Mattel is recalling yet another batch of Chinese manufactured toys....but if only they'd asked I've got proof the toys are safe. Recent studies with dogs and Barbie dolls have shown that consisent chewing of Mattel products does NOT lead to any health problems. And if the kids are out there licking their Barbies then perhaps whatever lead leaks into their systems will teach them a lesson. In the good old days a bit of lead was considered a part of any healthy kid's diet.

The Chinese Communist Party does it's very best to limit all news and views on the events of June 4th, 1989. But not teaching history can have its consequences...not merely in the (in)famous Marixsm that it is repeated as farce, but in the law of unintended consequences too. The SCMP (new site, still unlinkable and not even working today) reports:

A young woman unaware of the June 4 Tiananmen crackdown is believed to have let an advertisement saluting the mothers of students killed in and around the central Beijing square make its way into a Chengdu newspaper, highlighting the national collective amnesia about the events of 18 years ago.

Two sources with connections to the Chengdu Evening News, which ran the controversial 13 character classified adverstisement on Monday, said the woman, who worked for an advertising company responsible for the newspaper's classified section, was in charge of receiving content from clients.

A man visited the copmany on May 30 and the woman took down the advertisement - which read "Saluting the adamanat Tiananmen Mothers" - from the client without knowledge of the June 4 crackdown, the sources said.

"She called the man back two days later to check what June 4 meant and the man said it was [a date that] a mining disaster took place," one source said. The woman's age was not known but the source said she had just graduate from school.

Still, the whole story leaves the question as to how Beijing deals with a new generation who know nothing of Tiananmen. Is ignorance always bliss?

Taken from a large collection of AP photos with captions.

Also: Tiananmen Square, 1989: The Declassified History

Last week I mentioned an anecdote from The Economist which says that firms often use the billboards on the road from Beijing airport to show their boss how well their firms are doing in China. At the time I posed the question whether this was true or just a good yarn (the full article is below the jump)? After emailing with Will I suspect it is the latter...which begs a couple of questions:

1. Why is the article by-lined Hong Kong instead of Beijing?
2. Has the reporter actually been to Beijing to research the article?
3. Has The Economist editors fallen for a different kind of signalling trick - if our journo says it's true and it sounds plausible, it must be true? Do they fact-check these things?
4. As Will asks, aren't their cheaper ways to "trick" the boss than using some of the most expensive advertising space in China?

Anyone else got more on this?

All mouth and no trousers Mar 29th 2007 | HONG KONG From The Economist print edition

Are foreign firms as keen on Asia as they claim to be?

THE announcements come in bold headlines. On March 26th Intel trumpeted plans to build a $2.5 billion chip plant in China. This follows deals in various other industries, including pharmaceuticals and aviation. With $6 billion of foreign direct investment pouring into China alone each month, and other Asian countries growing at a feverish pace, it seems that foreign firms are racing to build up their operations.

But are the headlines and the big numbers misleading? The Boston Consulting Group (BCG) analysed several large western firms and found that, although an estimated 34% of the potential market for their goods is in Asia, the region accounted for only 14% of sales, 7% of employees, 5% of assets, 3% of research and development and 2% of their top 200 people. And these disparities are growing larger, not smaller. “When most corporate groups see this analysis, they say ‘That's our company, too’,” notes David Michael of BCG.

Several explanations spring to mind for the discrepancy between perceived opportunities and actual behaviour. Going into new markets is risky; Asia's boom is still young, so big firms lack the hard data they need to commit; and of course there are currency and foreign-ownership restrictions to worry about (China, South Korea, Thailand, the Philippines, Indonesia, India), the threat of expropriation (South Korea, Thailand), subtle legal changes aimed at foreign firms (Japan) and corruption (everywhere).

Staffing is also a problem. For top executives, moving to Asia requires a leap of faith. A senior manager at one global firm says that, with rare exceptions, Asia is a “career killer”—at the end of a successful tenure there is nowhere to return to at head office. Putting locals in charge can result in embattled regional offices without strong links to headquarters, and headquarters without strong local knowledge.

Some bosses think that a lot of travel in Asia signals their commitment to the region, says BCG. Aircraft to China and India are packed with executives trying to inhale whatever it is that produces rapid growth. The trouble with this approach is that in regions where efficient execution is paramount far too much time is spent ensuring that visitors from head office have a successful trip. And as local managers go overboard to display their success, they weaken the case for more resources.

One example has become a well-understood signalling device for who is visiting China: the rental of a huge billboard on the road between Beijing airport and the city to advertise a firm's products. The idea is that a visiting boss will see it on the drive into town and remark on the company's prominence in China. The sign is changed a few days later as the next boss, from another firm, touches down.

One of this site's ongoing interests is the lack of reliable statistical data, economic or otherwise, on China. Tim Johnson of McClatchy* points to a FEER article asking have all China scholars been bought? The article in FEER posits that China academics are largely complicit with the CCP in ignoring controversial topics, which Tim Johnson takes issue with. The reality is if you study China you have to get along with the government to get that data, although that data may not be worth much. China's National Bureau of Statistics admits to the problem of dodgy data, largely because those collecting the data are also evaluated on the results. Are we just waiting for those canny researchers who can find alternative ways to measure China? Can China's political system, as it stands, ever really allow for such measurement in a society where control of information remains a principle raison d'etre of the CCP?

Two other articles worth checking out: one on the Chinachem code, asking where did the Wangs' wealth come from, especially post-Teddy's kidnapping? Could it actually be that Nina Wang was a good businesswoman, alebit one with strange taste in hair styles and clothing? Also Justin Mitchell looks at Baidu's launch of a Japanese version of its search engine, and finds China is discovering what the rest of the world has long known: the internet is for p0rn.

* As an aside, why has there been an explosion in the number of China journalists that are now keeping blogs in the past 6 - 12 months? Along with Tim Johnson there's the Telegraph's Richard Spencer, Time magazine's stable, Mary-Anne Toy's from the SMH (although 2 entries a blog does not make) plus likely more that I've missed. They vary in quality but generally add useful voices to the English-speaking China blogosphere. Are they playing catch-up with Roland or are they meant to be "slice of life" pieces that wouldn't make the grade in their papers/magazines? Is everyone now so busy blogging no-one has time to actually read other blogs to find ideas or stories they may not have come across otherwise?

We're thinking of visiting world-famous Lijiang sometime soon, but we might take our time with finding a tour guide. The (very brown these days) SCMP reports:

A 15-year-old Anhui youth who was visiting the world-renowned ancient town of Lijiang, in Yunnan province, was still in serious condition yesterday after sustaining brain damage in an attack on Sunday by his knife-wielding tour guide. The tour guide, identified as Xu Minchao from Jilin's Rime Travel agency, wounded 15 tourists and five city residents in the attack - two of them seriously - but the motive for the violence was unclear.

