China News - Winter 2007

Mattel apology to China over toy recall

The world's largest toy maker, Mattel has apologised for damaging China's reputation after massive recalls of Chinese made toys. Mattel admitted today that in the majority of cases, flaws in its own designs, were responsible for high levels of lead paint and loose magnets, which prompted safety scares.

Thomas Debrowski, Mattel's executive vice president of world-wide operations told, China's quality watchdog chief, Li Changjiang, 'Mattel takes full responsibility for these recalls and apologises personally to you, the Chinese people and all of our customers who received the toys.' He went on to say, 'But it is important for everyone to understand, that the vast majority of these products that we recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in Chinese manufacturers'. Debrowski realised the damage done to the reputation of Chinese goods, but added that Mattel was committed to manufacturing in China, and was investing $30 million in a Barbie store in Shanghai. (From RTE Business)

Is apology enough?

The Guangzhou Daily has made the point that despite a senior executive of Mattel's apology on 21 September is apology enough? Mattel admitted that they themselves should shoulder all the responsibility of recalling toys with lead paint. Media worldwide were quick to jump on the story, reporting the poor track record of China's product safety standards, and Chinese products now have a poor image internationally and are dubbed 'low quality' items. (From Beijing Review11/10/07)

From the British Press

Beijing airport-British designed terminal

Beijing's capital airport terminal 3, taking up 245 acres (99 hectares), is bigger than all five of Heathrow's terminals combined. Building work started during August 2004 and is expected to be finished by the end of this year-on time and within budget. Compared to Heathrow's terminal 5, Beijing's terminal 3 is twice the size, and was built at half the cost and in a third of the time as the London terminal. The cost of the Norman Foster designed terminal, is estimated to have cost 21 billion yuan (£1.6 billion) compared to the cost (£3.5 billion) of its equivalent designed by Richard Rogers in London. During peak construction periods, 50,000 workers were employed. There are 445 passenger lifts, 1,800 miles of electric cabling and 20,000 suitcases can be processed per hour. With 66 million passengers expected next year, the airport will jump from ninth busiest, to third busiest in the world. Despite this, a working group is searching for a second site, because even this new terminal is believed to be not sufficient to cope with extra air traffic into Beijing in the future. (From The Guardian 13/9/07)

The Chinese know how to save energy

In one sense, the Chinese have a grasp of economic and environmental issues, which the West has never had, namely resource constraint. This is the reason for the single child policy and it is why every accommodation block in the city where I live has an array of solar powered tanks on the roof for generating hot water. In addition all the stairwells have sound activated energy saving light bulbs. Even the primary school age children I teach are all fanatical about turning off unused lights and you see more solar panels, wind turbines and dams than you ever see in Britain.

China continues to grab as many resources from around the world as it can, because if they don't, the West will take them. Developed counties still do not have the slightest intention of adopting low-consumption life styles. They talk about them but do not adopt them.

(From a letter to the Independent, 19/10/07, sent in by Mike Shearing living in Duyun, Guizhou, China)

China allows overseas investment

For the first time, Chinese citizens will be allowed to directly buy overseas securities. This is a pilot project announced last month. This move is seen as a big step towards the integration of Chinese capital markets, with the rest of the world. Initially Chinese investments will be confined to stocks listed in Hong Kong. The government will exempt these trades from the £25,000 limit, the amounts of foreign currency Chinese nationals are allowed to buy or sell each year.

The change will allow more investment opportunities for Chinese people, and also relieve pressure on the yuan to revalue, by allowing more foreign exchange to leave the country and 'promoting basic equilibrium in the international balance of payments'. While Chinese investors will be able to buy all Hong Kong traded stocks, they will be expected to focus on mainland companies, which are traded at an average 50% discount to the mainland. (From China-Britain Business Review September 2007)

US city proposes ban on Chinese goods

Palm Bay in Florida may become the first city in America to ban Chinese products, amid national concern about China's effect on the US economy. The mayor, John Mazziotti, cited the goods questionable quality, safety, human rights, China's pollution record and the loss of American manufacturing jobs. If approved by the city council, the ban would stop the city buying Chinese made produces, costing more than $50 (£25), or those products which have more than half their parts made in China. A product could be bought if it was not available from another country, or if an alternative would cost more than 150% or more than the Chinese version. The ban would not affect private firms or residents who could still buy whatever they wanted.

