Here we go again, though not on our own: It’s safe to say that everyone with money in the mainland markets keeps searching for a rebound, but no one seems to find what they’re looking for.

We’re quite frankly running out of words to describe the state of the markets - “grim” and “dismal”, which sounded so appropriate at first, no longer seem to capture the pervading sense of inevitable doom around A-shares. That’s despite – or perhaps because of – noises from Beijing that the government could step in to prop things up. We noted in the CER Weekly Email Briefing yesterday that half-hearted moves by the government earlier this week only strengthened the sell-off. As trading stops for lunch on Friday, the Shanghai Composite Index (SCI) is down another 2.4%, to around 2,372. Remember when everyone was so sure that the government wouldn’t let the SCI fall below 3,000? Ha.

So how is the fund doing? We’re down 36.9% as of this writing, meaning that the value of our initial RMB10,000 fund has been reduced to RMB6,310. Of course, those are just paper losses (or so we keep telling ourselves) because we still haven’t sold anything. As has been the case, the only good news is that the bad news isn’t getting significantly worse. Anhui Conch (600585.SH) continues to wallow around 52% below the price we bought it, and Hubei Guangji Pharmaceutical (000952.SZ) is still down about 40% - more or less the same as last week. Industrial and Commercial Bank of China (601398.SH) has also been blessedly boring.

So, still no action from us, and we won’t make any forecasts for the coming weeks. We just hope that we don’t keep going down the only road we’ve ever known.

What we’ve been reading recently:

Stryde Hax: Hack the Olympics! - A US blogger sets off an investigation into Chinese gold medal gymnast He Kexin’s real age (dubbed “babygate” by Imagethief) | none

Liverpudlian scalpers, scam Web sites, and other highlights of an Olympic-sized ticketing fiasco. - By Jacob Leibenluft, Tom Scocca, June Shih, and Tim Wu - Slate Magazine - You can still get Olympics tickets in Beijing, but it’s tricky. A CER editor went so far as to impersonate a Dutchman, but to no avail. | none

Letter from Beijing: The Only Games in Town: Reporting & Essays: The New Yorker - More from the New Yorker: Anthony Lane on the first week of the games | none

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What we’ve been reading recently:

Olympics Postcard: Bug Wars: The Talk of the Town: The New Yorker - Kari Heliövaara, the man behind the greening of Beijing | none

ESPN - Opening Ceremony performers faced harsh conditions - Olympics - Heatstroke, injury, adult diapers, and one unforgettable Olympics opening ceremony | none

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It works like clockwork. You get the subway to Beitucheng, go through security and you are in the special ticket-holders-only zone. Back on to the subway and it’s a short ride to the Olympic Green, complete with sporting venues, broadcast facilities and shrines to the corporate gods that agreed to sponsor the proceedings.

(Volkswagen: Nice dancing show. China Mobile: Does the huge imitation TD-SCDMA handset sticking out of the side of your building work any better than the real things? Johnson & Johnson: Tasteful decor. Adidas: Pretty interesting from a sporting perspective, particularly a display that includes Jesse Owens’s running shoes and Ian Thorpe’s swimsuit. State Grid: Given that many people don’t actually get to choose whether they use your services or not, do you really need to be there? Why not spend the money plugging holes in the grid?)

Entry into the National Stadium (the Bird’s Nest) is equally smooth. And not only does the lattice design look good from the outside, but it works from the inside too. The stairwells thread in and out of the beams that form the stadium’s outer shell, creating plenty of vantage points from which you can catch glimpses of the surrounding area (Fortunately, the weather was great on Saturday.)

Crucially, the sight lines from the seats are good. This is generally the case with most modern sporting arenas but if you’ve been to a few of the older English football stadiums and seen how the other half lives, it is much appreciated.

As the day’s feature event was the final of the 100 meters, the crowd was large and responsive. Some of the biggest cheers went to the Chinese shot putters, which makes you wonder just how intense the reception will be for 110m hurdler Liu Xiang later in the week.

And now for the criticism: Food. Or, more to the point, the lack of food. No complaints about the drinks. Coca Cola has a stranglehold on the soft beverage offerings while Budweiser, Tsingtao and Yanjing are engaged in a three-way battle for the beer market (the result of a bidding war laced with local politics).

