A nice meta-piece on the media machinations behind the NPC sessions in the Straits Times (of Singapore; subscription required) today.

Correspondent Tracy Quek reports that Premier Wen Jiabao’s usually staid post-NPC press conference was given a shot in the arm this year.

The event usually starts at 10am, after the NPC session has officially ended, and lasts for more than two hours. It’s held in a room on the third floor of the Great Hall of the People. Quek notes that the premier handles all questions (which are usually pre-selected) with the same genial smile he flashes so often on television and in photographs.

Questions to the Premier - no matter how leading or provocative - are met with polite replies spoken in measured tones, occasionally capped with a slight poetic flourish.

But this year’s press conference was different. The premier brought along some special guests, setting off a “lightning storm” of camera flashes.

A gasp ran through the crowd when instead of just Mr Wen alone, the three newly appointed vice-premiers walked into the room. With them was incumbent Vice-Premier Hui Liangyu.

But the vice premiers weren’t there to talk. Instead, it appeared that they had been invited simply to observe Wen in action. A cheeky German reporter, however, seized the chance to ask potential future premier Li Keqiang a question.

There was some uneasy shifting about on stage before Mr Jiang Enzhu, the official chairing the conference, cut in.

He said: ‘I said earlier that this is Premier Wen’s press conference. There will be other occasions to hear from Mr Li and the other vice-premiers. Now, Premier Wen will continue to answer your questions.’

Without missing a beat, a smiling Mr Wen reclaimed his place in the spotlight.

Another amusing episode involves a reporter with a question that involved “a word starting with the letter T,” after a series of questions concerning Tibet.

To a reporter who said his question involved a word starting with the letter ‘T’, Mr Wen quipped: ‘Thank you for raising yet another question with a word starting with ‘T’.’

Before launching into his reply to a Taiwanese reporter who asked about furthering cross-strait economic cooperation, he said: ‘Please…convey my regards to our compatriots in Taiwan.’

So, while the many reports on Wen’s statements on Tibet and inflation will dominate headlines today, it’s nice to get a look at the workings of the NPC media machine once in awhile.

In recent weeks, a trend in the US Democratic primaries has been the increased tough talk on globalization and its effects on America’s manufacturing sector. This is a topic - surprise, surprise - that strikes chords in states like Ohio. Senators Obama and Clinton have been one-upping each other in speeches and debates on the virtues of protectionism and the evils of NAFTA (though Obama reportedly sent signals to the Canadian government to reassure them that, hey, it’s all just campaign talk to win the nomination - pandering is the name of the game**).

So where do the candidates stand on China? We learn from The Nation’s Campaign ‘08 blog (via the China Law Blog*) that, when asked by a coalition of labor, agricultural and environmental groups what they would do about “China’s unfair advantage over Ohio workers and manufacturers,” Obama said:

“I recognize that China’s currency manipulation and domestic subsidies gives it an unfair trade advantage and has led to U.S. job losses. The Bush administration has utterly failed to address this growing threat to U.S. businesses. I am committed to tackling this problem and ensuring that all trade manipulations are addressed by the U.S. government. I have cosponsored tough legislation in the U.S. Senate to overhaul the U.S. process for determining currency manipulation and authorize new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles. I have also supported proposals to increase tariffs on Chinese goods in order to offset the advantage their goods receive due to currency manipulation. As president, I will immediately adopt a strong program to push the Chinese toward voluntary reform – a goal that is possible with the right leadership in Washington.”

Manipulation talk. “Tough” legislation. A “strong program” to “push the Chinese” toward “voluntary reform.” So far, sounds like a typical member of Congress to me, albeit with the slightly mixed image of pushing someone to do something voluntarily.

Here’s what Mrs. Clinton said:

“The Bush administration has failed to make China play by the rules. Consequently, our workers – particularly those in manufacturing states like Ohio – have paid a price. That is why as President, I will crack down on China’s unfair trade practices. I have co-sponsored the Currency Exchange Rate Oversight Reform Act, which will require the administration to take definitive steps to stop China and other countries from harming American interests by undervaluing their currencies. And because currency manipulation is contributing to the trade deficit, I have also co-sponsored legislation that will require the administration to address the ballooning trade deficit. As President, I will make enforcement of trade agreements a priority. To that end, I will appoint a trade enforcement officer and double the enforcement staff at the Office of the United States Trade Representative. The current staff is too small to monitor and enforce the increasingly complex trade agreements.”