Mr Mazziotti hopes that other parts of America will follow suit. His sentiments are widely shared in the USA, which increasingly likes to blame China for its economic woes. After the toys containing lead affair, a Gallup poll showed that 65% of Americans were trying to avoid Chinese products. However Sara Bogiorni has Just written a book on how her family boycotted all Chinese products for a whole year. She reported great difficulty finding many items, such as electronic goods, coffee makers, birthday candles and inexpensive sunglasses not made in China.

China exported $288 billion worth of goods to the US, including $65 billion in televisions and other electronics, $21 billion in toys, games and sports equipment and $20 billion in clothes. They accounted for 16% of American imports.

Opponents of the bans on Chinese goods point out that their cheapness has saved American consumers more than $600 billion over the last decade, according to a Morgan Stanley report. (From The Telegraph 29/10/07)

China's inflation at 10-year high Last month, China's inflation rose to 5.6%, the highest in a decade. Almost all of the dramatic increase can be accounted for by a sharp rise in the price of food, which is more important in China than in richer western economies. Food in China is 15.4% more on average than a year ago. The prices of meats especially pork, surged 45.2% and that of eggs rose 30.6%. By contrast, clothing prices and other non-food goods rose by only 0.9%. The Chinese government's chief economist Yao Jingyuan, said inflation would continue to rise over the next two months due to food-price hikes, but he predicted inflation would fall in the final quarter of the year.

The increase in the price of food can be explained by three factors; short-term problems caused by floods, distribution difficulties and an outbreak of (pig) blue ear disease, which depressed agricultural output. Longer term, Chinese inflation will continue to be affected by burgeoning demand and export-led growth. It may also be a result of 'agflation,' as food producers across the world switch to crops used for ethanol and other 'bio-fuels'. The gap between global food inflation and global consumer price inflation is the highest since 2002.

In Beijing, the government is concerned because of China's booming and unbalanced economy. Three increases in interest rates have not cooled output or China's stock markets. China's leaders are urgently trying to curb the sharp rise in food prices that have hit the industrial and rural poor especially hard. Balanced growth between the richer industrialised eastern provinces and the agricultural west, has long been the subject of official attention because of the political strains these inequalities create. (From The Independent 14/8/07)

Solar energy in China

A two-hours bus ride from the Chinese beer city of Tsingtao is the city of Rizhao in Shandong province. The city's name means 'sunshine' is appropriate because 99% of the 3 million residents rely on solar energy for their hot water. This is unique in the world, but the use of solar energy is widespread in China. In fact in 2005, 63.1% of solar heated hot water in the world was located in China. The EU's figure was 12.7%, Japan's 6.0%, India's 1.3%, the USA's 1.8% and Brazil's 1.8%. In Kunming, China, half of the 4.7 million residents use solar water heaters.

The heaters comprise about a dozen parallel glass tubes connected to a large water tank. Sunlight passes through the glass cylinders and heats black absorber tubes inside. The cheapest units cost about $150, and at present there are about 2,000 manufacturers in China. During the Beijing Olympics, 45,000 tubes will provide hot water, heating and possibly power for air conditioning.

Since 2002, all new buildings in Rizhao had facilities for producing solar hot water installed in them, and recently, Jinan, the capital of Shandong province planned to do the same in new construction sites. In April, this year, the vice-minister of China's National Development and Reform Commission said that a similar policy would be announced all over China. The Mayor of Rizhao, Li Zhaoqian, who was recently promoted to city chairman of the National People's Congress, said that, 'More and more cities will adopt our policies'. (From New Scientist 10/11/07)

Prince Charles 'courted' by China's rich

Prince Charles has a reputation for coldness verging on hostility towards the Chinese Communist Party leadership. He did not turn up for the banquets when Jiang Zemin visited in 1999, and when Hu Jintao visited in 2005. In addition in his leaked diary of the Hong Kong handover ceremony, he wrote that the Chinese leaders attending were 'appalling old waxworks'.

