Monday, September 25, 2006

Taming the Civil Society

While Taiwan and Thailand are undergoing political changes dramatically, everything seems to remain unchanged in Hong Kong. There is only one local news story attracts my attention: Some students of the University of Hong Kong (HKU) proposes to quit the Hong Kong Federation of Students (HKFS). This does not look like a big deal. But the term "passive revolution" might be an appropriate idea to understand what's happening in Hong Kong.

HKFS has been the representative body for student unions at seven universities and colleges since the late 1950s. Over the past few decades, it had been very politicized. During 1980s-1990s, HKFS was active in democratic movement, particularly in the incidents of June Fourth and fighting for revision of the Basic Law. In recent years, it has become less active but is still seen as a part of the pan-democratic alliance.

But now something different has happened in some university student unions. Chan Chi-kin, the former president of HKU students' union, and some students have launched a signature campaign to push a referendum to decide whether its student union should continue to join HKFS. This challenges the leadership of HKFS in local university students.

Chan criticized HKFS as an organization without a system of checks and balances and he was not happy about a large part of funding being allocated to the Social Movement Resource Centre, a group concerning social activism. He accused Lo Wai Ming, HKFS's former secretariat, of taking control over the financial resources of the federation.

But some were skeptical of Chan's political stances. Last year, before the July 1 rally, HKU student union released a statement which aroused controversies. It said, "Universal suffrage is not the solution to everything. Pursuing it blindly will lead to negative consequences. Cultivating good citizen quality and social environment congenial to universal suffrage is more meaningful than chanting slogans and taking to the street." A group of HKU alumni condemned this statement as discouraging people from joining the mass rally.

Now the signature campaign coincides with another incident. In mid-August, Lau Fong, president of HKU student union, and some student representatives went to meet Chief Executive of Hong Kong SAR government Donald Tsang. But this meeting was boycotted by four student unions because they were told not to inform the media of it. Lau Fong's father, Lau Nai Keung, a pro-Beijing government politician and committee member of Political Consultation, was the "middleman" who helped organize this meeting.

Yet all of these might not be a well-organized plot or political repression. But it demonstrates the pro-Beijing government partisans have shifted their strategies from promoting "patriotism" to gaining support and consensus from the civic associations. The political struggles and conflicts occur in the most grassroot levels of the society.

Over the past few years, local activists have advocated the slogan of "civil society" which is a force fighting against the encroachment by the government. What Lau Nai Keung, the pro-Beijing ideologue, proposed is not a crackdown on the civil society by the state. Instead, as he said, the civil society is not necessarily anti-government and it could "co-exist" with government "peacefully". He is so smart in playing with words that he even suggested Hong Kong need more "political oppositions" which would cooperate with the government.


Thursday, September 21, 2006

Hacker Attack on

When the portal website of was broken down, what reasons came into the mind of Liu Jianguo,'s Chief Technology Officer?, the biggest search engine in China, was attacked by hackers on September 12. The breakdown lasted for almost 30 minutes. Baidu claimed that the attack was pre-meditated and highly organized. Some speculated that it is related to its recent cutbacks in personnel and its litigation with former clients.

As Liu Jianguo said, the hackers used the technique of syn flooding to create a huge number of IP addresses to overload the servers. He claimed that this kind of attack was so unusal that it would be an revenge taked by a company or a group rather than individual.

It is believed that the attack is related to two recent incidents. Some former's advertising customers sued for filtering out their information in all search results. This happened after they decided not to renew their contract with it. It was also alleged that Baidu competed with his rivals, such as Google, by not showing some key links of Google's customers. Despite moral condemnation and public concern, some lawyers pointed that there was no law regulating what information a search engine should show to its users.

Over the past few months, had dismissed some employees and shut down its software department in July without prior notice. Some workers submitted an arbitration applicaton to court. But did not want to arouse more controversies and said it affected less than 1% of its 2,000 staff.

Yet an experienced hacker alleged that this was only an attack launched by an individual hacker who felt furious with what had done to its staff and former advertising customers. Baidu refused to comment on it., the most popular internet search engine in China, was accused of providing links to websites of music pirates and helping the China government censor politically sensitive information. It got listed on Nasdaq in August last year and its stock price had skyrocketed from US$27 to US$122.54 on the first date of trading. Recently it is threatened by competition from Google who is expanding in China, the world's second largest internet market.

Photo: doubleaf

Thursday, September 14, 2006

Disney fever is gone

Last year a shop in Mongkok, the most populous shopping area of Hong Kong, was taken over by a new tenant, a Korean cosmetic company. It afforded a rental as high as HK$ 980,000, more than 50% higher than the previous one. Some believed that Hong Kong Disneyland would create an economic booming, particularly in retailing sector, by attracting a huge number of mainland Chinese tourists. However, less than one year later, it withdrew from Mongkok and terminated the leasehold.