Her answer, true to form, is wonkier and emphasizes specific experience more than Obama’s, but it sounds like the same tune to these ears.

Do either (or both) of them mean what they say? No word so far on whether Team Obama has slipped a back-channel note through to placate Hu Jintao (although if he did, that sounds like something that the Chinese, unlike the Canadians, would keep to themselves for now). To be sure, this was almost certainly not aimed at a Chinese audience, but people in the PRC will be taking note of what these candidates say. Or at least they will at some point - certainly after they’re through being bombarded with news reports from the National People’s Congress.

The pattern in past elections has been that candidates who talk tough on China soften their tone once they get into the White House (see: Clinton, William J.). Will that hold true this year? It will be interesting to watch, especially around Olympics time, when George W. Bush comes to Beijing (as a “sports fan,” he helpfully points out). Campaign talk is one thing, but if the (hopefully nominated by then) Democratic candidate goes too far in denouncing Bush’s visit - say, by getting caught up in “genocide games” rhetoric - well, that might be harder to take back.

* Geeky aside to China Law Blog’s Dan Harris: We love your blog, but we love our RSS reader as well. Please, oh please, consider a feed not powered by the blocked-in-China Feedburner.

** Update: According to Canada’s own Globe and Mail, Obama isn’t the only one seeking to reassure the neighbors to the north:

Mr. Brodie, during the media lockup for the Feb. 26 budget, stopped to chat with several journalists, and was surrounded by a group from CTV.

The conversation turned to the pledges to renegotiate the North American free-trade agreement made by the two Democratic contenders, Mr. Obama and New York Senator Hillary Clinton.

Mr. Brodie, apparently seeking to play down the potential impact on Canada, told the reporters the threat was not serious, and that someone from Ms. Clinton’s campaign had even contacted Canadian diplomats to tell them not to worry because the NAFTA threats were mostly political posturing.

In a land where the benchmark index more than quadrupled in two years, does the Magic Kingdom really have a place? According to the Shanghai government, yes - although Disney itself seems more reticent.

I first read rumors of a Shanghai Disneyland in March 2006, when China Daily quoted the city’s mayor, Han Zheng, as saying a theme park was being planned.

“We have hoped to build a Disneyland theme park for a long time, but we are not sure when the construction will begin,” the report said. Han was talking to reporters in Beijing during the 10th National People’s Congress.

Then, nothing. Now, new, more detailed rumors have surfaced. AP did a story recently (it was carried on the website of Singapore’s subscription-only, no-free-archive Straits Times, and I can’t seem to find that story on the news aggregators) saying that a Disneyland for Shanghai has nearly been confirmed. All that’s left is approval from the central government. It even named possible sites for the park: Chongming Island or Chuansha in Pudong.

The evidence this time? The AP quoted an anonymous source in the city government, and also pointed to a quote by city official Qian Weizhong in the online edition of “state-run magazine Oriental Outlook”: “Once we have central government approval and a concrete plan, Shanghai Disneyland can begin construction right away.”

AP also pointed out that two “high-level executives” from a US Disney theme park had surveyed Chongming Island twice in early 2007. Disney has denied that a Shanghai park is in the works.

Interestingly, the report says public discussion of Shanghai Disneyland was suspended after the pension fund scandal that took down former city party boss Chen Liangyu shook the city in 2006.

That theory would explain a few things. Han Zheng was only recently officially let off the hook - this Reuters report says he’s been allowed to keep his job despite being implicated in the pension fund abuse probe. There’s a new party boss (former construction minister Yu Zhengsheng) in town, and anointing a Disneyland for his new jurisdiction would surely be a nice bonus - even if the heavy lifting for the deal began during Chen’s reign.

The set-up seems perfect: Chongming is already earmarked for the Dongtan eco-city project, which means Disney visitors won’t be choking on smog while they ride Space Mountain. It’ll be a major tourism boost for a city that desperately lacks top-class family entertainment venues. And Disney would get a major presence in the mainland market, introducing millions of newly minted middle-class Chinese to the joys of Mickey and co.

