When it comes to making public statements, the Chinese Communist Party often opts for trends rather than specifics. It was therefore not an enormous surprise when the official communique on the Central Committee’s four-day meeting neglected to mention a potential landmark reform that would allow farmers to trade their land titles.

But all the evidence - from state media organs and President Hu Jintao himself - points to a policy change in the not-too-distant future.

Easing restrictions on the transfer of land-use contracts makes sense. It codifies what was already an established process through unofficial channels, thereby hopefully making the system less open to abuse. It is also in keeping with government policy to encourage urbanization and, as of last Sunday, double rural incomes and eliminate absolute rural poverty by 2020.

Obviously, China’s major cities must find a way of dealing with those who sell up and go urban - without even a scrap of land to their names. Steps must be taken to ease registration processes so that these people can become eligible for benefits.

One beneficiary of this policy may actually be the fields that migrant farmers leave behind. If transfers lead to the consolidation of land - taking individual lots of around 3,600 square meters and combining them under a single point of control - China’s agriculture industry has a better chance of becoming truly commercialized.

Chaoda, a Hong Kong-listed company that produces high-end vegetables, is perhaps a sign of what the future may hold. One of the few large-scale agriculture corporations in China, Chaoda won the backing of local governments to persuade farmers to sign over control of their land in exchange for a job tending the land. The company accounts for less than 1% of China’s vegetable industry, but it is building a healthy and lucrative export business.

For more on bringing business into Chinese agriculture, it is necessary to dip into the CER archive in search of the April 2007 issue. The numbers may be a little out of date, but the trends are still plain to see - which just goes to show you shouldn’t expect a fast turnaround regarding land title transfers.

Seven hours to go before the polls open for what has been called the “worst ever” election.

I refer, of course, to the 40th Canadian General Election, an event so momentous as to have been entirely ignored outside of Canada, and greeted with spiteful indifference within.

But questionable election call aside, it seemed a good opportunity for me, as a conscientious voter, to examine the various parties’ platforms relating to China.

Canada has long enjoyed good relations with China - in 1998, former Premier Zhu Rongji called Canada China’s “best friend in the world,” and in 2005 Prime Minster Paul Martin and President Hu Jintao issued a declaration of a “strategic partnership” between Canada and China.

Unfortunately, there’s not much to examine at the moment. The lack of foreign policy discussion within Canada indicates that it - let alone China policy - is not an issue of concern to voters or the parties. That apathy is depressing, if unsurprising: The previous election in 2006 was similarly light on the rest of the world.

It’s not just the elections. Despite those grand pronouncements by Zhu, Hu and Martin, Canada still lacked a comprehensive China strategy when Conservative Prime Minister Stephen Harper was elected in 2006. That, anyway, is the argument of Paul Evans, a professor at the Liu Institute for Global Issues at the University of British Columbia, in “Canada, meet Global China.”

Rather than continue the Liberals’ work, however, Harper’s government has tried to take on a more combative tone in its dealings with Beijing. In an article in the Canadian Foreign Policy Journal (”Responding to Global China: Getting the Balance Right” – subscription required), Evans calls this approach “cool politics, warm economics.”

The idea is that Canada can continue to pursue business opportunities on the one hand, while Ottawa gives Beijing a stern talking-to on human rights, Tibet, Taiwan and any number of other issues guaranteed to please domestic voters on the other.

This has allowed Harper to tell Canadians he’s not afraid to talk tough with Hu. After their first meeting - a quick, five-minute chat at an APEC summit in 2006, Harper had this to say:

We’ve had very frank discussions with a wide range of leaders, including although it was not a very long discussion, a very frank discussion with President Hu of China - a distinct impression, if I may say that, that the Chinese aren’t used to that from a Canadian government, but I can’t speak for them.

The patent ridiculousness of Canada attempting to lecture China aside, this is a dangerous path for Canada to blindly walk down. Evans notes that there is a growing acceptance within the Conservative Party of views such as those espoused by Bruce Gilley, a professor of political science at Queen’s University.

Also in the CFPJ (”Reawakening Canada’s China Policy,” also not for free), Gilley begins by arguing that Canada’s recognition of Beijing in 1970 was a betrayal of its spirit of “liberal internationalism.” He then goes on to suggest that Canada set up an agency to directly push for “democratic transitions” around the world, “with the independence necessary to support real change in China.”

Harper giving Hu a talking-to may be embarrassing, but it’s ultimately little more than a sorry joke. Undermining Chinese sovereignty - essentially what Gilley is proposing - is rather more serious.

