A Campaign to Strike at the Root of Corruption

As the anti-corruption drive cuts through China’s officialdom, dealing fatal blows to both “tigers and flies” at both the higher and grassroots levels, there is rising demand for institutional reform in managing officials.

Qin Xiaoying

When “tigers” as big as Zhou Yongkang, the Standing Committee member of the ruling party’s Political Bureau, and Xu Caihou, vice-chairman of the Central Military Commission, were accused of amassing a huge amount of wealth through bribery and embezzlement; when a host of officials at the ministerial level were charged with corruption; and when nearly one third of the top officials of Shanxi province were involved in corruption cases, the shocked public began to ask: how did these corrupt officials get selected and ascend to the top rungs of the hierarchical ladder without being rooted out earlier? Wasn’t there a mechanism to screen them and monitor their behavior? If there was one, what were the loopholes in the system?

Take the cases of Zhou and Xu. The powerful duo appointed and promoted a large number of officials to crucial posts in the military, police, judicial and economic departments, including a minister-level official in the Ministry of Public Security and a deputy chief of the powerful National Development and Reform Commission. The fact that a single person’s likes and dislikes determined the nomination of officials to the country’s defense and security organs appalled the public, who began to question China’s system for managing officials’ selection and promotion. Comments in the media and on the Internet argued that the corruption of personnel management is the most pernicious of all.

Critics also questioned the government’s financial system, which, they argued, contains loopholes that allowed corrupt officials to take bribes, trade official posts for benefits, and squander public money on feasts and pleasure-seeking.

With such a sentiment brewing in society, observers predicted that the time is ripe for China’s anti-corruption campaign to change from merely arresting corrupt officials to institutionalizing a mechanism for anti-corruption.

This change has been in the minds of President Xi Jinping and Wang Qishan, the Party guru in charge of the anti-corruption work.

When talking about China’s current anti-corruption campaign, Xi expressed his determination to crack down on “both tigers and flies” and to establish a clean government. He said: “The purpose is to ensure that our officials dare not go corrupt, cannot go corrupt and do not want to go corrupt.” This also represents the three stages of the anti-corruption campaign.

Obviously, officials “dare not go corrupt” because they are under mounting pressure from the ruthless crackdown. If they are to be “unable to go corrupt”, there should be strict rules and regulations to prevent them from adulterating their business activities with personal interests. The ways China’s officials, especially those of high rank, spend public money for half-public, half-private purposes, or even purely private purposes, are surprisingly variegated. The scenario of officials “not wanting to go corrupt” may not materialize in the near future, but it is certain that it would become true only if officials are “unable to go corrupt.”

Wang also used Chinese metaphors to explain the strategic planning of the anti-corruption campaign. He said “zhi biao” (to alleviate the symptoms of an illness) is the necessary step in the course of curing the illness before “zhi ben” (getting to the root of the problem). His idea is to use zhi biao to win time for zhi ben. That is obviously a philosophical wisdom for a most efficient deployment of force and planning of time.

His zhi biao refers to the treatment of specific persons and cases in corruption; and zhi ben is to destroy the hotbed for corruption, or to establish a complete, rigid and permanently effective system for preventing and cracking down on corruption.

Things are going that way. Xi Xinping recently disclosed how large the remuneration for leading officials of companies directly under the central government should be. The meeting did not attract much attention from observers, but it marked an important step towards institutionalizing anti-corruption efforts. It represents the central leadership’s determination to block all institutional loopholes through which groups of established interest monopolize the country’s resources, steal state wealth and squander public money in the name of the state. It is reasonable to predict that the Fourth Plenum of the 18^th Central Committee of the Communist Party of China this fall will focus on the establishment of an institutionalized anti-corruption mechanism for stopping loopholes in the personnel and finance management systems.

Qin Xiaoying is a Research Scholar with the China Foundation for International and Strategic Studies.

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Seize the Moment

Lawrence Lau

1. Seize the Moment

The Standing Committee of the National People’s Congress (NPC) in its recent decision has sketched out a broad framework for the election of the Chief Executive (CE) of the Hong Kong Special Administrative Region (HKSAR) by universal suffrage in 2017. Many among us are disappointed that the framework is not as open and flexible as one may have wished. However, the outcome was not totally unexpected, given that any arrangements made for the election of the CE by universal suffrage must

Ayesha Macpherson Lau

comply with the legal requirements of the Hong Kong Basic Law.

Whatever shortcomings that the NPC-approved framework may have, it is still an important step forward. The alternative is to continue the election of the CE by the Election Committee in 2017, which no one wants to see happen. The NPC Standing Committee Decision has actually not specified the details of implementation, leaving plenty of decisions to be made and work to be done locally, before universal suffrage can be implemented and realised. After all, “the devil is in the details.” It is therefore time for the people of Hong Kong, regardless of their political persuasion, to put aside their differences and work together to make the election of the CE of the HKSAR by universal suffrage a reality in 2017.

There is little time to waste as there are three more steps to go before the election of the CE by universal suffrage can take place and each step will take time. The NPC Standing Committee Decision is supposed to apply to the CE elections by universal suffrage in Hong Kong beginning with 2017. However, if the CE election by universal suffrage fails to be implemented in 2017, it will be necessary to start the five-step process all over again to make possible the CE election by universal suffrage in 2022. It does not appear that waiting until 2022 to implement the CE election by universal suffrage will necessarily improve the terms, since, in particular, it will depend on the prevailing conditions then. If we fail to take advantage of this opportunity to implement universal suffrage in 2017, not only will we continue with the existing Election Committee system, but we shall further delay the introduction of the election of the Legislative Council (LegCo) by universal suffrage to 2024 or beyond. This is definitely the time to move forward.

2. The Selection of the Members of the Nominating Committee

The NPC Decision specifies that the size and composition of the CE Nominating Committee and the method of selection of its members should essentially follow the principles and practices of the existing Election Committee. This means major changes are not likely to be possible for the 2017 CE election. However, marginal changes are still possible, for example, the abolition of corporate voting in some of the functional constituencies. In future, looking beyond 2017, one of the ways in which the composition of the Nominating Committee may change gradually is when more and more of its ex-officio members, for example, the members of the LegCo and the District Councils, are elected by universal suffrage.

3. The Threshold for Becoming a Nominee before the Nominating Committee

It makes practical sense and is probably the easiest way to achieve a consensus among us to maintain the requirement of open endorsement by at least one-eighth of the members of the Nominating Committee, analogous to the requirement of the existing Election Committee, for a person to become a nominee as a candidate for the CE. Each member of the Nominating Committee can openly endorse only one nominee, but is not required to endorse any. This will mean that in principle, it is possible to have up to eight nominees before the Nominating Committee, which will then select from among them by democratic procedures two to three CE candidates for election by universal suffrage. In actual practice, it is unlikely to have eight nominees but certainly possible to have more than three nominees, including at least one nominee supported by the Pan-Democrats. If a ceiling is imposed on the total number of endorsements that a nominee can round up, say, also at one-eighth of the membership of the Nominating Committee, it is likely to lead to more nominees.

4. The Procedures for the Nominating Committee to Nominate CE Candidates

Analogous to the voting procedure of the Election Committee, voting of the Nominating Committee on the nominees should be conducted by secret ballots. Each nominee will come up for a vote by the entire membership of the Nominating Committee. He or she must obtain more than half of the votes of the members of the Nominating Committee (say, 601 affirmative votes based on a Nominating Committee of 1,200 members) to become a CE candidate. However, in the event that more than three nominees have received more than half of the votes, which is a possible outcome given the proposed threshold of endorsement by one-eighth of the members for a person to become a nominee, the three nominees with the highest number of affirmative votes will become the CE candidates. It is possible at some future date that the restriction of up to three CE candidates may be relaxed as the total number of CE candidates will always be limited by the threshold required for becoming a nominee. Also, under this system, there is no a priori reason why a nominee supported by the Pan-Democrats cannot become one of the candidates if the platform of this person is sufficiently appealing and credible.