However today, he will attend a series of high profile events with the Chinese ambassador, Madam Fu Ying. They will meet some of China's leading businessmen and women in London, including Zhang Yin whose paper recycling operation, has made her one of the world's richest women with a fortune of £5 billion. He will also visit London's Chinatown and in the evening he will accompany Madam Fu to the Royal Festival Hall for the Pearl Foundation Awards, a ceremony to honour Britain's Chinese community.

The drive to repair relations between the prince and Beijing is believed to be the work of Sir Michael Peat, his private secretary and Madam Fu who was partly educated in Britain. One source commented that the British government has a good relationship with China, but the future king does not.

Prince Charles's brother, Andrew is a frequent visitor to China in his duties as Britain's trade envoy. Madam Fu is said to have made it her aim to persuade Prince Charles to make his first visit to China,and if at all possible, to attend the Beijing Olympics next year. (From The Telegraph 1/11/07)

China and US co-operate on product safety

America and China held a summit meeting in Washington recently on product safety. It was described as a 'co-operative effort. China agreed to eradicate the manufacture of toys containing lead and to co-ordinate policies with America on safety standards for exports. Meanwhile America's Senate called in the bosses of Mattel and Toys 'R' Us to discuss the recent recalls of Chinese made toys. (From The Economist 15/9/07)

Transparency International annual Corruption Perceptions Index

The poorest counties tend to be the most corrupt according to Transparency International. New Zealand, Denmark and Finland are the least corrupt. Myanmar and Somalia suffer from the most corruption. Some African countries including Namibia, South Africa and Swaziland improved their scores in the survey. Austria, Bahrain, Jordan and Thailand were reported to have worsened. Britain was rated 12th, the USA 20th, Italy 41st whilst China shared 72nd place along with Brazil, Mexico and India. Amongst those countries below them were Thailand (84th), Russia (143rd) and Iraq (178th). (From The Economist 29/9/07)

Senior leaders punished for corruption

A senior Chinese parliamentarian was executed yesterday for killing his former mistress by planting a bomb in her car. Duan Yihe, 61 was the latest victim of a crackdown on corruption and extramarital affairs. He was a former chairman of the Standing Committee of the Peoples' Congress or parliament of Jinan, the capital of eastern Shandong province and had admitted faking a road accident, helped by his nephew, to eliminate his mistress. Some reports say that his mistress obtained evidence linking him to illegal income, and she may have been blackmailing him. Duan's prosecutors believe he had taken bribes and he was unable to explain assets in excess of 1.3 million yuan-well beyond his income level.

Duan Yihe was the latest in a series of senior officials in China punished for corruption. The finance minister Jin Renquing was demoted last month, after it was revealed he had a secret mistress. Chen Liangyu, Communist party chief in Shanghai was fired after he was found to have raided government funds. Wang Shouye, vice-admiral of the Chinese navy was sentenced to death for accepting up to £8 million in kickbacks. Liu Jinbao, the head of the Bank of China in Hong Kong received the death penalty in 2005 for embezzling £1 million. Lin Longfei, party secretary in Fujian province was sentenced to death for corruption after it was discovered he had invited all 22 of his mistresses to annual banquets. (Source; Times archives; Britannica Book of the Year 2007- From The Times 6/11/07)

Victoria and Albert Museum to host eastern design exhibition

China is now pouring out graphic design, fashion and architecture at a baffling rate and the V & A is staging the first exhibition in the UK to document and capture this creative explosion. The exhibition will open next spring and will include more than 200 items from about 100 designers, nearly all of which have not been seen in Britain before. It will focus on the cities where design is flourishing most, Shanghai, Beijing and Shenzhen.

According to co-curator Zhang Hongxing, Shenzhen is the birthplace of graphic design for China. The Beijing section will offer an opportunity to see plans for the city's transformation before the Olympic games.