Cutthroat competition in the travel industry led to Sunday's attack in Lijiang, according to industry insiders. Lijiang tour guide Li Ge said most tour guides in the city received no salaries or benefits from their employers and relied solely on commissions from shops.

"Normally the tourist shops offer guides good commissions based on the number of tourists the guides bring in," Mr Li said. But he said the commissions had been eroded as agencies took a bigger cut of the shop proceeds and more guides competed for money...Mr Li said Lijiang was a well-known travel destination with few other industries and fights frequently broke out between guides over their share of the commissions...Lu Yuzhen , from GZL International Travel Service, said competition was so tight that a six-day package tour to Lijiang from Guangdong cost just 2,500 yuan.

Tour guides can be tricky to deal with. On our recent trip to Harbin, the clueless Helen was completely flummoxed when we heard her planned itinerary and decided to make some changes. That we were the paying customers didn't seem to be a consideration. Helen eventually came around to our revised plan, but then she had to battle with the driver, who was mightily put out that we were going to be crossing the river not ocne but twice under our revised plan.

So does anyone know of reputable tour guides in Lijiang?

One for the bosses to note next time they visit their China outpost, from this week's Economist:

...Aircraft to China and India are packed with executives trying to inhale whatever it is that produces rapid growth. The trouble with this approach is that in regions where efficient execution is paramount far too much time is spent ensuring that visitors from head office have a successful trip. And as local managers go overboard to display their success, they weaken their case for more resources.

One example has become a well-understood signalling device for who is visiting China: the rental of a huge billboard on the road between Beijing airport and the cuty to advertise a firm's products. The idea is that a visiting boss will see it on the drive into town and remark on the company's prominence in China. The sign is changed a few days later as the next boss, from another firm, touches down.

The Economist looks at what China's new private property law means and the underlying ideological struggle at the heart of China's economic reforms.

James Mann used to be the LA Times Beijing correspondent and has written a book, The China Fantasy. Here's a review of the book via Bloomberg:

This tale crops up in a new book by James Mann, a former Beijing correspondent of the Los Angeles Times who uses it to illustrate the way skewed information warps the views foreigners have of China. The difference, these days, is that the Chinese aren't the only ones doing the skewing, he writes.

In ``The China Fantasy: How Our Leaders Explain Away Chinese Repression,'' Mann points an accusing finger at the most powerful people in U.S., Europe and Asia -- politicians, corporate executives, scholars and diplomats.

These decision makers and opinion formers offer what he terms the Soothing Scenario whenever critics attack China's one- party regime and grim human-rights record: No one should worry, they argue, because increasing trade and investment will do more than speed China's economic transformation; it will also bring dramatic political change.

That, Mann contends, isn't true. ``Day after day, American officials carry out policies based upon premises about China's future that are at best questionable and at worst downright false,'' he says in these crisply written and pugnacious essays...

Still, this book could do with more balance. For instance, Mann omits to mention how authoritarian China has pulled off the unprecedented trick of lifting 300-plus million people out of poverty since 1980, according to United Nations figures. Nor does he offer much advice to China investors. That may not be the purpose of this book, yet it's something readers of Beijing Jeep will want.

Stupidest assertion of the year award, contender number 1: MP fears Japan may become mainland province. Someone had a little too much soju last night.

On the other side of the fence, ESWN points to an article on how Chinese people misread the world, especially Japan.

From Reuters:

Children receive drips to cure indigestion at a hopital in Suzhou, east China's Jiangsu province, February 23, 2007. A lot of children had to go to the hospital due to the inappropriate diet during the Chinese Spring Festival, China Daily reported.

And you thought you ate badly over the past week.

As Chinese New Year approaches there are a growing number of articles highlighting an expected jump in births in China because it is a particularly auspicious year - year of the golden pig. While no one is denying it is year of the pig, it seems that just like Valentine's Day and Christmas it could well be that Chinese superstitions are being superceded by commercialism....the SCMP:

If you think the next lunar year is going to be an incredibly lucky one, think again; you may have fallen victim to commercial hype. It will not be the year of the golden pig, fortune tellers say. Rather, it is the fire pig which will rule our destinies in the coming 12 months.

So mothers who want their children born under a sign that supposedly brings wealth and good fortune will have to wait until 2031 for golden pig offspring. Veteran fung shui master Peter So Man-fung said the popular misconception that 2007 is a golden pig year may have come about because restaurants and shops often advertise each year as a "golden" one to help their business.

"This year is definitely the ding hai, the fire pig. The people who run restaurants like to say it's a golden year. Last year they said it was the golden dog, in 2005 they said it was the golden rooster," Mr So said.

But he said the Hospital Authority, whose director of professional services and operations, Allen Cheung Wai-lun, has also called 2007 a golden pig year, may not be entirely wrong in predicting 11 per cent more babies will be born in the next lunar year. "Last year was very lucky for marriage and there were a lot of weddings, so it's normal that the following year, there will be a lot of babies," Mr So said.

Another fung shui expert, Raymond Lo, agreed that commercial interests had likely been responsible for the year being mistaken for a golden pig year. And astrologer Jin Peh said: "I guess it sounds more attractive to say it's the golden pig. People are happier with the vision of the golden pig and it's certainly easier to sell a golden pig than a fire pig."

Mr Lo said: "The Chinese element for the year is the fire pig. It's fire over a water element, but I think probably because all Chinese usually use gold as something auspicious - it's a commercial thing. Shops like jewellery stores want to sell gold. "The last year of the golden pig was in 1971, and in 1911 before that, as it falls every 60 years," he said.

Mr Lo said women who fell pregnant thinking their children would be born in an auspicious year should not be disappointed. Their children may not be destined for great wealth, but under their astrological sign they will be protected by a nobleman who will help them through troubled times.

"All through their lives, they'll have someone to help and guide them through danger," he said, and noted that US President George W. Bush and thriller writer Steven King are both fire pigs.

As we approach Chinese New Year it is time for Western journalists in China to dust off their cliches. This time of year it's the world's greatest migration, with lots of mentions of several hundred million people moving about, photos of crowded train stations and so on.

We could establish a competition: what is the most common China journo cliche?

I'm all for being tolerant and everything, but sometimes it can go too far...and who would have thought that it would be China's turn to catch political correctness disease? CCTV has banned pigs from being shown in TV advertisements to avoid offending Muslims. In 3 weeks the Year of the Pig starts. Being Jewish I can wholeheartedly say the appearance of pigs on TV causes me absolutely no offence whatsoever.