5. The Election will be Genuinely Competitive

The election of the CE by universal suffrage, with the candidates selected by a Nominating Committee, will be quite competitive. This is because the candidates will have to compete for the votes from among more than five million eligible voters. We may recall how competitive the last CE election turned out to be within the Election Committee, even though only 1,200 people had the vote. Election of the CE by universal suffrage will be many times more competitive as the candidates try to differentiate their respective platforms to compete for the votes of the electorate. For a voter, even if his or her ideal nominee fails to become a CE candidate, he or she will still have the chance of voting for a candidate with the closest similarity to his or her ideal candidate in terms of ideology and platform. The vote of every person will count.

6. Voting Arrangements for Electing the CE by Universal Suffrage

The Election Committee has in the past followed a rule that requires the winner of an election for the CE to receive the affirmative votes of more than half of its members, that is, 601 out of 1,200. We believe this is a good principle that should be extended to require that the CE elected by universal suffrage must also receive half of the total votes cast in that election (including valid ballots in which the voters abstain from voting for any of the candidates, in effect, voting for “none of the above”). Thus, for example, if there were three candidates, and none of them receive more than half of the total votes cast, there will be a run-off election between the candidates with the two highest numbers of votes. The run-off election is a standard arrangement in many countries, for example, France, in which the chief executive or president is directly elected by universal suffrage. The purpose of a run-off election is to guard against the possibility of a fringe or extremist candidate being elected under a “first-past-the-post” rule, which may not be in the best interests of the vast majority of the people in the country or region. Moreover, it also ensures that whoever ultimately wins the election will have had the opportunity to modify his or her platform before the run-off election to better reflect the mainstream aspirations and views of the electorate so as to attract the votes of voters who have not voted for him or her in the first round. In any case, it will help ensure that the winner of the election will not have extreme positions on either end of the political spectrum.

A notable exception to the run-off arrangement is the presidential election in Taiwan, in which the “first-past-the-post” rule is used. Under this rule, in the case of three candidates, the one with 34 percent of the votes cast will become the winner if the other two candidates receive 33 percent each of the votes cast. This is similar to the situation in the 2000 election in Taiwan, in which CHEN Shuibian won the election with less than 40 percent of the total votes cast. If there had been a run-off election between CHEN and James SOONG, the candidate with the second highest vote, CHEN would probably not have been elected. Thus, it is important for Hong Kong to be prepared to have a run-off election if necessary. If nothing else it would enable the elected CE to have a reasonable claim of a mandate from the voters.

In a run-off election, or in an election with only two candidates, if neither of the candidates have platforms that are attractive enough, it is possible that neither one wins more than half of the total votes cast, including valid ballots of abstention. In that case, it will be necessary to start the entire nomination and election process all over again. The Nomination Committee will have to be reconvened to select new candidates for a new election. Thus, ultimately, the electorate can still have the power to reject truly unpopular candidates. However, since it is not in anyone’s interests to have a “hung” CE election, the Nominating Committee must exercise due care in its selection of the candidates so as to avoid this possibility.

7. Concluding Remarks

If we reject a half-full glass as a half-empty glass, the glass will remain empty. If we accept a half-full glass, there is the possibility that it may become fuller in time. No electoral system in the World is perfect, including that of the United States, especially at the very beginning. Let us take the first step in making the half-full glass fuller! Let us move forward on election of the CE by universal suffrage in 2017!

Lawrence J Lau is an economist and Ayesha Macpherson Lau is a certified public accountant. The opinions expressed herein are entirely their own and do not necessarily reflect the views of organisations with which they are affiliated.

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Seeking Common Ground for Anti-Terror Cooperation

President Barack Obama chose to unveil his new strategy against the Islamic State in Iraq and al-Sham (ISIS) on September 10, the eve of the 13^th anniversary of the 9/11 terror attacks. The timing is a telling fact showing that the United States, under new terror threat from ISIS, has to adjust its anti-terror strategy to defend homeland security and national interests. The adjustments were made against the backdrop of the end of the previous round of anti-terror wars and the contracted anti-terror fronts.

Fu Xiaoqiang

The new strategy underlines the urgency to cope with terror threats posed by ISIS. The United States has realized that such terror forces, if not checked or eliminated, would pose an increasingly grave threat to countries outside the region. The United States itself is no exception because this terror or militant group has recruited a large number of extremists from the United States and Europe. In fact, ISIS grew out of the Iraqi branch of al-Qaeda by recruiting a quantity of international “jihadists,” and gradually developed into a terror and militant group with strong financial support and military power. Its leader Abu Bakr al-Baghdadi harbors an evil ambition of establishing a global Islamic caliphate. With territorial goals expanding from Europe, the Middle East, North Africa, and Central to Southeast Asia, even including China’s Xinjiang Uygur autonomous region, these ambitions threaten total religious war to achieve this dream. In the past two years, there were also cases of extremists from Xinjiang joining ISIS. From this perspective, China and the United States share similar views and the potential for cooperation when countering threats from ISIS.

The Unites States is seeking comprehensive support to fight ISIS, including to launch airstrikes on terrorists, provide greater support for the security forces of relevant countries, strengthen anti-terror capacity building and offer humanitarian assistance. China, however, being an advocate of non-interference in other countries’ internal affairs, will find it difficult to come to terms with the United States’ approach of solving one problem at the risk of giving rise to more, and will likely have reservations to the U.S. options that might constitute interference into other countries’ internal affairs and disrespect of other countries’ sovereign integrity. But it is also in China’s security interest to prevent ISIS from continuing to brutally kill the innocent and expand land under its control, and to stop it from growing into a new global terror leader that spreads extremism and “jihadists” in the world. As far as regional and global security is concerned, the plan announced by the United States might lead to the occurrence of new problems, but it is believed that the approach is better and more desirable than its standing-idle stance after the war in Afghanistan, which led to the rampant expansion of terrorist forces in the region.

Furthermore, in its new strategy against ISIS, the United States is beginning to cherish international cooperation, seeks consensus in the United Nations Security Council, and rallies support from the international community. This deserves praise. It shows that the United States is paying more attention to the role of international mechanisms, is more willing to coordinate with big powers like China and Russia, and is more ready to underscore the resources and enthusiasm of the countries in the regions in the war against terrorism and terrorists.

For China, terror threats mainly come from the “East Turkestan Islamic Movement” forces inside and outside the country. China is also on high alert against new international terror groups as represented by ISIS, as well as the influence of the international terror groups on the “East Turkestan Islamic Movement” forces. China and the United States share common ground in anti-terror cooperation. The two can find common interests in the ongoing U.S. efforts to form a coalition against the ISIS and China’s fight against the “East Turkestan Islamic Movement” forces. It is believed that future anti-terror cooperation between China and the U.S. can be reached in the following four areas.

First, they need to reach strategic consensus on preventing the reoccurrence of global terror organizations. The rise of terror groups like al-Qaeda and ISIS pose an enormous risk to countries like the United States, European nations, China and Russia. In the face of a new round of global terror threats, no country could be a safe haven or is able to stay away from the threats. China and the United States can play a leading role among the big-power countries in reaching such consensus. During this process, if regional terror groups with close ties to al-Qaeda and ISIS are not targeted, the global efforts to rein in the occurrence and growth of terror organizations can hardly achieve the desired results. Therefore, China and the United States could carry out pragmatic cooperation in the fight against the “East Turkestan Islamic Movement” forces, at least on some fronts, even if the United States cannot agree completely with China’s crackdown on such forces.

Second, the role of the United Nations Security Council and the Global Counter-terrorism Forum should be fully tapped. China and the United States can cooperate in establishing a cooperative mechanism for the prevention of cross-border flows of terrorists, and in clamping down the recruiting activities by the ISIS. They can also make efforts in border control and the prevention of cross-border flows of terrorists, strengthen cooperation in uprooting the online spreading of violent and terror audio and video programs, and take precautionary measures against any possible emergence of violence and terror. With influence on neighboring countries, China can also help promote the establishment of trilateral or multilateral security cooperation mechanisms among China, the United States and regional neighbors to effectively contain the spread of ISIS forces.

