On the night of April 30 in three cities around Taiwan, four death row prisoners were quietly taken from their cells and given a powerful anesthetic before being shot in the back, the island’s standard form of execution. Their death warrants had been signed two days before by the island’s new “Minister of Justice” Tseng Yung-fu, ending a four-year moratorium on State executions. An inquiry launched by Kuomintang (KMT) Legislator Wu Yu-sheng into the validity of the moratorium triggered a fierce debate on the death penalty, an issue avoided by politicians since the island’s last two executions were carried out in 2005. Former “Minister of Justice” Wang Ching-feng, previously a human rights lawyer and an outspoken abolitionist, said she would “rather resign than sign someone’s death warrant.” Citing her Buddhist beliefs as the reason for her objections, Wang added “If these convicts were offered an opportunity to reform themselves, I would be happy to be executed in their stead.” However, Wang’s viewpoint proved unpopular with KMT colleagues. On March 11, two days after the publication of her article Reasons and Forgiveness: Suspending the Executions, Wang was forced to resign, with her replacement Tseng Yung-fu pledging to resolve the death penalty issue once and for all. Despite the reshuffle, an anti-abolition demonstration by more than 1,000 people, including the families of murder victims, was held in Taipei on March 27. Under increased public pressure, Tseng signed death warrants for four convicted murderers one month later. Despite his anti-abolitionist stance, Legislator Wu expressed regret at the move, arguing that the executions merely resulted in “another four families in agony.” Moratorium The number of executions carried out in Taiwan peaked in the 1980s and early 1990s after the lifting of martial law saw a rise in the crime rate. 78 people were executed in 1990 alone under the Act for the Control and Punishment of Banditry, a piece of catch-all legislation against violent crime that was finally rescinded in 2002. Since then, the number of executions carried out on the island have been dropping year on year. Yet, doubts over the objectivity of Taiwan’s judiciary have meant that all death sentences meted out in the court system remain closely scrutinized, with a number of controversial convictions shaking public faith in the justice system. In one case, a couple living in Hsichih, a town near Taipei were robbed and brutally murdered in their apartment in 1991. Police later arrested their neighbor Wang Wen-hsiao on suspicion of murder after a bloody fingerprint was found at the crime scene. Police later arrested three other men who Wang, allegedly under torture, named as his accomplices. Wang, who was serving in the military at the time of his arrest, was court-martialed and executed in 1992, with the three suspected accomplices sentenced to death in a 1995 ruling by Taiwan’s Supreme Court. However, the then “Minister of Justice” Ma Ying-jeou, now “president” of Taiwan, refused to sign the death warrants and ordered a retrial. Discrepancies in the Supreme Court’s case were revealed, including a lack of conclusive evidence and the submission of statements allegedly obtained under torture. The case went on to be publicized by Amnesty International, resulting in the Supreme Court verdict being overturned in 2003. In 2007, however, Taiwan’s Supreme Court once again sentenced the men to death, though none of the three men were re-arrested, leaving the case unresolved until today. In another high-profile case, former policeman Lu Cheng was charged with the 1997 kidnapping and murder of two former classmates, and was sentenced to death in 2000. His family launched an appeal criticizing the police’s alleged use of torture to extract Lu’s confession as well as the failure of the Supreme Court to sufficiently investigate his stated alibi. Despite the controversy surrounding his conviction, Lu was executed in September that year, resulting in continued protests by his family and their supporters. Both cases have had repercussions throughout Taiwan’s judicial system. The then “Minister of Justice” Chen Ding-nan, the man responsible for signing Lu Cheng’s death warrant, later announced his intention to abolish the death penalty, a move supported by the now-disgraced former “President” Chen Shui-bian. However, abolition required a ruling from the Legislative Yuan (Taiwan’s “legislature”), at the time dominated by an opposition coalition of the pro-death penalty KMT and People First parties. Faced with conservative opposition, the DPP government only managed to secure a temporary moratorium on the signing of death warrants except in extreme cases. When the KMT returned to power in 2008, the new “President” Ma Ying-jeou appointed Wang Ching-feng as “Minister of Justice”. Wang’s personal opposition to the death penalty resulted in a hesitancy to recommence executions, which resulted in a total of 44 death row prisoners held in Taiwan’s jails by March 2010. Public Opinion Many in Taiwan remember the “white terror” of martial law between 1949 and 1987, during which, according to a recent report by Taiwan’s Executive Yuan, around 140,000 Taiwanese were imprisoned or executed due to their real or perceived opposition to the KMT government. Capital punishment, frequently used to suppress political dissent, is seen by liberals as a relic of Chiang Kai-shek’s dictatorship, and the DPP showed abolitionist sympathies prior to being elected in 2000. However, public support for the death penalty in the case of