China silences former critic, the liberal Nanfang news group

A shot of the Nanfang Zhoumo (Southern Weekend, or Nanfang Weekend). File Photo

A shot of the Nanfang Zhoumo (Southern Weekend, or Nanfang Weekend). File Photo

China’s Communist Party silences former critic, the liberal Nanfang news group

With papers like Southern Weekly, Nanfang Media hit government hard and often – but after overhaul it will avoid negative stories

PUBLISHED : Friday, 28 August, 2015, 11:53pm
UPDATED : Saturday, 29 August, 2015, 2:10pm
Mimi Lau in Guangzhou

The once outspoken Nanfang Media Group has adopted a raft of measures to align it with the Communist Party, weed out “negative” reports and ensure staff toe the official line.

Some employees had already been punished for transgressions dating to 2013, according to a report this week in the Nanfang Daily News.

Former editors saw the changes as the final nail in the coffin for what was once the best media outfit on the mainland and further evidence the leadership would tighten its grip on the industry nationwide.

The group underwent an inspection by the Guangdong provincial discipline watchdog in April and was roundly criticised in an assessment released the following month.

A reform task force was being led by the group’s party secretary Mo Gaoyi, who stepped down as deputy director of the provincial propaganda department in 2013.

The measures include strengthening the group’s party membership base and stepping up editorial management, according to the report.

Study sessions had been running since March and employees would be referring to instructional materials on Marxist news values.

As part of the overhaul, the group’s newspapers would sharply curb “negative” coverage and run “positive and mainstream” stories.

“Under the mechanism, Southern Weekly, Southern Metropolis News and 21st Century Business Herald have successfully transformed into mainstream reporting … where general social news, especially negative news has been greatly reduced,” the report said.

A former editor at the News who resigned last year said the group had become a pure propaganda vehicle. “It has become a party mouthpiece inside and out where every corner has been refined,” said the editor, who declined to be named.

Chang Ping, a former deputy editor at the Southern Metropolis Weekly, said the report demonstrated the confidence and complacency of propaganda officials. He predicted the crackdown on Guangdong media would be expanded into a national campaign.

“From a landmark media outlet where skills and professional knowledge far exceeded all other mainland media a decade ago, [the group] has degenerated and its influence is not even comparable to new media outlets such as Caixin or,” Chang said. Journalists had succumbed to government pressure and the profession as a whole should refuse to compromise, he said.

In 2013, editorial staff at Southern Weekly staged a protest over censorship of its popular New Year editorial. The stand-off sparked a rally by activists over government media controls, and grabbed international headlines.

The Nanfang group again drew the national spotlight last September, when the top management at the group that publishes the widely read 21st Century Business Herald were arrested over an extortion scam.

Correction: A quote was mistakenly attributed to a company statement instead of a report in the Nanfang Daily News.

Source: SCMP “China silences former critic, the liberal Nanfang news group”

China Punished 197 People for Stock Market Meltdown

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China, August 26, 2015.  REUTERS/Aly Song

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China, August 26, 2015. REUTERS/Aly Song

I pointed out the Chinese government’s ability to deal with stock market meltdown and gave the advice not to fight against a rich and powerful government in stock market in the following five posts:

Do Not Fight against Rich and Powerful Government in Stock Market dated July 29

China Punishes Short-sellers to Support Its Stock Market dated August 1

Stock Market Crash, a Golden Opportunity for CCP to Win Popularity dated August 6

Do Not Fight against Rich and Powerful Government in Stock Market 2 dated August 26

China Xi’s Iron Fist in Dealing Blows at Stock Market Irregularities dated August 27

True enough, according to Reuters’ report “Nerves on edge as Chinese authorities probe market mayhem” today, China has punished 197 people and will punish more through investigation for short selling and writing to push down the market in Chinese media. The following is the full text of Reuters’ report:

Nerves on edge as Chinese authorities probe market mayhem
BEIJING/LONDON By Paul Carsten and Nishant Kumar Mon Aug 31, 2015

The head of hedge fund manager Man Group Plc’s (EMG.L) China business has been taken into custody to help authorities in a probe into recent market volatility, Bloomberg reported on Monday, while separately a local financial reporter confessed on national TV to having spread false information that caused “panic and disorder”.

