Changing China

from George Chen:

Is China Inc still credible?

By George Chen The opinions expressed are the author’s own.

Chinese Premier Wen Jiabao once said there's something even more important and precious than gold -- people's confidence.

In recent weeks, I'm afraid global investors have been losing confidence in Chinese stocks from the New York to Shanghai markets. Sino-Forest Corp became the latest victim of a slump in overseas-listed Chinese companies. The company earlier this week accused short-seller and research firm Muddy Waters of defamation for alleging in a report that it had fraudulently exaggerated its Chinese forestry assets.

Unfortunately, this is just the beginning of the hit to confidence over Chinese stocks, especially small caps listed at home or abroad, for example in Hong Kong, Singapore, New York and even on the second-tier board of the London Stock Exchange.

If you look at yesterday's trading carefully, you may find investors suddenly became more cautious on small-cap Chinese stocks after the Sino-Forest case. There were already signs with the growing dotcom bubble exported by some Chinese Internet companies to Wall Street.

Remember matchmaking website Jiayuan.com, which recently listed on the Nasdaq? These days it's in trouble with investors and users, who say its service may not be as good as its claim to be China's No.1 online matchmaking site suggested. Read my previous column "Is China exporting a dotcom bubble?" here.

from Reuters Investigates:

China’s U.S. debt holdings make it a powerful negotiator

Worrying about the power China has over the U.S. as America’s largest foreign creditor has become a national pastime. It’s a bipartisan issue in Congress and a favorite subject among pundits lamenting the decline in U.S. influence around the world. But could China really use its Treasury purchases to shape U.S. policy? Diplomatic cables released by WikiLeaks and obtained by Reuters suggest that has already happened.

Emily Flitter’s special report outlines a diplomatic flare-up between the two superpowers following the U.S. financial crisis. Chinese officials said they were worried about the safety of their U.S. investments. U.S. diplomats worked hard to ease the tensions, but the conflict ultimately led to the request of a personal favor by a top Chinese money manager in a meeting with U.S. Treasury Secretary Timothy Geithner.

from Sebastian Tong:

Stop pushing and we’ll do it

The growing acrimony in the international debate over China's currency policy has led some to warn that Beijing could dig in its heels if pushed to hard to let its yuan rise.

But Barclays Capital says Beijing could let its currency strengthen as early as next month, notwithstanding its public resolve against Washington's threat to label it as a currency manipulator.

"They do have a 'If you stop pushing, we'll do it' attitude, which is kind of childish, really. But it will happen because they are the only country in the world, besides India, where there is a whiff of inflation," says Barclays' asset allocation head Tim Bond.

"It's in their own interest. It's the right thing to do."

Barclays expects the relaxation of China's de facto dollar peg to result in the equivalent of a five percent annual appreciation over the next year.

Investors should also keep the heightened rhetoric among U.S. lawmakers in perspective, Bond says.

"The anti-China lobbyists in the U.S. are a lot noisier than the pro-China lobbyists."

from Pakistan: Now or Never?:

Can China help stabilise Pakistan?

When President Barack Obama suggested in Beijing last month that China and the United States could cooperate on bringing stability to Afghanistan and Pakistan, and indeed to "all of South Asia", much of the attention was diverted to India, where the media saw it as inviting unwarranted Chinese interference in the region.

But what about asking a different question? Can China help stabilise the region?

As I wrote in this analysis, China -- Islamabad's most loyal partner -- is an obvious country for the United States to turn to for help in working out how to deal with Pakistan.

It already has substantial economic stakes in the region, including in the Aynak copper mine in Afghanistan and Gwadar port in Pakistan. Its economy would be the first to gain from any peace settlement which opened up trade routes and improved its access to oil, gas and mineral resources in Central Asia and beyond. It also shares some of Washington's concerns about Islamist militancy, particularly if this were to spread unrest in its Muslim Xinjiang region.

There is virtually no chance of Beijing sending military forces to Pakistan or Afghanistan. But Chinese support could come in the form of pressure on Pakistan, help for its economy, and at least tacit backing for U.S. actions and demands.

It already indicated a willingness to take a more nuanced approach to Pakistan when it supported a U.N. ban on the Jamaat ud-Dawa, the humanitarian wing of the Lashkar-e-Taiba, after last year's attack on Mumbai. It is also looking for ways to help bolster Pakistan's economy --a Pakistani finance ministry official said this week that Pakistan was in talks with China on a currency-swap deal with the aim of conserving its foreign exchange reserves.

But Chinese antipathy to interference in other countries' affairs, a divergence of views on exactly what needs to happen in Pakistan, and China-India rivalry all limit how far Beijing can be roped into helping on Pakistan.

On Obama’s trail in Beijing

Guan Yongning is a senior cameraman with Reuters Television in Beijing . In  15 years in the field,  he has covered stories ranging from natural disasters to politics and major sporting events.  Guan was one of the chosen few reporters able to follow U.S. President Barack Obama’s visit in China up-close.  He tells the story of what reporters have to go through to capture a few precious shots of the U.S. leader.