violent crimes such as murder and kidnapping remains strong, backed by traditionalists demanding “an eye for an eye.” Pai Ping-ping, a former entertainer whose teenage daughter was kidnapped and murdered in 1997, is one of the most vocal advocates of the death penalty. In 1998, Pai founded pressure group The Swallow Foundation to lobby against the abolition of capital punishment as well as to provide legal support to victims of violent crime. When media reports early this year indicated that Taiwan’s “Ministry of Justice” had tabled plans for a bill abolishing capital punishment by the end of 2011, Pai told media that she would commit public seppuku, ritual disembowelment, if such a bill was ever passed. During Ma Ying-jeou’s tenure as “Minister of Justice” in the 1990s, a government opinion poll indicated that more than 70 percent of citizens supported the continued use of capital punishment as a deterrent to violent criminals. However, more than 60 percent agreed that a convict’s sentence should be commuted to life imprisonment if they showed genuine remorse for their crimes. In February, Taiwan’s Ministry of Justice published a series of opinion polls on the death penalty carried out between 1993 and 2008, which suggested a consistent 70 percent public approval rating for the death penalty. However, the data also indicated increased support for life imprisonment without parole as a viable alternative to execution. Moreover, official figures indicate that the murder rate on the island decreased 30 percent during the four-year moratorium on executions, undermining popular arguments that the abolition of capital punishment would lead to a rise in the crime rate. However, with politicians unwilling to be drawn into a public debate on this sensitive issue, the lives of Taiwan’s remaining 40 death row inmates still hang in the balance.

Kneeling as a gesture of submission and respect has a long history in China, one that continues to this day. In more recent times, to get down on one’s knees is seen as a clear indication of gratitude or desperation. Collective kneeling, however, remains the near exclusive preserve of the former imperial court, and is rarely seen in public. So, when pictures surfaced online of hundreds of villagers kneeling in front of a government building in Zhuanghe City in the northeastern province of Liaoning, the public reaction was overwhelming. The villagers, who were from the nearby village of Haiyang, had amassed in protest against the forced requisitioning of farm land by the local government. According to the villagers, the local government had failed to provide adequate information regarding the size of the land area to be requisitioned. Many also claimed that compensation was purposely withheld from them by local officials. “All we want to know is a simple figure. Just tell us how much compensation we will receive for our village, and we will leave right away,” said an unnamed villager during an interview with the China Business Daily, on April 13. According to reports, the protest, which lasted several days, had begun as a response to the authorities’ refusal to grant villagers access to information regarding the requisition of their land. In desperation, as many as 1,500 villagers traveled to the city government building on April 8, where they had hoped to take their compliant directly to the mayor. “For no obvious reason, people started to kneel down, and we all followed suit,” said a villager. However, Sun Ming, the mayor of Zhuanghe, refused to meet the protestors, despite their refusal to leave. Shame or Strength? While condemning the local government over its alleged corruption and mishandling of the protest, many people also took aim at the villagers for their apparent “weak knees” and “contemptible voluntary submission.” A China Youth commentator went further still, criticizing local villagers for their deeply embedded sense of servitude. According to the commentator, the villagers had been “poisoned by ancient tales of legendary upright officials, who punished bullies, and dismissed corrupt officials.” Take for example an archetypal scene from traditional Chinese opera. Here, injustice is only resolved after it has been brought to the attention of a powerful and virtuous official. In such a scene, attention is typically sought through brave, albeit deferent actions such as kneeling in front of the official’s carriage during a procession through the local town. After an initial bout of confusion, an investigation is opened, the bad guys are punished and the wrongs redressed. “By getting down on their knees, the villagers actually abandoned their dignity and their rights,” wrote the China Youth commentator. “In doing so, they were in fact begging the officials for pity, rather than demanding that their rights be protected.” But others argued that kneeling down before the local officials was a way of embarrassing them, and therefore a useful means of preventing a possible crackdown. Professor Liang Jianbing from the Law School of Liaoning Normal University called the villagers’ kneeling protest an example of “innovative public demonstration with Chinese characteristics.” According to Liang, once protests fail to achieve their desired response, there is an overwhelming tendency to resort to violence. However, this immediately plays into the hands of the local government. By kneeling down, the Haiyang villagers cleverly adopted a purposely weak position, forcing the local government into the role of the aggressor. “ On the one hand, it prevented the protest from