Third, they can cooperate by halting the financing network of major terror groups. Financing is a key issue influencing the recruitment and expansion of terrorist organizations. For ISIS, a terror organization with the richest financing in history, the most effective way to contain and eliminate its spread is to cut off its financing channels like their non-ceasing flows from oil revenues and donations. China and the United States could cooperate closely with the Middle East countries to bust and destroy the black oil trading market, which is the main source of financing for ISIS. Only when its financing channels are severed could the anti-terror campaign succeed.

Finally, China and the United States can work together to contain the spillover effect and rampancy of extremist ideology. One of the most eye-catching threats ISIS poses is the export of its violent and terrorist ideology, which indirectly incites terror groups across the world to conduct further terrorist attacks. Therefore, China and the United States share a broad scope for anti-violence and counter-terrorism cooperation, and can jointly crack down online terrorist propaganda and recruitment by ISIS and other groups. The United States should consider listing terrorist and violent groups, such as Hizb ut-Tahrir and their extremist activities and ideology, on their counterterrorism agenda because these groups are important carriers and channels for the escalation of ISIS activities.

Fu Xiaoqiang is a researcher and the director of the Institute of Security and Arms Control Studies at the China Institutes of Contemporary International Relations.

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The Fight Against Terror Will Entail Joint Efforts

The world is currently haunted by video clips showing ISIS operatives beheading American journalists. The cruelty of the terrorists has broken the bottom line of human forbearance, and inspired indignation worldwide. ISIS is challenging the human conscience with an ideology preaching religious extremism and conquest by violence. It is increasingly clear that ISIS is a threat to peace and security; not only in Iraq and the region, but also the entire world. The United States has recently enhanced air strikes on ISIS forces in northern Iraq. But it has yet to work out a fundamental solution to the problem. The fierce offensives frequently launched by extremist organizations in Iraq and Syria have resulted in severe humanitarian crises in the region. Some have observed that the long-term conflicts and state of division in Iraq, present conditions in particular, indicate the failure of US policies and anti-terror strategies. Just as some American media have pointed out, US policies on the Middle East lack consistency, and are full of opportunism and utilitarianism. Instead of mitigating conflicts, expedient intervention with force will bring more terrorist threats to the US.

Wu Sike

Meanwhile, some media have also shifted their attention to China. Western media have been struggling over what role China should play in Iraq and the Middle East. One moment they accuse China of not having done enough and of being a “free rider”; another moment they worry that, as Chinese interests in the Middle East expand, China may “get involved more deeply in Middle East affairs.” In fact, China’s role in the Middle East is persistent, active and constructive, consistent with its identity as a permanent member of the UN Security Council and major developing country, and with obvious Chinese characteristics. The basis of such a role is respect for the intention and principles of the UN Charter, as well as the sovereignty of countries, mutual respect, and equality of all nations. China has always been a positive energy preserving peace and stability and promoting common progress in the Middle East.

Four weeks ago, when ISIS began to scale their actions, I visited Iraq and its neighboring countries as a special envoy of China, conveying China’s staunch support for Iraq’s anti-terror endeavors, urging different factions there to reconciliate and to form an inclusive government, and promoting neighboring countries to make concerted efforts in the fight against terror. China has made persistent efforts in both security and development, Iraq’s two most pressing imperatives. China supports Iraq’s efforts to fight terrorism, safeguard national sovereignty, independence and territorial integrity; hopes all concerned parties will work for the political resolution of hot-spot issues in the region and create a favorable environment for a political solution to the Iraq crisis; and is willing to collaborate with the international community to rebuild Iraq and stimulate a national reconciliation so as to eradicate the hotbed of terrorism.

The strategy of imposing a regime change on a country by force, or promoting “universal values” and western democracy has been proven false. Middle East countries have developed unique religious, social, political and economic characteristics over thousands of years of evolution, which determine that they won’t copy “western models”, and that they have to pursue their own course that best suits their own national conditions. Promoting political progress in the Middle East must take into consideration who can guarantee the peoples’ basic rights to live and need for survival. The current miseries in Iraq, Syria, Libya and Afghanistan prove that the people’s most imperative needs are safety, food, and a life of dignity. Attempting to promote “political progress” in a country not yet ready can only generate disappointing outcomes. The seeds of democratic politics can only grow in the soil of peace and harmony.

Last but not least, the international community must seek consensus and synergy, abandon double standards, and speed up the political resolution of such hot-spot issues as the Syria crisis so as to not leave room for the incubation and spread of terrorism. Iraq’s neighboring countries should be aware of the serious threat from terrorism’s spillover, as a result of the escalation of terrorist forces in Iraq. They should put aside disputes, act immediately, and make concerted efforts to fight extremism and terrorism, and safeguard regional peace and stability. Terrorism is the top public hazard of the present-day world. Its eradication calls for global cooperation and a shared sense of urgency.

Wu Sike is a member on the Foreign Affairs Committee of the Chinese People’s Political Consultative Conference and member on the Foreign Policy Consulting Committee of the Ministry of Foreign Affairs.

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Uighur Scholar Ilham Tohti Goes on Trial in China on Separatist Charges

A prominent ethnic Uighur economics professor from Beijing went on trial Wednesday here in the far western region of Xinjiang on charges of separatism.

As the trial of the professor, Ilham Tohti, began in the Urumqi Intermediate People’s Court, uniformed police officers stood on alert outside the courthouse and in the surrounding streets, some with riot shields. They had sealed off the blocks around the building with white tape. Plainclothes officers also strolled in the area.

A conviction for separatism can result in the death penalty, but in this case life imprisonment is likely to be the maximum punishment because of the specific charges.

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Senate: China Hacked Military Contractor Networks

China’s military hacked into computer networks of civilian transportation companies hired by the Pentagon at least nine times, breaking into computers aboard a commercial ship, targeting logistics companies and uploading malicious software onto an airline’s computers, Senate investigators said Wednesday.

A yearlong investigation announced by the Senate Armed Services Committee identified at least 20 break-ins or other unspecified cyber events targeting companies, including nine successful break-ins of contractor networks. It blamed China’s government for all the most sophisticated intrusions, although it did not provide any detailed evidence.

The Senate report did not identify which transportation companies were victimized.

Investigators said China’s military was able to steal emails, documents, user accounts and computer codes. They also said China compromised systems aboard a commercial ship contracted by Transcom for logistics routes, and hacked into an airline the U.S. military used.

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China Home Prices Weaken Further

China’s economically vital property market slid for a fourth straight month as more cities reported new-home prices fell in August and at a faster pace, adding to the gloom in the world’s second-largest economy.

Shares of Chinese financial service and property developers fell as much as 2% in morning trade after the news, dragging down the Hong Kong market. In a further response to slower growth, China’s central bank lowered the 14-day repurchase rate it uses to lend to commercial banks by 0.2 percentage points, to 3.5%, the second cut this year.

With some economists and real-estate analysts expecting housing prices to continue falling through at least the end of 2014, potential homeowners have been in no hurry to buy, leaving developers struggling to sell empty apartments and houses.

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From ‘crazy’ to China’s richest man: Alibaba’s Jack Ma

China’s richest man celebrated his 50th birthday last week in the United States and expects his company will last twice as long, plus two years.

Revealing his ambition — and a love of numbers common in China — Jack Ma says Alibaba will last 102 years so the Internet empire he founded in 1999 can span three centuries.

Under Ma’s maverick leadership, the 15-year-old firm has already bridged a period of extraordinary change in global trade and the Chinese economy. In a nation with little e-commerce but plenty of Communist Party bureaucrats he raised a still-growing giant whose U.S. initial public offering this month could be the largest in history.

