Home > Analysis, media > A few gripes with Tania Branigan’s Bo Xilai corruption piece

A few gripes with Tania Branigan’s Bo Xilai corruption piece

(Update 4/20/2012: see update section below with response from Branigan.)
There has been a lot of rumor mongering going on in the Western press about Bo Xilai and the alleged murder of British citizen Neil Heywood by his wife Gu Kailai. In an otherwise fairly well researched article by Guardian U.K. reporter, Tania Branigan, there were couple of crucial errors that were uncalled for. This scandal is indeed one about corruption. However, as Premier Wen recently said, corruption is the most critical problem China faces today. That view is unanimous across the whole country. Insinuating the Chinese government not sincere about it is ridiculous.

Branigan wrote:

Corrupt officials smuggled 800bn yuan (£80bn) out of the country and around 17,000 people fled abroad between the mid-1990s and 2008, according to a report that China’s central bank released last year, apparently unintentionally.

Since Branigan didn’t cite any fact backing up “apparently unintentionally,” my conclusion is that this accusation is a purposeful attempt at defaming the Chinese government. In fact, reporter Yan Jie, wrote about that report in China Daily and cited those figures in June 16, 2011.

China over the years has been trying to extradite embezzlers with mixed success. For example, Yan Yongmin(闫永明) fled to New Zealand with 100 million RMB, and apparently succeeded using political asylum. In July 2011, a Canadian court agreed to Lai Changxing’s extradition. He was accused of running a multi-billion dollar smuggling operation in Xiamen in the 90s.

As Branigan’s own article showed, the Chinese government has brought justice to many cases of corruption, including to influential and high ranking officials.

That leads to the second error in her article where she wrote:

The party is spinning the case as proof of its determination to keep cadres clean, with state media saying it shows that no one is above the rules and treating it as an isolated case. How many believe that is another matter. Corruption has long been a major public concern.

What ‘spinning?’ As Premier Wen stressed, the Chinese government is absolutely serious about fighting corruption. If foreign countries in fact are more cooperative with the Chinese government in extraditing fugitives, perhaps China’s situation would improve faster.

Rumor has it that Heywood wanted a bigger cut in helping Gu Kailai funnel money abroad. Their relationship soured, so the rumor goes, with Heywood threatening to expose Gu’s overseas investments. That supposedly led to the murder. (Curiously, Branigan’s article didn’t mention Heywood wanting a bigger cut.) Perhaps money funneled into the U.K. through corruption with assistance from Britons is a detail that can be overlooked?

So, there we have it. An otherwise seemingly well researched article about corruption must find a way to sneak in few jabs of defamation (see “Collective Defamation“).

[Update April 20, 2012 - Branigan's response below via Twitter]

9:45 AM – 20 Apr 12 @hiddenharmonies no, not mistakes 1) report was stamped “internal data, store carefully” & was removed from website after ppl reported on it
9:46 AM – 20 Apr 12 @hiddenharmonies 2) spin does not mean something is false. it means it is being deliberately portrayed in certain light.
9:48 AM – 20 Apr 12 @hiddenharmonies have mentioned allegation re heywood elsewhere; did not here as piece abt corruption not abt intricacies of this case

I will have to admit that I didn’t know that People’s Bank Report was later taken down after the Chinese media reported on it. The AFP reported it as follows:

The report, which was prepared by the central bank’s anti-money laundering supervision and analysis centre, was initially stamped “for internal use only” but was posted on the People’s Bank of China website this week.
It was reported in some Chinese media but was no longer showing on the website Friday. AFP accessed it via a cached link.

With that, I would say, Branigan is technically correct to qualify the central bank report as having been published “apparently unintentionally.” In that context, I apologize for being harsh above.

However, the narration in her article is still problematic for the same reasons. Though Branigan is probably one of the much better Western journalists reporting on China, and so I want to remind readers to focus on this particular piece rather viewing this post as a condemnation on the journalist herself. The problem with the narration is as follows:

1. Uncritical Westerners will view the central banks report about corruption and money laundering being “apparently unintentionally” published as an attempt for the Chinese government to cover up and not sincere about the problem. Those predisposed to think the Chinese government ‘evil’ naturally interprets that narration as just that.(see “Collective Defamation“) Whereas, if you think critically, it may also means that the Chinese government is very sincere about this particular problem – hence the effort put in by the central bank looking at how funds are embezzled out of the country.

2. I don’t accept Branigan’s point above about ‘spin.’ Why would the Chinese government need to ‘spin’ to want to uphold rule of law and trying to keep the government clean? ‘Spin’ carries a negative connotation of distorting truth.

3. I don’t accept Branigan’s point about leaving out other details about Heywood either. If she brings in the rumor that Heywood threatened to expose Gu Kailai’s foreign investments as the reason for murder, then why not point out the other rumor that he wanted a bigger cut and that people like him are helping to expedite corruption in China? Perhaps unintentional, but my issue is with the article’s lack of balance.