But barely two hours into the evening athletics program, food outlets in the Bird’s Nest were devoid of hotdogs, sandwiches, chips and noodles. The last bread roll went to a guy several places ahead of me in the queue. I eventually returned to my seat armed with pots of yogurt and packets of cream crackers - much to the disappointment of my hungry friends.

Tim Wu at Slate argues, persuasively in my opinion, that Western coverage of the Olympics has focused on the “two Ps” – pollution and protests – to an extent out of proportion to their significance, and displayed a more negative slant than it might in other countries:

So are the media just being a little mean to China? It does at times feel akin to if coverage of the Atlanta Olympics were focused on the failings of the U.S. health care system and the plight of the American Indian. One foreign correspondent for a major American newspaper agreed, telling me, “In Athens the traffic jams were presented as the outgrowth of a hip Mediterranean lifestyle. Here they become yet another product of state repression.”

John Pomfret at the Washington Post agrees, saying further that the Olympics have proven irresistible bait for Western pundits to seize on in support of pet theories about China’s supposedly “collectivist” model. He takes two particularly egregious op-eds that have popped up recently in US newspapers to task, starting with the NYT’s David Brooks (full column here; also see James Fallows’s diplomatic but thorough dissections of the piece here and here):

“It was part of China’s assertion that development doesn’t come only through Western, liberal means, but also through Eastern and collective ones,” Brooks states. He then broadens this theory to say: “If Asia’s success reopens the debate between individualism and collectivism (which seemed closed after the cold war), then it’s unlikely that the forces of individualism will sweep the field or even gain an edge.” Takeaway? China is a challenge. Not just because it’s big and bad but because they think different over there and the Olympic Ceremony proves it.

I wonder if Brooks has ever seen American marching bands, or line dancing, or visited a high school where the coolest kids are always part of a group - say, the football or basketball teams. I would argue that in many way Americans bow more to the group than the Chinese, which explains why the Chinese party-state has been so intent on forcing comformity.

Even more, I wonder if Brooks has ever driven in China (look out for grandma!), or sharpened his elbows in the scrum that forms each time you try to get off an airplane, or tried to get Chinese co-workers to band together. Let’s just say in the decade that I’ve lived in China (over the course of 30 years), I haven’t seen or heard much collectivist impulse except when it was rammed down the throats of ordinary Chinese.

And as to Brooks’ point about China’s rise being attributed somehow to collectivist impulses. Wait a second. The most dynamic sector of China’s economy is the private one. It’s a nation of entrepreneurs. It’s a culture of entrepreneurs. Look at Hong Kong, or Sydney, or Main Street Flushing and now Beijing, Shanghai, Shenzhen, Chengdu. That’s Chinese and it’s “individualist” up the wazoo.

Then he deals with the Post’s Harold Meyerson (full column here), who for some reason took 2,008 drummers drumming in unison as a more frightening omen than, say, an invasion of South Ossetia:

Meyerson noted that during the parade of athletes China’s flag bearer, Yao Ming, was accompanied by a 9-year-old boy who dug two classmates out of the rubble of the Sichuan earthquake. When asked by NBC why he did it, the boy said “he was a hall monitor and that it was his job to take care of his schoolmates,” Meyerson wrote, adding “that answer may tell us more than we want to know.”

Huh???

What we’ve been reading recently:

China’s newfound obsession with wine. - By Mike Steinberger - Slate Magazine - Mike Steinberger on China’s growing obsession with wine (and we don’t mean baijiu)

No “frangers,” no “frozen” at somber athletes camp - Olympics - Yahoo! Sports - Despite excellent facilities, the Olympic Village seems to be lacking in fun. Great quote from Kazakh canoeing trainer at the end.

FT.com / Asia-Pacific / China - China to overtake US as largest manufacturer - Economics consultancy tips China to overtake US as world’s largest manufacturer next year - four years earlier than expected

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Inauspicious omens for our fund on Olympic opening day. Our initial RMB10,000 investment is now hovering around the 7,000 mark, tethered as it is to the sinking stone of Anhui Conch and the anemic Guangji Pharmaceutical. Anhui has now lost nearly half its value since we scooped it up in early June, and riboflavin producer Guangji is down 25% since we bought it a couple of weeks back.

ICBC, our third stock, continues to stick around at about the level we bought in, which is not bad considering that the Shanghai Composite Index is once again nearing the 17-month low it hit back in mid July. These are grim times, but who’s watching the markets today anyway? All eyes are on Beijing’s National Stadium for tonight at least. Maybe next week we’ll gain the fortitude to make some moves that take us in a positive direction.