In Shanghai the focus is on chic, luxury work in fashion, furniture, ceramics and cosmetics. Co-curator Lauren Parker says that there is 'truly a sense of design frenzy in China right now.' The Guardian is media sponsor for the exhibition. (From The Guardian 3/10/07)

Milk drinking promoted in China

Developing countries, especially China are seeing a boom in dairy products. China's government has started sponsoring school milk programmes. In China, dairy consumption is not traditional; prime minister Wen Jiabao has said that he wants to provide every person with half a litre of milk every day. (From The Sunday Times 5/8/07)

From the Chinese Press

Thirty Chinese companies in the Fortune 500

During 2007, 30 Chinese companies are listed in Fortune Magazine's top 500. This is seven more than in the previous year. Two are Hong Kong based, six are in Taiwan and the 22 other are on the mainland. Sinopec (China Petroleum and Chemical Corporation), ranks 17th, up six places from last year, with annual operating revenue this year of $131.636 billion. It is the largest Chinese company, and is the second in Asia after Toyota. Wal-Mart of the USA is the world's largest with annual operating revenue of $351.139 billion. (From China Today September 2007)

China's forest cover to increase further

Since the commencement of China's compulsory tree planting activities, more than 49.2 billion trees have been planted. China has 2,348 nature reserves making up 15.2% of the land area of China. This forest cover is expected to reach 20% in 2010 and to increase further to 26% in 2050. At this stage the carbon dioxide absorption capability by trees is expected to be 90.4% higher than it was in 1990. (From China Today September 2007)

Beijing has over 3 million cars

New vehicles are being registered in Beijing at the rate of 1,000 per day and there are now about 3 million cars in Beijing. There are 4 million licensed drivers. By the time of the Beijing Olympics there are expected to be 3.3 million on the road in the capital city. (From China Today August 2007)

Suggestions on Water Law

A draft of the Water Pollution Prevention and Control Law, which promises heavier punishments for water polluters and irresponsible officials has been publicised to solicit public opinion. The draft was issued through the General Office of the Standing Committee of the National People's Congress, (NPC) and submitted to the 29th Session of the NPC. The public is invited to comment through the standing committees of provincial or municipal peoples' congresses, the Law Committee of the NPC or the NPC website.

The draft law stipulates the amount of pollutants discharged into water should not exceed limits set by national or local regulations and offenders will be fined 100,000 to 1 million yuan. (From Beijing Review13/9/07)

Chinese peacekeepers arrive home

Crowds greeted a unit of Chinese peacekeepers at Chengdu airport, Sichuan province. The unit was one of three totalling 335 soldiers in medical and engineering teams, which served in Lebanon. Their duties included removing 1,100 mines and other explosives, repairing 15,000 metres of road and attending to over 2,100 local patients. All of the soldiers and officers have been awarded peacekeeping medals by the United Nations. (From Beijing Review 13/9/07)

China's Mr Green names and shames

To show that China is getting serious about bringing to light those companies who flout the water pollution regulations, a number of multinationals were blacklisted recently by a Beijing based non-governmental organisation, the Institute of Public and Environmental Affairs (IPE). The IPE published their 'Chinese Water Pollution Map' on their website In 2006 there were 33 offenders and this rose to nearly 100 by this August. The offending companies included Pepsi-Cola, Samsung, 3M, General Motors, Kentucky Fried Chicken, Pizza Hut, Dupont, Degussa and Ciba.

Mr Ma Jun, IPE's director said they are trying to raise public awareness of the severe increase in environmental degradation. He said that the parent companies are often models of environmental protection standards at home, but some seem to have slackened their efforts here in China. He believes that weak law enforcement and supervision, have left loopholes for offenders to exploit. The purpose of publishing their names is to pressure them into taking more responsibility for environmental protection.