Foreign countries like the U.S. and Canada play a HUGE role in how corruption escapes punishment for Chinese fugitives. See this excellent report:

The way they escape punishment is the fifth failing. Extradition involves the political and judicial systems of two countries, each with its own concept of law enforcement. The judicial procedure is often complicated and tedious. Extradition is very often obstructed by the fact that a person condemned to death in absentia cannot be extradited for human-rights reasons. In addition, China has not signed extradition treaties with the U.S. or Canada, the two most used destinations, so once the official has run away, the chance of catching him and putting him on trial is close to zero.

Even if they do get caught, the stolen funds are rarely recovered. This is the sixth failing. The U.N. Convention Against Corruption sets out the principle of returning illegal assets, but the procedure is difficult in practice. Not only does China have to show that it owns the assets, but it also has to share some of the money with the countries participating in the joint action. After deductions here and there, there isn’t much left.

  1. raffiaflower
    April 20th, 2012 at 00:45 | #1

    `apparently unintentionally’.
    That sounds so posh, for a paper like Guardian. I fancy Zhou Xiaochuan (or whoever) on a slow day,munching melon seeds and sipping pu’er, amusing himself by casually dropping corruption figures on everyone via mass email. Whooops!!

    I think TB is a fairly dedicated reporter. But in her first draft of the Gu Kailai arrest, she also wrote that the wife was named as Bogu Xilai by official media, and couldn’t understand the reason. If something is unclear, a good copy editor would have left that out.

    And a China-based reporter should have at least the basics of Chinese culture, to report on China (or any country).
    Simply, a married woman takes on her husband’s name: thus, Bo Gu Kailai. However, in post-revolution China, where women `hold up half the sky’ as equals, this is no longer a common practice.
    An anecdote is that after their marriage, Bo Xilai 薄熙来 asked Gu to follow his name, as in tradition. It seems that she complied by changing the character of her given name, 莱 to 来.

  2. Navigator..
    April 20th, 2012 at 03:09 | #2

    ” If foreign countries in fact are more cooperative with the Chinese government in extraditing fugitives, perhaps China’s situation would improve faster.”

    Id sooner China stopped corrupt officials “at source” rather exporting the problem so others have to deal with it. The PRC should take responsibility for curing this insidious disease, and no amount of spin by Wen or any other leader will change the reality on the ground. More accountability, and transparency is needed, and no amount of “fei hua” can change it.

    Corruption is rampant in all levels of society, and the government have the responsibility to tackle it. Is 65 years not long enough?

    And instead of reaching hasty conclusions as to Tania’s motives, how about……………asking her? Crazy huh

  3. pug_ster
    April 20th, 2012 at 04:37 | #3

    What do you expect? These foreign ‘correspondents’ in China have to sensationalize stories about China or they will be out of the job. Funny thing is that the countries like the US that are receiving these corrupt money and officials do little or nothing at all to extradite them back to China on ‘humanitarian’ grounds.

  4. raffiaflower
    April 20th, 2012 at 05:34 | #4

    “Corruption is rampant in all levels of society, and the government have the responsibility to tackle it. Is 65 years not long enough?”

    Reading Mabubhani’s book, one passage mentions a late 19th century official called Liang sent by the Qing government to study the American system of government. But the envoy concluded that there wasn’t much that was useful, considering the corruption, cronyism, nepotism, etc.

    A century later, things appear same…much? 1 per cent elite hogging the wealth, Madoff’s Ponzi-style scheme, greedy bankers and industrialists in bed with politicians, etc, etc. Not only is America corrupt, it corrupts the rest of the world.

    Last time we checked, Europe wasn’t looking pretty good either. Does Tania Branigan have a personal axe to grind? I don’t think so. But she needs to file her stories with slant/angle to fit the paper’s agenda, sorry, editorial objectives.

    This is just another day at the Guardian office.

  5. Navigator..
    April 20th, 2012 at 06:40 | #5

    Ahhh yeah “America is worse”. About time someone dusted that one off and brought it out.

    You need to come up with some new material. I can only assume you don’t live in China if you think that corruption here isn’t a major problem. Recent events indicate its rotten from the top down, and not just at the bottom. This doesn’t come as a surprise to most of my local friends.

    How about Hu Jintao’s wife and Wen Jiabao’s son, will that ever come out?

  6. April 20th, 2012 at 07:12 | #6

    @Navigator..
    Corruption definitely cost China at least 1% GDP growth each year. But without making a comparison, it is meaningless. When you use words like “Recent events indicate its rotten from the top down, and not just at the bottom.” it is stupid. Dick Cheney recently got a transplant despite being behind the line and above the age requirement. How is China’s corruption at the highest level compare to even Japan, Korea, India, Phillipines etc?