Via Talk Talk China.

The differences between Beijing and Shanghai taxi drivers, plus politicians, mistresses, sex, and Osama Bin Laden.

In an age where terrorism is never far from the headlines, people's perceptions of safety have changed. The idea of being "safe", at least according to the media, is under attack. But at least one knows that there's one place you can truly be safe...Beijing's bomb-proof toilet:

The construction of a bullet proof public lavatory in the capital, worth up to 800,000 yuan (about US$100,600), is under fire citing a misuse of public funds, reports the Huaxia Times.

Toilet tourism is the future.

Conventional wisdom says China's intellectual property rights (IPR) are close to non-existant. Piracy is rampant and the exception that proves the rule is the tight control over China's Olympic merchandise. That said, even the same association can't quite work out how much it's costing. Two articles from today's Standard. First:

Piracy cost filmmakers US$2.7 billion (HK$21.06 billion) last year, with domestic firms shouldering more than half those losses, according to a study commissioned by a trade group representing the major Hollywood studios. China's film industry lost US$1.5 billion in revenue to piracy, while US studios lost US$565 million, according to data released Monday by the Motion Picture Association...Some 93 percent of all movie sales in China were of pirated versions of films, according to the latest study.

California Democratic congresswoman Diane Watson, whose district includes parts of Hollywood, said roughly 95 percent of all CDs and DVDs manufactured in China are counterfeit. She quoted the Motion Picture Association of America, claiming that its member companies lost about US$244 million in revenue to Chinese piracy last year.

Who's to blame here? Is it the average Chinese worker, who earns maybe 5,000 yuan a year and can either buy a copy for 5 yuan or the original for 10 times as much? Is it China's government, who's domestic industry and creativity suffers far more from piracy than Hollywood? Or is it the outdated business and pricing models of foreign companies in the Chinese market?

Update 21/6

AP points to an excellent piece on the Variety blog that also shows the MPAA numbers are fantasy and rubbery (but what else can you expect from Hollywood?), as well as making some other telling points about these "losses".

Victor Mair talks about learning Mandarin in America, especially on the introduction of Hanzi characters.

I expect this will be ESWN's cup of tea...The Standard reprints a WaPo article that digs into the supposed plethora of engineering graduates in China and India as opposed to the United States. It appears the numbers on graduate engineers from both China and India, unsurprisingly, are on the rubbery side of accurate:

Among such recent attention-getting statistics are 600,000, 350,000 and 70,000. These are, allegedly, the number of engineers produced in 2004 in China, India and the United States, respectively....Bialik couldn't find any obvious birthplace for the Indian figures, but National Science Foundation analysts told him the number was unlikely to be anywhere near 350,000. As for the academies' report, Deborah Stine, who led the study, told Bialik that the committee had "assumed Fortune did fact- checking on their numbers" and so used them.

Meanwhile, a McKinsey Global Institute report had cast doubt on the quality of the Chinese engineering graduates, so Bialik reasoned that removing unqualified candidates would obviously reduce the total.

Appropos Dave's recent post on the Three Gorges Dam, and courtesy the generosity of the British taxpayer, the BBC has an excellent photo-essay of the Three Gorges Dam. I can only echo Dave's sentiments - they might have moved 1.3 million people, flooded arceological wonders and more but it's quite an achievement.

If only they could take out Tom Cruise it'd be watchable.

First, China's previously heralded breakthrough in computer chip design turns out to be a fraud, in an earily similar scandal to the Korean cloning one. Then it turns out that 60% of Chinese PhDs admit to plagiarism and bribery (via Asia Business Intelligence). Richard at ABI asks:

For modern-day mainland Chinese, does the goal and one's pursuit of it validate any means of obtaining it, including the purposeful obscuration of the truth?

It now appears China is well qualified in the copying area. The innovation and improvement parts might have a way to go. What's most impressive is this guy was caught and it was published, rather than swept under the carpet and kept quiet.

I'll let the China Daily answer:

...But Naomi Simmons, whose books do not appear on any sales charts, has outsold him [Dan Brown, author of Da Vinci Code] by more than two to one.

Simmons, from Shenley in Hertfordshire, north of London, is the author of "New Standard English," a series of text books for primary school children that has sold 105 million copies in China. But unlike Brown, who has earned US$425 million from royalties for his novels, Simmons took a fixed payment of US$272,000.

Simmons and her co-authors became a phenomenon in China after the Ministry of Education decreed in 2001 that English should be taught in schools. Her book published by Macmillan English and FLTRP, the publishing house of Beijing University has inspired a generation of Chinese schoolchildren to sing songs about how the British use knives and forks rather than chopsticks.

Looking to impress your friends at the next dinner party? In our high brow China reading department, try the American Foreign Policy Council paper on China's Africa Strategy. Don't thank me for raising your IQ.

The folks at Marginal Revolution have turned in not just one but two different but interesting posts.

Firstly they point to an LA Times article on the village of Renhe, where villagers took advantage of a loophole in a government regulation by getting divorced to qualify for better housing as compensation for their land, only for the government to change the rules. It'd be funny if it weren't so sad that many elderly villages have been screwed thanks to a government cock-up.

Even more interesting is the pointer to a research paper looking at how cultural differences matter for behavioral biases:

Behavioral economic research has tended to ignore the role of cultural differences in economic decision-making. The authors suggest that a systematic bias affects existing behavioral economic theory - cognitive biases are often assumed to be universal. To examine how cultural background informs economic decision-making, and to test framing effects, morality effects, and out-group effects in a cross-cultural study, the authors conducted an experiment in the United States and China. The experiment was designed to test cultural and cognitive effects on a fundamental economic phenomenon - how people estimate the financial values of objects over time.

Results of the experiment demonstrated dramatic cultural differences in financial value estimations, as well as on the influence of variables such as framing effects. Chinese participants made higher object value estimates than Americans did, even when adjusting for differing national inflation rates. In addition, the results showed that contextual information, such as framing, morality information, and group membership affected judgments of financial values in complex ways, particularly for Chinese participants. The results underscore the importance of understanding the influence of cultural background on economic decision-making. The authors discuss the results in the context of behavioral law and economics, and propose that importing cultural competence into behavioral models can lead to cognitive debiasing, both temporary and permanent.

There, you just learnt three new things today. No need to thank me.

(MR link to LA Times and to the research paper).

The Economist has a survey of China in its latest edition. The first article in the series looks at the challenges China faces at home before the 2008 Olympics and beyond. The rest of the survey requires subscription. Once I've read through it I'll post more thoughts and comments.