“Whatever the estimated dollar costs,” Evans writes, “it is important to underscore that the fallout would be multi-dimensional and not easily captured in the rise and fall of trade balances.”

There may have been a time for such a challenge, but it is long since gone. Harper has already caused some concern as the head of a minority government. If polls over the weekend are correct and Canada elects a Conservative majority, I can only hope that Harper’s government realizes the importance of good relations with China - not just for Canadian businesses, but because Canada is most persuasive when leading by example.

Missed this earlier, but worth reading in this month’s Esquire: A nice profile of past CER interviewee and Nicobar Group head Barrett Comiskey, rather boldly titled “The New American.” On one hand the article is full of chestnuts like Shanghai/Blade Runner comparisons and the breathless style that we’ve come to expect from the parachute journalism form (sample sentence: “He is an unrepentant logician, even here in Shanghai, a place that defies rationality.” One wonders if an earlier draft had exclamation marks). On the other hand, it does a good job of classifying the various species of Shanghai expatriate (with some delicious barbs at the expense of the Bund-frequenting yuppie phylum thrown in for taste) and gives a solid portrait of a genuinely interesting person.

Also worth noting, if you get your hands on a paper copy of the magazine: The cover this month includes a changing E Ink display, also used in the Amazon Kindle and pioneered by Comiskey when he was an undergraduate at MIT. Neat touch, and an impressive logistical feat.

A shorter post today, because quite frankly we don’t want to have to think about our portfolio much right now. As of just before noon on Friday, the SCI has fallen back under 2,000 points - and given the Dow’s 679-point drop on Thursday, we don’t much think Chinese investors are going to be in a buying mood this afternoon.

Aside from stomach-churning drops (one financial analyst explained the upside to me this week by noting that “ultimately, you can only fall 1,000 points so many times before you just run out of points”) the big story in mainland markets this week was the China Securities and Regulatory Commission’s announcement that it would be introducing short selling and margin lending.

Reports today indicate that this will be going ahead soon, but for now the Capitalist Roader Fund can’t make money in a falling market. And we’re still stubborn in our refusal to convert paper losses into real ones.

That means more of the same: gritting our teeth and holding. Anhui Conch Cement (600585.SH), which we continue to think is undervalued, is now threatening to fall below RMB20 (we bought in on June 3 at RMB55.97). Industrial and Commercial Bank of China (ICBC, 601398.SH) is now down almost 25%.

Overall, we’re doing slightly worse than the SCI, which has fallen more than 42% since June 3. And we’ll leave it at that until next week.

What we’ve been reading recently:

China Media Project - Conscience sold to the highest bidder in China’s “melamedia” - The role played by Chinese media in covering up the melamine scandal

The Green Leap Forward - China’s Coal Industry–MIT Report Challenges the Myths - A new report from MIT researches explains why new technology is not enough for China’s energy sector

Pomfret’s China - Is China Dismantling Its ‘Socialist’ Countryside? - China considers allowing farmers to become landlords

FT.com - Crisis marks out a new geopolitical order - Philip Stevens says the west can no longer assume the global order will be remade in its own image

The New Yorker - The Rationality of Panic - Why the panic surrounding the financial crisis is not “irrational,” as many claim

Silicon Hutong - Story of a Small Giant - Silicon Hutong on Chris Devonshire-Ellis’s “The Story of a China Practice”, which can now be downloaded for free (a nice touch)

Subscribe to our recommended reading feed for things China and business-related or browse our previous recommendations at del.icio.us

As of today, China’s one-year benchmark lending rate is 6.93%, down 0.27 percentage points from 7.20%. The one-year deposit rate has fallen 0.27 percentage points to 3.87% from 4.14%. The number 0.27 is divisible by nine - as is always the case with adjustments to Chinese interest rates. This is done to make it easier for lenders, who work a 360-day banking year, to calculate interest. Remember it wasn’t too long ago that the bank teller in a small provincial branch would have nothing more than an abacus at his or her disposal.

I have read countless stories on interest rate hikes and I believe the “increments of nine” thinking has appeared on my radar before. But I still get that slightly geeky, “well, I never…” feeling.

There was talk of the middle to end of September. Then they said after the National Day holiday, for sure. Now there are rumors about the middle to end of October. Nobody, it seems, can say exactly if and when the China visa situation will return to normal.

A Hong Kong travel agent today gave the following verdict: Things are back to normal, but not quite how you might have expected. Those with a Hong Kong ID card and work permit can get one-year or six-month multi-entry business visas for the mainland - but each visit can last no longer than 30 days. Those without a Hong Kong ID are stuck with the single or double entry visas.

