Betrayers unite for personal profit - China's mining investment losses in Australia - switch to food

Nationalistic Australian citizens have voiced concern and opposition to selling more national assets to the Chinese despite the tremendous gains and spinoffs from foreign capital inflow. Aussies are not anti-foreigners as long as foreign ownership is exceeded by US (or a western nation) to offset undesirable influences from another state. 

In reality, Chinese state companies have been reformed since the 1980s and behave like private enterprises though the level of accountability is not well established ... not that all non-Chinese corporations are free from rigidity and unethical conduct. 

http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/demystifying-chinese-investment-O-201207.pdf

In most transactions, the buyer and seller stand to gain or else there is no deal. Cash loaded and enthusiastic, China state owned enterprises have been lured and wooed by the opportunistic firms who are keen to sell.  

http://www.theaustralian.com.au/national-affairs/china-investment-elephant-is-well-and-truly-in-the-room/story-fn59niix-1226452825060

http://www.theage.com.au/opinion/political-news/chinese-investment-no-threat-20120422-1xf64.html

http://www.terradaily.com/reports/Chinese_bids_welcomed_in_42_bn_Australian_asset_sale_999.html


Despite investment restrictions, the Chinese have quite successfully bought up many mine shares to feed its mills back home. From hindsight, this is a blotched plan rather than an achievement. It would not be an overstating Chinese losses in the millions if not billions for purchasing overrated companies, changing market conditions, poor performance and unforeseen results. The true picture is probably less rosy than that painted by the buyers and sellers or what is reported in the media. There are good reasons why officials and business managers want to portray it negatively to cover their folly or mistakes. 

Inevitably, the topic of corruption cannot be evaded. Mistakes cannot be attributed mainly to innocent miscalculation, lack of due diligence and market changes as a result of falling production. Surely the Chinese investors are smarter and the Australian sellers would play harder to get. We may never know how much kickbacks were involved. 

Credit must be given to the Chinese for quick thinking and adjustments. Now, Chinese investors have decided that the mining sector is jinx. It is high time that the government directs investors to diversify into other sectors rather than placing all the bets in fading minerals sector. 


http://www.couriermail.com.au/business/chinese-investors-look-to-diversify-beyond-resources-sector/story-fnbdkrr9-1226443327176

Attention is now turned to the next most important resource - food - to feed its billions of people. More Chinese are investing in Australian farms recently. 

KPMG Australia’s China Practice, said that Chinese companies are showing an increasing appetite for investing in Australia’s food sector “from gate to plate” as they seek to meet rising food demand at home and capture more expertise from Australia’s companies and farmers.  

Banks, both domestic and Chinese, are also increasingly interested in financing the sector at a time when many miners and energy producers are struggling to secure financing for new projects in the face of falling commodity prices and concerns of a falloff in demand ...

http://blogs.wsj.com/dealjournalaustralia/2012/08/22/kpmg-sees-more-chinese-investors-buying-aussie-farms/?mod=google_news_blog

Another indication of change is China investing in mines (and others) elsewhere where the government and people may be less hostile to Chinese money.  

http://www.ibtimes.com/articles/374441/20120816/china-gold-rush-africa-supply-barrick.htm

Nevertheless, merely containing the damage will not solve the fundamental problems that has wasted Chinese funds which could be better spent helping its poor and boosting domestic development and consumption. 

Attempts to monitor and penalise corrupt officials venturing overseas have been put in place but with limited success. Reports of arrests have been random and rare, for most have used their positions to amass personal wealth and enrich their cronies at the expense of the nation's benefit with little reprisals. 

http://www.globaltimes.cn/content/728010.shtml

Change for better or worse - China target post-Bo Xilai fiasco

Viewed with outsider lens and attempting to impose Juedo-Christian tradition, law and political mould, William Pesek presents a more pessimistic and patronising analysis. 

The subtle tussles may not be evident to most China watchers but to the experts who watch every step closely, the horse trading has been going behind the scenes, beneath the relatively calm surface. Hence the explosive scandal came as a shock to many Chinese and foreigners alike. 

Sure, focussing on the gossipy and juicy parts of the scandal would only hamper a deeper understanding of the key issues that would really matter to China's future. 

Corruption and bending rules have long been recognised as potential time bombs and have been addressed delicately by the Chinese central leadership. At times, the most severe penalty have been meted out including death sentences. However, these moves had not been implemented as coherently, quicklyand lawfully as some impatient external observers and idealists hope for. As if it had not been sufficiently drastic and destabilising.  