Update

At the half-way point, the survey has basically rehashed much of what you've lready seen at this blog and others over the past year or so. The conclusion seems to be that to solve the rural/urban divide serious rural land reform needs to happen, primarily involving given peseants tradable land rights. Sounds right to me.

The People's Daily asks an interesting question and replies with a load of blather: are human rights higher than sovereignty? The not-so-subtle introduction says:

As the United Nations is reforming its Human Rights Commission into Human Rights Council, the United States has published 2005 Country Reports on Human Rights Practices accusing countries like China, DPRK and Myanmar of having poor records and claiming human rights are higher than sovereignty. Experts say the essence of such a claim is a pretext for interfering in other country's domestic affairs.

That human rights are higher than sovereignty is an excuse.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just Powers from the consent of the governed, -- That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Say's Law in action, or the study of incentives....The Standard reproduces a WaPo report on changing status of baby girls in China from pariahs to sought-after commodity for gangs to kidnap and provide for adoption by Westerners. And while on things economic, William Pesek discusses how a yuan revaluation can lift Asia out of poverty, although the potential to destabilise China and cause economic chaos remains large, the yuan has recently weakened even in its limited float and the Chinese trade surplus shrank last month (although one month's numbers don't make a trend). It's not clear that the yuan is over-valued, protectionist frothing American senators notwithstanding.

Many China watchers are united in the hope that this great country will one day turn democratic. However as recent experience has shown, becoming a democracy does not necessarily mean becoming a peaceful, loving, caring and liberal place (Hamas, anyone?). David D. Hale has released a report observing that a democratic China could well be a greater threat to the rest of Asia. There is an excellent summary of the report in the CSM by Arthur Bright, with additional links to mainstream media reporting on this. David Hale himself discusses the report in an article in The Australian, comparing China's recent rise with Germany in 1914.

Without paying A$20 to read the report itself, the implications certain ring true. A democratic China is not necessarily a more compliant, gentler or less assertive one. In fact the penchant for nationalism the current leadership shows the deep undercurrent of nationalism that exists within what passes for a polity in China. It's not hard to imagine nationalist forces (small n) jumping into a democratic mess - what else could unite such a diverse country? And with a democratic mandate there would be room to push the envelope even further, especially if there's votes in it (please see Chen, Taiwan).

Sometimes it pays to be careful what you wish for.

Josephine Ma in the SCMP looks at the downside of the new socialist countryside fairy tale, by taking at a look the new model villages being built.

It is an unusual combination: piles of dry wood and maize leaves stacked behind rows of two-storey villas in a clean concrete compound, surrounded by muddy traditional villages. New Liangzhui village and the lookalike Xujia village 2km away look like any other luxury Beijing property development - except for the stockpiled fuel that betrays the residents' dilemma.

As the campaign to build a "new socialist countryside" - a main theme of this year's National People's Congress and the Work Report of Premier Wen Jiabao - sweeps the country, New Liangzhui, the 2002 brainchild of property tycoon Liang Xisen, is widely hailed by the media as a sample of what a modern village could be. It could be likened to a 21st-century version of Dazhai village, the model village that symbolised modernisation and wealth for farmers in the "new socialist countryside" campaign of the 1950s. But this time it owes its existence to capitalism rather than communism.

Mr Liang, who developed Beijing's exclusive Rose Garden estate, spent 42 million yuan converting his home village in the poorest part of Shandong into his vision of a modern village. When the project was completed in 2002, each family was allocated a 280 square metre villa, while younger villagers were given smaller flats in four-storey buildings. In return, villagers handed their farmland to Mr Liang to build a 23-hectare beef feedlot and abattoir. Most of Liangzhui's 400 villagers are hired by the beef operation, earning a stable monthly salary of 600 yuan. They were also given shares in the farm and are eligible for bonuses.

Nevertheless, life in the model village is not as carefree as it appears. Although almost every family has an electric stove, many still burn firewood and maize leaves for cooking, to minimise electricity bills. Li Yulan said although her two children were each allotted a flat and she received a villa, meeting the bills was difficult.

The problem is even more acute in Xujia village, a second attempt by Mr Liang to covert a traditional village into rows of villas, completed late last year. Sitting outside her new villa, 48-year-old Zhang Delan kills time stripping the cotton she harvested last year. "This is the last time we will do such work as we have no land anymore. This is last year's harvest," she said. Xujia villagers also handed over their farmland, with Mr Liang telling the media he planned to introduce mechanised farming, run by a co-operative. "I think they will give us a job, otherwise what can we do? We have no land anymore," Ms Zhang said.

Mr Liang, a farmer with just one year's schooling who became a billionaire after buying out the bankrupt Rose Garden project, has said he plans to convert 109 villages in the town of Huangjia along the same lines. To provide jobs for the landless farmers, he planned to expand his beef business and set up more factories. But Xujia villagers have doubts: the beef business and the modernisation of Liangzhui village cost Mr Liang 400 million yuan, although they can barely hide their pride when they show off the new homes.

Taizhang village lies just next to Xujia, its winding mud paths lined with brick houses. Mr Liang originally chose Taizhang for his second experiment, but the plan soured over a trivial argument with villagers about the thickness of the wall enclosing the village. Taizhang villager Zhang Jun , 60, said he would not mind moving to a villa, although he was also content with his two-storey farmhouse. He used to work in Tianjin , a three-hour drive away, as a migrant worker and managed to save 400,000 yuan to build a house of his own. Mr Zhang said all young villagers were now working in cities and life was better since the agricultural tax was scrapped last year.

Chen Xiwen, a top rural policymaker with the central government, recently said the latest campaign to build a new socialist countryside was not about demolishing old villages, but more concerned with setting aside public funding for infrastructure, education and healthcare services. "I saw in some places they built tall buildings of 10 or 20 storeys and it is so inconvenient for farmers to carry sickles and pickaxes with them into the lifts," Mr Chen said. But despite repeated warnings, local governments had scrambled to spruce up villages and select model villages as "new socialist" showcases, analysts said.

Without billionaire backers, other villages have to foot the bill through public finances or by raising funds from farmers.

There's a new buzzword entering the Chinese lexicon: "new socialist countryside". As part of its efforts to help the 800 million Chinese peasants who are seeing their city cousins get richer far faster than they are, the CCP has put out a policy statement that contains enough motherhood statements to last a lifetime. The real test is whether these good intentions of the central government can be translated into facts on the ground once provincial and regional authorities get involved. Beijing, despite appearances, does not have a strong grip over the provinces and those governments are often intimately involved with state owned enterprises. That leads to clashes with peasants over land rights, development, pollution and more. In a democracy, of course, the peasantry can vote the bastards out at the next election. But examples such as Taishi show that even getting rid of corrupt village leaders is a difficult and dangerous task. The government knows about these problems and pledges to "strictly protect interests of land-lost farmers" while cutting the numbers of township-level officials. In short, we're watching a struggle between the central and provincial governments, with 800 million livelihoods in the balance.

