The Sinocism China Newsletter – September 21, 2016

Bill Bishop , September 23, 2016 10:09am (updated)

THE ESSENTIAL EIGHT

1. 特稿|陈光标:“首善”还是“首骗”?政经频道财新网 批评者称陈光标慈善数字注水为主,靠倒卖拆迁项目赚钱,涉嫌围标、违规转包,拿着跟领导的合影骗捐款、骗头衔、骗项目;令计划曾看重其舆论动员能力;但陈光标自称从来不给任何官员行贿,“潜规则陈光标从来不去做”。他是“首善”还是“首骗”? //  great Caixin piece on self-styled “philanthropist” Chen Guangbiao and his troubles, including ties to Ling Jihua case…sounds like a world-class scammer, in case you had not already assumed that…

2. Big Data Lens on China’s Economy (Mostly) Affirms Official Stats – Bloomberg A growing universe of big data offers an increasingly complete alternative view on China’s economy, and it’s not massively different than the official statistics.  That’s according to a new report by Bloomberg Intelligence economists Tom Orlik and Justin Jimenez, who compared National Bureau of Statistics numbers with those generated from the vast amounts of data and information collected by businesses and governments. The new gauges affirm that manufacturing is weak, real estate is better, auto sales and online consumption are robust, but malls and tourism are suffering and employment is slipping as old industries shed workers, Orlik and Jimenez wrote. For industrial, property, autos and employment, they said the picture is similar to official data, while for some aspects of consumption, big data are more negative.

3. Follow the Money » The August Calm (Updated Chinese Intervention Estimates)-Brad Setser-SAFE’s data on foreign exchange settlement, which in my view is the single best indicator of true intervention even though (or in part because) it aggregates the activities of the PBOC and the state banks, actually indicates a fall-off in pressure in August. The FX settlement suggests sales of around $5 billion in August. Even after adjusting for reported changes in forwards (the dashed line above). All this said, there is no doubt something changed in September. The cost of borrowing yuan offshore spiked even though the exchange rate has been quite stable against the dollar and generally stable against the CFETS basket.

Related: Suitcases of Cash: Chinese Travel Data Hint at Capital Outflows – Bloomberg The explosive growth of spending overseas by Chinese tourists dwarfs the increase in the number of Chinese traveling abroad. The most likely reason? Disguised capital outflows. So says former U.S. Treasury official Brad Setser, who drilled into the spending data provided by some of the most popular destinations for Chinese travelers

Related: China Capital Outflows Bubble Below the Surface – WSJ Chinese banks’ foreign-exchange data shows that capital continued to leave the economy in August—the 24th straight month of outflows, according to Goldman Sachs’ gauge. And while at first glance the pace slowed from July, Standard Chartered said that when changes in foreign-exchange reserves are netted off against trade and investment flows, August turns out to have been the worst month since January. Sliced in different ways, China’s outflows this year are north of $400 billion, which is reflected both in a $190 billion decline in the country’s foreign-exchange reserves and a weaker yuan, down about 3% this year against the dollar and more than 6% against a basket of currencies.

4. We need US for South China Sea – Duterte | The Philippine Star President Duterte has apparently mellowed even further on his sentiments about the United States, reiterating yesterday he did not seek the pullout of American forces as the Philippines would need its ally in defending the country from intrusions in the West Philippine Sea and South China Sea. “I said there will be some time in the future that I will ask the US special forces to get out, almost 117 of them, better that you get out so that I can talk peace… and so I can show that you are not there,” he said in a speech before the 10th Infantry Division of the Philippine Army in Mawab, Compostela Valley. “I never said get out of the Philippines. For after all, we need them in (South) China Sea,” Duterte added

5. China launches cyber security talent training nationwide – Global Times Li Shuyong, Wuhan government publicity department head, told the Cybersecurity Technology Summit during China Cybersecurity Week that the city government will cooperate with companies to cultivate the world’s top cyber security talent. Li said the local government will double the number of scholarships for cyber security majors and recruit top cyber security graduates in Chinese and overseas schools as well as from competitors at cyber security contests. She added it will also open a class for minors and run special recruitment for “maverick geniuses.” She also said the city government will establish an innovative evaluation system. Instead of taking exams, cyber security majors will be evaluated based on their performance and given priority to practical and entrepreneurship training.

Related: 坚持网络安全和网络发展同步推进 让互联网更好地造福人民–时政–人民网 刘云山强调,各级党委和政府要把网络安全工作摆上重要位置,切实履行领导责任,严格落实网络安全责任制。各有关方面要各负其责,协同推进网络安全工作。互联网企业要坚持社会效益和经济效益相统一,不断强化社会责任和道德责任。要加强互联网对外交流合作,推动建立多边、民主、透明的全球互联网治理体系,共同构建和平、安全、开放、合作的网络空间。// it is cybersecurity national propaganda week

6. Once a Voice of Young China, Han Han Stakes Out a Different Path – The New York Times Of course, Chinese people’s views on many issues are very different from those in the West, but that’s not the result of a lack of information. Even if every American website could be accessed here in China, Chinese would be just as nationalistic, or even more so….[What do you think of the nationalism embraced by some younger Chinese today?] Nationalism is part of online culture all over the world, and I think everyone is nationalistic to some degree, more or less. But nationalism is stronger among young Chinese people today. Maybe because of China’s economic development — even if people themselves don’t really benefit from it — they think they’re more powerful, and so are mandated to take over Taiwan and subdue Hong Kong. But their assertiveness only generates more and more resistance from people in Taiwan and Hong Kong. The more forceful they are, the greater the disagreement. The true power of a nation lies in tolerance.  // very important point on nationalism… Han Han is very politically savvy, but did the charges that he used ghostwriters also have something to do with his stopping writing?

7. How Women Won a Leading Role in China’s Venture Capital Industry – Bloomberg The largest venture capital fund ever raised by a woman isn’t in Silicon Valley or even the U.S. It’s in Beijing and is run by a former librarian who keeps such a low profile that she’s a mystery in her native China. Chen Xiaohong rarely attends industry conferences or events. She hadn’t given a media interview in more than a decade until agreeing to break her silence this summer. “I don’t like being part of a club,” said Chen during a four-hour discussion at her firm’s headquarters. “I believe in staying independent, making your own decisions.” Chen, 46, is part of an unusual group of female investors who have risen to the top of the venture business in China and helped fuel the country’s technology boom. They’ve backed some of China’s most successful startups and their influence is growing as they raise more money, recruit other women and seed the next generation of technology companies. // nice to see some friends get long overdue recognition

Related: Measures to promote sustainable development of startup investment-State Council he State Council issued a circular on Sept 20 on promoting the sustainable development of startup investment, as an effort to advance mass entrepreneurship and innovation in China. The circular decided to encourage multiple investors to set up venture capital enterprises or pour money into startups. The investors include investment agencies that have rich resources in entrepreneurship and innovation, such as leading enterprises, business incubators and insurance asset management institutions.

8. What not to expect from Chinese SOE reform | Andrew Batson’s Blog It’s hard to overstate how depressed most China-watchers have become about the state of state-owned enterprise reform. After some promising signals in 2013 that seemed to indicate an openness to a new approach, it has just been one disappointment after another. Instead of more privatization and more professional management, there is instead a renewed love affair with forced mergers of large SOEs, a heightened emphasis on SOEs as instruments of government industrial policy, an increase in the Communist Party’s role in company management, and a proliferation of new “anticorruption” procedures to limit decision-making by SOE executives.

You can read the rest of today’s newsletter here.

Bill Bishop

Author and curator of the daily Sinocism newsletter.