Both are likely to jangle nerves in the financial industry as regulators try to find out who they think was behind China’s wild stock market rollercoaster ride in the past three months.

Authorities have been investigating possible market manipulation following wild swings in the stock markets, .CSI300 .SSEC which have plunged around 40 percent since mid-June on concerns of a slowing economy and a surprise devaluation of the yuan currency CNY=CFXS earlier this month.

Officials are probing the financial industry amid allegations of malicious short-selling and other strategies seen as weakening confidence in the market.

Bloomberg, citing a person familiar with the matter, said Li Yifei, Man Group’s China chairwoman, was assisting with police inquiries, noting this doesn’t mean she faces charges or has done anything wrong. Reuters could not independently confirm the report.

Man Group spokeswoman Rosanna Konarzewski declined to comment on the matter, and China’s Ministry of Public Security could not immediately be reached for comment outside regular working hours.

Li’s husband, Wang Chaoyong, told Reuters he had spoken to his wife on Sunday and Monday, and she had told him she was in “highly confidential” meetings. “She said she was in meetings and it’s inconvenient for me to contact her,” he said by phone, adding he did not know where the meetings were taking place.

Separately, Chinese police are looking into the spreading of rumors about the stock market, as well as other issues such as the fatal explosions at a chemical storage facility in Tianjin.

On Monday, Wang Xiaolu, a reporter for the Caijing business magazine, read a confession on national state television, saying he spread false information in his reporting of the stock market that had caused “panic and disorder”.

“I shouldn’t have sought to make a big splash just for the sake of sensationalism,” he said.

It was not possible to verify whether Wang made his confession freely or under any coercion.

State news agency Xinhua said earlier that 197 people in total have been punished in the rumor campaign.

The investigations are likely to unsettle China’s investment community, and the report of Li’s involvement could leave foreign investors particularly on edge.

“Short run, any sane foreign businessman would have pause about doing business in China, given the environment,” said Bob Eisenbeis, vice chairman and chief monetary economist at Cumberland Advisors. “Long run, people will not overlook the size of the market and what that offers.”

Li, a former MTV Networks executive, was appointed Country Chair, China in 2011, according to a page on Man Group’s website archived by Google on Aug. 6. The page is not currently accessible.

Man Group says on its website it has $78.8 billion of assets under management.

(Reporting by Paul Carsten and Nishant Kumar, with additional reporting by Michelle Price, Shu Zhang, Richard Leong and Chris Kaufman; Writing by Rachel Armstrong; Editing by Mark Bendeich and Ian Geoghegan)

China’s New Heavy Reconnaissance-strike Drone Better than US Predator

 Rainbow 5 is the latest in a series of unmanned aerial vehicles developed by China Aerospace Science and Technology Corporation. Photo: Sina News

The Rainbow 5 is the latest in a series of unmanned aerial vehicles developed by China Aerospace Science and Technology Corporation. Photo: Sina News

Select guests get a close-up look at the Rainbow 5 military drone. Photo: CNTV

Select guests get a close-up look at the Rainbow 5 military drone. Photo: CNTV

China's new drone has a take-off weight of more than three tonnes and a wingspan similar to that of the United States’ Reaper drone (above). Photo: AP

China’s new drone has a take-off weight of more than three tonnes and a wingspan similar to that of the United States’ Reaper drone (above). Photo: AP

China's flagship Rainbow 5 military drone is capable of performing missions without ground support. Photo:

China’s flagship Rainbow 5 military drone is capable of performing missions without ground support. Photo:

In its report titled “Built to kill: China unveils its latest heavyweight contender in military drone race” on the successful maiden flight of China’s new Caihong-5 (CH-5 or Rainbow-5) drone, SCMP quotes the drone’s designer as saying, “The unmanned Rainbow 5, with a wall-penetrating radar, is a game-changer in China’s airstrike missions.”