Lest Hong Kongers feel that all these peasants are hogging the limelight, you can sleep easy knowing Hong Kong remains key to the mainland's bright future.

Running Dog explains the media rituals of Chinese New Year.

There was an AP report last night from Atlanta where an active Fa Lun Gong supporter had his home broken into, got beaten up, and had two laptops taken by three Asian men that apparently spoke both Korean and Mandarin. The Fa Lun Gong supporter seems to have no doubt that the perpetrators were Chinese agents.

The FBI had no comment except that they were looking into it.

The French organization Reporters without Borders claims that Chinese agents have abused Fa Lun Gong supporters in Hong Kong, South Africa and Australia, but that this was the first case reported of such a serious incident in the US.

Is this a case of Agents Chinois Sans Frontieres? Would be very bad PR for China in the US, to put it mildly, when religious freedom is a hot-button issue in the American southern states, not to mention a gross violation of the world hegemon's sovereignty. But let's see how the evidence in the case develops first.

Admist all the ongoing bashing of American companies that are being labelled traitors and collaborators with the Chinese government in internet censorship efforts, important developments are likely to be missed. For example the IHT reports on an extra-ordinary protest by senior ex-officials of the CCP and scholars against the closure of Beijing magazine Freezing Point. Amongst the protesters is Mao's former secretary and biographer, Liu Rui. Absolutely read the whole article.

Another must read piece is ESWN's translation of an article in Caijing, seen as a veiled warning from the central government to the provinces to avoid obstructing reforms through their collaboration with local businesses.

China's has half the firehouses it needs, according to international standards. Which makes one wonder how the whole place hasn't burnt down already...or that perhaps everywhere else in the world is over-serviced (or burdened?) by excess firehouses.

From Peter Zeihan and the good folks at StratFor, by :

The "Chinese miracle" has been a leading economic story for several years now. The headlines are familiar: "China's GDP Growth Fastest in Asia." "China Overtakes United Kingdom as Fourth-Largest Economy." "China Becomes World's Second-Largest Energy Consumer." "China Revises GDP Growth Rates Upward -- Again." Everywhere, one can find news articles about China, rising like a phoenix from the economic debris of its Maoist system to change and challenge the world in every way imaginable.

But just like the phoenix, the idea of an inevitable Chinese juggernaut is a myth.

Moreover, Western markets have been at least subconsciously aware of this for a decade. More than half of the $1.1 trillion in foreign direct investment that has flowed into China since 1995 has not been foreign at all, but money recirculated through tax havens by various local businessmen and governing officials looking to avoid taxation. Of the remainder, Western investment into China has remained startlingly constant at about $7 billion annually. Only Asian investors whose systems are often plagued (like Japan's) by similar problems of profitability or (like Indonesia's) outright collapse have been increasing their exposure in China.

Once the numbers are broken down, it's clear that the reality of China does not live up to the hype. While it is true that growth rates have been extremely strong, growth does not necessarily equal health. China's core problem, the inability to allocate capital efficiently, is embedded in its development model. The goals of that model -- rapid urbanization, mass employment and maximization of capital flow -- have been met, but to the detriment of profitability and return on capital. In time, China is likely to find itself undone not only by its failures, but also by its successes.

The Chinese Model

Until very recently, China's economic system operated in this way:

State-owned banks held a monopoly on deposits in the country, allowing them to take advantage of Asians' legendary savings rate and thus ensuring a massive pool of capital. The state banks then lent to state-owned enterprises (SOEs). This served two purposes. First, it kept the money in the family and assisted Beijing in maintaining control of the broader economic and political system. Second, because loans were disbursed frequently and at subsidized rates -- and banks did not insist upon strict repayment -- the state was able to guarantee ongoing employment to the Chinese masses.

This last point was -- and remains -- of critical importance to the Chinese Politburo: they know what can happen when the proletariat rises in anger. That is, after all, how they became the Politburo in the first place.

The cost of keeping the money circulating in this way, of course, is that China's state firms are now so indebted as to make their balance sheets a joke, and the banks are swimming in bad debts -- independent estimates peg the amount at around 35-50 percent of the country's GDP. Yet so long as the economic system remains closed, the process can be kept up ad infinitum: After all, what does it matter if the banks are broke if they are state-backed and shielded from competition and enjoy exclusive access to all of the country's depositors?

This system, initiated under Deng Xiaoping in 1979, served China well for years. It yielded unrestricted growth and rapid urbanization, and helped China emerge as a major economic power. And so long as China kept its financial system under wraps, it would remain invulnerable.

But the dawning problem is that China is not in its own little world: It is now a World Trade Organization member, and nearly half of its GDP is locked up in international trade. Its WTO commitments dictate that by December, Beijing must allow any interested foreign companies to compete in the Chinese banking market without restriction. But without some fairly severe adjustments, this shift would swiftly suck the capital out of the Chinese banking system. After all, if you are a Chinese depositor, who would you put your money with -- a foreign bank offering 2 percent interest and a passbook that means something, or a local state bank that can (probably) be counted on to give your money back (without interest)?

The Chinese are well aware of their problems, and perhaps their greatest asset at this point is that -- unlike the Soviets before them -- they are hiding neither the nature nor the size of the problem. Chinese state media have been reporting on the bad loan issue for the better part of two years, and state officials regularly consult each other as well as academics and businesspeople on what precisely they should do to avert a catastrophe.

The result has been a series of stopgap measures to buy time. Among these, the most far-reaching initiative has been a partial reform of the financial sector. The government has founded a series of asset-management companies to take over the bad loans from the state banks, thus scrubbing them free of most of the nonperforming loans. The scrubbed banks are then opened up so that interested foreign investors can purchase shares.

So far as it goes, this is a win-win scenario: Foreign banks get access to assets in-country before the December jump-in date, and the state banks avoid meltdown. In addition, a measure of foreign management expertise is injected into the system that hopefully will teach the state banks how to lend appropriately and -- if all goes well -- lead to the formation of a healthy financial sector. At the same time, the deep-pocketed foreign companies come away with a vested interest in keeping their new partners -- and by extension, the Chinese government -- fully afloat.

The only downside is that central government, through its asset-management firms, assumes responsibility for financially supporting all of China's loss-making state-owned enterprises.

But this rather ingenious banking shell game addresses only the immediate problem of a looming financial catastrophe. Left completely untouched is the existence of a few hundred billion dollars in dud loans -- linked to tens of thousands of dud firms for which the central government is now directly responsible.