    China GDP grow by $1.5 trillion last year and will probably do so for the next ten years. If there is no corruption in the west, we won’t see the finacial crisis like we see today. (20% unemployment in Greece, Spain etc)

    And from yinyang:
    Rich Countries Seek to Block UN From Working on Global Finance Reforms
    http://truth-out.org/news/item/8609-rich-countries-seek-to-block-un-from-working-on-global-finance-reforms

  7. April 20th, 2012 at 07:14 | #7

    @Navigator..
    And please get a life. You can simply read about how bad China is in the mainstream western press. No need to parrot what is reported everyday. If you can’t come up with anything special and unique to say, why waste your time?

  8. April 20th, 2012 at 07:36 | #8

    Navigator.. :
    Id sooner China stopped corrupt officials “at source” rather exporting the problem so others have to deal with it. The PRC should take responsibility for curing this insidious disease, and no amount of spin by Wen or any other leader will change the reality on the ground. More accountability, and transparency is needed, and no amount of “fei hua” can change it.
    Corruption is rampant in all levels of society, and the government have the responsibility to tackle it. Is 65 years not long enough?
    And instead of reaching hasty conclusions as to Tania’s motives, how about……………asking her? Crazy huh

    In case you don’t know, that’s why country has extradition treaty. Are you so stupid you don’t know that every country in the world is plague with corruption. Name one country that has no corruption.

  9. April 20th, 2012 at 07:38 | #9

    “There has been a lot of rumor mongering going on in the Western press about Bo Xilai and the alleged murder of British citizen Neil Heywood by his wife Gu Kailai.”

    Just like there was a lot of “rumour mongering” about Wang Lijun’s attempted defection – much of which was then confirmed by Xinhua a few weeks later.

  10. pug_ster
    April 20th, 2012 at 08:36 | #10

    @Navigator..

    The problem with corruption in the US goes to a point where it seems to be legal to do it, and much worse in the US than China. Look at the rotating door between lobbyists and politicians. The trillion dollar bailout to the banks and endless amount of money going to the military.

    Besides, the problem is not totally within the China’s government. Foreign governments who harbor these criminals won’t do anything to send them or the ill gotten money back to the Chinese government. So in fact, it entices more people to do this because if they can move themselves and their money out of the country without fear of getting sent back to China.

  11. pug_ster
    April 20th, 2012 at 08:43 | #11

    @FOARP

    FOARSE, where do you see this kind of “rumor mongering” of the attempted defection?

  12. jxie
    April 20th, 2012 at 09:54 | #12

    Gonna go against the grain and ask this question: would you rather your politicians and/or government bureaucrats competent but corrupt, or clean but incompetent? Clean and competent ones, not jumping ship to the private sector to make bigger money, do they have fathers like Joe Kennedy Sr.?

    Let’s compare the Beijing-Shanghai HSR and the California (SF to Anaheim only) HSR:

    Beijing-Shanghai HSR || California HSR
    Length (km): 1300 || 750
    Design top speed (km/h): 400 || 350
    Initial est. cost (year): Y170B (2006) || $37B (2005)
    Latest cost (year): Y220B (2011) || $68B (2012)
    Status: Completed || Pipe-dream

    The Beijing-Shanghai HSR ended up near 30% over its first official budget, due to a host of factors such as inflation, especial commodity inflation. Reportedly some higher-ups have had their hands caught in the cookie jar. Corruption, yes? Competent, also yes. You have the HSR built and is delivering hundreds of billions yuan worth of direct and indirect benefits to the society each year — increased productivity, energy efficiency, lower oil consumption, etc.

    Then you have this strange beast called California HSR. In 7 years, not a single damn thing has been built, and the cost estimate has already gone up by 80+% nominally, way more than the inflation. BTW, the 2012 estimated cost is in 2012 dollar, which means the final tally if the HSR is ever built will be far larger — if we want to compare apple to apple with the Chinese HSR line. Are the Californian politicians and government workers less corrupt than their Chinese peers? Yes, but look what you’ve got?

  13. April 20th, 2012 at 11:01 | #13

    Branigan has responded to this article. See ‘Update’ section in OP.

  14. April 20th, 2012 at 13:10 | #14

    @FOARP

    Just like there was a lot of “rumour mongering” about Wang Lijun’s attempted defection – much of which was then confirmed by Xinhua a few weeks later.

    The murder of the British Businessman is ongoing and it’s inconclusive what really happened. It’s also still unclear what Wang Lijun did at the U.S. consulate. So I don’t know what you mean by what’s confirmed.

    There had also been other rumors – such as Tanks in the streets of Beijing and an impending coup or civil war… which we now know was a pure fabrication.

    Anyways rumors can and do sometimes contain truths. But even when a few rumors do eventually get substantiated, it does not mean they were not rumors at the time they were reported.

