Archive for the 'SOE' Category

Interview with China’s most incredible holdout

March 22, 2007

This is a follow up on my previous posts with regards to “China’s most incredible holdout”, where a housing dispute led to the developer digging a moat around someone’s house who refused to move. This post is the translation of an interview with the owner of this “nailhouse” on an island, 40 year old Mrs. Wuping.

According to the interview, all Mrs. Wuping wanted was a space of comparable footage in the new building but the developer just wanted to give her a small sum of money. The local press was also forbidden to report on the story and the developer worked with the local government and courts to coerce Mrs. Wuping.

In this long interview you get an inside look into the local politics of relocation and the kind of difficulties people face if they chose to fight the developer.

You can also watch a CCTV legal society TV program which includes interviews with the developer and Mrs. Wuping and a number of Chongqing residents. Link to video HERE.

Translated from Chinese, original can be found here.
Another interview from a Beijing newpaper 新京报 here

Mrs. WupingOn March 21st reported that “China’s Most Incredible Holdout” which caused a huge stir on the Internet will soon disappear. Yesterday Chongqing Jiulong Hill District court held a hearing and ruled that the owner of the property (the holdout) has until the 22nd to tear down the building. Chongqing Court decides “Histories most incredible holdout” must relocate in three days became one of today’s hot topics on web forums throughout china. The following is the transcript of a telephone interview with the household’s owner, Mrs. Wuping

Facing the notification: I don’t have the power to appeal

Host: We saw the Chongqing courts decision on the Internet, can you explain to us in simple terms what the situation is?

Wuping: Among the residents moving, I am the largest private property owner, furthermore you can basically say I am the only one who has complete papers, such as a property rights land right certificates, they both clearly indicated that it is a building zoned for business. At that time I had just finished renovations, and they (the developer) said they had to tear everything down and people had to be relocated, as a result this was really damaging for us. According to my property right certificate, I am clearly in ownership of 219 square meters, so for this use it should be returned to me.

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#$^%! you China Mobile!

February 23, 2007

As anyone who has ever owned a cell phone in china knows, dealing with the big telecom providers can be a pain; their customer service usually consists of answers such as “我不太清楚”(I’m not really sure) or “很抱歉我们的系统正在升级中”(sorry our system is currently undergoing an upgrade.)

When I was in Beijing trying to buy a new SIM card that would allow my brand new Treo 650 connect to the Internet, I was told repeatedly by China Mobile reps that the M-Zone or 动感地带 plan which had the cheapest online rates, was currently unavailable to new customers due a system upgrade. I was told that my only option was to buy the GoTone cell phone plan, which was far more expensive than the MZone plan. Although I am fairly sure they were just trying to get me to fork out more money!

But, thanks to the efforts of Ms. Li and the dissatisfaction of most likely a hundred million or so Chinese, there may be hope that this kind of lousy service could be fixed! But wait, there are only 2 or 3 State Owned telecom providers in China (Rumor has it that taizi or children of high CCP officials own and control these companies) that have an absolute monopoly over the market, so in reality nothing is going to happen unless there is some sort of privatization.

I translated this from chinese, original can be found here

In a first, China Mobile is Sued for Violation of “Communications Freedom”

Legal Daily
by Wang Xiao Yan

Without being notified, China Mobile unilaterally suspended Beijing resident Ms. Li’s cell phone service for over 9 days. After complaining without avail, Ms. Li thus took China Mobile to court for violating her right to telecommunications freedom. Beijing City DongCheng District People’s Court has already decided to hear this case in court.

On 1/31/2007, Ms. Li realized that her cell phone was unable to make calls, the screen continuously displayed the characters for “currently searching,” even switching cell phones didn’t work. Realizing it might not be a problem with her cell phone, Ms. Li immediately went to a China Mobile sales hall for consultation. The salesperson subsequently told Ms. Li that there was no problem with her mobile card, but due to current upgrades in their system, her signal had been stopped. The sales agent further explained that they didn’t know when the system upgrade would be complete, so the only way for Ms. Li to resume her cell phone service would be to change SIM cards. But when changing cards, Ms. Li was informed that she had to pay a 10 RMB card change fee. Unable to come to an agreement, Ms. Li dialed 10086 (China Mobile service hotline). Finally the telephone operator indicated that she could change her card for free, and stated that she would receive 30 RMB of free service, but expressed that this was not a compensation for her 9 days without service.

Ms. Li was not satisfied with the 30 RMB reparations for her discontinued service. “Due to being unable to use a cell phone for nine entire days, contacting many relatives and friends was difficult, it even created misunderstanding, yet the provider didn’t provide any reasonable explanation or notification, and when I dealt with them I felt China Mobile was very arrogant, so I believe they violated my right of to communications freedom!

On 2/5/07 Ms. Li submitted her case to court, demanding China Mobile assume responsibility for violating her right to communications freedom, compensate for all sorts of loss, and make a formal apology. But when Ms. Li’s lawyer Kou MingGuo went to the court to submit the suit, the court explained to him the it could not accept this case because “communication freedom” was not within the realm of the courts, and was informed that only if the plaintiff changed the charges to “telecom contract dispute” would they put the case on file. After changing the charges, the court formally accepted the case.

But after changing the main charges in the case, the plaintiffs fight for the upholding of the right of “communications freedom” will create definite difficulty in the courts. Legal representative Kou Mingguo expressed they will not change the original lawsuit requests, “We want to express what our goals are; that is our lawsuit is not only asking for compensation for damages, more importantly, it shows how we take seriously the communications rights of small and weak citizens, and their dissatisfaction and protest with regards to how the accused uses its monopoly status to disregard the rights and interests of consumers.”