Which still leaves for China the unsettled question: "Now what do we do?"

Two Opposing "Solutions"

As can be expected from a country that just underwent a leadership change, there are two competing solutions.

The first solution belongs to the generation of leadership personified by Deng Xiaoping and Jiang Zemin, and could be summed up as a philosophy of "Grow faster and it will all work out." It could be said that during Jiang's presidency, while the leadership certainly perceived China's debt problem, they -- like their counterparts in Japan -- felt that attacking the problem at its source -- the banking system -- would lead to an economic collapse (not to mention infuriate political supporters who benefited greatly from the system of cheap credit).

Jiang's recommendation was that everyone should build everything imaginable in hopes that the resulting massive growth and development would help catapult China to "developed country" status -- or, at the very least, raise overall wealth levels sufficiently that the population would not turn rebellious. In the minds of Jiang and his generation of leaders, the belief was that only rapid economic growth -- defined as that in excess of 8 percent annually -- could contain growing unemployment and urbanization pressures and thus hold social instability at bay.

The second solution comes from the current generation of leadership, represented by President Hu Jintao. This solution calls for rationalizing both development goals and credit allocation. The leadership wants to eliminate the "growth for its own sake" philosophy, consolidate inefficient producers and upgrade everything with a liberal dose of technology. Key to this strategy is a centrally planned effort to focus economic development on the inland areas that need it most -- and this entails tighter control over credit. Hu wants loans to go only to enterprises that will use money efficiently or to projects that serve specific national development goals -- narrowing the rich-poor, urban-rural and coastal-interior gaps in particular.

There are massive drawbacks to either solution.

Regional and local governors enthusiastically seized upon Jiang's program to massively expand their own personal fiefdoms. And as corporate empires of these local leaders grew, so too did Chinese demand for every conceivable industrial commodity. One result was the massive increases in commodity prices of 2003 and 2004, but the results for the Chinese economy were negligible. China consumes 12 percent of global energy, 25 percent of aluminum, 28 percent of steel and 42 percent of cement -- but is responsible for only 4.3 percent of total global economic output. Ultimately, while "solution" espoused by Jiang's generation did forestall a civil breakdown, it also saddled China with thousands of new non-competitive projects, even more bad debt, and a culture of corruption so deep that cases of applied capital punishment for graft and embezzlement have soared into the thousands.

Yet the potential drawbacks of the solution offered by Hu's generation are even worse. In attempting to consolidate, modernize and rationalize Jiang's legacy, Hu's government is butting heads with nearly all of the country's local and regional leaderships. These people did quite well for themselves under Jiang and are not letting go of their wealth easily. Such resistance has forced the Hu government to reform by a thousand pinpricks, needling specific local leaders on specific projects while using control of the asset management firms as a financial hammer. After all, since the central government relieved the state banks of their bad loan burden, it now has the perfect tool to strip power from those local leaders who prove less-than-enthusiastic about the changes in government policy.

Or at least that is how it is supposed to work. Local government officials have become so entrenched in their economic and political fiefdoms that they are, at best, simply ignoring the central government or, at worst, actively impeding central government edicts.

Hu's team is indeed making progress, but with the problem mammoth and the resistance both entrenched and stubborn, they can move only so fast for fear of risking a broader collapse or rebellion. And this does not take into consideration Beijing's efforts to strengthen the Chinese interior -- where the poorest Chinese actually live. Complicating matters even more, Hu's strategy relies upon the central government's ability to wring money out of the wealthy coastal regions to pay for the reconstruction of the interior.

That has made the coastal leaders even more disgruntled. However, they have come upon a fresh source of funding, replacing the traditional sources of capital that now are drying up as a result of the personnel changes in Beijing: the underground lending system, which was spurred by the official government monopoly over banks in years past. The central government now estimates that the underground banking sector is worth 800 billion yuan, or some 28 percent of the value of all loans granted in country.

Dealing with Failure -- And Success

The question in our mind is which strategy will fail -- or even succeed -- first. If Jiang's system prevails, then growth will continue, along with the attendant rise in commodity prices -- but at the cost of growing income disparity and environmental degradation. The likely outcome of such "success" would be a broad rebellion by the country's interior regions as money becomes increasingly concentrated in the coastal regions long favored by Jiang. And that is assuming the financial system does not collapse first under its own weight.

Local rebellions in China's rural regions have already become common, but two of are particular note.

In March, the villagers of Huaxi in the Zhejiang region protested against a local official who had used his connections to build a chemical plant on the outskirts of town. When rumors of police brutality surfaced, some 20,000 villagers quite literally seized control of the town from 3,000 security personnel. Before all was said and done, the villagers invited regional press agencies in to chronicle events in the town that had told the Politburo to go to hell, and started burning police property and parading riot control equipment before anyone who would watch. They actually sold tickets to their rebellion. Huaxi marked the first time local officials actually lost control of a town.

Then, in December, protests erupted against a local official in Shanwei, who had similarly lined his pockets with the money that was supposed to have been made available to farmers displaced by his expanding wind-power farm. The local governor figured that since he was investing not just in an energy-generating project in energy-starved China, but a green energy project, that he would have carte blanche to run events as he saw fit. He was right. When the protests turned violent, government forces opened fire -- the first authorized use of force by government troops against protesters since the Tiananmen Square incident in 1989.

Such events are, in part, evidence of a degree of success for the strategy espoused by Jiang's generation. The grow-grow-grow policy results in massive demand for labor by tens of thousands of economically questionable -- and typically state-owned -- corporations. This, in turn, draws workers from the rural regions to the rapidly expanding urban centers by the tens of millions. The dominant sense among those who are left behind -- or those who find their urban experiences less-than-savory -- is that they have been exploited. This is particularly true in places like Shanwei, on the outskirts of urban regions, when urban governors begin confiscating agricultural land for their pet projects.

But for all the complications created by Jiang's solution to China's economic challenges, it is Hu's counter-solution that could truly shatter the system. In addition to dealing with all the corrupt flotsam and high-priced jetsam of Jiang's policies, Hu must rip down what Jiang set out to accomplish: thousands of fresh enterprises that are unencumbered by profit concerns. A steady culling of China's non-competitive industry is perhaps a good idea from the central government's point of view -- and essential for the transformation of the Chinese economy into one that would actually be viable in the long term -- but not if you happen to be one of the local officials who personally benefited from Jiang's policies.