    I can guess a number as the winning lottery number, and even if I turn out to be right and make a few million bucks, it does not mean that I knew what the lottery was. I merely guessed wildly, and happened to be right.

    The same is true with rumors. Tabloids cover news or all sorts. Some may turn out to be true. That does not mean the tabloids all of a sudden became trustworthy news sources. When Chinese gov’t says something is a rumor, it is attacking the trustworthiness of the news. It is not knowingly and deceitfully denying the news – as Bill Clinton did when he denied he ever had sex with Monica Lewinsky. (In Heywood’s case, for example, remember it was on Chinese gov’t’s on initiative that a homocide is exposed; the families of the Heywood actually believed he died of natural causes till the Chinese gov’t / xinhua came up with a preliminary report; it was not a case of Chinese gov’t being forced to fess up…)

  15. April 20th, 2012 at 13:33 | #15

    Good job yinyang on this piece. Those twitter replies were pretty weak, but it’s good you took the effort to publish them. (I’d probably have ignored them, because I am usually lazy… ;-) )

  16. April 20th, 2012 at 14:02 | #16

    @Allen
    Thanks Allen. It’s worthwhile to engage the journalists, because unless they are told how biased they are, they probably won’t even think about it. From what raffiaflower said about Branigan and some email I received privately, she’s fairly well regarded.

  17. pug_ster
    April 20th, 2012 at 20:01 | #17

    @YinYang

    When Tara Branigan ‘defends’ herself by saying “@hiddenharmonies 2) spin does not mean something is false. it means it is being deliberately portrayed in certain light” proves that she is nothing more than a propagandist.

  18. The Chongqing projects
    April 20th, 2012 at 20:45 | #18

    Wen has said the same thing about income inequality and official corruption every year since at least 2007, and the actions haven’t nearly matched the words it seems obvious to me. You take the other opinion, which seems to me completely blinkered. If you can only apologise for not solving the real problems over 5 years, better get out of the way and let someone else do thanks. Your propaganda is really sickening.

  19. April 20th, 2012 at 22:34 | #19

    @pug_ster
    As Allen said, that particular defense is weak.

  20. April 20th, 2012 at 22:41 | #20

    @The Chongqing projects
    In regards to income inequality, while under Wen, China has:

    1. Restricted wealthy individuals from hording property.
    2. Latest 5-year plan calling for 11 million low income housing.
    3. Raised the minimum wage limit enabling many million more poor Chinese for more benefits
    4. Rural health care reform to enable the poor better access
    5. Continued to grow and lifting many more millions out of poverty.

    If you think there are better policies China could implement instead, offer them.

  21. Navigator..
    April 20th, 2012 at 22:50 | #21

    As evidenced by the Bo Xilai debacle he should obviously done more to stop corruption and cronyism among high- level officials. Since Wen is on his way out now his talk is cheap anyway.

    The issues with Hu Jintao’s wife and Wen Jiabao’s son are the worst kept secret in China apart from Jiang Zemins concubine, and yet nothing has been done.

  22. April 20th, 2012 at 23:35 | #22

    Here is the criticism coming from David Li, director of the Centre For China in the World Economy at the Tsinghua University. He is also on the Monetary Policy Committee of the People’s Bank – China’s central bank. He actually spent a great deal of time on Bo Xilai and why his ‘Chongqing’ model only appeals to short term populist demands and fundamentally not the reform and opening up that China needs:

    http://www.abc.net.au/lateline/content/2012/s3481591.htm

    Australian Broadcasting Corporation
    Broadcast: 19/04/2012
    Reporter: Tony Jones

    TONY JONES, PRESENTER: Joining us now in the studio is David Li, director of the Centre For China in the World Economy at the Tsinghua University in Beijing.

    David is on the Monetary Policy Committee of the People’s Bank in China and while in Sydney he’s giving a lecture at the Lowy Institute titled “Is China ready for global economic leadership.”

    Thanks for being here.

    DAVID LI, CENTRE FOR CHINA IN THE WORLD ECONOMY: My pleasure.

    TONY JONES: Before we examine movements in the Chinese economy, let’s start with politics because they’re closely linked in China. What’s the story behind the recent fall of one of China most powerful men, Bo Xilai who was the Politburo member and party member of Chongqing.

    DAVID LI: Underneath the exciting events going on in China it is fundamentally the debate, ongoing debate in China, regarding how China should deal with all these social issues. Indeed, over past 10 years and arguably over 20 years, wealth inequality has been going up and there’s a lot of discontent about these new developments.

    The issue is how to go around, how to deal with these issues. The Chongqing Party secretary tended to rely on the old rhetoric, the Cultural Revolution rhetoric.

    TONY JONES: How he did do that? What was actually going on in Chongqing? It sounds like we had a man setting himself up as a kind of new Mao?