Although Shanghai and Hong Kong are two very different markets - and the parks will also surely be quite different, at least in terms of scale - the question remains: Will a Shanghai park end up like Disney’s Hong Kong venture, which isn’t exactly raking in the cash? Or will Disney conquer China with all-American values and entertainment? It’s a small world, after all.

Highlights from the last week of China business news.

Inflated figures
China’s third-quarter macro figures came out last week. The trade surplus in October continued to surge, which for once is actually surprising. Expensive commodities worldwide meant that the value of imports was up 25.5% from a year ago, but export growth still outpaced it, leaving the month’s trade surplus at US$27.05, a record high. The central bank said GDP rose 11.5% in the first three quarters, compared to a total increase last year of 11.1%. On the other hand, inflation rose 4.1% in the first three quarters, compared to a 1.5% rise in 2006. Goldman Sachs analyst Hong Liang raised a warning about inflation again (she did this a few months ago at the height of the pork shortage too), saying that the monthly CPI could hit 7% this year. The central bank has done the only thing it can do: raise interest rates. The reserve requirement rate will go up for a ninth time this year, to 13.5%, effective November 26. Central bank governor Zhou Xiaochuan has pledged to fight inflation, but how exactly he plans to do this is anyone’s guess. Goldman predicts two more rate hikes by year’s end.

Planning a buying spree
Remember all that talk about a gush of Chinese capital outflows? Well, it’s definitely in the works. China National Offshore Oil Corp, which reduces to the rather cute acronym CNOOC, was linked to acquisitions in Australia and Nigeria this week. There was a rumor that CNOOC wanted to take over Shell’s stake in an oil project in Australia’s Northwest Shelf region for US$450 million, which was later curtly denied by the Chinese company. Now, a new story has surfaced, saying CNOOC wants to hand over US$900 million to Shell, again, but this time for almost 50% in two Nigerian offshore blocks. No comment from CNOOC.

But commodities acquisitions aren’t really news - banking buy-ins, however, are. The FT broke the news - citing anonymous sources - that China’s top three banks, Bank of China, ICBC and China Construction Bank, approached Singapore’s Temasek Holdings to buy its 17% stake in Standard Chartered. The contacts were “informal and discreet,” which could mean anything, really. In any case, no deal is on the cards - Temasek isn’t selling, and Standard Chartered isn’t keen on having its independence questioned by having the Chinese as its largest stakeholder. An ICBC official denied that any such offer to Temasek took place. Lastly, the much-ballyhooed China Investment Corp revealed that it’s a cornerstone investor in China Railway Group’s Hong Kong listing. The sovereign fund will take US$100 million, the biggest institutional stake, in the H-share offering. This is its second move after buying into Blackstone months ago.

Singapore boosts its guanxi
China and Singapore indulged in a week of cozy relationship-building, with top officials of both countries meeting here and in the land of the Merlion. Singapore’s Lee Kuan Yew told Singapore’s newspaper, the Straits Times, that the man tipped to be Hu Jintao’s successor, Xi Jinping, belonged to the “Nelson Mandela class of persons,” upon meeting him for the first time in China. Meanwhile, Premier Wen Jiabao spoke candidly at a conference in Singapore, saying that illegal money flows threatened China’s stability and that his government would have difficulty reaching the environmental targets they set for themselves. This culminated in the announcement that China and Singapore would build an “eco-city” together in Tianjin, that hot economic development zone the central government is now so keen to promote. It brings to mind another Singapore-China project, the Suzhou Industrial Park, which was started when China was still trying to encourage industry in the Yangtze River Delta. More eco-cities are a good idea, because hopefully it will mean hearing less disturbing news, like the report this week about China’s increasing appetite for nuclear energy, and how it has just signed a landmark deal with Kazakhstan to buy the uranium it needs to build 40 new nuclear power plants by 2020.

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Highlights from the last week of China business news.