Even the most cynical China critic must admit that the Chinese economy, human rights record, legal system, political participation and redistribution of power and wealth have undergone immense transformation and bold experimentation. Transparency and accountability have improved despite fledging areas which seem to get undue attention. 

The bottomline is that princelings and ideologues who form part of the stabilising foundation could be removed when they ran foul of the law and commit excesses for self enrichment at the expense of the people's interests. It is a step forward in people's democracy but the road ahead is fraught with dangers. 

Antiquated political structure may be only in form whereas the economics and government has undergone incredible overhaul in essence more than any other country in the world in recent times. 

Here may be something that wealthy bankers and big business who have a stranglehold on politicians through lobbying and interest groups could take a leaf from to sort out their own unique set of problems despite having a well developed democratic and legal system in place.  

Occupy Wall Street - who wishes for color revolution in the faltering economies and social inequalities in developed world. Just wondering?

http://www.bloomberg.com/news/2012-04-17/billionaires-make-killing-amid-china-murder-tale.html

"It’s the rare scandal that involves murder, corruption, Harvard University and comparisons to Jacqueline Kennedy. The Bo Xilai kerfuffle now mesmerizing China offers all this and perhaps more: It could forever change an entire political system.
---   ---  ---

We’re missing the true story here, though. It’s really more evidence that China’s political system is trapped in the past, while its economy races ahead. This dangerous mismatch is often dismissed by pundits and investors, and yet Bo’s ambitious rise and fall, as well as the opacity surrounding it, embodies much of what’s wrong in the fastest-growing major economy.

China is iPad central, with state-of-the-art factories, modern office towers of mirrored glass, six-lane highways, high- speed rail, expanding WiFi networks and state wealth that’s the envy of Washington and Tokyo. China’s nouveau riche are so vital to Prada SpA, Louis Vuitton and Mercedes-Benz that they have been called the “Middle Blingdom.”

Yet China’s political system dates to the days of Mao and Josef Stalin. As democracy takes root from Egypt to Myanmar, China is still mired in closed-door deliberations, backroom deals and purges. This murky world is bumping up against a burgeoning Internet culture that makes it impossible to contain and control the news.

---  ---  ----

In 2011, the richest 70 members of China’s legislature were worth more than the annual gross domestic product of Slovakia. The $90 billion concentrated among them is both emblematic of how China’s model is failing the masses and why Communist Party bigwigs will stonewall any change that crimps their income.

Because the extremely wealthy are often politicians, China may have a truly difficult time retooling its economy and narrowing the rich-poor divide. The hurdles to reform increase the odds of a hard landing in China that breeds social unrest.

We can marvel over Bo’s downfall. We can go on about how China’s leadership refuses to countenance rising political stars who challenge its clubby world. We can engage in whodunit fantasies about the wife and the dead businessman. But more than anything, this tale shows how an antiquated political system imperils a nation’s future.

Positives and Negatives of Bo Xilai Scandal

Extremist Maoist Bo Xilai would have caused much damage and negated China's achievements if he had made it to the top. While factional infighting is more stable and mature coalition, divisions must be healed and decadence eradicated by seizing this opportunity to unify and reform the flawed system. 

The chances of a comeback for Bo have been dimmed to nothingness.  Treason, crime and concentration of power in one person is incompatible with today's collective leadership.  That Deng Xiaoping was rehabilitated after several power struggles and Cultural Revolution because of his sincerity and passion for uplifting China. Bo could only rise to the post as mafia busting owing to his mafia and unlawful methods. He does not possess the essential traits for national leadership. Let this be a lesson to aspiring Chinese leaders who want the short cut and devious ways to power. 

A must-read for every one who is interested in China:

http://www.nbr.org/research/activity.aspx?id=236

Quote : Excerpts of "Bo Xilai Crisis : A Curse of Blessing?"

Cheng Li, an expert on Chinese elite politics and a senior fellow at the Brookings Institution :

the dismissal of Bo Xilai is a very positive event in China’s political development. While it has already constituted the most serious political crisis since the 1989 Tiananmen incident (and perhaps since the 1971 Lin Biao incident), the Hu Jintao–Wen Jiabao administration may have successfully avoided an even bigger crisis. In stark contrast with the 1989 Tiananmen incident, China’s economy and society have hardly been disrupted, at least up until now. This reflects the maturity of Chinese society and the strength of the country as a whole. To a great extent, this crisis has been a good thing for China. It not only reveals major flaws in the Chinese political system, but may also help the Chinese leadership, intellectual communities, and the general public reach a new consensus, thus contributing to bold and genuine political reforms. However, if the leadership fails to seize this great opportunity, the CCP will be in greater jeopardy in the years to come.