The radar enables the drone to identify terrorists hiding in a bush or building and attack them.

The US uses such radar earlier than China, but SCMP says, “But another Rainbow 5 designer, Lan Wenbo, said the new Chinese drone was equipped with more advanced technology that better equipped it for future warfare.”

According China’s Oriental Satellite TV’s footage in Chinese that displayed by SCMP in the report, CH-5 is a medium- and low-altitude long-duration drone with a takeoff weight of 3 tons, wingspan of 20 meters and ability to remain in air for 30 hours. Only the largest US Predator drone is comparable to CH-5 in size, weight and flight duration. CH-5 is entirely made of synthetic materials and able to carry 900 kg load.

Ou Zhongming, chief commander of drone series in Research Institute 11 of China Aerospace Science and Technology Corporation (CASC), says on TV screen, “According to our standards, the maiden flight should be regarded as an entire success.”

Lan Wenbo, Director of the Totality Office of the Institute, says on screen, “It is able to increase its scope of reconnaissance from 20-30 to 80 km and to discover and attack a target from a longer distance away so as to keep itself farther away from the source of danger.”

SCMP says the drone can carry 6 missiles.

Full text of SCMP’s report with the Oriental Satellite TV’s footage can be viewed at

Source: SCMP “Built to kill: China unveils its latest heavyweight contender in military drone race” (summary by Chan Kai Yee of the TV footage in Chinese)

China to Showoff Newest Ground Missile Defense in Victory Parade

China’s official military media describes in its report what advanced weapons China will showoff in its victory day parade on September 3, especially China’s high-, medium- and low-altitude missile defense systems. The system to be displayed for the first time will be China’s homegrown low-altitude combined missile and artillery low-altitude air defense system.

The system combines the advantages of the high accuracy of missiles and the quick firing of the anti-aircraft cannons that can shoot several thousands shells within one minute to effectively intercept low-altitude fast targets within their short range.

Source: “First showoff of all the third-generation ground anti-missile systems in victory day parade” (summary by Chan Kai Yee based on the report in Chinese)

China banks warn of rising bad loans, falling margins as economy slows

A Chinese national flag flutters at the headquarters of a commercial bank on a financial street near the headquarters of the People's Bank of China, China's central bank, in central Beijing November 24, 2014. REUTERS/Kim Kyung-Hoon

A Chinese national flag flutters at the headquarters of a commercial bank on a financial street near the headquarters of the People’s Bank of China, China’s central bank, in central Beijing November 24, 2014. REUTERS/Kim Kyung-Hoon

China’s largest banks warned of a tough year after posting their weakest half-yearly profit growth in at least six years as a slowing economy forces the lenders to make even more provisions for soured loans and squeezes interest income.

State-owned Industrial and Commercial Bank of China (ICBC) (1398.HK), China’s largest bank by assets, and peers Bank of China (BOC) (601988.SS), Agricultural Bank of China (601288.SS) and Bank of Communications (601328.SS) this week reported another spike in bad loans in the first half and net profits that grew at most by 1.5 percent, a far cry from the double- digit growth banks enjoyed after the 2008 financial crisis.

With China’s economy set to grow at its weakest pace in a quarter of a century this year, the lenders said they were bracing themselves for even more bad loans as industries ranging from steel to petrochemicals and property struggle.

“We will continue to face pressure from non-performing loans for a period of time,” ICBC President Yi Huiman said.

The bank, also the world’s largest bank by assets, increased provisions for troubled loans by 74 percent from a year ago in the first half.

In addition to increasing bad loans, China’s slowing economy raises the likelihood of more interest rate cuts, which would further pressure the banks’ net interest margins (NIM), the spread between the lending and borrowing rates that banks earn.

BOC, the country’s fourth-biggest lender, said on Friday it faces margin pressure in the second half of the year from interest rate liberalization.

The People’s Bank of China has cut interest rates five times since November, and in the first-half all the banks reported lower NIMs.

