier. The survey was carried out between March and May and asked about the government’s performance in the preceding six months. Wong Hung, an associate professor at the university and director of the Centre for Quality of Life, said how the government handled the Occupy protests last year played a role in the results.// Source: SCMP

 2. CY Leung: Beijing ‘very satisfied’ with my performance

1. // Chief Executive Leung Chun-ying, who sought a pivotal role for Hong Kong in the mainland’s overseas economic expansion during his trip to the capital, said Beijjng was “very satisfied” with his performance. Summing up his two-day trip yesterday, Leung dropped a strong hint he would seek a second term. A Hong Kong government source also revealed Leung asked Beijing to choose the city as home to the regional headquarters of the Asian Infrastructure Investment Bank (AIIB). During his visit, Leung met National People’s Congress chairman Zhang Dejiang for the first time since the blueprint for the 2017 chief executive election was voted down. “[Zhang] has ‘highly affirmed and is very satisfied’ with my performance – and the SAR government – over the past 20 months on political reform,” said Leung, who repeated the leader’s praise five times in his 12-minute speech. “[Zhang] said he would firmly support me and the administration to rule [the city] in accordance with law.” // Source: SCMP

3 A Mingpao interview with Legco President Jasper Tsang

1. Source: Mingpao