This, apparently, is normal for applications from Hong Kong. Things become complicated when you consider that a lot of visas issued in Hong Kong prior to the restrictions were actually issued in Shenzhen. It was the Shenzhen visa office that had license to issue six-month multi-entry visas to all and sundry, and with no time limit on the length of each visit. According to the travel agent, Shenzhen is no longer allowed to issue these visas.

If the full dubious history of this visa saga is anything to go by, the word of one Hong Kong travel agent is not enough - so we would welcome any further input. But it appears we may have to wait a little longer before things really do return to normal.

(Anyone relying on a resumption of normal business so they can return to running their not-properly-registered - and therefore not-properly-tax-paying - China-based operations, should take a look at these words of warning from our legal columnist Steve Dickinson, which originally appeared in the June issue of CER.)

What we’ve been reading recently:

The Economist - The long march backwards - A new book argues that China is becoming less capitalist, not more

Imagethief - Illegal Baby part 2: I fought the law and the law won - Congratulations to Imagethief for legalizing his child. Shame about the fine

Danwei - New business magazines try to make the best of a bad situation - Chinese-language magazines for the rich hope to weather the economic storm

The China Vortex - The New Investment Rules For China - Suggestions for foreign investors in China

Chinese Negotiation - 10 Warning Signs - Telltale signals that a deal in China is about to get more complicated than you bargained for

Foreign Affairs - A Strategic Economic Engagement - Hank Paulson takes time out from fixing the US financial crisis to ponder on US-China relations

The American Scholar - The Censor in the Mirror - National Book Award winner Ha Jin on censorship in China

Subscribe to our recommended reading feed for things China and business-related or browse our previous recommendations at del.icio.us

An internet artist's impression

I found myself invited to a lunch meeting two weeks ago in Shanghai’s spiffy new World Financial Trade Center. I was the fly on the wall as lawyers from DLA Piper met with a trade delegation from Liverpool, England that was on a whistle-stop tour of the city. The Liverpudlians were getting the lay of the land (and hammering out their marketing pitch) before opening up their booth at the 2010 Shanghai Expo and trying to woo Chinese investors.

The Expo is a big deal for Liverpool, which I quickly learned is a sister city of Shanghai. It was the only UK city besides London to win a bid for a place at the Expo - “a massive coup for Merseyside and the North West,” says the Liverpool Shanghai Partnership.

Going after Chinese tourists was one Expo strategy raised at the meeting. One rep told me afterward that he thought the city would have a shot at bringing in Chinese football fans on account of Liverpool’s two Premier League clubs. I told him I wasn’t too sure how much Beatles tourism they should count on. Not much of a knowledge base to build on besides about 20-odd years of Enya-fied “Hey Jude” in KTV parlors, that is.

How exactly Liverpool will attract Chinese investment during the Expo still seemed up in the air at the meeting’s conclusion. “It depends on how the city leverages its distinctiveness.” In other words, who knows?

Yet one interesting nugget came up on the real estate front. I learned that Manchester-based property and transport conglomerate Peel is planning to build a 60-story, US$527 million skyscraper in Liverpool to reshape the city’s waterfront. It would be the UK’s tallest building outside of London (and still taller than the Gherkin). The name? Shanghai Tower - inspired by a two-week trip to this fair city by Peel chairman John Whittaker.

Inspiration is always nice to see between sisters, but, as the rep told me after the meeting, it would be nicer if Liverpool’s Shanghai Tower could attract a few Shanghai investors to help foot construction costs before the Expo hits town. Either that, or hold out for a “Liverpool Spire” to be built in Pudong some time in the coming years, to return the favor.

A private equity guy I know looks for deals in China that are tied to hard assets likely to deliver steady long-term cash flow. He has become, as he puts it, somewhat middle-aged in his approach to investment, having tired of the two-year double-your-money plans put forward by (over) ambitious types in the tech sector.

This investor came across a cement company in Sichuan province that he thought had potential and so the months of due diligence and negotiation began. Come mid-May the deal was all but done. The investor flew back to Hong Kong on May 9 - and was promptly hit by news the following Monday that a devastating earthquake had struck barely 10 kilometers from where the cement company was based.

“So did you get it for a discount?” I asked, assuming the asking price for assets that have fallen victim to a natural disaster would fall.

“The basic terms of the deal had already been agreed - and a good thing too,” the investor replied. “The price of cement in Sichuan has gone up so much due to the anticipated reconstruction projects that the company owners would have probably asked for more money.”