At the end of 2006, Mr Ma was awarded the 'Green Chinese' title, and was also named as one of the top 100 most influential persons in the world by Time Magazine. (From Beijing Review 30/8/07)

Renewable energy in China

At least 20% of the total electricity needed by the Beijing Olympic Games in 2008 will be from wind turbines situated hundreds of miles to the north of the city. From September 1, the State Electricity Regulatory Commission required that power distributors must purchase electricity generated by renewable sources.

On 4th September, a medium and long-term plan for the use of renewable energy in China was launched. Under this plan, China aims to raise the share of energy from renewable sources to 10% by 2010. In 2005 the figure was 7.5%. By the year 2020 the target will be 15%. The main sources of renewable electricity in China are hydro, biomass, wind and solar. In the year 2010, the amounts of electricity generated from these sources are expected to be ; hydro 190 gw (gigawatts), biomass 5.5 gw, wind 5 gw and solar 300 mw. These amounts are equivalent to the burning of 270 million tonnes of coal. (From Beijing Revue 13/9/07)

Rural officials disciplined

From 2003 to June of this year, 207,214 officials in rural China were punished for breaking laws and regulations, according to the Ministry of Supervision and the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China. In the first six months of 2007 alone 671 officials were charged with criminal offences, and 10,822 were disciplined. The charges included misusing farm subsides, imposing random fines, and unfair charges on rural households, creating land use contracts that go against farmers' interests and overspending on infrastructure development projects. The CCDI said that it had launched several campaigns during the past four years to wipe out these offences and clean up administration in the countryside.

As part of these efforts, accounting management has been handed over by village committees to independent accounting service centres to avoid malpractice in most parts of the country. (From Beijing Review 11/10/07)

Social security expands in China

Ten years ago a basic living guarantee system was set up for the low-income urban population. Under this system a family whose income is lower than the basic living expenses measured and published by the local government, can apply for a basic living allowance. Up to now this allowance was only available to urban dwellers, but by the end of this year, is expected to be available to China's entire rural population-800 million people. Farmers on low incomes will be entitled to the basic living allowance that covers the gap between actual earnings and basic life expenses. To facilitate the delivery of the basic living allowance to rural families, many local governments have opened bank accounts for disadvantaged families and put money into these accounts every month. (From Beijing Revue 20/9/07)

New air routes to China

Air China is to start new international flights to Toronto, Rome and 10 other European and North American cities by the end of 2009. New routes next year will see flights from Beijing to Berlin, Istanbul and Warsaw. China Southern Airlines will introduce five new services before the end of 2009, including flights to Newark (New Jersey) and Moscow. In all, Chinese airlines plan 29 new routes to Europe and North America by the end of 2009 as they attempt to end losses by winning new market shares. (From Beijing Review 20/9/07)

China to apply for GPA entry

China is expected to start negotiations for entry into the World Trade Organisation (WTO) Government Procurement Agreement (GPA). A proposal will be submitted on the opening of the government procurement market by the end of 2007. In 2003, the total size of China's government procurement market was 165.9 billion yuan. By 2006, this number had doubled and it now exceeds 350 billion yuan (about £24 billion). It is a WTO requirement that members open up their domestic government procurement market, and reform government procurement systems according to the terms of the GPA. On the basis of meeting the GPA terms on energy-saving and environmentally friendly products, China will further refine its procurement policy and methods, encouraging innovation in these areas. (From China Today August 2007)

Kaiping watchtower houses-World Heritage

Kaiping (Hoiping in Cantonese) watchtower houses have become a hot tourist attraction since being put on the UNESCO World Heritage list last year. There are 1,833 of these fortress-fashioned residences scattered around 15 towns in the county of Kaiping, Guangdong province, about 70 miles south-west of Guangzhou. Kaiping is one of the 'Four Counties' (See Yep in Cantonese) from where many of the earlier overseas Chinese in the USA, Europe and many other parts of the world originated.

These watchtowers are a spectacular sight set amid a background of lush checkered farmland. The oldest were built in the 17th century but those in the best condition, mostly date from the 19th century. They are built in a fusion of foreign and native architectural designs, including Greek, Roman, Gothic, Baroque and Islamic.