Bo Xilai’s story is certainly linked to China’s present-day factional politics, which I characterize as “one party, two coalitions.” One coalition is led by former president Jiang Zemin’s protégés. While the core of this coalition used to be the so-called Shanghai Gang, “princelings” (leaders who come from high-ranking family backgrounds) have become more central since the fall of Shanghai party boss Chen Liangyu on corruption charges in 2006. Bo Xilai is a princeling, as his father Bo Yibo was a revolutionary veteran who served as vice premier. The other coalition primarily consists of former officials from the Chinese Communist Youth League and is led by President Hu Jintao and Premier Wen Jiabao. These two coalitions fight with each other over power, influence, and policy initiatives. Bo Xilai’s career advancement can certainly be attributed to his princeling background and his patron-client ties with Jiang Zemin.

Bo’s downfall is also related to his own egotistical personality and notorious ambition. While his ambitions were most recently focused on achieving a seat on the Politburo Standing Committee, it would have not stopped there. In the months preceding the crisis, members of Bo’s staff spread the rumor that he could become China’s next premier. In addition, Su Wei, a scholar close to Bo at the Chongqing Party School, compared Bo Xilai and Chongqing mayor Huang Qifan to former leaders Mao Zedong and Zhou Enlai in comments circulated in both the Chongqing and national media.

The Bo episode is also related to ideological conflict, as he was associated with China’s “new left” thinking—especially through his Mao-style campaigns, such as the “smash the black” anti–organized crime campaign—and advocated an ultra-egalitarian and ultra-nationalist development model for China, known as the “Chongqing model.”

But this episode is really more than the sum of these factors. Most importantly, it involves Wang Lijun’s attempted defection to the United States and the charges against Bo’s wife related to the murder or assassination of British citizen Neil Heywood. The Chinese public has been shocked by both incidents, since this is a very unusual set of events in CCP history. How is it possible that national hero Wang Lijun and one of China’s top leaders are capable of such actions? When these kinds of charges are involved, all Chinese leaders—regardless of which faction they belong to—will not support Bo Xilai any longer, because the current crisis poses a challenge to the legitimacy of the CCP itself. The stakes are very high, and the challenge facing the CCP leadership is intimidating.

factional politics: the tensions between the princelings coalition and the Youth League coalition.

Specifically, the other princeling leaders wanted to use Bo to their advantage. Within elite circles, Bo was nicknamed “the cannon” because he was always ready to attack his political rivals, including Hu Jintao, Wen Jiabao, and Bo’s liberal counterpart—Guangdong party chief Wang Yang. Thus, he was considered a much-needed weapon by the other princelings, though they did not necessarily like or trust him. On the other hand, Hu Jintao and Wen Jiabao saw Bo as a liability for their opposition because they believed Bo’s campaigns were doomed to fail and that he ultimately would undermine the strength of the princelings due to his divisive tactics. In addition, his Cultural Revolution–style initiatives were seen by Hu and Wen as remnants of the past with no hope of succeeding. Therefore, they may have been even less concerned about Bo than some of the other heavyweights in the princeling camp.

In fact, Bo had many enemies, including at least four major groups: (1) liberal intellectuals, who often regarded him not only as a Maoist, but also as a Nazi-like leader who often singled out particular social groups as targets; (2) lawyers and legal professionals alarmed at his roughshod treatment of Chinese legal practices in Chongqing and Dalian; (3) the majority of political and military elites, who feared Bo did not play according to the rules and would take China down the wrong path; and (4) entrepreneurs in China and abroad alarmed at Bo’s anti-market tendencies, evident in his rough handling of Wal-Mart stores in Chongqing.