Recent economic indicators show that even the Chinese growth target of about 7 percent may be at risk. Turbulence in China’s stock markets and the recent devaluation of the yuan may also end up pushing more manufacturers, construction firms and retailers into delaying or defaulting on loan repayments.

One bright spot for the banks this year has been their fee-generating businesses, but the volatility in the stock market rout is set to curb income from these services too.

“Given the tough pressures of the downturn, the banking industry will face an austere operating environment,” BOC said in its earnings statement.

China Construction Bank (601939.SS) (0939.HK), the nation’s second-biggest, will announce its interim results on Sunday.

(Additional reporting by Matthew Miller; Reporting by Engen Tham and Shu Zhang; Editing by Muralikumar Anantharaman)

Source: Reuters “China banks warn of rising bad loans and falling margins as economy slows”

China Xi’s Iron Fist in Dealing Blows at Stock Market Irregularities

Cyclists pass the China Securities Regulatory Commission building in Beijing. The regulator is investigating several securities companies. Photo: EPA

Cyclists pass the China Securities Regulatory Commission building in Beijing. The regulator is investigating several securities companies. Photo: EPA

I said in my post “Do Not Fight against Rich and Powerful Government in Stock Market 2” yesterday that the Chinese government “can punish short sellers. Chinese law enables the government to imprison short selling speculators for the crime of disrupting the market. As for foreign investors, there are rules to restrict their sales of shares. China can tighten the rules while the speculators can do nothing but crying foul.

In addition, “(t)his is more a political than economic move aimed at winning popularity among the vast number of Chinese retail investors. It is what the Chinese government must do and must not fail!”

True enough Hong Kong’s SCMP describes the government’s moves in that respect in its report today.

Article by Chan Kai Yee as comments on SCMP’s report.

The following is the full text of the report:

Stealth mode: Chinese police spend weeks on trail in shock market probe

Investigators had been quietly building up to a surprise statement this week into alleged irregularities in China’s financial sector

PUBLISHED : Thursday, 27 August, 2015, 12:03am
UPDATED : Thursday, 27 August, 2015, 2:20am
Staff Reporters

The investigation “started quietly weeks ago” but its high-profile, late-night announcement took many by surprise, with some seeing it as a drastic response by Beijing to the “Black Monday” market rout that sent mainland shares to eight-month lows.

Xinhua announced on Tuesday night that eight people – including a top executive of a major mainland securities firm, an employee of a well-known media group as well as a serving and a former official of the national market regulator – had been taken away for questioning over alleged market malpractice.

Sources familiar with the case told the South China Morning Post on Wednesday that police had been making informal inquiries “for weeks” and the case was not directly linked to the market turbulence. But they said it did reflect the leadership’s determination to weed out rampant irregularities in the financial market.

“The investigation is not only about the current market correction. It was triggered by something bigger. It is more complicated than people think,” a former senior official with the China Securities Regulatory Commission (CSRC) told the Post.

The assessment came as Xinhua issued a commentary calling for greater efforts to “purify” the capital markets. It said more people would be implicated as the investigation went deeper.

The Xinhua commentary, posted on the central government’s website, vowed the police would “get to the bottom of things” and punish those caught in breach of market regulations.

Xinhua did not name the eight people but mainland media yesterday reported that Xu Gang, managing director of one of China’s biggest securities firms Citic Securities; Ouyang Jiansheng, a former CSRC department director in charge of market supervision; Liu Shufan, a CSRC division head; and Caijing magazine reporter Wang Xiaolu were among them.

Read more: Citic Securities among five of China’s top brokerages under probe amid stock market slump

Caijing issued a statement confirming that Wang Xiaolu was taken away by police on Tuesday for questioning, but said it had not been told of the reasons for the probe.

Citic Securities also said it had not been told about the nature of the investigation.

But a source at the magazine said it could be linked to an article by Wang published on July 20 – soon after the government unleashed hundreds of billions of yuan to bail out the beleaguered market. In that article, Wang claimed the CSRC – a key part of the massive bailout – was preparing an exit plan. The regulator immediately denied the story.