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China Opens Gold Market to Foreigners Amid Price Ambition

China will give foreign investors direct access to its gold market for the first time today as the biggest-consuming nation seeks to exert more influence over prices while boosting the yuan’s global use.

The Shanghai Gold Exchange will start trading contracts in the city’s free-trade zone that will be linked to its domestic spot market and available to about 40 international members including Goldman Sachs Group Inc. and UBS AG. Access was previously limited to some Chinese units. Gold in China this year cost as much as $31 an ounce more and $42 less than the London spot price, according to data compiled by Bloomberg.

China, which overtook India as the biggest bullion buyer in 2013, wants to establish a benchmark price in Asia by opening up trading to a larger pool of investors. It’s also pushing to reduce controls over the movement of capital across its borders after policy makers pledged last year to carry out the widest expansion of economic freedoms since the 1990s.

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US Worrisome Approach to the South China Sea Situation

The United States approach in handling the situation in the South China Sea is not wise. It is actually worrisome or damaging. As the only superpower in the world, the US has exercised hegemony in the world for years. It is understandable that the US finds it very difficult to refrain from playing a “leadership role” or getting involved in the changing situation in the South China Sea. However, it would make the matter worse and cause great damages to the peace and stability in the region, and to the Sino-US relations if the US intentionally gets more and more involved in the territorial disputes in the South China Sea and makes no efforts to restrain its unreasonable and hegemonic statements and actions over those disputes as part of its rebalance strategy in Asia.

Wu Zurong

The last three years or more have witnessed the US trying its best to play a “leadership role” in the situation in the South China Sea. Despite the fact that China has repeatedly declared that it has indisputable sovereignty over the Nansha islands and the adjacent waters, the US has not demonstrated the minimum respect for China’s sovereignty. It seems that its knowledge of and position on the issue are not based on historical facts and the United Nations Convention on the Law of the Sea, but on its own Asian policy needs and selfish interests. In recent years, especially since its implementation of its rebalance strategy in Asia, the US has rarely or never talked about China’s jurisdiction, for the last hundreds of years, over the Nansha islands in the South China Sea, but has emphasized the so-called “US national interests” in safeguarding the freedom of navigation in the South China Sea at a time when there has been no problem at all with the freedom of navigation in the South China Sea. Although the US is not a party to any of the disputes in the South China Sea, it has repeatedly tried to exert influence on, or even to set unreasonable rules for the resolution of those disputes. When China and the ASEAN countries are working together to build a close community of common destiny, pursuing good-neighborliness and friendship, the US has time and again talked strangely at great length about its opposition to “coercion, the use of force or threat of force” in the South China Sea. It is ridiculous that the US has recently proposed that all activities to change the islands’ configuration be frozen in the South China Sea. It is common sense that such a proposal is a clear violation of China’s lawful right to conduct economic, public welfare and other activities on its own territories and in its own territorial waters in the South China Sea.

It is obvious that US public statements and positions on the territorial disputes in the South China Sea come from its outdated and rigid approach, which requires the US to draw a clear line of demarcation, with the Cold War mentality, between its military allies and other countries in the region. Because the Philippines is a military ally of the US, the US supports whatever it says or does, making no distinction of right and wrong, with regard to its territorial disputes in the South China Sea with China. The US even goes so far as to give it tacit consent and all kinds of support when it is stirring up troubles or making provocations in the South China Sea. The so-called official position that the US does not take a position on the territorial disputes in the South China Sea has already vanished like smoke. So far, what the US has said and done has offered no help to the solution of the disputes, but rather has exacerbated the differences and tension there, disrupting peace and stability in the region.

In the larger picture, almost all international observers have seen that the US has been alarmingly increasing its military presence around the South China Sea. By strengthening bilateral defense cooperation with the Philippines, Japan and Australia, the US is planning to station more troops or to deploy more military equipment in the three countries on a long-term basis. Military cooperation with Vietnam, Singapore and other countries is being enhanced. The second fleet of the US aircraft carrier is sent to where it is close to the South China Sea. US surveillance of China and the South China Sea is being carried out in a sustained and intense manner. What is the US up to by concentrating its military forces in Asia? Most Chinese observers and analysts cannot draw other conclusions, but believe that the US is trying to contain China by its superior military forces. It is worrisome, or even dangerous that the US is doing so under the slogan of “welcoming China’s rise” in beautiful words.

In the face of the wrong direction in which the US is heading intentionally, it is advisable for China to give the US unequivocal loud warnings so as to help the US policy-makers realize that the current US approach to the situation in the South China Sea is totally wrong and that it can only lead the US to a dead end. Times have changed. China is not the Soviet Union, and the Sino-US relations are vastly different from the US relations with the former Soviet Union. The probable US movement in the direction towards conflict and confrontation with China would be so costly that the prolonged accompanying attrition could make the US feel the unbearable burden. Only by getting to know China in an entirely new light and working with China in a truly sincere manner, can the US formulate its right China policy and help produce a win-win situation for both China and the US through increased cooperation with China in the South China Sea.

Wu Zurong is a research fellow at the China Foundation for International Studies.

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China Central Bank Appears to Inject $81 Billion Into Top Lenders

With industrial production growing at the slowest pace since the worst of the global financial crisis and foreign direct investment in a tailspin, China appears to have taken the unusual step of using monetary stimulus in an attempt to forestall further economic weakness.

China’s central bank has lent 100 billion renminbi, or $16.2 billion, to each of the country’s five main, state-controlled banks, bankers and economists said Wednesday, although the central bank and the five banks involved stayed silent. The seemingly stealthy decision to inject a total of $81 billion into the banking system this week came as the Chinese economy, like many economies in Europe, has slowed over the summer, although still expanding at a pace that would be the envy of most countries around the world.

The move by the central bank, the People’s Bank of China, to transfer the money directly to state-controlled banks drew immediate criticism from economists at international banks. The central bank had been seeking in recent months to reduce the role of bureaucratic guidance in China’s financial sector, relying instead on pushing interest rates up and down and then letting market forces allocate money among borrowers and lenders.

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Australia Urges Russia and China to Support Coalition Against Islamic State

The threat posed by Islamic State to global security should prompt Russia and China to give at least tacit backing to an international coalition targeting radical jihadists in Syria and Iraq, rotating United Nations Security Council member Australia said Tuesday.

Ahead of Friday’s Security Council talks on Iraq in New York to be chaired by U.S. Secretary of State John Kerry, Australia’s Foreign Minister Julie Bishop said military strikes on Islamic State, also known as ISIS or ISIL, and other al Qaeda-linked militants would be in aid of Iraqi and Kurdish forces, and at the request of the country’s fledgling government.

“I hope that China and Russia will see that a prudent and proportionate role is appropriate and that our efforts will be with the consent and in full coordination with the Iraqi government,” Ms. Bishop told The Wall Street Journal in an interview. China and Russia are permanent members of the Security Council, along with Britain, France and the U.S.

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China mum on diplomat’s whereabouts amid Japan spying report

China’s Foreign Ministry refused to say on Wednesday where its ambassador to Iceland was or who was even representing Beijing in the country, following reports he had been arrested by state security for passing secrets to Japan.

New York-based Chinese language portal Mingjing News reported on Tuesday that China’s envoy to Iceland, Ma Jisheng, and his wife had been taken away by Chinese state security earlier this year.

It said Ma was suspected of having become a Japanese spy while working in the Chinese embassy in Tokyo between 2004 and 2008.

The story was then picked up by Hong Kong’s Ming Pao newspaper and subsequently carried by some mainland Chinese news sites, though many of those stories were later deleted.

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China sees jihadi inspiration coming from abroad by way of the Web

On a rocky hilltop close to the city of Urumqi in China’s troubled Xinjiang region, five men don black bandanas decorated with Arabic writing. A black flag used by jihadi groups across the world flutters behind them as they press their hands together in a circle and pledge their allegiance to holy war.

In another video, the bearded leader of those men is in his kitchen as he first spits on and then burns small flags belonging to the United States, Britain and several Muslim nations — before stomping, with one bare foot, on a Chinese flag placed on the countertop.

