A few good posts over on Paul Midler’s The China Game blog over the last couple days. In the first, he reproduces a letter from a reader drawing an important distinction between China’s financial and “real” economies, and how exposed each is to external forces:

One point that I think needs to be borne in mind is the difference between the financial economy and the real economy. In China’s case, the financial economy is not integrated into the global economy (you can’t move large sums in to invest or repatriate or invest-out large sums without bureaucratic approval and good reasons), which is one reason people say Western financial conditions have limited impact on China. This is why many large financial firms are clamoring to get into China, not only because it’s a promising new market but because it represents diversification in the way few overseas markets do these days. As far as the real economy of imports and exports etc. goes, I think there’s little doubt that China is significantly integrated into the global trading system, for good and for ill.

In another post, Midler highlights a welcome introduction to the (English-language) China blogosphere, Pomfret’s China written by John Pomfret of the Washington Post, formerly that paper’s China bureau chief and the author of Chinese Lessons, which is a great read. He’s only starting, and like most blogs that have mentioned T!b3t in the past several weeks, it’s already attracted swarms of comments that are as valuable for their insight into the massive support the crackdown has received in China (and by native Chinese abroad) as they are disposable for the quality of their reasoning.

Finally, there is an interesting post from today on a Chinese drug firm that may have accidentally disqualified the Greek weightlifting team from performing in the Olympics by supplying it with “tainted” health supplements:

A surprise inspection of the Greek team by the World Anti-Doping Agency revealed that 11 of the team’s athletes had unapproved substances in their systems. The Chinese firm has already apologized for providing the bad product, saying: “We send [sic] you L-tyrosine mixed with something else that it [sic] only for research purposes.”

Highlights from the last week of China business news.

Hobnobbing in Bali and Beijing
Lots of high-powered meetings recently, with the attendant speculation about their outcomes. Probably the most enjoyable one to be at is in Bali, where 190 countries have sent delegates to hash out a plan - for two weeks - to replace the Kyoto Protocol, which expires in 2012. That meet started Monday, and, although details are still surprisingly thin on the ground, it appears that China will continue to reject imposed emissions targets. It will propose the creation of an international technology transfer fund - paid for by developed countries - that will help developing nations research and create their own clean technology. This works out very well for China, clearly. In the less salubrious environs of Beijing, another meeting of consequence ended this week, confirming the rumors that the top national leadership has decided to step up monetary tightening measures next year. The seasoned decoders of bureaucrat-speak at the Journal say officials now speak of a “tight” monetary policy for next year, instead of the “stable-to-tight” regime now in place. Next week, the US-China Strategic Economic Dialog happens for the last time this year. Hank Paulson flies in with Susan Schwab, product safety chief Mike Leavitt and others to talk about product safety and - surprise! - letting the yuan appreciate more quickly. Vice Premier Wu Yi must be glad she’s retiring in March.

Rio Tinto mines a rich vein of rumors
Will they or won’t they, steel executives wondered this week about a Chinese counter-bid for Rio Tinto. Last week, we wrote that China Investment Corp was rumored to be putting together a deal to buy into Rio, but that was quickly squashed by CIC and Rio executives. The sovereign wealth fund did say, after all, that it’s not confident enough to go raiding abroad yet, and that it would steer clear of sensitive industries. So the rumor mill promptly put new hearsay into circulation. For awhile, it seemed that Baosteel would spearhead a consortium of Chinese firms to snatch up Rio Tinto. A Baosteel executive told Economic Observer last week that his firm would only join a bid if the Chinese government wanted it to - hinting that a bid was possible, though not confirmed. Then the 21st Century Business Herald said Baosteel chairman Xu Lejiang confirmed that a bid was in the works. Shares of Rio Tinto jumped. Today, the official Shanghai Securities News quoted Xu denying the quote. “I did not say this. It is a fabrication of the media,” he said. Even with that seemingly definitive response to the matter, our guess is the rumor mill still has plenty of grist to keep it churning.

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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…)

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.

Highlights from the last week of China business news: Mattel toy recalls escalate the product safety issue; China’s forex reserves are safe - for now.

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Food safety in China has always been a concern but that concern has been whipped up into an international frenzy recently by the media. Abroad, the concern is about the safety of Chinese imports. Here in China, there was a kafuffle about an investigative report that purportedly showed dumplings made of cardboard being sold in Beijing.

Now a new food class must be approached with caution. In Beijing again, a “high-ranking” South Korean diplomat died after eating a sandwich from a shop near his office. He suffered a stomach-ache and diarrhea after ingesting the food item.

The Beijing hospital conducting the postmortem said only that results would be out in a month.

This makes me rethink the wisdom of having eaten a sandwich I just bought from a shop near my office.

I originally came across this article on the website of the Straits Times, Singapore’s main paper, which is pay-only, and there were some comments left by readers. Since Beijing will be host to plenty of tourists and foreigners next year, their comments might be worth reading: (more…)