Who’s out, who’s in

The Chinese Communist Party’s 17th quinquennial congress (we so rarely get an opportunity to use that word), with its multiethnic pageantry and interminable state of the party speeches, came to an end on Sunday. Time for the announcement everyone was waiting for - the new roster for the party’s leadership group, the Politburo Standing Committee. Three members - Zeng Qinghong, Wu Guanzheng and Luo Gan - stepped down, making room for four people to complete the nine-seat committee with the death of Huang Ju earlier this year. Those four are Liaoning party secretary Li Keqiang, party secretary of Liaoning province and long-time protege of president Hu Jintao, Xi Jinping, the replacement of dead-to-the-party Shanghai party boss Chen Liangyu, He Guoqiang and Zhou Yongkang. The former two are the true rising stars - one or the other is expected to take Hu’s place as party secretary-general when he steps down in 2012 - while the former two will have reached the unofficial retirement age of 68 by then. Vice premiers Wu Yi and Zeng Peiyan have also retired from the party’s broader Central Committee. Notably (read: incredibly) still keeping his post is 67-year-old Jia Qinglin, who has close ties to ex-president Jiang Zemin and has been linked in the past to corruption in Fujian.*

3, 2, 1 … blast off

The title of this item could apply to China’s first lunar probe, which launched successfully in Xichang, Sichuan province on Wednesday to start a one-year mission to orbit the moon and take pictures of the surface with really cool cameras. It was seen as a big coup for national prestige, despite the fact that Japan launched its own unmanned lunar mission a few weeks back and India is planning one soon.

On the other hand, it could just as easily refer to the blockbuster IPO of PetroChina, which got off the ground Monday and will likely set yet another record for the mainland stock market. PetroChina set an indicative price range of RMB15-16.70 (US$2-2.23) for the sale, which should begin trading on November 5. The listing, along with strong performance of PetroChina’s Hong Kong-listed unit, could also push the state-owned energy giant past ExxonMobil as the world’s highest-valued publicly traded company. Defying the mob that will inveitably rush to buy in, Nebraskan mega-investor Warren Buffett sold the last of the 11.05% stake in PetroChina held by his firm, Berkshire Hathaway. Buffett denied speculation that he was selling because of outcry over the company’s dealings in Sudan, saying that it was simply a smart move. We find it hard to argue: He made a handsome US$3.5 billion from an initial investment of US$488 million.

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*Correction: We got it mixed up earlier. To our knowledge, Jia Qinglin had no ties to the Chen Liangyu affair in Shanghai, although he was questioned in the same anti-corruption probe that resulted in Chen’s demise.

The CER cover story for October included, perhaps unsurprisingly, a discussion of political developments taking place in China, with particular reference to the Communist Party Congress. The problem with previewing these kinds of events is that it is very hard to distinguish truths from falsehoods and rumors from likelihoods.

Now the congress has actually begun, talk is rife about who may be elevated to the Politburo Standing Committee (which guides the Politburo, which guides the Communist Party, which guides the country, which… either way, if you have a place on the standing committee, you are well positioned to achieve your professional goals and probably your personal ones as well). The (relative) young bloods who get promoted will automatically become potential future presidents and premiers.

In Li Keqiang, party secretary in Henan province, and Xi Jinping, party secretary in Shanghai, we have two supposed front runners from opposite sides of the track. While Li comes from humble roots in Anhui province and rose through the ranks of the Chinese Communist Youth League, Xi had a comparatively privileged upbringing as son of former Vice Premier Xi Zhongxun.

Should Xi make it on to the standing committee - opinion is divided as to whether he will or, if he doesn’t, whether he’ll have missed his shot at succeeding Hu Jintao - he would be at the front of a large cluster of newly promoted “princelings” (children of former party elders). Writing in the most recent Jamestown Brief, Dr Cheng Li of Hamilton College in New York suggests there could be as many as eight or nine princelings in the next politburo.

But what does this mean? In a country still rife with corruption where the public tend to perceive government officials as on the make and on the take, it could be argued that elevating people distinguished by birth rather than by quality (although there are numerous effective administrators among the princelings) will only serve to exacerbate social tensions.

Update: The first cut’s already been done. The 200+ members of the Central Committee have been selected, and a few predictable faces aren’t in the lineup, including Wu Yi and vice president Zeng Qinghong. Standing Committee lineup is out later toda - the excitement is palpable!

Update 2: The nine-member Standing Committee’s been announced. The four new members are: Xi Jinping, Shanghai party boss; Li Keqiang, Liaoning party boss; He Guoqiang, head of the party’s organization department; Zhou Yongkang, public security minister. They join Hu Jintao, Wen Jiabao, Wu Bangguo and Jia Qinglin.