The home videos look like an amateurish attempt to copy those produced by al-Qaeda and Islamic State militants, but there is nothing comical about what happened next.

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Chinese envoy says North Korea’s Kim Jong Un may visit Beijing: Yonhap

North Korean leader Kim Jong Un could go to China on his first foreign trip since taking power, China’s ambassador to South Korea said on Wednesday, according to a report from South Korea’s Yonhap news agency.

The 31-year-old leader assumed power after his father, Kim Jong Il, died suddenly in 2011. China is North Korea’s closest ally and main benefactor.

“I think that a visit from Kim Jong Un might materialize sometime in the future,” Chinese Ambassador Qiu Guohong was quoted by Yonhap as saying at a forum in Seoul.

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Intra-SCO Security Cooperation Helps Regional Stability

The recently concluded “Peace Mission 2014” anti-terrorism military drill mounted by the Shanghai Cooperation Organization in Inner Mongolia, China was a great success. A day before it finished, Chinese President Xi Jinping, who is also the general commander of China’s military forces, met the chiefs of general staff of Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan in Beijing, all of whom were attending a meeting for the SCO chiefs of staff. The success of the drill and the meeting indicates that the member states are attaching greater importance to cooperation in defense and security.

Shao Yuqun

Since its launch in 2005, the annual Peace Mission joint exercise has been conducted seven times. Of them, the events in 2007, 2010, 2012 and 2014 involved all of the SCO members, except for Uzbekistan’s absence in 2010 and 2012. The other three were conducted between China and Russia. Xi Jinping spoke highly of the drills, praising them for “having made positive contributions to regional security and stability.”

SCO countries are trying to strengthen cooperation in defense and security in response to the changes in the regional situation, as well as for the organization’s own development. The regions surrounding SCO member nations have recently become unsafe. Threats originate from two aspects. One is the Islamic State of Iraq and al Shams (ISIS) extremist forces, who are active in the Middle East and neighboring areas. There are complicated reasons accounting for ISIS’s sudden rise and growth, which makes it difficult for the international community to thwart its threats. As the Obama administration is anxious to extricate itself from the Iraqi quagmire, the threats ISIS poses to the Middle East won’t be eradicated any time soon, and very likely would spillover to surrounding areas. The Central Asian region, where many SCO countries are located, has been under the threat of Islamic extremist forces. Now, threats from outside are posing new challenges to Central Asia’s security and stability.

The second source of threats is Afghanistan, where the political situation remains uncertain, thereby threatening regional as well as its domestic security. As Afghanistan is an observer country of the SCO, any spillover effect will constitute a serious challenge to the organization. American troops are withdrawing from the country but the US-Afghanistan Security Agreement is yet to be signed, leaving a number of uncertainties. But one thing is clear: Washington wants to dump the burden and leave the country’s domestic security to the Afghan National Army and police forces. Now, the country’s presidential election has reached a deadlock with the new government waiting to be formed. If the new administration continues to be out of service or is formed but not capable enough to initiate political reconciliation and economic reconstruction, the country’s domestic security will remain problematic.

The SCO nations’ moves to strengthen cooperation in defense and security went beyond the organization’s natural agenda to develop itself. Since its establishment in 2001, its fast development and growing influence on regional affairs have drawn attention from the international community. Only by deepening cooperation over politics, security, economy and society, can it meet the members’ needs and lay a solid foundation for long-term development. SCO members began by cooperating over security, and it was in this field that they benefited most from the cooperation. With its member states confronted by the new challenges in the field of security, the SCO needs to strengthen cooperation on a deeper level to meet expectations and to instill confidence about the organization’s future.

Strengthened cooperation among SCO members in defense and security is helpful for regional stability. This understanding is based on the following reasons.

First, this cooperation will constitute a strong deterrent to terrorist and extremist forces in the region. The Obama administration has made it clear that the American troops will begin to withdraw from Afghanistan no later than the end of this year, so countries in the region as well as the international community are worried about security prospects in the country. If the country collapses into anarchy or even civil war, it will provide a huge stage for terrorist activities. What is more, the latest chaotic situation in the Middle East has given rise to security concerns in Central Asia and South Asia. Any failure on the part of the countries and international organizations in these regions to act in timely response would deliver the wrong signal to the terrorist and extremist forces, encouraging them to take adventurous actions. Therefore, joint military drills and other moves taken by SCO members for defense and security cooperation will send a strong deterrent signal to the “three forces” of terrorism, extremism and separatism in the region.

Second, strengthened cooperation in defense and security will help armed forces to exchange their experience in fighting against terrorism. Since its launch, the annual Peace Mission military exercise has laid a foundation for defense cooperation. However, changes in the international situation and the emergence of terrorist threats in the region have made it urgently necessary for SCO members to increase their anti-terrorism capability through security cooperation, so as to meet new challenges.

Third, cooperation can help build up mutual trust between the member states and thus enable the SCO to play a greater role in stabilizing the region. Needless to say, political mutual trust is the foundation for defense and security cooperation, which in turn will strengthen trust. Military means alone cannot meet the threats of the “three forces.” Cooperation in politics, economy and society is also needed, and this also calls for greater trust among SCO members. In this sense, defense and security cooperation is helpful for the member states to increase their cooperation in political, economic and social fields.

In addition to their intra-cooperation, SCO members also need to increase communication with NATO and the US in anti-terrorism affairs. The SCO has had some regular contacts with the US and keeps liaisons with NATO through Turkey, a dialogue partner country of SCO. However, hostility and prejudices against SCO still exist in the US and some NATO countries. And the recent Ukraine crisis has led to tense relations between Russia and the US and EU. Due to these factors, it is still a faint possibility that the US and NATO will cooperate with SCO in defense and security to meet the regional security challenges. At present, the SCO should still focus its efforts on intra-cooperation in security, politics and economy. By doing so, the regional organization will increase its cohesion and thus enhance its ability to cope with regional challenges. And only in this way can it win respect from the rest of the world.

Shao Yuqun is Executive Director of the Center for American Studies, SIIS.

Shao Yuqun, Director, Center for American Studies, SIIS via CHINA US Focus http://ift.tt/1u6F7jJ

China August FDI at two-and-half-year low as factory investments slow

China’s foreign direct investment fell to a low not seen in at least 2-1/2 years in August, underscoring the challenges to growth facing the world’s second-biggest economy.

The weak investment data came as China’s economic growth appears to be hitting a soft patch after a bounce in June, with indicators ranging from imports to industrial output and investment all pointing to sluggish activity.

China attracted $7.2 billion in foreign direct investment in August, the Commerce Ministry said on Tuesday, down 14 percent from a year earlier and at a level not seen since at least February 2012.

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China Maritime Silk Road Is Sri Lanka’s Boon as Xi Visits

A view from Sri Lanka’s capital of land curving into a sea once famed for its pearls now shows giant yellow digger trucks piling boulders. It’s another show of China’s increasing global influence.

Once fought over by European powers, Sri Lanka is now benefiting from the attention of Asia’s biggest economies, drawn to its Indian Ocean location along some of the world’s busiest sea-lanes. The Chinese-financed $1.4 billion “Colombo Port City” project is its largest foreign-funded investment on record.

President Xi Jinping, who has sought to restore China’s prestige and historical links along the “maritime Silk Road” through Southeast and South Asia, arrived in Colombo today, shortly after a visit by Japanese Prime Minister Shinzo Abe. Deepening ties with East Asia would reduce the role of neighbor India in Sri Lanka’s trade, and aid its recovery from 26 years of civil war.

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Anusha Ondaatjie, Bloomberg News via CHINA US Focus http://ift.tt/1o0nz5A

Police Detain Tie Liu, Beijing Writer and Underground Publisher

At 81 years old and after decades imprisoned in labor camps as a foe of the Communist Party, the Beijing writer and underground publisher Tie Liu had said that he was too old to seriously worry the security police anymore. But they raided his home over the weekend and detained him on a charge of “creating a disturbance,” his wife and friends said on Monday.