The source said the magazine was under huge pressure to rectify its reporting practices after it published the article.

Mainland markets have been on a roller-coaster ride since mid-June and government efforts to intervene have had little success. The A-share market has fallen more than 22 per cent in the past five days.

A team of investigators led by the Ministry of Public Security was sent to the CSRC’s office on July 9 to uncover “malicious short-selling” that the government blamed for the turmoil.

Separately, four other securities firms also announced on Tuesday night that they were being investigated by the regulator. Haitong Securities, GF Securities, Huatai Securities and Founder Securities all said they had been notified by the regulator about the probe.

Do Not Fight against Rich and Powerful Government in Stock Market 2

On July 29, I had a post titled “Do Not Fight against Rich and Powerful Government in Stock Market”, giving the advice that selling short against rich and powerful Chinese government’s efforts to stabilize the Chinese stock market is doomed to failure.

I cited the incident of Hong Kong government defeating international speculators’ attack at Hong Kong stock market during the Asian financial crisis. Hong Kong government made huge profit from its intervention of the stock market.

Now, the history is repeating. Speculators are attacking Chinese stock market against Chinese government’s efforts to stabilize the market.

The problems for the speculators are:

First, the Chinese government has the best sources of information about the market so that it knows what level to buy with certain profits.

Second, it has much more the financial ammunition for the battle. Speculators have limited supply of shares for selling short as the number of shares in the market is limited. The government, however, has the power to forbid large shareholders’ sales of their shareholding; therefore, the speculators have limited ammunition.

The government, on the other hand, has unlimited ammunition. First, it can increase money supply to such an extent as to enable it to buy the entire market. As a result, there will be no supply of shares for speculators to sell!

Do not forget, Chinese currency is printed and issued by the Chinese government. Oversupply of Chinese currency will cause the exchange rate of the Chinese currency to fall, which is precisely what the Chinese government wants to support its economy and increase export. The Chinese government is killing two birds by one stone in doing so.

True enough, the Chinese government reduced interest rate and relaxed reserve requirements yesterday to increase money supply. There will be more money and less shares to buy!

Third, the government can change the rules while the speculators cannot. It can punish short sellers. Chinese law enables the government to imprison short selling speculators for the crime of disrupting the market. As for foreign investors, there are rules to restrict their sales of shares. China can tighten the rules while the speculators can do nothing but crying foul.

The last but the most important: This is more a political than economic move aimed at winning popularity among the vast number of Chinese retail investors. It is what the Chinese government must do and must not fail!

Article by Chan Kai Yee as comments on Reuters’ report “China cuts rates, relaxes RRR”

The following is the full text of Reuters’ report:

China cuts rates, relaxes RRR
Tue Aug 25, 2015 8:12am EDT

China’s central bank cut interest rates and relaxed reserve requirements for the second time in two months on Tuesday, cranking up support for a stuttering economy and a plunging stock market that has sent shockwaves around the globe.



“This move makes sense from economics point of view. The real interest rates have stayed above double-digit for a few quarters, suggesting that the policy rates should be lowered aggressively. The market liquidity conditions have tightened significantly since the “one-off devaluation”, as PBoC bought CNY against USD to stabilize the exchange rate. In fact, we have seen that the agent banks stepped into the offshore market this afternoon to offer liquidity.

“However, the side effect of monetary easing is the depreciation pressure on CNY and the potential capital outflows. In fact, the question remains whether China wants to see more currency depreciation.”


“This is within our market expectations, the only small added is the interest rate cut, including the lower lending rate and deposit rate. The 50 basis point RRR cut is more important. This will inject 650 billion renminbi ($101.38 billion), a huge amount. This will ease hard landing concerns.