Highlights from the last week of China business news.

Democracy, but only within the party
While we wait breathlessly for the new leadership lineup next Monday, at the close of the twice-a-decade Party Congress, we’ll just have to content ourselves with these morsels about the CPC’s burgeoning “intraparty democracy.” Say what? President (and party boss) Hu Jintao said in his key speech to the Congress that the party is working to “expand intraparty democracy to develop the people’s democracy.” Xinhua noted that Hu uttered “democracy” more than 60 times during that speech (which, by some accounts, was a 2.5-hour test of attendees’ stamina). Then, the party’s HR chief, who vets promotions and appointments, said “Democracy within the party is the lifeline of the party,” but also added, “Likewise, unity is also the lifeline of the party.” Huh? The markets, meanwhile, paid no attention to this game of ideological tongue-twisters. The Shanghai Composite broke through the 6,000-point ceiling on October 16, setting a new record. Making money trumps politics, for now, it seems.

High-tech picks up speed
Just as talk of a second internet bubble in the US starts to gain traction (don’t believe it? This great New York Times article will convince you), Alibaba, right on cue, pops up with its IPO. Jack Ma, Alibaba’s pugnacious boss, has made plans to raise US$1.33 billion on the Hong Kong Stock Exchange, which would make it China’s biggest tech IPO to date. If all goes to plan, Alibaba will receive a net profit of more than US$80 million. Ma has already bested foreign pretenders like eBay, who dared encroach on his turf (Alibaba’s auction site Taobao dominated eBay in the local e-auction market). Now, pockets lined with cash, it looks like he’s ready to start the next phase of Alibaba’s rise and rise. Another smart Chinese player, telecom firm Huawei, is also making its mark felt abroad. Last week it announced a plan to buy 21.5% of 3Com, the US network equipment manufacturer. The folks at the Shenzhen Stock Exchange must have been paying attention - Huawei, after all, is still a privately held company, although it’s already a global telecoms equipment player. The exchange will launch a new growth enterprise board targeting high-tech companies, part of a national plan to accelerate the country’s tech sector, which also includes a US$10.7 billion investment from China Development Bank.

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Official reactions to the many recent recalls of foods and other goods made in China over the last few months have fluctuated between two main approaches:

1) stressing the need for better quality and safety standards to redeem the international image of the “made in China” brand (internally) and 2) accusing the countries lodging the complaints of trade protectionism of the worst sort (externally).

The accusations, it seems, get more intense when the company declaring the goods unsafe is a trade competitor, as this article from the Washington Post on trade complaints made to China by Southeast Asian countries suggests: (more…)

Highlights from the last week of China business news: Hu Jintao has a few aces up his sleeve in the run-up to the party congress; the world’s largest standing army, the PLA, gets in on this whole ‘internet’ thing.

(more…)

A slightly macabre post today. The news of toy company boss Zhang Shuhong’s suicide in the wake of Mattel’s first global product recall brought to mind another recent suicide, also apparently caused by external pressures. On June 3, Song Pingshun, formerly Tianjin’s representative to the Chinese People’s Political Consultative Conference, was found dead in an apparent suicide as he was being questioned for corruption.

The 61-year-old Song’s rank was equivalent to that of a cabinet minister, because of Tianjin’s economic clout, according to Reuters. Song had held a number of powerful positions in the city over the course of his career, having been vice mayor, chief of police and party official in charge of the judiciary and law enforcement.

Song was expelled from the party posthumously in July, a rare disgrace. From China Daily:

The CPC Central Commission for Discipline Inspection decided to take the rare step of posthumous expulsion after finding that Song had “abused his public power to seek benefits for his mistress, seriously violating CPC discipline.”

“Song, morally degenerate, kept a mistress and helped her obtain money through illegal means,” the discipline watchdog said.

Talk about flogging a dead horse!

Cheeky feline blogger Black and White Cat makes some excellent points about the mysterious circumstances surrounding Song’s death, including the fact that mainland media took nearly a month to report it, and that initial reports couldn’t even determine whether he had suffocated himself or leaped out of a building.

Whether it’s business or politics, it seems suicide is a new way out.