In the dark of early Sunday, the police banged on the door of Mr. Tie’s house in a suburb of eastern Beijing, handed him a summons, made him dress and then led him away, his wife, Ren Hengfang, said in a telephone interview. Officers searched their home, hauling away four laptop computers, an iPad and his cellphone, as well as piles of books and periodicals, many of them privately published by Mr. Tie, she said.

“He asked, ‘What disturbance have I been stirring up?’ and they said, ‘You’ll find out when it’s time to find out,’” Ms. Ren said. “We’d warned him to think twice before publishing his essays, but he’s a stubborn character.”

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Chris Buckley, New York Times via CHINA US Focus http://ift.tt/1qJq0z4

China to Ban Coal With High Ash, Sulfur

China will ban certain types of highly polluting coal starting next year, making good on a vow its cabinet issued late last year as part of an accelerating campaign to clean up its air.

The directive from China’s top economic-planning agency is aimed at low-grade coal mainly coming from Indonesia and Australia. But analysts say exporters would likely be spared from a harsher brunt because Beijing lowered its targets from earlier, tougher limits.

Effective Jan. 1, the government will no longer allow sales or import of coal with 40% or more of ash content and 3% or more of sulfur content, the National Development and Reform Commission said late Monday. Specifically, it will ban lignite—a low-grade coal burned by power plants—if it contains 30% or more of ash content and 1.5% or more of sulfur content, the agency said. Heavily populated areas will have even tougher standards.

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New Treaty Allows China to Sue Canada to Change its Laws

Despite public outcry, Stephen Harper, Canada’s prime minister, ratified a controversial treaty on Friday that will allow China to sue Canada in secret tribunals to repeal Canadian laws that interfere with Chinese investments.

Analysts interpret the move as an attempt to ease strained relations between the two nations. This summer, Canada accused China of hacking government computers, and China detained a Canadian couple for “spying.” Wenran Jiang, a senior fellow at the Asia Pacific Foundation of Canada and a special adviser to the Alberta government told the Globe and Mail, “We need something from China prior to the prime minister’s visit, and we’re ratifying this treaty and we’re kicking the ball over to the Chinese side to get something in return.” That “something” is thought to be the release of the couple before Harper visits China in November.

The Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) was quietly signed two years ago in Vladisvostok, Russia, but public protest delayed ratification up until now.

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Lauren Walker, Newsweek via CHINA US Focus http://ift.tt/1o0nyP8

U.S. Treasury Warns China Over Antimonopoly Efforts

U.S. Treasury Secretary Jacob Lew warned his Chinese counterpart in a recent letter that a spate of antimonopoly investigations against foreign companies could have serious implications for relations between the two countries, according to people briefed on its contents.

The letter, which Mr. Lew sent in recent days to Chinese Vice Premier Wang Yang, said that China’s recent focus on foreign companies could devalue foreign intellectual property, the people said. It also made reference to a meeting in July attended by Messrs. Lew and Wang, at the Strategic and Economic Dialogue forum in Beijing, at which China committed to using its monopoly laws to promote consumer welfare and not other companies or industries, the people said.

Representatives for China’s cabinet, to which Mr. Wang belongs, didn’t respond to requests for comment on Sunday. Previously, Chinese officials have said they treat foreign and domestic companies equally. Xu Kunlin, a senior antimonopoly official at the National Development and Reform Commission, China’s top economic-planning body, said at a media briefing Thursday that foreign companies accounted for about 10% of antimonopoly cases.

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Laurie Burkitt and Bob Davis, Wall Street Journal via CHINA US Focus http://ift.tt/1qEsL4P

In Southern China, Residents Wary of the Government Protest a Plan to Burn Waste

Residents of a county in southern China thronged the streets in protest over the weekend to oppose a proposed garbage incineration plant, defying government warnings and police detentions. The protest was the latest of a succession of demonstrations against waste-disposal projects by pollution-weary Chinese citizens.

A street march broke out on Saturday in Boluo County, Guangdong Province, and three residents contacted by telephone said the protest had resumed on Sunday, when people again walked toward government offices in the main town, despite a police announcement issued through the domestic news media that 24 people had already been detained. The residents spoke on the condition of anonymity, citing fears of arrest.

“We strongly urge the government authorities to reconsider the siting of the waste incineration plant,” said an appeal against the project that spread on the Internet in China. One of the Boluo residents who helped with the appeal confirmed it had come from there.

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Chris Buckley, New York Times via CHINA US Focus http://ift.tt/1sXBmiz

Worry, mystification in China over Scotland independence vote

As Scotland heads to the polls this week to vote on whether to become independent, one country with restive regions of its own is watching the debate unfold with nervousness and some mystification – China.

China has every reason to look askance at the idea of regions separating. It is facing persistent unrest in far-flung and resource-rich Tibet and Xinjiang, and also the matter of Taiwan, the self-ruled island China claims as its own.

In 2005, China enacted an “anti-secession law” that allows it to use force on Taiwan if deemed necessary. The law was seen as a warning to Taiwan’s then-president, Chen Shui-bian, who angered the mainland with his independence-leaning rhetoric.

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Ben Blanchard, Reuters via CHINA US Focus http://ift.tt/1tVZvnP

Chinese city tests out sidewalk lanes for cellphone users

Tired of bumping into people glued to their phones? One Chinese city thinks it has the answer: It has divided a sidewalk on one of its busiest streets into two lanes — one for cellphone users and the other for those without.

The sidewalk is in the city of Chongqing in southwestern China. Fifty meters long and three meters wide, it has warning signs painted in white on the ground.

Long Cheng, a spokesperson for the developer that came up with the idea, said that the sidewalk lanes reminded tourists not to walk while playing with their cellphones.

“It’s an unsafe gesture with potential safety hazards,” she said.

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Katie Hunt and Serena Dong, CNN via CHINA US Focus http://ift.tt/1sXulyb

Malaysia Risks Enraging China by Inviting U.S. Spy Flights

Malaysia’s reported invitation to the United States to fly spy planes out of East Malaysia on the southern rim of the South China Sea seems likely to intensify China’s anger at American surveillance of the strategic waterway and its disputed islands, analysts say.

The United States’ chief of naval operations, Adm. Jonathan W. Greenert, told a forum in Washington last week that the recent offer by Malaysia for P-8 Poseidon aircraft to fly out of the country’s most eastern area would give the United States greater proximity to the South China Sea.

Malaysia, which has had warm ties with China, has not confirmed whether it made the offer. The United States has vowed to maintain its influence in the region in the face of China’s rise, and this year won an agreement with the Philippines to give American troops, warships and planes greater access to bases there.

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Jane Perlez, New York Times via CHINA US Focus http://ift.tt/1tVZsbA

China’s Monetary Policy Needs Balance

Recently, China has been dithering in reforming its economic policies. The State Council has repeatedly reaffirmed its determination to maintain steady economic growth; but it has continued to slow. On the one hand, the central government asked local governments to reduce their reliance on the real estate industry for economic development and enforce strict measures against property speculations; on the other hand, it turned a blind eye to attempts to lift curbs on real estate development, which may terminate the current periodical adjustment of the country’s housing market.

Yi Xianrong

Even though such a dilemma exists, the Central Bank’s recently announced Monetary Policy for the Second Quarter did not include any guidelines for the near future, except two tasks the report listed as “basic”, namely: exercising monetary control in the drive to deepen reform; and using financial innovation to enhance the banks’ capability to serve the real economy. These two tasks suggest that China’s current monetary policy aims to strike a balance between differing concerns in two ways.

First, there is a need to strike a balance between economic growth and economic reform.

China now faces the urgency of stopping a decline in its economic growth. Under this pressure, any move to readjust the current real estate market lengthens the course to putting the growth back on a fast track. That is because the rapid GDP growth over the past decade or so boosted by the real estate boom has become unsustainable and needs to be readjusted. However, once the periodical readjustment of the real estate-led economy starts, the real estate-boosted GDP growth will inevitably slide. The longer the readjustment, the stronger the momentum to slow down.