The reporters able to cover Obama’s visit up close might be considered the lucky ones. Following the American commander-in-chief means long hours working days,  skipping meals, lugging around heavy gear and enduring the harsh Beijing winds. But would they give up the chance?

China kinder to Obama than Bush?

How does one measure how U.S. President Barack Obama was received by the Chinese government?

I like to read the tea leaves and decided one measure might be to compare the reception Obama got in comparison with that given his predecessors.

For me, an indication is the most senior Chinese official greeting an American president at the airport.

Chinese Vice-President Xi Jinping was the first Chinese leader Obama met in Beijing when Air Force One touched down on Monday. Xi had rushed back on the same day to the Chinese capital from the northern province of Shaanxi, where he was on an inspection tour.

An Internet search showed that in 2002 and 2005, Foreign Minister Li Zhaoxing was on hand when U.S. President George W. Bush arrived. Li’s replacement, Yang Jiechi, turned up when Bush landed in 2008.

Judging from the rank of the top official greeting the two U.S. presidents, China appears to like Obama more than Bush.

It is no coincidence that Xi was tapped to welcome Obama.

Beijing’s American acupuncturist

The U.S. President may be in China but it is business as usual for Beijing’s American acupuncturist.  Connecticut born Bryan McMahon is treating a Chinese patient in his traditional courtyard in the backstreets of Beijing.   Bryan has spent years studying Chinese traditional medicine in both Beijing and Shanghai.  He says that part of the reason he chose Chinese medicine over its western alternative was the way in which it is so deeply rooted within Chinese culture. Bryan’s patient Sai Na  believes the American-Chinese approach to acupuncture offers a new and improved form of treatment.

Look in the mirror

The U.S. rejection of the $18.5 billion bid by China’s top offshore oil company, CNOOC Ltd, for  Unocal in 2005 was not a move worthy of a world power such as the United States, asserts a Chinese academic with the government’s top economic planning agency.

“If you are weak, then I can understand,” said Chen Dongqi, deputy director of the Academy of Macro-Economic Research under the National Development and Reform Commission (NDRC).

“The United States is a strong country. What is it afraid of?” he said at the Reuters China Investment Summit.

“There is a problem there.”

Chen was responding to a question about rising protectionism in China, and criticism that Beijing had blocked Coca-Cola Co from buying China’s Huiyuan Juice.

Chen also said that blaming China for global climate change was also off the mark, as climate is affected by hundreds of years of human activity, not just a few decades.

“China’s economy has been growing for only 30 years,” he said. “I don’t believe a few years of fast economic growth from one country is responsible for climate change.”

from Global News Journal:

How Ill is Kim Jong-il?

Photo:A compilation by Reuters of pool photographs and images provided by North Korea's KCNA news agency showing North Korean leader Kim Jong-il from 2004 to 2009. The photograph in the lower right was released this week by KCNA

By Jon Herskovitz

The image the world once had of North Korean leader Kim Jong-il, with a trademark paunch, platform shoes and a bouffant hair-do, is gone and may never come back. He has now become a gaunt figure with thinning hair who has trouble walking in normal shoes, let alone ones with heels 8-10 centimetres (3-4 inches) high like he used to wear.

A look at photographs the North’s official media has released of Kim over the past few months indicate he is not a healthy man. There has been an enormous amount of speculation about what is wrong with Kim, 67, including a report from South Korean TV network YTN this week that he has life-threatening pancreatic cancer.

Kim’s health is one of the most closely guarded secrets in the highly secretive North and his actual condition is likely known by a handful of people in his inner circle who risk death or prison camp for themselves and their families if they ever whisper a word about Kim’s problems.

It is a state crime in North Korea to make any comment that questions Kim’s god-like status in the communist dynasty he has ruled since 1994 when his father and state founder Kim Il-sung died.

Redeem team brings it home for the U.S.

After watching the United States destroy every opponent in the basketball tournament by an average of more than 30 points before the final on Sunday, there probably weren’t many people expecting Spain to have a chance against a “Redeem Team” determined to win back the gold medal after the debacle of the bronze in 2004.

But then Spain played a superb match and kept the Americans on the ropes all the way to the very end with one dazzling basket after another.

It was by far the best match of the tournament. Dave Beckham was among the delighted eyewitnesses — we were all wondering which team he was rooting for — and so was Jacques Rogge and Juan Antonio Samaranch. All of them got cheers from the big crowd whenever their smiling images of were flashed up on the giant scoreboard. 

Many of the players and coaches after the match used the word “historic” to describe what they had just been through — getting a jump on the hundreds of journalists who had clearly just witnessed something special play out before their eyes. It’s a big word and often overused. But for anyone who was there, it was hard to disagree.

“We played with great character in one of the great games of international basketball history,” said U.S. coach Mike Krzyzewski.

Spain’s Paul Gasol added: “People will remember it for a long time. We never backed down. We can be proud.”