The approach of Hu's generation is nothing less than an attempt to recast the country in a mold that is loosely based on Western economics and finance. Even in the best-case scenario, the central government not only needs to put thousands of mewling firms to the sword and deal with the massive unemployment that will result, it also needs to eliminate the businessmen and governing officials who did well under the previous system (which did not even begin to loosen its grip until 2003). And the only way Beijing can pay for its efforts to develop the interior is to tax the coast dry at the same time it is being gutted politically and economically.

The challenge is to keep this undeclared war at a tolerable level, even while ratcheting up pressure on the coastal lords in terms of both taxation and rationalization. But just as Jiang's "solution" faces the doomsday possibility of a long rural march to rebellion, Hu's strategy well might trigger a coastal revolution. As the central government gradually increases its pressure on the assets and power of China's coastal lords, there is a danger that those in the coastal regions will do what anyone would in such a situation: reach out for whatever allies -- economic and political -- might become available. And if China's history is any guide, they will not stop reaching simply because they reach the ocean.

The last time China's coastal provinces rebelled, they achieved de facto independence -- by helping foreign powers secure spheres of influence -- during the Boxer Rebellion. This resulted, among things, in a near-total breakdown of central authority.

Mao Zedong was such a lunatic that even his successors running the Chinese Communist Party saw fit to largely disown his ideology. Even behind the clouded veil of recent Chinese history there is plenty of evidence that Mao is firmly ensconced in the pantheon of modern monsters. Which makes op-ed pieces like Pueng Vongs in today's SCMP almost criminal. The headline reads Still an inspirational leader, and in the spirit of Scrooge here's a Christmas fisking.

Almost 30 years after the death of Mao Zedong, many are still trying to define the controversial leader. But, like China, Mao defies simple classification. And his name still evokes deep respect amonst many Chinese.

Today, Beijing officials will honour the 112th anniversary of Mao's birth...

...Outside the country, many Chinese around the world say Mao gave China back its dignity. Yun Shi, 31, who grew up in Shangdong province and now lives in California, recalls the poet, hero and liberator who rescued the Chinese from a "century of humiliation" - the 100 years of foreign domination following the Opium Wars. In founding the people's republic in 1949, "[Mao] annoucned in Tiananmen Square that the Chinese have stood up," Shi said.

Ms Shi doesn not discount the controversial leader's crimes. Her own family suffered during the communist takeover led by Mao before be became chairman. While she may not agree with Mao's tactics, she still belives in the principles of a fair society, she said.

Not all Chinese see Mao in a favourable light. In Wild Swans, author Jung Chang chronicled the hardships her family endured as one of millions jailed or sent to the countryside for hard labour during the Cultural Revolution. In her recently release Mao: the Unknown Story, Chang uncovers a far darker side of Mao, much of it never before reported. After the book was released, Chinese came to Mao's defence on internet message boards, citing his contributions to China.

Ling-chi Wang, a professor of ethnic studies at the University of California at Berkley, said that while Mao's wrongdoings cannot be discounted, he "made an important contribution to Chinese history, as a leader who instilled a great sense of self-reliance and pride in the people.

In San Fransisco, where Chinese form the city's single largest ethnic group, a restaurant in the Richmond district called Mao Zedong Village is a living homage to the former leader.

...Beijing has recently been using Mao's influence to advance its own agenda, said Chaohua Wang, editor of One China, Many Paths and a dissident. "As discontent grew in the countryside over the growing disparity betweem rich and poor, in the late 1990s the government began to talk about Mao to comfort those who were complaining," Mr Wang said.

Leaders like President Hu Jintao copied Mao, he said, travelling to villages in the countryside [Where else would villages be? - Ed.], and emphasised MAo's achievements in making China strong". The message that they deliver was different from Mao's, however. Instead of speaking about "class struggles" against capitalism, as Mao did, they emphasised a "harmonious society".

Indeed, these days Mao is becoming more intertwined with China's spectacular rise. Shanghai-born Miachel Xin, 42, a venture capitalist in Silicon Valley, is in awe of what his country has become. And he says Mao gets a partial nod for laying the foundations.

1. The biggest and easiest gains came from undoing collectivization and giving individuals the responsibility for farming. In other words, Communism doesn't work.

2. Reducing taxes the poor face helps alleviate poverty. In other words, the less the Government interferes, the quicker people get out of poverty.

3. China benefited from a relatively equitable land distribution when collectives were broken up. Given what the country had to go through to get to that point, it's a silver lining in a very black cloud. Nevertheless it emphasises the importance of land reform and distribution in poverty alleviation.

It boils down to something very simple: does the means justify the ends? Especially if those ends are so obviously wrong? 73 million dead Chinese say no.

The title is a subversion of a silly, immature T-shirt often sported during the cold war, replete with a mushroom cloud, that read: "Peace Through Superior Firepower".

I refer to the issuance today by China of a White Paper on Peaceful Development. The full text, for anyone with a lot of time on his/her hands, is here. It is basically saying that China is big, it just wants to make money for its people and leave the world alone, and by doing so it will make the world a better place. Let's leave aside the environmental challenge posed by China's coal-based industrialization for the moment, and discuss how it will really affect the international political environment. Little has been written on this subject so far.

Discussion below the jump.

I would argue that China's rise, particularly if the United States retreats from some of its international obligations, will actually mean that the United Nations will become an organization more closely aligned with its original founding principles.

China has been a big fan of the UN since taking its rightful place on the Security Council in 1972 from Taiwan - indeed, it has been a bigger fan of democracy in international relations than in domestic policy. In recent years, the UN has become rather activist, and has been brought in on several occasions to effect nation-building. Overall, too, after the end of the Cold War there has been a greater willingness worlwide to tolerate multilateral interventions in states the world community considers to be failing, whether due to human rights violations, the persecutions of minorities, or otherwise.

But the chief purpose of the United Nations, when it was founded in 1945, was to stop countries from invading each other (specifically, Germany and Austria, Czechoslovakia and Poland) and the most sanctified virtue of the original UN Charter was that nations always had the right of sanctity in its own internal affairs. But the rise and fall of the Iron Curtain, and the many momentous events during and after, made that principle subordinate to other considerations (with the exception of Bush I invoking the sanctity of sovereignty of Kuwait after Saddam invaded it).

Now China, given its political set-up, rather likes that principle, and does not really care for countries being able to attack one another, particularly over differences in how a country should treat its own people. The guiding philosophy for Chinese international relations in the 21st century is set out in this white paper - we make money, you'll make money too, and we'll all be happy - happy enough to leave each other alone in terms of internal issues. It invokes Chinese history constantly to prove its point.

The trouble, as I've said before, that what China considers 'internal affairs', its own 'Monroe Doctrine', if you like, has been a continually shifting set of territories. France and China went to war in 1884, for instance, over who had a stronger sphere of influence in Vietnam (China lost, but evidently tried to re-establish it unsuccessfully in 1979). China has throughout history tried to exert its influence in much the same way a Godfather (in the Puzo sense) does, in setting up tributary relations for all bilateral ties. Let us hope China does not revert to historical norm on this front as well.