Thus, the need for the rebalance mentioned above. In other words, the Central Bank’s monetary policy must help promote steady growth in the economy and reduce the growth’s reliance on real estate development, while supporting economic reform and industrial restructuring. The loose monetary policy recently adopted by the Central Bank, such as a lowering of the deposit-reserve ratio, was part of the Central Bank’s effort to reform the monetary policy. It was designed to channel capital to the real economy in order to support weak industries and small and medium-sized enterprises. Another instance of the Central Bank’s recent reform efforts was granting the China Development Bank RMB1 trillion in supplementary loans. The Development Bank then extended the loan to local governments to help with their shantytown reconstruction projects.

These efforts are different from the usual practice of using a loose monetary policy – such as cutting interest rates and lowering reserve requirements – to stimulate economic growth. If this old practice were adopted, China’s economy would return to the path of relying on an excessive credit expansion for infrastructural investment and real estate development. And that would lead to a situation where the effort to strive for steady economic growth becomes the largest hindrance to reform. The monetary policy is aimed at striking a balance between maintaining steady economic growth and continuing a drive for reform. Stopping reform would lead to more difficulties. Therefore, the directional monetary policy will be adopted as a regular policy tool for a certain period of time.

Nevertheless, monetary policy is universal in nature, while a directional policy is specific, provisional and partially applicable. If the latter becomes regular, that may lead to statistics conveying false information, and weaken the market’s role of channeling capital. The policy itself may also become an interest carrier. It is predictable that the Central Bank will keep readjusting the monetary policy in a constant experiment of corrections.

The second balance that the current monetary policy aims to achieve is the one between the need to reduce the economy’s reliance on the real estate industry and the need to achieve a “soft landing” for the housing market. Many of China’s economic and financial problems are caused by the economy’s excessive reliance on real estate. For example, raising loans has proven too difficult and expensive for small and medium-sized enterprises, and involves too high a risk; and the financing system itself is suffering from a warped structure. That’s because the real estate-dominated economy has siphoned almost all resources, especially capital, into the housing market. A massive influx of cash not only pushed up housing market prices, but also increased the price of banking in the financial market and brought greater risks to China’s banking system. And the rampant mushrooming of “shadow banks” and local governments’ financing platforms was also the result of the economy’s reliance on real estate. Therefore, depriving the real estate industry of its leverage role in the economic growth is the main task of the Central Bank’s monetary policy this year.

Detaching real estate from economic development is also a way to burst the housing bubble. This will cause credit risks in the banking sector. The reports issued by publicly traded domestic banks indicate that many of them have seen a rapid increase in their bad loans, although their earnings growth mostly met market expectations. Housing prices had barely begun to drop before the real estate credit showed signs of crisis. If housing prices plunge drastically, bad loans will surge while local governments’ financing platforms will be exposed to even greater risks. Then, would things get worse and trigger a regional or overall crisis in China’s banking system? That’s what the Central Bank’s monetary policy has to deal with.

And that’s why the Central Bank neither expressed consent nor voiced opposition to local governments’ moves of lifting restrictions on the real estate industry, or even forcing local banks to relax credit curbs. By acquiescing, the Central Bank will try to help achieve a balance between real estate detachment and a soft-landing in the housing market.

So, the current monetary policy is to guarantee “two balances”. It is unlikely that the Central Bank will go for an all-round quantitative easing. It will still concentrate its efforts on directional credit loosening and the prevention of bank risks caused by the plummeting of housing prices. These are expected to be the focus of the monetary policy in the next few months.

Yi Xianrong is a researcher at the Financial Institute of the Chinese Academy of Social Sciences.

Yi Xianrong, Researcher, Chinese Academy of Social Sciences via CHINA US Focus http://ift.tt/1y4lFuj

China’s antitrust regulators defend probes; Qualcomm inquiry nearly over

China’s three anti-monopoly regulators on Thursday launched a vigorous defence of their recent investigations into foreign companies, which have prompted mounting international criticism, and said they are not targeting multinational firms.

At least 30 foreign firms, including U.S. companies such as Qualcomm Inc (QCOM.O) and Microsoft Corp (MSFT.O), have come under scrutiny as China seeks to enforce a 2008 anti-monopoly law that some critics say is being used to unfairly target overseas businesses, raising protectionism concerns.

“Our anti-trust enforcement work is strictly conducted according to regulations,” said Xu Kunlin, director general of the National Development and Reform Commission’s (NDRC) Price Supervision and Inspection and Anti-Monopoly Bureau.

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China Fines Volkswagen and Chrysler for Antitrust Violations

Chinese regulators fined Volkswagen and Chrysler for violating antitrust laws, announcing on Thursday the first monetary penalties against large multinational carmakers swept up in a broad investigation.

The fines, which totaled $46 million, were the latest in a series of tough measures by China against what it considers monopolistic practices. In recent months, foreign companies in a range of industries including automobiles, technology, pharmaceuticals and food packaging have faced increased scrutiny, including raids and allegations of unfair practices.

The scrutiny of automakers comes as Chinese players are being pummeled by international competition. The government has been searching for ways to help its homegrown industry, which only several years ago held the promise of becoming a big exporter.

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China: Fighters Back From Iraq, Syria Are Threat

China and its Central Asian neighbors face increased terrorism threats as their citizens return home after fighting in Iraq and Syria, the head of a regional anti-terrorism organization said Thursday.

The Shanghai Cooperation Organization’s Regional Anti-Terrorism Agency is assisting authorities in those countries in monitoring militants who have traveled to terrorist hotspots, the group’s director, Zhang Xinfeng, was quoted as saying by China’s official Xinhua News Agency.

They are also closely watching online discussions where radicals “tend to incite religious extremism, recruit followers and plot terror attacks,” Zhang said.

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China Credit Growth Surges

Chinese banks stepped up lending in August after a sharp, unexpected decline a month earlier, as analysts said the central bank moved to keep lending steady.

The growth in bank loans and total aggregate credit returned to trend in August, economists said. Chinese financial institutions issued 702.5 billion yuan ($114.6 billion) in new yuan loans in August, up sharply from 385.2 billion yuan in July, data from the People’s Bank of China showed Friday. That was also higher than the 650 billion yuan median forecast of 14 economists polled by The Wall Street Journal earlier.

Total social financing—a broader measurement of credit in the economy—ballooned to 957.4 billion yuan in August, up from 273.1 billion yuan in July.

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Journalists in China Describe Extortion

Journalists who worked for a business news website under investigation in Shanghai have described a scheme of extorting Chinese companies, which were pressed to pay in return for the production of flattering articles or the burying of damaging ones, according to reports in the state-run news media.

The accusations against the site, 21st Century Net, came after the arrests of eight people last week in the case. On China Central Television on Thursday, the president of the website and several arrested reporters described how they had colluded with public relations firms to identify vulnerable Chinese companies.

China’s corporate landscape is pitted with scandals involving corruption, nepotism, bribery and false company results. The CCTV accounts from the 21st Century Net journalists added vivid detail to claims that some members of China’s news media have become a part of the problem by turning self-censorship and skewed reporting into a source of revenue.

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Chris Buckley, New York Times via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/fKNBofiIMJo/

Alibaba Is Bringing Luxury, Fast, to China’s Middle Class

On a cold day in April, a group of New Zealand fishermen set out to harvest 50,000 large oysters from the waters of the South Pacific.

Once collected, the briny mollusks were transported to processing facilities, packaged four to a container, sealed in chilled polystyrene containers affixed with bright labeling and put on planes to China.

Over the next three days, the oysters traveled thousands of miles to 67 cities across the Chinese mainland. There, they were shipped — still alive — by an army of deliverymen to the homes of thousands of shoppers who had ordered them using Tmall, a website operated by Alibaba, the sprawling Internet empire on the verge of an initial public offering that will most likely value it at about $160 billion.