“We should see some rebound in September or October and growth should rebound in the fourth quarter … The Caixin PMI data was very weak and we expect the official PMI to also be quite weak. Although this has some elements of giving comfort to the market, this is more about giving a real boost to the real economy so the government can continue to have its 7 percent growth rate fulfilled – although I don’t think that’s possible. But in the second half of the year, if they don’t have very disappointing growth, they may get closer (to the target).”


“The measures will certainly stabilise sentiment in the short term. “(But in the longer term) it’s debatable whether the moves in monetary policy can stabilise equity markets. One hopes the easing in monetary policy would help the economy.”


“China’s decision to cut reserve requirements by 50 bp will be regarded by many investors as overdue, but nevertheless reassuring. It was the failure of the authorities to act over the weekend that seemed to spook markets yesterday as it strengthened the impression that Chinese policymakers were starting to rely more heavily on the exchange rate as a way of stimulating demand as opposed to taking additional domestic policy measures.

“Today’s decision helps to correct this impression, and is naturally relieving some of the strain on highly stressed trade partners and commodity exporters. The litmus test will come overnight, however, and the efficacy of the RRR cut in boosting the domestic stock market. For now, though, expect to see a further, albeit by no means complete, reversal of yesterday’s moves (i.e. EUR and JPY lower, the dollar, commodity and EM FX higher).”


“The PBOC is doing what it has to do, but it is very likely it is not enough so more will have to be done. The cut in the reserves rate (RRR), that was well expected, so no surprise at all and we have to remember that cutting RRR right now is not easing. It is just preventing a tightening.

“The interest rate cut is a bit of a surprise, but the signal of easing is offset a bit by the recent liberalisation of the deposit rate.”


“Will it be enough? It’s difficult to say – it’s not a huge rate cut but it does show markets that they are willing to act in order to arrest any slowdowns. It has proved to markets that China is willing to act. Investors have been waiting for them to act and they have.

“Is this sufficient? It might not be, but it does set a precedent that they are engaged and looking to prevent any further declines. The key point to make with China is that it does have considerable policy levers if necessary – the interest rate is not low by global standards and they can always rely on their more traditional policy tools such as public investments if it’s a slowdown in the economy that is taking place.”


“It might suggest there’s a change of tack now from directly trying to shore up the equity market to trying to limit downside risks facing the economy.

“We’ve seen over the past couple of days that the so-called ‘national team’ hasn’t stepped in to stop the equity market from falling, so perhaps they have realized the futility of trying to prop up prices through direct purchases and it makes sense to concentrate on the macro repercussions.

“It may help shore up equity prices but I don’t think we’re going to get a big rebound. I think that too many investors in China have been burned badly from what we’ve seen over the past few weeks and won’t be too eager to step back in.”


“I think the cut of RRR and interest rates is mainly aimed at supporting the stock market, as well as to ease capital outflows following yuan depreciation. It will offer a buffer to the tumbling stock market, but isn’t likely to have material support.

“The deposit rate cut is out of our expectation given CPI will soon exceed 2 percent, which will push the real interest rate into a negative territory. There’s little room to further cut benchmark rates in the coming few years as negative rates will hurt the economy and financial markets.”


“That’s quite a move. Seems like everything but the kitchen sink. Clearly the timing is all about the double-whammy of the stock market and downward pressure on the currency, both of which I’d argue they brought on themselves. They stood back and watched while the stock market ran up, then had a ham-fisted response when it fell, that created the need for a correction but made it more difficult to react … The RRR cut buys them some time as far as having to allow the currency to depreciate, because defending the exchange rate and providing liquidity are at odds with each other.”

(Reporting by Pete Sweeney, Marc Jones, John Geddie, Jake Spring, Marius Zaharia and Sudip Kar-Gupta Compiled by Ian Geoghegan)

Tension Has Eased between China and Vietnam in South China Sea

According to Reuters, China has completed the drilling of a well near Vietnam coast without a repetition of the standoff between Vietnamese and Chinese vessels, a clear indication that tension has eased between China and Vietnam in the South China Sea.

