March 25:
Some Chinese executives have begun lining up behind Washington’s call for a revaluation of China’s currency, the yuan. Lenovo CEO Yang Yuanqing says currency appreciation would boost Chinese consumers’ purchasing power; Qin Xiao, Chairman of China Merchant’s Bank, said an end to the yuan’s peg to the dollar would let lenders set market-based interest rates; Chen Daifu, chairman of Hunan Lengshujiang Iron & Steel Group, says a stronger yuan would cut his company’s import costs. “We need to emphasize the benefit’s of yuan gains,” Zhang Yanling, vice-president of the Bank of China, the nation’s biggest currency lender, said in comments carried by Businessweek. China Eastern Airlines, Beijing’s second largest carrier, would see 280 million yuan ($41 million) in profits for every 1% annual yuan appreciation thanks to its dollar denominated debt. Other Chinese companies with dollar exposure would also benefit.
[Editor’s Note: These comments contradict Premier Wen Jiabao’s March 14th statement that said criticism of Beijing’s exchange rate regime amounted to protectionism. China has kept the yuan at 6.8 to the dollar since July 2008 but contracts linked to the currency’s future value predict it will appreciate in July. Meanwhile, China’s dollar purchases to maintain the peg have driven its dollar reserves to $2.4 trillion and flooded the financial system with yuan.]
China is implementing policies to boost domestic competitiveness at the expense of foreign firms, Businessweek reports. Billions in government purchases will be made in accordance with an “indigenous innovation” law (See CRM #799) that favors local technology in computers, software, and energy. It could cost GE, SAP, HP, Dell and Microsoft millions in contracts. A new patent law forces foreign software and drug makers to register all new innovations developed in their mainland labs, giving Beijing bureaucrats access to their trade secrets. China also inks 10,000 new standards each year, more than any other country, with some intentionally written to keep foreigners out. Licensing laws for foreign banks and insurers, for instance, only allow them to apply to open one outlet at a time and each application takes 18 months.
March 31:
Local residents and firemen have discovered the bodies of nearly two dozen dead babies – mostly baby girls – many with hospital tabs, discarded in a river in Shandong’s capital Jining. Reports suggested the girls had been discarded because parents wanted to try for a male child within the one-child system. The Beijing News reported the bodies may have been dumped by cleaning staff from local hospitals after abortions and induced labor. These fetuses are treated as "medical waste" by hospitals, it said. The Jining Municipal Health Bureau apologized for ineffective supervision and suspended some hospital staff, the Times of India reports.
April 2:
The United States has suspended the delivery of 200 surplus trucks and trailers to Cambodia in response to the Southeast Asian nation’s decision to deport 20 Uighur refugees to China. Last December the Uighur refugees arrived in Cambodia via Vietnam and were placed under the supervision of the UN High Commissioner for Refugees until Cambodian authorities deported them on the eve of the arrival of Vice-President Xi Jinping in Phnom Penh. During the visit, Xi pledged $1.2 billion in grants and loans to Cambodia. John Johnson, a U.S. Embassy spokesman in Cambodia said Washington was "deeply disturbed" that the Cambodian government, at China's request, violated its international obligations by forcibly repatriating the Uighurs, Japan’s Kyodo News Agency reports.
April 3:
While in Hong Kong, Yu Jianrong, a professor from the Chinese Academy of Social Sciences, produced an internal government document showing that local counties paid bribes to officials in the Public Security Ministry to delete the complaint records of dozens of petitioners. Every year millions of villagers participate in a "cat-and-mouse game" between the central government and local officials to seek redress from Beijing for local grievances. “There are many interception companies who specialize in helping local government liaison offices in Beijing stop petitioners,” Yu said. Employees pretend to be a petitioner and if someone mentions they are from Hunan, for instance, the staffer informs the Hunan provincial liaison office. Yu said the interception companies' staff initiates confrontations with petitioners because “they can identify your township from your accent." One province’s “county-level politics and law committee” paid 8,000 yuan to find an important petitioner, the South China Morning Post reports.