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U.S . likely to get Beijing’s ‘quiet’ support in bid to destroy ISIS, analysts say

With a long-held ethos of non-interference in other countries’ affairs, risk-averse China is perhaps an unlikely ally in President Barack Obama’s pledge to “degrade” and “destroy” ISIS in Iraq and Syria.

But with Beijing’s growing unease about terrorist threats by Islamist extremists at home, analysts say China — a U.N. Security Council permanent member – is unlikely to oppose plans to build a “broad coalition” to go after ISIS.

“I think China in principle will quietly support this idea to curb ISIS,” says Chen Dingding, an assistant professor of government at the University of Macau.

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Philippines displays ancient maps to debunk China’s sea claims

The Philippines on Thursday put on display dozens of ancient maps which officials said showed that China’s territorial claims over the South China Sea did not include a disputed shoal at the centre of an acrimonious standoff.

The Philippines is in dispute with China over parts of the South China Sea, including the Scarborough Shoal, an area believed to be rich in oil and natural gas as well as fisheries resources.

China seized control of the shoal in June 2012 and has prevented Philippine fishermen from getting close to the rocky outcrop, a rich fishing ground.

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China’s Global Mining Play Is Failing to Pan Out

A $10 billion iron-ore mine that has taken more than eight years to develop near this remote Australian port is a glaring example of how much has gone wrong with China’s decade long push to buy up raw materials around the world.

Citic Pacific’s Sino Iron mine cost roughly four times its initial budget, and analysts who track the project say it likely will lose hundreds of millions of dollars in 2014, its first full year of production. Citic Pacific, a Hong Kong-listed subsidiary of Chinese state-owned behemoth Citic Group, and its contractors made a series of blunders, from thinking they could import workers at Chinese pay levels to a botched bet on currencies that forced the company to seek a $1.5 billion bailout from its parent.

And while Sino Iron is at last shipping ore, it remains locked in a legal battle with its local partner, Clive Palmer, a property mogul turned politician who has accused Citic Pacific of taking Australian resources without fully paying for them.

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Wayne Arnold, Wall Street Journal via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/HDDGZRSnX50/

China Inflation Stays Subdued as Producer Prices Extend Decline

China’s consumer inflation eased to a four-month low in August while factory-gate prices extended their decline to 30 months, adding room for government stimulus to support the economy amid a property slump.

The consumer price index rose 2 percent from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the 2.2 percent median estimate in a Bloomberg News survey and 2.3 percent in July. The producer price index fell 1.2 percent, compared with projections for a 1.1 percent drop.

Today’s data add to signs of weakness in domestic demand after figures this week showed declining imports and a slowdown in money-supply expansion, bolstering the case for additional measures to support the economy. Premier Li Keqiang reiterated yesterday that China won’t have a hard landing and has confidence in achieving key development goals for 2014, with a growth target of about 7.5 percent.

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Bloomberg News via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/kgsUYNkjL5k/

Premier says confident of achieving major economic targets in 2014

China has all the confidence, ability and resources to realize its major economic and social goals for 2014, despite recent sluggish momentum, Premier Li Keqiang said on Wednesday.

In a keynote speech at the opening of the Summer Davos forum, Li promised China would continue to coordinate efforts to stabilize growth, promote reform, readjust structure, improve people’s livelihoods and prevent risk for the rest of this year.

China has targeted its gross domestic product (GDP) growth at around 7.5 percent and the consumer price index (CPI) at about 3.5 percent for 2014. It also aims to add 10 million more urban jobs, and keep the registered urban unemployment rate at a maximum 4.6 percent this year.

“We will continue to … carry out reforms in key areas of systemic importance with every determination to forge ahead and bear long-term interests in mind when addressing current problems,” said the premier.

The government will continue to streamline administration and delegate powers to the lower levels, further fiscal and taxation reform, improve the budget management system, and continue to expand the pilot program to replace business tax with value-added tax (VAT).

China will deepen financial reform, promote pilot programs for private banks, and develop a multi-tiered capital market. It will also continue reform of state-owned enterprises.

The government will improve pricing systems for energy products, medicine and medical services. It will also implement government purchase of service contracting, public-private partnership models and franchise operation system.

The premier said his government would continue to increase supply of public goods to generate effective demand with a view of making up the weakness of falling investment. It will continue to boost household consumption and create new growth areas.

Li also vowed to further scale up support for the real economy and emerging industries and businesses, for more benefit of rural areas, agriculture and farmers, as well as micro-businesses and the service sector.

“These efforts are aimed at turning the gains of reform into new dynamism of development that would bring more benefit to the people,” the premier added.

Mandy Peng via CHINA US Focus http://ift.tt/1qGcFX2

Dalai Lama urged again to respect reincarnation

China repeated a call on the Dalai Lama on Wednesday to respect the historic practice of reincarnation, after he implied in a newspaper interview he may be the last to hold the position.

The Dalai Lama, in an interview with German newspaper Welt am Sonntag, said the tradition of the post could end with him, adding the Tibetan Buddhism was not dependent on a single person.

The Dalai Lama, 79, has stated previously that he may not be reborn in China. China has previously warned the Dalai Lama he has no right to abandon the tradition of reincarnation.

Chinese Foreign Ministry spokeswoman Hua Chunying told a daily news briefing that when it came to the reincarnation of living Buddhas, including the Dalai Lama, China had a “set religious procedure and historic custom”.

“China follows a policy of freedom of religion and belief, and this naturally includes having to respect and protect the ways of passing on Tibetan Buddhism,” Hua said.

“The title of Dalai Lama is conferred by the central government, which has hundreds of years of history. The (present) 14th Dalai Lama has ulterior motives, and is seeking to distort and negate history, which is damaging to the normal order of Tibetan Buddhism.”

China Daily via CHINA US Focus http://ift.tt/WXzOIU

China Asks U.S. to End Close-Up Military Surveillance

The United States should halt its “close-in” aerial and naval surveillance of China, a senior Chinese military officer told Susan E. Rice, President Obama’s national security adviser, on Tuesday.

Gen. Fan Changlong, vice chairman of the Central Military Commission, gave the warning on the last day of Ms. Rice’s visit to China, her first since she took up her post 15 months ago. It came with Chinese-American relations at their coolest in years.

General Fan told Ms. Rice that the United States should take the “correct” view of the development of the Chinese military, and “decrease and even end close-in ship and aircraft surveillance of China,” according to Xinhua, the state-run news service. American forces have watched China closely for decades.

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Vietnam-China Tensions Renewed on Maritime Incident

Vietnam on Wednesday accused crew members of Chinese boats of harassing fishing vessels and beating Vietnamese fishermen near the contested Paracel Islands in the South China Sea, but China dismissed the accusations as groundless.

Individuals from the Chinese boats—including two identified as rubber dinghies—searched and seized equipment from three Vietnamese fishing vessels on three separate occasions in August, according to a statement posted on the Vietnamese Foreign Ministry’s website. The Chinese boats and their crew members weren’t further identified in the statement.

Vietnam has accused Chinese boats of harassing its fishing boats several times in recent years, but often hasn’t provided details about the Chinese crew members.

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Vu Trong Khanh, Wall Street Journal via CHINA US Focus http://ift.tt/1qhVwny

China Now Building Factories on Disputed Islands in South China Sea

China is now building factories and what appears to be a runway for the takeoff and landing of military jets on disputed islands in the South China Sea.

Some of the islands are mapped, some are not. The latter are man-made islands which China has been busy creating from dredged up rock and sand dumped atop reefs to form new islands; islands China can then improve upon with factories, sea walls, and even “an airbase.”

BBC News reports that the airbase will technically give China “an unsinkable aircraft carrier, right in the middle of the South China Sea.” And this all comes in the short time since “the Communist Party reclassified the South China Sea as a ‘core national interest’” in 2012.

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Awr Hawkins, Breitbart via CHINA US Focus http://ift.tt/1twFCU6