At the 2007 Party Congress, Bo had aggressively sought two positions, membership in the Politburo and a vice-premiership. In my view, the fact that he got the former but not the latter was the result of a compromise between the two camps. Assigning him to an interior city like Chongqing was an effort on the part of Hu and Wen to reduce Bo’s influence and power. While there were some unconfirmed reports during his first few months on the job that he was deeply dissatisfied with his new assignment, in the end he did a remarkable job of putting Chongqing on China’s political map and, for a time, effectively turned it into his own personal kingdom. Regardless, prior to this most recent scandal, there had been long-standing concerns among the Chinese political establishment that Bo would go too far and undermine the unity of the central leadership of the CCP. Even before the latest scandal, some in Beijing felt that Bo would not receive a seat on the Politburo Standing Committee because he was so divisive and could cause trouble for the CCP as a whole. Certainly, with Wang Lijun’s actions, Bo Xilai’s career was over immediately.

Although the princelings did support Bo and used him when convenient, this does not mean that they gave him a blank check to do as he pleased. Just as there is political infighting within the political parties in the United States, the relationship among members of a Chinese coalition is both cooperative and competitive.

Much has been made of Xi’s visit to Chongqing in December 2011, interpreted by some as an endorsement of Bo. Five Politburo Standing Committee members visited Chongqing, and Bo interpreted this as an endorsement of his leadership and his Chongqing model.  

It is unclear whether Bo would have fallen if Wang Lijun had not gone to the U.S. consulate. I believe it would have been much more difficult to purge Bo without Wang’s actions due to strong factional tensions within the leadership, as Bo not only represented himself but also a social movement. Even today, some people are suspicious of whether this entire incident is true and whether the death of Heywood has anything to do with Bo and Gu. Some even accuse the United States of involvement in a conspiracy. However, the evidence provided by Wang Lijun made the case against Bo much easier and clear-cut. Thus, without Wang Lijun’s dramatic visit to the consulate, removing Bo would have been much more difficult for his opponents to achieve, though given Bo’s actions and the ongoing investigation of him, he may have fallen eventually even without this crisis.

The party leadership will be extremely cautious and not expand the scope of the Bo Xilai case to other leaders. Purges will be relatively limited. The fact that certain leaders closely affiliated with Bo, such as Huang Qifan, are still free implies that the top leadership does not intend to punish too many people. The fact that the country is on the eve of the 18th Party Congress, with so many destabilizing factors, will also lead the leadership to limit the scope of targeted officials.

Therefore, though the Bo case is a victory for Hu and Wen, this victory will not necessarily translate into more seats for their coalition on the Politburo Standing Committee. To a certain extent, this explains why Guangdong’s liberal party chief Wang Yang has been reluctant to claim victory since there still could be a backlash against him. The makeup of the future Politburo Standing Committee will largely be determined through compromises between the two coalitions. The balance of power within this system will not be easily changed. If the princeling faction collapsed, this would constitute an unimaginable revolution with implications for Chinese politics and social instability ten times greater than the Bo scandal. Thus, at the moment, there is a tremendous incentive for the party’s top leadership to preserve the current structure of “one party, two coalitions,” and show unity and solidarity.

Evidence of the Chinese leadership’s unity on this matter can be found in the man who replaced Bo as party chief of Chongqing, Zhang Dejiang, a protégé of Jiang Zemin and part of the same princeling coalition as Bo. This appointment means that a deal has been made and the top leadership of the party is united. To a certain extent, this is similar to what happened in 2006 with the fall of Shanghai party boss Chen Liangyu. All those who have followed Chen as Shanghai party boss, including Xi Jinping, have been protégés of Jiang Zemin, just as Chen was.

Consequently, it is highly likely that Bo’s potential seat on the Politburo Standing Committee will be taken by someone from the princeling coalition. Zhang Dejiang would likely have attained a seat on the committee regardless of Bo’s fall, though he will now probably receive an even more important position. Zhang Gaoli, the party chief of Tianjin, and Shanghai party chief Yu Zhengsheng, both protégés of Jiang Zemin, are now likely to go further with Bo gone. Though we do not know for sure which specific officials will receive which posts, I do think it is highly likely that the factional balance of power on the Politburo Standing Committee will remain unchanged with five seats for one coalition and four for the other.

The Cultural Revolution and the 1989 Tiananmen incident are two of the great disasters in the history of the CCP, but in the aftermath of these events you see opening and reform after the Cultural Revolution and the acceleration of China’s market transition and integration with the outside world after Tiananmen, respectively. Positive political developments came out of these terrible events. There is hope that something similar may yet happen following the Bo crisis. Lessons will be learned, a consensus will be reached, and bold decisions will be pursued. Wen Jiabao, in recent comments at the National People’s Congress, said very clearly that the party-state leadership system needs to be changed and that the rule of law should be emphasized in the handling of Wang Lijun’s case in order for the CCP to endure the test of history.