The local people already suffered from the volatility of property market in retail sector before they saw any Disney's economic contribution. It becomes more and more difficult to run small business in Hong Kong. The tourist sector saw the arrival of Disney as a new opportunity for expanding their market and network. In anticipation of high growth rate, many chain shops competed for space in shopping areas and malls along the railway route to the theme park. Yet their expectation proves to be wishful thinking.

On September 12, the celebration of Hong Kong Disneyland's first anniversary did not attract people's attention. So is its contribution to Hong Kong economy. While few people remember Hong Kong Disneyland's birthday, a corporate watch organization, Students and Scholars Against Corporate Misbehavior (SACOM), staged a protest against the Walt Disney Company's sweatshops.

In its first year, about 5 million people visited Hong Kong Disney, a number less than the expected target of 5.6 million, despite many aggressive promotion such as offering free tickets for taxi drivers. The economic bubble caused by people's high expectation of "Disney effect" is also gone despite the park's managing director Bill Ernest's optimism.

Hong Kong Disneyland, the fifth Disneyland in the world, is a project initiated by Hong Kong government who wanted to boost the local economy hit by financial crisis in 1998. The officials wanted to attract a huge number of tourists from mainland China. It takes more than 5 years to finish the project.

I doubt if Mr Ernest really cares about the future prospect of Hong Kong Disneyland. Since the year of 1999, The Hong Kong government has spent HK$22.4 billion on it, including 13.6 billion on infrastructure, 3.2 billion on capital investment and 5.6 billion on loan. The Walt Disney Company who owned 43 per cent of the shares in the Hong Kong Disneyland, only invested about US$ 0.31 billion.

Some criticized Hong Kong Disneyland, the smallest one in the global family of Disneyland, for its size. It is even smaller than some mainland theme parks. The management mishandled the chaos that ensued from the Lunar New Year holidays when a large number of Chinese visitors came. Thousands of angry ticket-holders were locked out of the gate of the park. Hong Kong Disneyland might be only a low-priced launching pad for its further expansion in Shanghai, Seoul or Singapore.

Photo: the zen master

Wednesday, September 13, 2006

Land Expropriation Reform Makes "Land Enclosure" Worse

Author/Qin Hui

The land problem has become intensified after local tax reform. The central government has paid a lot of effort in constraining land "enclosure". In the year of 2004, it initiated the reform in land expropriation, the so-called "new land policy", "land revolution" and "The deadline of August 31", and it has enormously constrained the collusion between government and business sector and protected the national interest. The reform has changed the interest distribution between developer and government. The system of negotiated leasehold is replaced by open auction. Now it is less possible for developers to offer bribe to local officials to get land at low price. This policy reduces the loss of land revenue to national financial income.

However, this policy not only fails to alleviate but also further worsens the problem of land enclosure.

The previous leasehold system definitely causes corruption in land expropriation. Bribery and the people in power lured the local officials to sell land at low price. It did harm to national interest and peasant. Only developers and the officials involved made a lot of money. But these illegal practices only increased personal wealth rather than govenment financial resources. So it not only led to anti-corruption campaign but also the internal constraint within governments, particularly the incentive to monitor by the officials who did not benefit from corruption. There was incentive for the businessmen and officials to pursue personal interest. But the "incentive for government fiscal revenue" is comparatively less.

"Reform in land expropriation" is different. Now after low prices in expropriation and leasehold was replaced by low price in expropriation and high price in "auction", the revenue from expropriation of peasant's land does not decrease. More land revenue goes to government rather than the pockets of officials and developers. Land revenue becomes more important to government financial income.

Although corrupted officials might have less personal incentive to push forward land enclosure, governments become much more active in it. It is difficult to condemn these practices as "corruption" because the land revenue goes to government rather than individuals. Because the financial interest is shared within local government, the monitoring and constraining by "disinterested colleagues" will be reduced. The land enclosure perpetuated by government's land revenue rather than officials' personal interest, by governments rather than individual official, and legal rather than illegal, will move faster. This is not unimaginable. One and half year after new land policy, the conflict between people and government caused by land expropriation has increased. The conflicts like the incident of Ding Zhou, which was rarely seen previously, happened persistently.

