News roundup: Small-time investors risk jail to recoup billions

Small-time investors risk jail to recover investments in government-backed scheme

Quartz reports that the Fanya Metals Exchange, whose business model heavily relied on deposits from retail investors, collapsed in 2015 with an estimated $6 billion of investors’ money frozen. Though some of the architects of the scheme were arrested (paywall) last year, a total of 220,000 investors across the country are still begging for their money back.

The exchange platform was once backed and endorsed by the local government of Kunming, where Fanya is based, in order to persuade investors to believe that the company was too big to fail, and that the products it sold were recognized by the officials. But state regulators charged with protecting investors have remained silent despite last year’s arrests, and so far no trial date has been set. Meanwhile, street protests organized by victim investors have met with government suppression and online communications between investors are closely monitored by the government.

Cash from Chinese auto companies flooding into the U.S. widget market

Chinese auto companies have not yet succeeded in selling their cars to the American markets, but Bloomberg reports that instead they are entering the American market by “buying up parts makers at a record pace.”

—Jeremy Goldkorn, Editor in Chief

Today on The China Project

We release our second introduction to a notable Chinese city – this time, Chengdu. The city, well-known to Chinese but a blip on the radar for most foreigners, is a center of great food, gorgeous scenery, and plenty of pandas. See also our previous city guide for the famous city of Hangzhou.

This issue of the The China Project newsletter was produced by Sky Canaves, Lucas Niewenhuis, and Jiayun Feng. More China stories worth your time are curated below, with the most important ones at the top of each section.

BUSINESS AND TECHNOLOGY:

• U.S. eyes new tactic to press China / WSJ (paywall)
  A new policy is under discussion in the White House to discourage China from devaluing its currency to increase exports. According to people briefed on or involved in formulating the plan, to avoid making confrontational claims about whether or not China is intentionally manipulating its currency to its advantage, “the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country,” without singling out China. In light of Trump’s phone call with Chinese president Xi last week, in which the U.S. president said he would honor the one-China policy, “the move could be a sign that the Trump administration is softening its stance on China,” especially given the context of Trump’s repeatedly calling China a currency manipulator and threatening to impose 45 percent tariffs on Chinese goods during his presidential campaign.
• China’s obsession with skyscrapers reaches new heights / SCMP
  It is the ninth year in a row that China, the world’s second-largest economy, ranked top in the world for having the largest number of new skyscrapers 200 meters or taller. In 2016 alone, China accounted for 70 percent, or 84 buildings, of 128 such mega-buildings constructed around the globe. Many of these skyscrapers are located in smaller cities, not the megalopolises of Shanghai and Beijing. This year, more than 10 mid- and small-sized cities, including Suzhou, Changsha, and Wuhan, will see 300-meter-plus skyscrapers begin construction or application for regulatory approval. The frenzy to erect more high-rises is partly attributed to “the acceleration of China’s urbanization and a desire to improve the national image with modern construction.”
  The problem, however, is that it will be hard to find quality tenants to fill the space in smaller cities. In fact, a remarkable percentage of already-existing skyscrapers are unoccupied and, over time, are neglected. Furthermore, it is estimated that by the end of 2017, “the cumulative vacancy area of office space in 17 cities will increase 3.3 percentage points to 23.5 percent, or 19 million square meters.”

• China factory prices surge most since 2011, boosting reflation / Bloomberg
• China credit surging to record underscores PBOC shift to tighten / Bloomberg
• Trump’s commerce pick faces questions over China ties / Financial Times (paywall)
• China anger at Dalai Lama visit complicates AC Milan buyout / Bloomberg

POLITICS AND CURRENT AFFAIRS:

• ‘We had to sue’: The five lawyers taking on China’s authorities over smog / The Guardian
  The Guardian has a good review of a case brought by five lawyers blaming the government for the toxic smog that threatens the health of residents of Beijing and other northern Chinese cities. As the report explains, “who is responsible for China’s chronic and deadly air pollution? That depends on who you ask. Officials blame the weather or outdoor barbecues, activists blame steel companies and coal-fired power plants. But Yu Wensheng blames only one actor: the government.”

• China’s Xi says officials should prevent abuse of power / Reuters
• Chongqing still grappling with ‘pernicious legacy’ of Bo Xilai / SCMP
• Beijing police develop app for citizen crime-busters / Xinhua
• Eight dead, three missing after explosion at Chinese coal mine / SCMP

SOCIETY AND CULTURE:

• China’s great awakening / Foreign Affairs (paywall)
  In a country where religion has long played marginal roles under the central government’s control, contemporary China is experiencing a spiritual revival in which hundreds of millions of Chinese are seeking to find answers in religious beliefs. The government has developed a complex relationship with rising religious movements by encouraging and fostering them in some ways, in a bid to serve the Party’s own interests. “Perhaps because Chinese religious traditions were so savagely attacked over the past decades and then replaced with such a naked form of capitalism, China might actually be at the forefront of this worldwide search for values,” writes Ian Johnson. For more, listen to this Sinica Podcast and a follow-up Q&A with the author, a Pulitzer Prize–winning journalist and an expert on religious topics in China.

• To stem spread of avian flu in China, some provinces shutter poultry markets / NPR
• Film review: Han Han’s race back to the ’90s is a sentimental journey / China Film Insider
• Cruise line operators see gold in China / Nikkei Asian Review
• Top rocket scientist dies, age 102 / China Daily
• Firework sales drop for sixth year in a row / China Daily