    DAVID LI: Well in the short run, that indeed mitigated social tensions in Chongqing; that indeed mobilised a lot of people on the street, making them, I would argue, temporarily feeling good. However, fundamentally this doesn’t work. This will not fundamentally solve the problem. Fundamentally, the country has to go back to its own path of reform and opening up. That is I think the fundamental issue.

    TONY JONES: How was he fomenting a kind of new Cultural Revolution though? How was that happening, I heard for example he was bringing back the mass singing of revolutionary songs, for example?

    DAVID LI: Beyond that, he has been implementing policies trying to go after those people who are getting rich, those people who made their money by doing business. What China is a transitional economy.

    If you dig very deep in the background of any business people, right, you for sure will find something illegal. Whereas don’t forget, a lot of laws did not come into being until maybe one decade, two decades ago, so by yesterday’s standards a lot of practices was illegal. By going back to dig background of those business people, is scary.

    TONY JONES: He was arresting a lot of businessmen accusing them of corrupt practices and I guess what you’re saying is probably many of them did commit corrupt practices.

    DAVID LI: Again, I make the emphasis, the Chinese economy is a transitional economy. If you use today’s standard to judge what’s going on 20 years ago, it is like you’re using today’s Australian law to judge what’s happening 200 years ago. Right?

    That’s not so comforting a thought for many people, right?

    TONY JONES: At the central level, at the highest levels of Politburo, what were they worried about with the rise of this man? There are some suggestions even that he was contemplating or planning a kind of coup to take over power at the centre of China.

    DAVID LI: That I’m not sure. The process is ongoing, the investigation is ongoing. What I’m sure is that the rhetoric, the approach to resolving the social discontent is very worrisome.

    TONY JONES: His rhetoric you mean? The rhetoric that he was using?

    DAVID LI: That’s right.

    TONY JONES: What they called the neo-left in China.

    DAVID LI: That’s right. This reminded the people of the years of Cultural Revolution, of the years of turmoil, of the years of instability, of the years of losing law and order. That is very scary.

    So I think overall, going beyond the personal disputes, beyond all these exciting events all these rumours, I think fundamentally it is about which direction, in which direction should China go.

    TONY JONES: So do you think that stopping his progress, which is what happened, was somehow a fundamental turning point in recent Chinese history, that it sets the course for the future of economic reform?

    DAVID LI: I would argue so. I would argue that. After this event, I think there’s more emerging of a consensus about reforms. That is, let’s go back to basics. Let’s go back to the things which brought country for the past three decades of economic prosperity. Let’s do the fundamentals. Let’s do reforms piece by piece rather than relying on grandeur rhetoric.

    TONY JONES: Let’s talk about how that works under the leadership of Hu Jintao. His economic reforms you said they’re almost like experiments, aren’t they. And we can see even now managed experiments in different cities and different regions, including, for example, a brand new experiment in opening up the possibility for commercial banks to set their own interest rates.

    This is happening only in a few places. How important is it?

    DAVID LI: That’s fundamentally the way of the Chinese reforms work. Frankly speaking, no one, not even the economists can think through what kind of economic institutions, what kind of regulations that would be suitable for the Chinese economy as a whole. The only way to get the answers is to go about reforms, go around and do reforms. That’s the basic principle of China’s reforms.

    Because the country is so huge, it is going through a transition process from formally central planned economy to modern market economy in the future. No one knows for sure what will, what will not work.

    What people know is let facts speak for themselves. Let’s do experiments. Let’s summarise the good things, let’s delete, lets revise the things that have not been working properly.

    So I think right now China is going back to the fundamental approach to the economic reform. That’s Deng’s approach which is summarised as just do it approach. Deng used to say, my only invention, I quote him, “is no debate. Just do it”.

    TONY JONES: Yes, it is a very different approach we have here. There are dangers, aren’t there, in what happens in these experiments.

    I’m thinking for example one of the key reasons you have been able to have this sustained economic slow down and the reasons behind it were fear of a kind of asset boom particularly in the housing and property market and somehow you needed to let the air out of this bubble that was developing, so this slow down works because it all happens from the centre.

    If you change the way interest rates are set, allow commercial banks to do it themselves, does that create dangers?

    DAVID LI: Well, yes, if the interest rate is suddenly liberalised, it is possible that some of the commercial banks would run very riskily high deposit rates, therefore cutting their future stability. That’s the worry, that’s the worry going out for many, many years. I have to say right now after so many years of reforms of the commercial banks, most of the commercial banks are very much knowledgeable, very much savvy in risk management.

    TONY JONES: And very profitable.

    DAVID LI: Also very profitable. Last year, one half of the total profits of the corporate sector comes from the commercial banks last year. So now the concerns for the commercial banks of competing with each other, charging too high or offering too high deposit interest rates is the concerns are lower today. I think conditions for pushing more reforms actually are ready right now.