Learning from this crisis is not a choice for the CCP as much as it is a necessity. If nothing changes, the party will continue to lose its credibility. I believe the characterization of the Chinese political system as “resilient authoritarianism” is incorrect. While the prevailing view had been that this year’s leadership procession would go smoothly, two years ago I argued that the upcoming succession would be highly problematic and feature some sort of major crisis. Now the general sentiment is that China is in a terrible situation due to a vicious power struggle, but I am more optimistic. China has removed a major danger and avoided the worst scenario, which would have been taking the country down a Maoist, ultranationalist path. Of course, Bo’s chances of accomplishing this were always slim, but now they are close to zero. This is solid progress, and a reason to be more optimistic about China’s future.

Liu Yuan's Anti-Corruption drive

Liu Yuan's anti-corruption drive in the military is to carry out the vision of the Communist Party collective leadership to Ito ensure that China's economic progress will not be unravelled.

As the Chinese saying goes, building an enterprise is difficult, but consolidation and preservation is more difficult.

It's plain and simple : for the long term survival of the Chinese. Only by learning from past mistakes, recognising the virtues of humility and take tough decisions could China hope to preserve the gains attained so far.

http://www.smh.com.au/world/chinese-general-to-fight-corruption-20120118-1q6n2.html

A mentor used to counsel that reading too much into something simple and obvious could generate unnecessary wild conspiracy theories. It may satisfy the imaginative but unhelpful in understanding realpolitik. This is a strategic project that cuts across factional struggles.

Because Liu Yuan is the son of Liu Shaoqi, the reformist who dared to stand up against the almighty and megalomaniac Mao Zedong. The late senior Liu was accused and denounced for being a capitalist roader. Now his son may clear his name by fighting against a negative outcome of free wheeling capitalism and liberalism exploited by unethical officials and businesses.

Bo Xilai : red revolution China necessary to counter excessive capitalism, plutocracy and inequality

How do analysts reconcile the fact that Bo Xilai and his family who were victims of Mao's purges during the Cultural Revolution has now become a fan of borrowing from Maoist ideas for good governance.

They don't and simply assume that communism is in the blood of Chinese leaders. Indeed, many articles published in the English language media has created more confusion than offered answers to understanding this fast rising next generation leader.

Bo Xilai and other leaders who had survived the Cultural Revolution know well that Maoist tactics are effective in mobilising people to do what is morally right to override the poorly developed and corrupt ridden legal system and mafia controls. Of course when misused for personal power enhancement and glorification, it had caused social upheavals, personal suffering and immense economic damage to the nation.

Perhaps it is timely to reintroduce some elements of desirable socialist traits into the highly successful albeit skewed economy. When the ills of capitalism are creeping in causing wide disparity in the social and economic (between the rich and poor and coastal and provincial areas), socialist campaigns are necessary to steer a balance and fairness.

China has learned from painful history lessons that excessive indulgence in one model and the neglect people welfare would bring about the downfall of the country rapidly.

Of course, no one is naive not to recognise that the communist party leaders have an interest to continue exerting power. There is no doubt that the communist party is not ready to give up power and let the people run amok. That is wishful thinking of scholars who wish the Chinese people ill.  Look at it positively, in fact stronger central control would effectively get rid of deviant and corrupt provincial officials. Hence there is a growing assymetry between what is good for the country, government and people.

This is a great contrast to the campaigns organised by the American Tea Party which had been manipulated by Republicans to pursue their selfish agenda and protected vested interests of the rich at the expense of the poor and working class who could not appreciate the need for belt-tightening and tax policies to serve their long term good.  
QUOTE :

Bo defended the red culture campaign, saying, “We aim to encourage people’s spirits.”

Bo said his campaign has four aspects — reading Chinese and foreign classics, including the theories of Mao and other Marxist leaders; telling popular stories; circulating inspiring mottos (such as, “Serve the people with a full heart!”); and group-singing of revolutionary anthems. “We should spread these things more,” Bo said.

Many here, including Communist Party adherents, agree that this revival of revolutionary fervor is needed to instill a new sense of pride and common purpose, adding that they feared China’s decades-long rush to get rich has eroded the country’s moral bearings and created an ethos of unchecked materialism.

http://www.washingtonpost.com/world/southwestern-chinese-city-leading-red-revival/2011/06/25/AGkh8JnH_story.html?wprss=rss_world