The following is the full text of the Reuters report:

Controversial China rig completes drilling well near Vietnam coast

BEIJING Mon Aug 24, 2015 6:50am EDT

The Chinese oil rig at the center of last year’s standoff between China and Vietnam over oil exploration in the South China Sea has completed drilling of a well not far from Vietnam’s coast, the official Xinhua News Agency said on Monday.

Xinhua did not give coordinates for the well, but the China’s Maritime Safety Administration website earlier put the drilling site just over 100 nautical miles from the coast of Vietnam and 75 nautical miles south of the resort city of Sanya on China’s Hainan Island.

China claims most of the potentially energy-rich South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.

China’s deployment of the rig last year in what Vietnam considers its exclusive economic zone, about 120 nautical miles off its coast, led to the worst breakdown in relations since a brief border war in 1979.

The $1 billion deepwater rig, known as the Haiyang Shiyou 981, is owned by state-run China National Offshore Oil Corp.(CNOOC), China’s largest producer of offshore oil and gas.

Xinhua, citing a company statement, said that the rig had completed China’s first high-temperature, high-pressure and deep water exploration well.

A statement could not be found on the company’s website or that of its flagship listed unit, CNOOC Ltd. A spokesperson could not immediately be reached.

Vietnam and China agreed on an equal split of their maritime boundary of the Gulf of Tonkin in 2000 but have yet to agree on demarcating waters further south, near the well’s site.

Vietnam’s people remain embittered over a perceived history of Chinese bullying and territorial claims in the South China Sea, although China said at the time the rig was operating completely within its waters.

China has also clashed with the Philippines in recent years over a disputed shoal that China seized in 2012.

On Monday, China’s foreign ministry again condemned an arbitration case initiated by Philippines, saying it was a violation of previous commitments to handle to dispute bilaterally and an abuse of the legal system.

China has for years insisted that disputes with rival claimants to the South China Sea be handled bilaterally and has refused to take part in the Philippines case.

But last month, its claims came under international legal scrutiny for the first time when the Permanent Court of Arbitration in The Hague began hearing a suit the Philippines filed in 2013.

(Reporting by Adam Rose; Additional reporting by Michael Martina; Editing by Nick Macfie)

Source: Reuters “Controversial China rig completes drilling well near Vietnam coast”

China to grant rare prisoner amnesties for war anniversary

China plans to grant prisoner amnesties to mark this year’s commemorations of the 70th anniversary of the end of World War Two, only the eighth time this has happened since the Communists took power in 1949, state news agency Xinhua said on Monday.

Four categories of prisoners – mostly elderly – who do not pose a threat to society will be given a special amnesty, Xinhua quoted Li Shishi, head of the Chinese parliament’s standing committee, as saying.

That will include prisoners who fought in the war against the Japanese, or who fought in wars post 1949 to “protect the country’s sovereignty, security and territorial integrity”, or who are older than 75, Xinhua said.

It did not say how many people would be set free as a result of this amnesty, and Li said that exceptions will apply to people convicted of serious crimes like murder, rape, bribery or terror offences.

There have only been seven previous instances of these special amnesties since the Communist take over, Xinhua said.

The move is in line with international practice and will help increase popular confidence in the party’s efforts to boost the rule of law, it added.

More than 10,000 troops – mostly Chinese but with contingents from Russia, Mongolia and a few other countries – will march through central Beijing on Sept. 3 in a military parade that will be the highlight of events marking the war’s end.

(Reporting by Ben Blanchard; Editing by Simon Cameron-Moore)

Source: Reuters “China to grant rare prisoner amnesties for war anniversary”

China Xi’s Dilemma in Dealing with the Malpractices of Extravagance

Lavish traditional pastries are making a comeback for the Mid-Autumn Festival this year. Photo:

Lavish traditional pastries are making a comeback for the Mid-Autumn Festival this year. Photo:

SCMP reports today on the reemergence of expensive mooncakes that disappeared due to Chinese President Xi Jinping’s austerity campaigns against the four malpractices of formalism, bureaucratism, hedonism and extravagance.