Power shortages aren’t a new thing in China, but now they’re getting an Olympic twist. This post on Danwei shows today’s Yantai Evening News, which reports on the drastic measures being taken in parts of Shandong to ensure adequate power for the Olympics, and to keep the television sets on for viewers at home.

“From August 8 to August 25, all big power consumers including steel plants, mines (except for coal mines), cement mills and chemical factories will suspend production; half of all street lamps will be turned off; air con thermostats in shopping mall, hotels, offices will be kept above 26 °C.”

Danwei notes that no official explanations have been given for the power shortages. That’s not surprising – the explanation that China’s power system is rife with intractable flaws might be a bit much for a casual government statement. Here’s a quick overview of some of the larger problems, which were covered in more detail in our June cover story:

- Huge distances between sources of energy (coal mines in the north and west) and demand centers (the eastern and especially southeastern coast)

- Inadequate freight rail links for carrying coal

- Underdeveloped power transmission networks

- Low retail power tariffs combined with pricey coal, making profitability a distant dream for power producers, and discouraging investment in new generation capacity

- Massive growth in demand for power

Those factors are no different in Shandong than anywhere else in China. Like many eastern provinces, its consumption of energy exceeds in-province production by more than 20%, according to the International Energy Agency’s 2007 World Energy Outlook report.

That these shortages are being seen before the Olympics even begin suggests the games are less to blame than an already-fragile power system. But why Shandong? Down in Shanghai, which is even more distant from the northern coal mines, and where you could probably grill yangrou chuan this summer by holding a skewer out of an open window, we haven’t been seeing these kinds of shortages.

Part of the reason is that Olympic-host-city Shanghai is going to get preferential treatment of a kind that won’t be enjoyed by second- and third-tier cities in Shandong. But one bit of data in the World Energy Outlook presents an intriguing possibility:

In 2006, average end-user power prices in Shandong were the third-cheapest of any province in eastern and central China (only Henan and Hebei were cheaper). On the other hand, Shanghai’s power was the second-priciest in the country after Guangdong. Could excessively cheap power in Shandong be aggravating the situation there?

There are problems with the pricey-power-means-no-cuts argument, of course – parts of Guangdong face regular shortages. Nevertheless, it makes some sense – certainly more than any Olympic connection.

What we’ve been reading recently:

The first protesters arrive… » The Peking Duck - The first protest of the games and a journalist's account of how he was accosted by angry locals while trying to photograph it | none

Beijing Taxis Are Rigged for Eavesdropping - WSJ.com - We've noticed these devices in taxis before – now we finally know what they are. | none

‘China’s first blogger’ Isaac Mao on the impact blogging has had on his country | Technology | guardian.co.uk - Isaac Mao on blogging in China | blogs internet china society isaacmao

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What we’ve been reading recently:

FT.com / Asia-Pacific / China - Beijing outlines Olympic protest rules - The Olympic guide to protesting - you can’t just turn up with your placard | china olympics protest

Beijing’s Anti-Smog Efforts Failing, Independent Readings Suggest | Wired Science from Wired.com - More confirmation that Beijing’s promise of clean air for the Olympics isn’t working out | beijing olympics pollution wired

Ben’s Blog…..小本的博客 » The Foreigner Card, Don’t Leave Your Home Country Without It - Using foreigners as loss leaders… an interesting business model (h/t Danwei) | foreigners fuzhou beer

New York Times exposes their own ‘anonymous’ source - How not to quote anonymous sources | nyt journalism beijing uighur

Nightly News video : Reporters struggle to scale China’s ‘Great Firewall’ - Danwei.org’s Jeremy Goldkorn on whether journalists are just whining about internet restrictions (answer: yes). H/T to internet gfw olympics danwei.org nbc

The Beijing she knew is gone; in its place, the Beijing she loves - Los Angeles Times - LA Times staff writer Ching-Ching Ni reflects on the new Beijing and the new China as she prepares to leave the country once again | Beijing Chairman Mao

Olympic shames for mascot makers | The Sun |News - Not a bad piece of journalism by any means, but indicative of the treatment China can expect while under the wider and more intense media spotlight that accompanies the Olympic Games | china olympics mascots journalism labor

Beijing lifts loan quotas to boost slowing growth - SMCP.com | china business economy PBOC banks lending

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