According to an article in the Sydney Morning Herald speaking Mandarin requires more brain power than speaking English:

Mandarin speakers use more areas of their brains than people who speak English, scientists said, in a finding that provides new insight into how the brain processes language.

Unlike English speakers, who use one side of their brain to understand the language, scientists at the Wellcome Trust research charity in Britain discovered that, in Mandarin, both sides of the brain are used to interpret variations in sounds.

I've also spoken to many Chinese students in the US who believe mastering the English language is the hardest thing they've ever done, but I suppose that depends on the individual because there are many people who are able to pick up foreign languages without a great deal of effort. Still, some say it is impossible to decide which is the most difficult language to learn.

Love is complicated in any society and China is no exception - in fact, it may be the rule. In most cases there are cultural and ethnic traditions, dowries and a long list of other protocols that must be followed (as I had to), but for China's migrant workers things can sometimes be even more complicated:

Marriage is nothing to be flirted with in a hasty way, but among young migrant workers from east China's Jiangxi Province, they are tying the knot in no time by binding each other with "marriage down payment". Lin Qing, a 24-year-old girl in the countryside of Jiangxi's Anyi County, married her husband Yang Geng on the seventh day after they got acquainted through a matchmaker in January this year. Yang, also a local farmer, had a job of selling aluminum alloy in Lanzhou, capital of northwest China's Gansu Province.

Before the marriage, Lin's mother Li Laiying received 23,000 yuan (about 2,875 U.S. dollars) from Yang's father -- 13,000 yuan for wedding feast, buying clothes and jewelry and 10,000 yuan for "marriage deposit" or "marriage down payment". The 10,000 yuan is meant for guaranteeing that once Yang is not faithful to Lin, the girl can at least get some compensation, and the money will be returned to them if the couple can remain in the wedlock and have child, said the mother.

Receiving down payment has become very popular in rural families with young people working in cities in Anyi. Generally, when a young man returns home from his migrant working life during a short vacation, he will be introduced to a girl by a matchmaker. If the two think it is all right to stay together, they will immediately sign an agreement to define their lover or spouse relations. After handing over some 10,000 yuan or more to the mother-in-law, they are allowed to go out working in cities and start a couple's life.

...Or has he just lost his freaking mind?

Asiapundit has stumbled on a rather startling piece of news; North Korean soldiers cross border and fire on Chinese soldiers:

It has been belatedly learned (thanks to KBS) that five North Koreans armed with rifles crossed the Tumen River into China's Yonbyon region in the early morning hours of Oct. 16 and attempted to burglarize a mountainside resort villa. The manager of the resort quietly notified the authorities, who responded by sending six of the PLA's finest to the scene. As the Chinese soldiers approached the resort, the North Koreans opened fire, killing a 19-year-old soldier by the name of Li Ryang. According to witnesses, the North Koreans were wearing KPA uniforms, and are believed to have been soldiers.

The last time I checked China was North Korea's sole remaining ally. Either Kim Jong-il has lost his mind or his troops are so desperate for food and other commodities for survival that they're now willing to bite the hand that feeds them.

Beijing has announced a clampdown on limousine useage for Government officials. The Standard today gives us an idea of the scale of government owned cars in China:

To get some idea of the amazing number of Chinese bureaucrats there are shuffling along in government-owned cars, consider this: maintenance and operation of official limousines in 1999 was taking up 3.6 percent of the national budget and costing 300 billion yuan (HK$287.88 billion). That was nearly three times the 107.64 billion yuan China was admitting to spending on the national defense budget, although of course the unofficial defense budget runs much higher, to about 20 percent of GDP. In the 1990s, the average number of official limousines grew 27 percent a year. Nearly a quarter of all government procurements in 2004 were for limousines for bureaucrats. Probably one out of every two cars you see on a highway in China is operating at government expense.

Whenever we have female visitors, they are typically taken by Mrs M for a journey across the border into the wilds of China. By border I mean Lowu train station and by across I mean the 50 yards from that station to the entrance of Lowu Commercial Centre. I don't know of any other shopping centre in the world to have books dedicated solely to navigating its depths. By depths I mean 6 floors of near endless tiny shops, all seemingly hawking the same thing: fakes. The major categories are all fast moving consumer goods: DVDs, wallets, handbags, glasses, golf clubs, clothes, shoes. There is the "jewellery" section, an electronics lane, several eateries of varying quality and assorted odd shops. There are tailors who will copy any design or picture you provide, and a marketplace of materials for those clothes.

Two main questions arise from a visit to Shenzhen. The first is whether there is more to the place than the shopping centre? The short answer is no. Readers from Shenzhen, feel free to correct me. However aside from "Wonders of the World", Shenzhen is not a tourist town. The second is when it comes to protecting intellectual property rights and these so-called drives against piracy, China is nowhere. I stood and watched how efficiently the entire place packed away the copied goods as soon as a cockatoo* gave word the cops were around. Once the cops left, it all came out. Obviously the triads are behind much of what goes on, but it occurs in such staggering scale that local authorities must surely be involved or at least bribed to turn a blind eye.

One shopkeeper told me the rent of a small stall in the Lowu Commercial Centre costs RMB25,000 a month in a high traffic area and RMB9,000 a month in more out of the way corners. When I say small, these stalls we maybe 5 square metres. Larger stores no doubt cost significantly more. That's an awful lot of fake handbags, DVDs and whatever else each store needs to sell. Hazarding a guess, many of the stores are likely owned by the same person/group, stocking exactly the same goods. Yes China is a big country and its police cannot be everywhere, nor can reps from the fashion companies. But if China wanted to get serious about protecting IPR, it could. That's not to say I agree with governments doing brands' dirty work for them - far from it. But if China really is committed to getting rid of piracy, it needs to visibly raise the cost of doing that business. Mass arrests, confiscations, public trials, visible patrols. And not just the retailers, but the gangs, corrupt government officials and manufacturers driving it all.

It's possible, but not probable. The costs are slight and the profits large. As a business it employs many and provides many with goods they could or would not otherwise buy. There is a slight sacrifice in quality, but compared to the savings it is deemed worthwhile by the huge numbers of customers. If the brands and movie companies want something done, they need to do it themselves. In other words, they need to quantify the cost of piracy to their business and invest those amounts in protecting their brands. The taxpayer doesn't benefit from police enforcing anti-piracy laws, but the brands and their bottom line does. Let them pay for it, for real.

* _{A lookout}