In the expanded second edition of my book Tiananmen’s Tremendous Achievements, I give the reasons for Xi’s campaigns:

The problem lies first of all in CCP officials’ fondness of pomp, status, extravagance and luxury. Quite a few rich people perhaps have the desire to keep a low profile due to the popularity of Maoism. They are afraid that they may be struggled against if unfortunately Maoism prevails later. However, they have to please the officials who have helped them become rich. Even if they have not got any help from officials, they have to please officials who have the power to create trouble for their business. As a result, the officials and the rich have squandered lots of money in luxurious cars, decoration, housing, visits, travel abroad, etc. They have especially wasted lots of expensive food in lots of luxurious banquets while most of the common people have to work hard to earn a modest living. Common people’s indignation at the yawning rich-poor gap is thus first of all the result of officials’ extravagance

That is why leftist Maoism is so popular in China. I describe in my book how Xi uses his Chinese dream to put an end to the fierce power struggle between leftist conservatives and reformists and make conservatives accept his thorough economic reform capitalist in nature.

Now, Xi is faced with the dilemma: He wants austerities to ease the conflict between the rich and poor. However, he wants the economic growth brought about by creation and innovation so that he has to encourage people to become rich entrepreneurs. That means he has to encourage the rich-poor gap to grow or at least allow it to exist. In addition, he wants a consumption-led economic growth so that he has to encourage people to spend as much as they can afford. There must be expensive goods to enable those who have become rich through creation, innovation and enterprising to spend on. What is the benefit to make so much money if you have nowhere to spend it?

How to control that within the limit acceptable by most people will test Xi’s wisdom.

Article by Chan Kai Yee as comments on SCMP’s report.

The following is the full text of SCMP’s report:

China regains taste for expensive mooncakes

High-end festival delicacies make a comeback despite the crackdown on corruption

Mimi Lau in Guangzhou
PUBLISHED : Monday, 24 August, 2015, 12:55am
UPDATED : Monday, 24 August, 2015, 1:03am

Luxury mooncakes linked in previous years to corruption have found their way back on the shelves for the Mid-Autumn Festival even as the nationwide anti-graft campaign continues.

State media Xinhua investigated the sales of such mooncakes in high-end hotels and shopping malls in Beijing, Guangdong and Fujian and found that the costly traditional pastries had made a comeback for the festival this year.

The sales of luxury mooncakes were badly hit in previous years after the authorities explicitly banned officials from giving or receiving expensive mooncakes as gifts.

But a high-end hotel in Beijing has recently been found selling a 1,688 yuan (HK$2,044) hamper comprising four luxury mooncakes, bird’s nest, abalone and costly tea leaves, Xinhua said.

In Dalian, Liaoning province, a hamper containing eight mooncakes, bird’s nests, olive oil and chestnuts was going for 498 yuan. One customer bought 20 of the hampers.

Most of the deluxe mooncakes came packed alongside tea leaves, wine, dried mushrooms, fruit or Chinese sausages.

Other mooncakes were marketed as being stuffed with expensive delicacies. One hotel was selling mooncakes at more than 1,000 yuan, marketing the pastries as being filled with abalone, truffles and dried seafood.

Another high-end Beijing hotel offered “tailor-made” mooncake packages priced at more than 1,000 yuan each.

Shoppers who prefer to remain low-key need not have to even step out of the comfort of their homes to buy such luxury mooncakes – they are also available through coupons sold on e-shops or social media.

Mainland media reported last year that the demand for deluxe mooncakes – often given as gifts to senior officials to buy their favour – had gone down because of the corruption crackdown.

Last September, the nation’s top anti-graft agency, the Central Commission for Discipline Inspection, said its investigators were targeting prepaid e-gift cards and virtual presents among other forms of corruption.

After President Xi Jinping took power in 2012, he ordered a clampdown on bureaucracy, hedonism and extravagance, and called for an end to the use of public funds for lavish gifts and luxury travel. Cadres were also urged to refrain from squandering money on costly mooncakes and hairy crabs during the Mid-Autumn Festival.