Snakes and suitcases...

A year in review
Last year was a very generous year of gift giving it seems with many Chinese seemingly awash with cash and, in some cases looking to transport it out of China. Seizures were reported at airports in North America and a road checkpoint in France, while even within China bank staff at one bank in Henan province spent their time in the new year counting through a large mountain of low value bills deposited by one customer.  With the Year of the Snake soon approaching and awards season kicking into full swing, it seemed like a good moment to reflect on some of the achievements of 2012 and make some predictions.

China's latest export?

Intoducing the Moutai Awards"! 茅台奖!
Inspired by the longstanding favourite of Baijiu connisseurs (although since being banned at military banquets it has fallen in popularity as a luxury item), we now present our nominations for celebratory bottles of the oft-contaminated tipple to mark outstanding achievements (and notoriety) during the year.

Wedding of the year - At a price tag of approximately $150 million, the dowry given by Wu Duanbiao, a Fujian businessman to his daughter at the start of her 8 day marriage celebrations in December seemed to include everything but the kitchen sink, which presumably could have been manufactured by Wu's ceramics firm Fujian Wanli Group.

Scoop of the year - Although the Bo Xilai affair had readers worldwide captivated for many months and despite a commendable late effort by Bloomberg in exposing the complex web of connected Princelings ruling over China's Bureaucracy and Xi Jinping's family wealth, David Barboza of the New York Times stood out for his perfectly timed expose of Wen Jiabao's family business interests, on the eve of Wen's retirement.  Not only creating a lot of attention, it caused an immediate response from the Chinese authorities and was probably the reason for a number of recent measures, including the proposed removal of directors' personal details from the companies registry in Hong Kong (a key source for investigating officials' dealings) and the collapse of HSBC's exit from dominant insurer Ping An.  Special mention also to John Garnaut for his research into reshuffles of the Chinese military leadership prior to the leadership handover.

Broadcast of the year - Congratulations to the team at Sinica who delivered a highly insightful discussion on the eve of the party congress and leadership handover.  Featuring a heavyweight panel of John Garnaut, Patrick Chovanec, Jamil Anderlini and regular hosts Kaiser Kuo and Jeremy Goldkorn.  The explanation of the history of Bo Xilai and the leadership was very precise and revelations, including Bo's penchant for Sylvester Stallone, quite surprising!  A runner's up award for Max Keiser who over a number of broadcasts on Russia Today has been seeking to highlight China's buildup of gold reserves which could shock markets in 2013.

Most creative use of official resources - in a crowded field, Wusu City police chief Qi Fang stood out for his resourcefulness, in housing his twin mistresses and employing them in the city's police department.  Equal second place goes to Lei Zhenfu, who found time to star in a sextape, and Yang Dacai, a Work Safety official from Shaanxi province who managed to amass a collection of luxury watches on his official salary and keep smiling amidst the human and machine wreckage of several traffic accidents. Definitely hard work did not go unrewarded this year.

For services to architecture - Developers of the Meiquan 22nd Century building were a late contender, having commenced a Chongqing development due to be completed before the Zaha Hadid designed Wangjiang SOHO development (which it is a poor copy of) is finished.  Earlier in the year, plans announced for the completion of the world's tallest (and possibly ugliest building), Sky City in Changsha, in an unbelievable 3 months, were noteworthy, as was the world's largest, the New Century Global Centre in Chengdu.  But for sheer pointlessness the planners of the ghost town of Ordos in Inner Mongolia are the winner in particular because it was also able to be used this year as the world's largest skate park.

Most subsidised sector - Jury remains out on this one.  Railways seem to be the winner with about $104 billion announced for 2013 (following similar amounts in 2012).  Shipbuilding and solar were notable also.

Congratulations to our winners!  They or their representatives can get in touch for some fine baijiu tipple!

(c) Shenzen Standard

Coming up next - some predictions for 2013...!

Lost century?

Back to work
Following a relatively smooth 18th party congress, China Inc has got back to work, albeit with a slightly different vision for more balanced growth.  There was not so much to take away from the various press showpieces, especially since (as is usual), many of the real decisions had been made in the final days leading up to the summit.  A post mortem piece in the Chicago Tribune highlighted the role of retired senior figures still play in the party - there must have been plenty of non-Chinese wondering what Jiang Zemin was doing centre stage at the conference.  The Wen family saga  rolled on, with a second instalment from the New York Times examining the very profitable stake held in insurance blue chip Ping An insurance by Wen's family and the lobbying to Wen on behalf of Ping An in 1999.  Wen's response included being asked to be forgotten.

In the swansong atmosphere it seemed likely that press would look around for an identifiable theme and many outlets settled on comparisons with Japan at its zenith.  One comparison, in a fairly high level of detail for the BBC was quite simply titled "Will China fall flat on its face"!  One of the most concerning points of comparison, which has been noted elsewhere, was the different developmental stage between China and Japan - thanks to its one child policy and it starting form a much lower income base, China has rapidly accelerated the aging of its population to now approaching Japanese levels (though getting a dividend along the way with a relative boost of young workers which is now decelerating) and consequently may grow old before it grows rich. 

More worrying in the immediate term was the surprisingly candid, though balanced piece by Charles Dumas of Lombard Street Research who nicely brought together all of the strands of the Chinese economy which are of concern - debt, stimulus, defaults.  What is particularly worrying is the ease with which, in 2 places, Charles can lead to a conclusion of the occurrence of banking crises - as a matter of course, as inevitable as a policy setting! - without policy change (debt reduction) and with trend growth shifting down to 5 per cent, "a plague of banking crises" could be a result, as could occur if financial liberalisation proceeds.  This is not the story spun by the large financial institutions promoting use of the Chinese currency (the Yuan/Renminbi) in trade settlement and with greater convertibility.

But these two things combined paint a worrying picture.  If China has all of the preconditions of a Japanese style financial collapse - sufficient to bring about the slow burning decline of a "lost decade" or "lost generation" (a term in vogue even in the West as it pushes through austerity, or in the case of the European Union, can-kicking), then could the less favourable demographics, level of social cohesion or uncertain environment make the impact for China worse than Japan?  As it happens there are deep social divisions in China with assertive foreign policy in areas like the South China Sea stirring tensions amongst the population and with reports of inequality and division within Chinese society attracting increasing concern and attention.  The task of the Chinese Communist Party to reinvent itself for slower growth and newer ideologies also complicates things.  Added sleaze and corruption scandals make for grim prospects.

Underlying the resurgence of nationalism is a sense of continuity with the period from the mid-19th century until the mid-20th century, when the sovereignty of the Chinese empire and state was subjugated to foreign powers and influence, starting with the First Opium War until the expulsion of foreigners after the Second World War (the Century of Humiliation).  As commentators have noted, the current administration perpetuates the focus on restoration of international profile and prestige while skipping over the Party's failures. Inability for self-criticism may come to harm the Party and the nation in years to come, and should the effects of China's boom be felt across one or more generations, Chinese may have to face up to another century of lost potential in many years to come.

Cracks appear in the China bull market (c) Caixin