Killing the zombies

Killing zombie companies with court-led bankruptcies

Bloomberg says that “China is getting serious about dealing with so-called zombie companies through court-led bankruptcies” as part of efforts to reform the economy, cut overcapacity, and maintain high rates of economic growth. On Sunday, speaking at the National People’s Congress, China’s Chief Justice Zhou Qiang 周强 stated that “authorities will improve the country’s judicial system for dealing with bankruptcies in 2017” — a priority, as bad debts at banks soared to an 11-year high in 2016. There was a 54 percent increase in bankruptcy filings to 5,665 last year. On February 28, state media reported (in Chinese) on a meeting of the Leading Small Group for Financial and Economic Affairs presided over by President Xi Jinping at which he emphasized a commitment to shut down state-owned “zombie companies.”

WeChat account about art gets a 20 million yuan funding round

TechNode reports that Yiwai11 意外艺术, a WeChat “official account” about fine art, has taken a round of funding of 20 million yuan ($2.9 million), putting the company’s valuation at more than 200 million yuan. Official accounts are WeChat feeds that function like small media outlets. TechNode says the Yiwai11 WeChat account is not aimed at the gallery or academic communities but “has been successful in popularizing fine art among Chinese people.” Some popular WeChat accounts can charge several hundred thousand yuan for a single advertising slot. Other official accounts that have recently attracted investment include the Logic Show 罗辑思维, now valued at 1.3 billion yuan, and Yitiao 一条, which recently raised 100 million yuan.

Women and China: A The China Project-sponsored forum
Save the date: May 18 from noon to 7 p.m.
Join us at the China Institute in New York to discuss how women are shaping a rising superpower. More details are forthcoming.

Photos of a drone-killing gun

An album of photos, compiled by Shanghaiist, depicts a gun that can take down drones shown off by police in Wuhan in the central Chinese province of Hubei.

The Washington Post on hardening rhetoric about Islam in China

Yesterday, we linked to an Al Jazeera article about the Chinese government’s increasingly strident statements on the dangers of radical Islam. Thanks to reader Christian Shepherd for pointing out that quotes and information in the article appear to have been lifted from this Washington Post piece.

This issue of the The China Project newsletter was produced by Sky Canaves, Lucas Niewenhuis, Jia Guo, 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:

• China homes sales surge 23 percent in first two months, defying curbs / Bloomberg
  China home sales rose 23 percent in January and February compared with the same period last year, reaching a total of 912 billion yuan ($132 billion) according to data released by the National Bureau of Statistics today. Policy makers had pledged to curb property speculation last year and reiterated the need to do so during this year’s Two Sessions, the annual political gathering in Beijing that ends this week. Guo Shuqing 郭树清, the new chairman of the China Banking Regulatory Commission, said earlier that he will pay close attention to real estate bubbles after 45 percent of the nation’s new loans went to the property sector in 2016, with most going to personal mortgages. Many first- and second-tier cities introduced measures to cool property markets last year. For example, Beijing increased down payments for first-time home buyers from 30 percent to 35 percent.
• This millennial Chinese stock guru has banker parents, but won’t touch bank stocks / Bloomberg
  Yu Baijing 俞白静 is a 32-year-old stock picker who co-manages a 189 million euro ($202 million) Greater China fund for Paris-based Comgest. Although she was raised by two generations of Chinese bankers, she told Bloomberg that she won’t risk her clients’ assets on shares of a Chinese lender because “lenders in China are often policy tools of the government with ‘black box’ balance sheets that provide little clarity on their exposure to non-performing debt.” Yu’s fund’s top holdings as of February included China Life Insurance Co., the nation’s largest insurer, and the internet and gaming company NetEase.

• Boeing and Ford power ahead with China expansion / CNBC
• China’s economy gets off to strong start in 2017 as investment rebounds / Reuters
• As China’s coal mines close, miners are becoming bolder in voicing demands / NPR
• Hollywood and China, a relationship doomed to fail / Hollywood Reporter

POLITICS AND CURRENT AFFAIRS:

• China welcomes Duterte’s remarks on navigation freedom / China Daily
  China’s foreign ministry spokeswoman, Hua Chunying, said today that China welcomed remarks made by Philippine president Rodrigo Duterte inviting Chinese research vessels to pass through the waters of Benham Rise, an area about 160 miles to the northeast of the island nation where Chinese survey ships were spotted last year. Duterte stated yesterday that he had ordered his country’s military to erect “structures” in the area to assert his country’s sovereignty. “You go there and tell them straight that this is ours, but I say it in friendship,” he said. However, Duterte backed off from his previous hawkish comments, saying, “Let us not fight about ownership or sovereignty at this time because things are going great for my country.” Hua responded that China fully respects the Philippines’ continental shelf rights over Benham Rise, that such rights have never been challenged by China, and that the two countries have already communicated over the issues “in a friendly manner.” These comments were made ahead of Vice Premier Wang Yang’s trip to the Philippines from Thursday to Sunday, during which he will meet with Duterte and attend the opening ceremony of the China-ASEAN Tourism Year.
• Top South Korean presidential candidate demands China stop retaliation over THAAD / Reuters
  Moon Jae-in, a South Korean politician who is expected to become the country’s next president, called on China to stop economic retaliation against South Korean firms over THAAD, the U.S. missile defense system that was deployed last week. Without making official announcements, China appears to have taken various measures against South Korean firms, including ordering travel agencies to stop selling trips to South Korea, and suspending construction of a planned amusement park by the Korean conglomerate Lotte. A presidential election will take place in South Korea before May 9, following the impeachment and dismissal of its former president, Park Geun-hye, last week.

• Five years on, why are China’s political stars shying from the limelight? / SCMP
• Trump’s top China expert isn’t a China expert / Foreign Policy (paywall)
• China’s internet censorship under fire – but proposal against controls gets…censored / SCMP
• Statue of Marx, funded by China, will stand in German city of his birth / NYT (paywall)
• The lone voices of dissent in China’s political wilderness – CPPCC delegates who are “willing to say it as they see it,” even if their suggestions are unlikely to be implemented / SCMP

SOCIETY AND CULTURE:

• China says rebuilding major western Buddhist learning center / AP
  In February, The New York Times reported (paywall) that six United Nations human rights investigators had issued a statement in late 2016 that condemns China for expelling monks and nuns from Larung Gar, a religious enclave in a Tibetan area of western Sichuan Province. Many of the dwellings occupied by the expelled have also been demolished. Today, the Associated Press notes that Chinese state media has denied that “the complex was being demolished and its residents evicted,” saying that “the purpose of the renovation is to improve the living standard of the residents there and eliminate fire hazards.”
• Pandas in China are about to get a sanctuary so big, it’s displacing 200,000 humans / Travel + Leisure
  Last week, Chinese authorities announced that thousands of people from Sichuan Province will be relocated to make room for a planned panda bear reservation, but did not mention where they will be placed. The London Times reported that 200,000 people will be relocated while the Shanghai Daily said that 172,000 people will be affected. The Giant Panda National Park, which will span 10,500 square miles across the Sichuan, Gansu, and Shanxi provinces, aims to restore habitats for pandas. According to the most recent findings of the International Union for Conservation of Nature, there are currently 2,060 pandas in China. In a video published by The China Project last week, we discussed a brief history of panda diplomacy.

• The chart that shows China’s baby-making frenzy since it lifted its one-child policy / Quartz
• A corny pop ballad explains in one verse why China is so mad about THAAD / Quartz