These watchtowers houses, or diaolou in Mandarin pinyin, were built with funds from wealthy overseas Chinese. The Kaiping region is hometown to over 750,000 Chinese expatriates in 67 countries of the world. In the mid 1800s over 100,000 men from Kaiping and neighbouring areas went to America, Canada, Australia and other places in the world to work in railway construction, gold mining and other labouring jobs.

When their contacts expired, many stayed on in their host countries, and some became wealthy enough to buy land and build houses for themselves and their families in China. Their families were often targets of robbers, bandits and kidnappers and hence the need to build diaolou, watchtower houses. The diaolou incorporate military defence features, such as small windows, massive gates, thick walls and turrets.

In Kaiping, the areas around Chikan, Baihe and Xiangang have the largest number of watchtower houses. (From China Today October 2007)

China may bid for Soccer World Cup

The vice-president of the Chinese Football Association (CFA), Xie Yalong has hinted that China may bid for the hosting of the Soccer World Cup in 2018. The bidding process will start in 2010, and so there is enough time. Mr Xie was speaking at a FIFA press conference in Shanghai. The FIFA president Sepp Blatter has previously expressed his hope, that the tournament will be held in China. Mr Blatter praised China's organisation of the Women's Soccer World Cup. Mr Xie said that he appreciated Mr Blatter's recognition and support and also said that the CFA is studying the bidding process details with FIFA. China is considering holding an international men's soccer tournament, so it can improve facilities and put forward a stronger bid. (From China Daily 1/10/07)

China Now in the UK

The biggest festival of Chinese culture in the UK, is to be launched during Chinese New Year next year. It will include more than 800 events and continue to the end of July 2008 and the opening of the Beijing Olympics. The festivals chief executive, Simon Heale said that no one else has arranged a festival quite like this in the UK before. It will be across the country and not just in London, and will cost more than £50 million.

The festival is organised by an independently funded, non-profit making institution and is supported by the Chinese and UK business communities. It is recognised by the governments of the UK and China. Wen Jiabao, the Chinese prime minister has said that we must work together to make the festival a success. Gordon Brown said that he welcomed the festival, as a valuable and exciting idea, to help bring the two countries together, and further strengthen their relationship.

Mr Heale who is also the chief executive of the London Metal Exchange Ltd, said that the festival would focus on contemporary Chinese society and culture whilst offering an insight into its history. It will comprise art, design, cuisine, science, education and sport. The highlights of the festival, will include a six-month exhibition displaying the work of Chinese and international designers at the Victoria and Albert Museum staring next March, and a car rally, London to Beijing in which 20 cars will make the journey between the two cities, staring from London in four weeks. (From China Daily26/10/07)

China not a main source of motion picture piracy

A Motion Picture Association study has found that whilst China and other Asian counties, are frequently blamed for pirating films and other intellectual property, they are far from the main culprits.

Hollywood lost $6.1 billion in revenue during 2005 and this can be broken down into estimates of revenues lost as follows;

Revenue lost in the USA $1.3 billion.

Revenue lost in Mexico, France and Britain $1.2 billion.

Revenue lost in Asia-Pacific (excluding China) $1.2 billion.

Revenue lost in China $0.24 billion.

(From Newsweek 3/12/07), quoting information from different sources)

Car drivers set to benefit from law change

Law makers are considering revising the road safety law to clarify the respective responsibilities of drivers and pedestrians involved in traffic accidents. The draft amendment tabled at the Standing Committee of the National People's Congress for its first review yesterday, suggested that car drivers who are found to be blameless should be liable for no more than 10% of the total compensation payment. It also suggested they should pay 40% if they are found to have had a 'minor' responsibility for the accident, 60% for 'half' responsibility and 80% for 'major' responsibility.

The existing law holds motorists fully responsible for all accidents involving pedestrians or non-motorised vehicles, regardless of who is to blame. He or she, can only escape total responsibility if it can be proved that they attempted to avoid a collision and that the other party broke a traffic rule. (From China Daily 26/10/07)

Sino File is compiled by Walter Fung with some input for From the Chinese Press by Teresa Ray.

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