    TONY JONES: Let’s go to the bigger picture, Chinese economic growth overall. The deliberate slow down I was talking about took growth from 9.5 per cent to 8.1 per cent in less than a year. You believe it is about to bottom out, don’t you. How will that happen?

    DAVID LI: Well again, big picture. The big picture today is that today the country is going through a process of political succession. 2012 is a very important year not only for the US, not only for France, but also for China. This is one of every decade political succession.

    So very important is to maintain stability. Social stability, political stability, which should be supported by economic stability, which means that the slow down of the GDP growth is necessary. However, excessive slowing down would be socially destabilising.

    So political will is there to make sure economic growth will be reasonably fast. Not too fast. Coming down from last year’s 9.2 percent to something around 8.3, 8.4 percent would be reasonable. But the first quarter number is 8.1, arguably is a bit too low.

    TONY JONES: What are the mechanisms that are in place to push it back up again? Are we simply talking about government spending, public spending measures that are already there ready to go?

    DAVID LI: I would argue that three things will happen. First, very important, is that certain public projects would have to be refinanced, would have to be pushed out. These public projects are already pretty mature. Feasibility studies, blueprints have already been done. These are water projects controlling floods, water projects controlling droughts and rapid rail. Rapid rail actually is suitable technology for the whole country.

    TONY JONES: What we call fast train.

    DAVID LI: Fast train. Fast train … China’s situation is that within cities huge populations and in between cities there’s a need for very quick transportation on the ground.

    TONY JONES: These public projects are about to kick in and you think they will raise the level of economic growth again?

    DAVID LI: Yes, that’s the most effective way to make sure there’s a floor to the economic slow down.

    TONY JONES: There is one other thing that’s happened recently, another reform, and that is that the Chinese banks, the reserves they have to keep behind themselves to keep stability, have been lowered so there’s more money for them to lend as well. Is there a pool of funds come into the Chinese economy from those banks as well?

    DAVID LI: Well judging from the numbers of last month, I would say that the monetary policy has already been relaxed a little bit and today the Government announced that there will be further fine tuning of the monetary policy, meaning that the lending, amount of lending from commercial banks, most likely will be increased for the real business, not housing market, the real business sector. That’s the second area for adjustment.

    The third area for adjustment is for fine tuning of some of the cities property markets policies which have been in place in order to cool down the property market. I’ve been arguing that the housing market is the problem in China was not produced over one month or one year. It was a problem accumulated over the past 10 years, the whole decade. Therefore, it takes a gradual list approach to gradually mitigate the problem of the housing market.

    TONY JONES: I’m sorry again for interrupting you, but from an Australian point of view it is absolutely critical if the growth starts growing up the Chinese will buy more Australian resources that will change the shape of the Australian economy. How far do you think growth will grow by the end of this year?

    DAVID LI: We’ve been working on our forecasts. We used to forecast 8.4 per cent, one week ago, last Friday with this new number, we downgraded to 8.3 per cent. Still a reasonably fast pace of growth and the pattern of growth would be that the intensity of economic activity would drop around the second quarter and then pick up again in the third and the fourth quarter of this year.

    So this would have direct implications for countries like Australia, that is, demand for resources will be again higher, higher gear, in comparison with the past half year.

    TONY JONES: At the same time, the central bank has eased its tight currency, the control on the yuan and it is going to be trading in a large band, a wider band against the US dollar. What will that mean? There’s been tremendous pressure from around the world for China to raise the value of its currency which the claims are is kept artificially low.

    DAVID LI: Well first of all this announcement of the band of trading is a sense of confidence, a confidence in the current exchange rate which is approaching equilibrium. I wouldn’t say it is already at equilibriums but very near the equilibrium, by which I mean that the trade surplus has been coming down from used to be $US400 billion a year to last year’s 150 billion and also further coming down to this year’s by my forecast 100 billion or even less than 100 billion as a share of GDP it used to be 8 per cent.

    Last year it was only 2.1 per cent. This year it will be further lower. In fact, in the first quarter of this year, China’s trade surplus was only around seven billion, so by implication, at this pace, the whole year’s trade surplus would be under 50 billion. Certainly under 100 billion.

    So trade surplus is basically coming down. Therefore implying that there’s less and less pressure for the renminbi to appreciate. In addition to this, in the capital account for capital inflow and outflow there’s already tendency for Chinese capital to go abroad. In other words people are exchanging their renminbi for US dollars, for Hong Kong and Australian dollars to go abroad and invest.

    The flow of capital across the border is pretty much moving towards a two way flow rather than one way flow like one years or two years ago. This indicates the Chinese economy is gradually reaching that external balance rather than imbalance. The exchange rate is reaching equilibrium, therefore giving the government confidence, lets expand the band of fluctuation of the exchange rate.

    TONY JONES: David Li we will have to leave there you there. I’m sorry we’ve run out of time, there are so many other questions we need to ask you. We’ll try and do that again in the future. Thank you very much for being here.