China’s non-market economy, a Chinese perspective

February 20, 2007

This is a very interesting editorial that was featured in 南方日报 Southern Daily a few days ago detailing how private industry in China has been cut out by large SOE’s due to the enormous advatage their government connections have given them, most important being regulatory power over the market.

I have translated this from Chinese, original can be found Here

China’s Biggest Economic Threat Has Already Emerged

Ye Tan, Southern Daily

In the past few days, like a shooting star that is gone in a flash, the immeasurable amount of young female powerful elite has aroused people’s intense interest in the bagua or balance of finance and economic problems. Strip the cover off these ornamental surface issues, and the story behind the news is a refraction of private enterprises frantic inability to find a return on investment. Another just as important piece of news that lightly glided out of people’s vision: in 2006 State Owned Enterprise (SOE) economic performance increased by 18.2%, absolute profit rose, but relative decline, after experiencing the high growth of 2003 and 2004, centrally controlled SOE’s profit rate of increase declined by over 5%, central SOE’s have entered a declining passageway, the realization of over capacity and rampant production has taken a step closer to reality.

Private capital is unable to find a channel of investment, the commanding height of SOE’s monopolized profits are entering a decline, both sides folded together are the biggest threat to China’s economy. A key factor has been that until now, China has been unable to devise a way to efficiently use it’s resources. With the lack of high-efficiency enterprises, which are propped up by the internal demands of the market, this could imply the development of Chinese enterprises is unsustainable.

The worry of China’s SOE monopolized profits is being completely replaced by an even deeper worry: if the production of these high-grade, resource consuming gigantic enterprises see a decline in production, or if medium and small sized companies are unable to absorb the supply in raw materials provided by big SOE’s in China, what kind of economic situation will emerge?

This gradually recessive danger is emerging on the surface. The newest data from the State Statistics Department show that in 2006, raw materials and fuel wholesale purchasing prices increased by 6%, and that factory pricing of industrial products only increased by 3%. China’s capacity of production is in serious excess. The previous figures reflect the reality that the chain of raw materials and finished products between the upper and lower reaches of industry has become disconnected. The upper reaches of industry depend on price fixing power in order to increase production, and when they actively seek to make people admire their returns on investment, the lower reaches of the economy is left to do nothing but piece together a fight for survival. On the other hand, due to the decrease in profits for large-scale SOE’s, whose profits come from bank loans and the capital market, both which are almost completely owned by large SOE’s, we may yet see another push of state assets being shifted to the capital market.

Recently, this overcapacity has existed due to two main characteristics: the first is much of this phenomena been seen in the capital-intensive heavy chemical industry, for example: steel, electric power, petrochemicals, auto industry and construction materials etc. Secondly, government investment or government leadership takes up a considerable portion; the majority of industries experiencing overcapacity are solely dominated by large SOE’s. This reality warns us that the intentional and controversial bias in planning the allocation of resources has not achieved much success. Special privileged SOE.s in order to construct a high rate of return on investment, contrary to planning can create a devastating aftereffect.

Hong Kong Chinese University president Mr Liu Zunyi in the past pointed out that macro-economic in-stability is because of the bankruptcy of large scale enterprises, their failure will very quickly influence other companies. These failed companies faced with a heavy burden, will drag suppliers with them, and then suppliers will pull in other companies. This chain of events will ultimately lead to the closing of the banks, thus leading to a full-scale economic crisis. Even if it doesn’t lead to a full scale crisis, the dramatic reduction in costs by large companies in the heavy chemical and natural resources industries will still be hard for people to bear; banks, tax revenue, employment and the stability of society will all be seriously effected.

Both upper and lower enterprises can create a healthy industry chain through the means of implementing market adjustment to the pricing system, thus reaching a rough balance in supply and demand. Yet, due to the systematic differences in China’s upper and lower reaches of it’s economy, in reality what exists is a system of plundering, oppression and exploitation, leaving insufficient small companies with a thorough loss of space for making a profit. Today, with private capital losing space for survival, it is also time for the glacier like big companies to melt away.

This model will not only harm private industry concentrated at the lower reaches of the economy, but will sooner or later lead them to falsely accuse big industry for not allowing the enterprising of private companies, blind production, and the loss of global market price fixing ability. Increasing domestic demands and exports in order to solve this problem is not a realistic solution, expanding internal demand over the years has not seen significant progress: China’s trade surplus has already become the biggest drawback of economic development, leading to conflict at every turn. So-called expanding exports are no more than a meaningless term. The first step in solving these hard problems is immediately cutting preferential treatment for heavy industry. These man made special privileged companies simply in the pursuit of quick profits, are endangering China’s long-term economic security.

MIT processor Huang Yasheng’s research has indicated that China’s small and medium sized entrepreneurs after the golden boom of the 1980’s and early 1990’s have sunk into decline. The scope of China’s private industry is still incomparable to the peak time of growth for India’s private industry at the beginning of the 1980’s. (It created large barriers to limit the nationalization of banks, restriction of foreign investment, and the heavy hindrance of private enterprise.) The exhaustion of China’s private companies can be seen everywhere. Private industry is still unable to transgress the market entry threshold, large declining private companies have been bought out by SOE’s, investment faces obstructed channels, entrepreneurs are often chased off by the government, thus forth large private entrepreneurs seek the refuge with SOE’s, using a “Mixed economic model” to achieve success. These conditions without exception reflect the helplessness of private investment. Central SOE decrease in profits, represent private investments lack of a fair competitive platform, these hidden dangers are already unable to be covered up.

We almost always seem to fall into a state of hallucination upon hearing the cheery figures of China’s SOE’s, but their profit sources and investment return should warn us, this hallucination cant sustain for long, as this non-market economy which is the biggest threat to China, has already begun to emerge.