Since the fiscal and tax reform in the 1990s, with the exception of some coastal areas, most local governments, particularly those of county-level or below, are increasingly "thirsty and hungry" for finanical resources. The reform in tax and fee allievates peasants' economic burden but put more grassroot-level governments into financial difficulties. But the appropriate measures of grassroot-level government reform do not bring substantial change. Now the land expropriation reform further causes great seduction of "land reveneue" for government. With these factors together, where is the land enclosure heading to? The answer is expected.

2006-08-28 New Express

Qin Hui teaches in the Faculty of Human and Social Sciences, Tsinghua University, Beijing. He is an expert in agricultural problems of China and Russia.

The original article
Photo: *LJ*

Friday, September 08, 2006

FoxConn, First Financial Daily and CCP

China studies scholars in western countries have been concerned with a question: What kind of society has been brought by open-door policy? The reconcilation between FoxConn and The First Financial Daily gives us some hints.

The world outside China has the impression that China's media is controlled by government. It is partially true. Strictly speaking, media in China is janus-faced. Sometimes they look like any media in western countries. Sometimes they seem go back to the old times. The incident of "Freezing Point" (Bingdian) is a recent example.

The professional practices and autonomy of some mainland journalists are much better than all Hong Kong reporters. The coverage of the labor condition in FoxConn is a good example. This is not the direct and necessary consequence of marketization (The highly "marketized" Hong Kong media could prove it). Many journalists ride the tide of marketization to create more space for press freedom. Over the past ten years, newspapers have been looking for money and higher sales. They certainly need to reduce official articles and investigative reports become a selling point.

The media with "Chinese characteristics" is run increasingly like any news corporate group in western countries. They compete for news stories and sales. They are working on cross-media merge and acquisition. They attempt to monopolize the market by strategic alliance. But in some critical moments, they are still subject to the supervision of different party-state organizations respectively. There is no privately owned newspaper in China. The First Financial Daily is a joint venture of Shanghai Media Group, Guangzhou Daily Group and Beijing Youth Daily. They are affiliated with the Communist Party Committees of Shanghai, Guangzhou and Beijing Communist Youth League respectively.

Behind the conflict between the newspapers and corporation, there is the operation of the Chinese Communist Party. FoxConn's Shenzhen branch is the first Taiwanese owned enterprise with party committee in 2001. There are 1791 party members and 68 branch offices. One third of the members are management. The interest of party committee and enterprise are united. As FoxConn's party committee secretrary said, "Party's task is to serve company's production and business." Last year, the company allocated RMB 8 million to its party committee.

It is hard to believe that this gigantic party, with a membership of over 70 million, would not intervene into this affair. The joint statement follows the party line: "Harmonious soceity".

As Jurgen Habermas said, corporatization of modern media led to the decline of pampheteering-style small media. The discussion in public sphere turned into the public relations work manipulated by political and economic groups. The joint statement is a PR document. But the Chinese characteristics of this public-relation dominated society are prominent. In the new social space, the party organizations proliferate and work like a pair of invisible hands. The weak voice of workers in media is further covered up by the symphony of "harmonious voices".

Photo: El Mambo Taxi

Friday, September 01, 2006

Insufficient domestic demand in China

Despite incredibly high growth rate, China economy is always characterized by its insufficiency of domestic demand. In other words, the ordinary people do not want or are not able to consume as much as the producers expect. Where have the money gone? Some put money into their bank account. But most people's purchasing power is much weaker than economic development. The annual growth rate of income is only 6-7% but GDP increases at about 15% each year. It is estimated that the supply of consumer goods exceeds demand by 70%. Now the average Chinese people make only RMB 700 (less than US$100) each month. How could they afford the way of life of high consumption?

This is also an issue of economic inequality. The fast-growing sectors, particularly the companies related to raw material such as oil and electricity, and property developer, made a lot of money. So did the China government and banks. But the ordinary people did not gain much. That is why there is an oversupply of credit in China. In order to make more money, the banks lend most money to the fast-growing sectors and make a never-ending cycle of economic overheating. The privileged class further capitalizes on this chance to accumulate their wealth. That is why CPI(Consumer Price Index) increases mildly compared to GDP and other economic indicators.

According to the ILO's report, most Asian people experienced rapid economic grwoth but suffered from economic hardship including low wage and unemployment. 1 billion people earn less than US$2 each day in Asia. More jobs also need to be created for satisfying the expanding labor force. Chinese Workers' productivity increased by 170% from 1990 to 1999 but their real wage only increased by 80%. India is even worse. The salary of workers in India decreased by 22% while labor productivity increased by 84%.

Now China economy is primarily driven by persistent investment in fixed capital and export. The Beijing government fails to stimulate domestic demand. What it can do is to keep tightening credit supply and cooling down the property market. But many people begin worrying about the shrinking US economy which is supporting China's economic growth.