News roundup: Why is economic reform so difficult for China?

Economic reform stagnates as ‘old economy roars back’

Several stories published today show how difficult it is for China to change the fundamentals of its economy from manufacturing and heavy industry to services and consumption. Bloomberg has a story titled “Li Keqiang Index jumps as China’s old economy roars back,” which notes that “electricity use, rail cargo volume and bank loans…are collectively at the highest level in three years.” This sounds like good news, but the article quotes a financial analyst who sees it as “more borrowing, more over-investment, more can-kicking,” adding, “If this wasn’t a finite strategy that will have to end badly one way or another, I’d be breaking out the champagne. As it is, I’d be fastening my seat belt.”

Other signs of economic woes and the stagnation of reform: the Wall Street Journal article “China’s slowing growth forces rethink on worker protections,” the New York Times piece “Despite climate change vow, China pushes to dig more coal” and a compelling gallery of photographs in The Guardian of unauthorized steel factories in Inner Mongolia.

Top stories from Chinese state media

Xinhua News Agency’s top story today is a speech that Xi Jinping gave to the China Federation of Literary and Art Circles and the China Writers Association. It exhorted the members of those organizations to ensure that contemporary culture is a vital part of the “great rejuvenation of the Chinese nation,” which is the key element of the “Chinese Dream.” (An English summary of the speech is here; see also The China Project’s translation of the 25 key phrases of Xi Jinping.) Meanwhile, People’s Daily focused on a Politburo meeting chaired by Xi to review and standardize benefits such as housing and offices of party and state leaders (in English here).

Uber China woes

Finally, on The China Project today, we publish a brief Q&A with China tech industry veteran David Wolf on changes at Uber China, now owned by former homegrown competitor Didi Chuxing, that make it very difficult for foreign visitors to use the ride-sharing service.

More China stories worth your time are summarized below.

BUSINESS AND TECHNOLOGY:

• • China said to add curbs on yuan outflows as pressure builds / Bloomberg
    “Officials won’t approve requests to bring the yuan overseas for the purpose of converting into foreign currencies unless applicants provide a valid business reason, according to people familiar with the measures drafted by China’s central bank.”
  • China has to get creative to buy assets abroad / WSJ
    “Even as China cracks down on outflows, its state companies find novel ways to fund far-flung deals for natural resources.”
  • China hopes new film studio and theme park will boost ties to international movie industry / LA Times
    A $2 billion film studio and theme park complex in Chongqing will be named after Xi Jinping’s One Belt, One Road trade and investment initiative, which aims to revive the ancient routes of the Silk Road.
  • Why Facebook’s China adventure will need more than censorship to succeed / The Guardian
    “Experts inside China say the company’s efforts to control news deemed unfavorable by the ruling Communist Party would need to be as good as the censorship practiced by the government itself.”
  • All-American pickup trucks aim to lure China’s wealthy / Reuters
    Even though most Chinese cities restrict the larger vehicles to overnight driving, “Ford and General Motors are aiming the pickup truck, an iconic staple in the United States, at upmarket buyers in China, where most associate trucks with farmers and construction workers.”

POLITICS AND CURRENT AFFAIRS:

• • Michael Flynn, a top Trump adviser, ties China and North Korea to jihadists / NYT
    Retired Lt. Gen. Michael T. Flynn, Trump’s choice for national security adviser, claims that China is part of an anti-West conspiracy allied with militant Islamists, despite the country’s official status as a secular Communist state and its ongoing fight against domestic religious extremism.
  • Putin brings China’s Great Firewall to Russia in cybersecurity pact / The Guardian
    “Russia has been working on incorporating elements of China’s Great Firewall into the ‘Red Web,’ the country’s system of internet filtering and control, after unprecedented cyber collaboration between the countries.”
  • China welcomes incoming head of UN, where it wants a larger role / NYT
    “China extended a warm welcome this week to the incoming United Nations chief, António Guterres, praising the world body and making clear that it wants a greater role there, at a time when Donald J. Trump’s election to the White House has many wondering whether American involvement will recede.”
  • A U.S.-Cuba breach presents an opportunity for China / WSJ
    “Trade between China and Cuba grew 13 percent to $1.1 billion in the first two quarters of this year, after swelling 59 percent in the previous year to reach $2.2 billion for all of 2015, according to China’s Ministry of Foreign Affairs.”
  • Troop carriers seized: Is China sending Singapore a message? / CNN
    Nine Singaporean armored troop carriers were impounded in Hong Kong after being used for military exercises in Taiwan. “In the context of deteriorating relations, it could be a Chinese strategy to teach Singapore a lesson and a way to indicate their unhappiness,” says Zhang Baohui, a political science professor at Lingnan University in Hong Kong.
  • China tells Taiwan to stay out of Hong Kong debate / Reuters
    “We advise the Taiwan side not to talk nonsense about the Hong Kong issue, interfere in Hong Kong’s enforcement of ‘one country, two systems,’ or damage Hong Kong’s prosperity and stability,” said a spokesperson for China’s Taiwan Affairs Office.
  • 3 Chinese rights activists disappear in apparent state crackdown / NYT
    “The three men, Jiang Tianyong, Huang Qi and Liu Feiyue, all disappeared within days of each other in November, each in a different province.”
  • China’s leaders emerge from the fog of pollution denial / Financial Times
    “According to people who claim to know, President Xi Jinping himself genuinely cares on a personal level about protecting the environment,” writes Jamil Anderlini. “More important is the Communist Party’s realization that reducing the country’s shocking levels of pollution has become a matter of political survival.”
  • China says foreign NGOs must provide funding proof / Reuters
    “Foreign non-governmental organizations (NGOs) in China must provide details of where their funding comes from and show that their chief representative has no criminal record, the government said of new rules due to come into effect next year.” The complete text of the new rules is in Chinese here.

SOCIETY AND CULTURE:

• • Designers breathe new life into China’s dying folk crafts / Seattle Times
    As low-cost Chinese manufacturers turn to the cheaper labor available in Southeast Asian countries such as Vietnam, “the local garment makers that previously thrived churning out cheap clothes for overseas brands are revamping their sweatshops with smart, small-batch production methods such as 3D printing and cloud computing.”
  • Researchers may have ‘found’ many of China’s 30 million missing girls / Washington Post
    A new study posits that many births were simply not registered with local authorities. “Most people are using a demographic explanation to say that abortion or infanticide are the reasons they don’t show up in the census and that they don’t exist. But we find there is a political explanation,” says John Kennedy, a political scientist at the University of Kansas and one of the study’s authors.
  • Chinese crematorium worker live-streams dozens of videos of bodies being cremated / SCMP
    Live-streaming platform Kuaishou has shut down the man’s account and deleted dozens of macabre videos he shot that showed close-up images of cadavers being prepared and cremated.