    DAVID LI: My pleasure.

  23. zack
    April 22nd, 2012 at 01:11 | #23

    good on David Li,

    yinyang, do we have a link to Professor Li’s lecture “Is China ready for global economic leadership.”?

  24. raffiaflower
    April 22nd, 2012 at 06:07 | #24

    I can’t get over that term “apparently unintentionally’’.
    Makes one think of a determined Sloane Ranger crunching into the multi-syllabic phrase, like a piece of Scottish shortbread, with pinky lightly curled on a cup of tea. Lol!

    Anyways, that big mouthful reveals the writer’s own speculation whether the report was made public by mistake or a deliberate `leak’ .
    Governments sometimes use a modus operandus of exposing reports `unintentionally’ – by letting it fall into unauthorized hands, etc – to overcome internal differences; in this case, the corruption statistics are carefully compiled but are still `guess-timates’.

    For such accuracy reasons possibly or b)to sideline conservative objections, party/parties may have taken the report to the public as a `leak’ and press the case for reform, unofficially.
    The report was as likely pulled after conservative objections, but “damage’’ is done.
    It’s as hard to believe that the `secretive’ Chinese government would have made such a gross error, as it is to believe that Obama and Medvedev, with every detail planned and watched by a huge posse of secret service agents, could be caught chatting candidly for all the world to hear. That sounds more like Putin’s endorsement.
    I think Ms Branigan is seasoned enough to question whether the open publication of the report is `intentional’ or not. So yinyang is correct: her following para is `spin.

    But then she has to please her editors in foggy London and their vested interests still bitter as beer over handbagging Thatcher’s failure to trash puny Deng
    into handing Hong Kong over in perpetuity, LOL!!

    Navigator,
    what’s the link between CPC being 65 years old and ending corruption?
    So I say that US after more than 100 years is still corrupt to the rafters. England claims great things since Magna Carta but still hasn’t rooted the problem and Zhou enlai says it’s still too early to tell about the French Revolution.
    Corruption is timeless and borderless. And at least, China is taking steps to stamp out the malignancy; but America and its Western cohorts are determined never to change and even expect poor countries to bail them out!
    As for all those other allegations , stop flogging `dog bites man’ stories.

  25. The Chongqing projects
    April 22nd, 2012 at 08:03 | #25

    raffiaflower,

    Bo’s circle alone is estimated to have moved $6billion out of the country in a few years. Clearly the higher up in the party, the more corrupt they are. China will take steps to stop the truth getting out, never stop the money racket at the top of the party.

  26. April 22nd, 2012 at 08:16 | #26

    @The Chongqing projects
    Is this your estimate? Why don’t you named all those “higher ups”?

    We welcome you to use this venue to expose corruption but please come up with evidence, if not is nothing but defamation.

  27. April 22nd, 2012 at 22:39 | #27

    The talk zack referred to by David Li is here:
    http://www.lowyinstitute.org/Publication.asp?pid=1846

    I haven’t had chance to listen to the podcast, though I am eager to hear it.

  28. zack
    April 22nd, 2012 at 23:08 | #28

    @YinYang
    many thanks, yinyang; i’m looking at it right now:P

  29. raffiaflower
    April 23rd, 2012 at 08:39 | #29

    Chongqing, the scandal unfolds like a set of Chinese boxes: one opens on another, & no-one knows where it all ends. Or that the final box will ever be opened.
    The investigation is ongoing, so I think you have to provide more substantial facts than just claiming the rot goes all the way up, as Ray says.
    For instance, in the French submarine bribery scandal, the officials of the Southeast Asian country receiving kickbacks have been named, witnesses called.

    I would say tho Guardian writer is partly right, at least in this particular instance. The bottom line is really about fighting for the keys to the kingdom.
    In a power tussle, there is no right or wrong, only might. Nevertheless, the Chinese govt has pledged to alleviate corruption – so the Xi Jinping era will be a test of its resolve.

  30. silentchinese
    April 23rd, 2012 at 10:27 | #30

    This Bo Xilai affair on the whole is an unwelcome distraction as far as I can see.
    The real issue facing china today will not be delt with wether or not the whole thing happened or not.

    The powers at being in china must push for more reforms on multiple fronts (economy, political, cultural) and political scandals like these only weakens those who are trying to build up china and strengthens those who are trying to tear down china.

    At a time scale of 10-20 years this episode does not matter, or, will not matter if no one is to think of it. If one dwell on these things and give too much reading into basically nothing, then too much and bad things will result from it, obstructing what other wise would be a rational process.

    frankly the reformers and the conservatives are both in the government in china. thus a grand coalition of centerists is ruling in china, and all has a vested interest in at least a stable and prosperous china.

    only the Nihilists such as those who are embittered and wants nothing but complete and utter chaos for china and its 1.4 billion hardworking people is rubbing their hands and salivating at the voyureistic peekshow right now.

  31. April 23rd, 2012 at 11:57 | #31

    David Li’s observation is probably the most official about the dominant views within the Chinese government about Bo Xilai’s ‘Chongqing’ model.

    Basically, he felt what was done in Chongqing is based on populism and providing residents there with short term handouts which is not true reform itself.

    Wait a minute, that’s populist democracy as practiced in the United States at the moment!

  32. zack
    April 24th, 2012 at 01:38 | #32

    @YinYang
    great talk by Dr Li; it certainly clarifies a lot and cuts through all the BS a lot of journalists like John Garnaut of the SMH have perpetuated.
    i certainly hope to see more of Dr Li

  33. Cathy Graham
    April 24th, 2012 at 07:46 | #33

    The people on this site seem to love to talk about things which “dont matter” such as this Chinese Communist Party corruption case. Though they seem to be more concerned with how its represented in the media than looking at the root causes of this widespread problem. This is different than my Chinese friends in China.

  34. pug_ster
    April 24th, 2012 at 10:10 | #34

    @Cathy Graham

    Seriously, read the whole thread. Where do we say that corruption “don’t matter?” Yes there is corruption in China, but tell us something that we don’t know. The Chinese government does go after corrupt officials what happened to Bo Xilai. If you have any new corruption issues, do let us know.

  35. April 27th, 2012 at 17:19 | #35

    To FOARP’s comment that rumors is basically truth, an idea I pushed back in this comment,

    Apparently even in the British press, the rumors are not considered truth (http://www.independent.co.uk/news/world/asia/a-bad-heart-killed-neil-heywood-but-whose-7668401.html).

    Here is a global times op ed that I think resonates with what I wrote.

    http://www.globaltimes.cn/NEWS/tabid/99/ID/706728/West-dwelling-on-Bo-case-to-score-cheap-points.aspx

    West dwelling on Bo case to score cheap points
    Global Times | April 26, 2012 00:30
    By Shan Renping

    The Chinese public’s interest on the case of Bo Xilai is dwindling. In today’s China, it is hard to keep public attention focused for long on one thing.

    However, some Western media are unusually keen on the case. They consecutively release special coverage, but many of their stories do not have detailed or convincing sources, but are all vividly described. They try to inoculate their opinions into the Chinese public’s minds before final official information is released.

    The Western media’s particular enthusiasm shows that they have overestimated the position of Bo’s case in China’s politics. Bo is being investigated in accordance with the law. This news is really explosive, but will not shake China’s political foundation.

    Some in the West are deeply prejudiced against China’s political system. In their eyes, China’s politics is like a mine field. They do not understand the positive correlation between China’s politics and the country’s rapid development nor believe that China’s progress is caused by the protection given of its politics.

    The West exaggerates the negative influences of Bo on the Party’s work. The final investigation result will uncover whether Bo was severely corrupt or not. But Bo cannot stand for all China’s officials. The central government takes a tough attitude on cracking down on corrupt officials and some have been punished. No matter how high-ranking the corrupt officials are, they cannot escape from punishment.

    Most Western people are unfamiliar with Bo’s name and Chongqing. It is illogical that the mainstream Western media places so much attention on Bo’s case. These reports do not bring important information but a negative moral image of China to the Western public.

    Since the Internet provides an open platform for information flow, the Chinese are also targets of these reports. The recent information on Bo’s case is primarily from Western media.

    Bo’s influence on Chinese society is history. The Western disclosure attempts cannot be more authoritative and detailed than the investigation of the central government. It will take some time for the authority to reach a conclusion on the case. Waiting for the final results and interpreting Bo’s case based on the authoritative information should be the rational attitude to take.

    It is hoped Bo’s case could bring China a new maturity, instead of confusion caused by various rumors.

  36. April 27th, 2012 at 17:21 | #36

    This looks like an interesting link…. I’ll observe and see where it goes…

    http://www.globaltimes.cn/NEWS/tabid/99/ID/706636/Rein-in-the-rumor-mill.aspx

  37. zack
    April 27th, 2012 at 18:06 | #37

    @Allen
    your average western detractor will start his rebuttal with: ‘globaltimes is not a source’, and that i believe says everything there is to know about the ethnocentric conceit and closemindedness and how brainwashed they are.

    i’ve started reading global times and contrary to what their western media competitors say, global times is nowhere near as biased as the NYT or the LAT or the Washington Post. arguments are reasonable, and non ideological which sadly cannot be said for the vast majority of what’s supposed to pass for media in the West these days.

  38. colin
    April 28th, 2012 at 02:33 | #38

    @zack

    ” global times is nowhere near as biased as the NYT or the LAT or the Washington Post.”

    I don’t read the global times, but cuckled out loud about the NYT/LAT/WP part. It’s so true. These rags are are a joke when it comes to reporting on China, as well as many things non US/west centric.

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