turning violent. On the other hand, it left no justification for local authorities to crack down on the protest,” Liang wrote. “It is an admirable example of grassroots political savvy.” As reports of the protest began to circulate, public pressure mounted, culminating in the dismissal of Sun Ming, the major of Zhuanghe, on April 24 by the Dalian City government, due to his “mishandling of the people’s petition.” According to reports, on April 20, the Zhuanghe local government issued an open letter addressed to all Haiyang villagers, offering detailed information over the proposed land requisition. The letter outlined plans to requisition 1,617 mu (266 acres) of land, with a total compensation of 89.22 million yuan (US$13.1 million). The Ministry of Land and Resources also announced that it had sent an inspection team to Zhuanghe City to monitor the investigation into the villagers’ complaints. However, this apparently happy ending soon sparked a series of copycat protests. On April 22, another kneeling protest occurred outside a government building in Huazhou city, in Guangdong Province, this time attracting hundreds of kneeling villagers in a protest over a land dispute. Unfortunately, this kneeling failed to create the intended impact. It is reported that one official responded to the protestors that “kneeling is useless here in Huazhou,” and despite significant media attention, their complaints remain unsolved. For civil activists, the kneeling protest, despite its accidental success, remains a sign of the power imbalance between the authorities and the people. “What we really need is not a sensational story,” commentated Cao Lin from the Beijing News, “but institutionalized and replicable justice.”

Following the earthquake that rocked the remote province of Qinghai on April 14 (See: Between Life and Death, last issue), the central government dispatched a colossal emergency response team to spearhead the relief effort. Unlike the familiar livery of the Wenchuan quake two years ago, this time, splashes of crimson clashed with the fluorescent orange and camouflage Gore-Tex of government relief workers. These were the uniforms of a vast local rescue force which flooded to the site to search for trapped survivors, to oversee relief efforts, to mourn for the deceased and to console the survivors, the uniforms of the region’s Tibetan Buddhist monks. Immediately after the quake hit Yushu, monks swarmed from their damaged monasteries to search for survivors. Gyegu Monastery, just north of the quake’s epicenter, was the first to galvanize such a relief effort. Having escaped the worst of the quake by taking refuge in their solidly-built sutra hall, Gyegu’s 400 monks used tools and their bare hands to help local residents dig survivors out of the rubble that had once been their town. According to the Ethnic and Religious Affairs Commission of Qinghai Province, more than 2,000 monks from the 23 temples surrounding Yushu joined the relief effort, saving over 600 people from the wreckage. Meanwhile, monks in neighboring Sichuan, Gansu and Tibet also made long overland journeys to offer support to government rescue workers and local residents. Even before government relief workers had arrived in Yushu, a city located on a high plateau almost 1,000 miles from Beijing, an estimated total of 40,000 monks had mobilized themselves to help relief efforts. Tibetan lamas, coming from the same ethnic group as many of the victims, were invaluable in the quake-hit areas. Far more familiar to Qinghai’s population than police officers and government officials, these important social figures were able to act as interpreters between Tibetan-speaking victims and Mandarin-speaking rescue workers, offering traditional medical treatments to the injured. Their large numbers and ubiquitous presence throughout the quake zone also helped government personnel in the distribution of relief packages, as the presence of the highly respected monks discouraged looters. “When altitude sickness and language barriers hindered progress, these 40,000 monks played an extraordinarily important role,” Liang Wendao, a renowned Chinese writer, commented in the newspaper Southern Weekend. He asserted that the monks, who represented traditional customs and social order, were one of the key factors in the success of the relief effort. The sheer scale of the lamas’ involvement in the rescue operation eventually attracted the attention of the media. Five days after the earthquake, two monks appeared on China Central Television (CCTV) reporting on their distribution of dried cow dung, used as fuel in Tibetan areas, at Gesar Square in central Gyegu, the town worst hit by the quake. CCTV went on to report that monks from nearby temples delivered 25 trucks of food and fuel daily, donating their own food and fuel reserves to the relief effort despite the collapse of many local temples. “The cow dung the lamas gave us will last two days,” a victim told CCTV. “It is the only fuel we have now that our electricity and gas have been cut off.” Premier Wen Jiabao, during his highly publicized inspection tour of the earthquake-hit areas, met with lamas in Yushu on April 16, praising them for “rescuing and consoling victims, and helping maintain social order.” The news and related pictures were published on the English-language websites of the two biggest State media organizations, Xinhua News Agency and the website of the People’s Daily. When recue work gradually shifted from material aid to offering emotional and spiritual support to bereaved locals, Tibetan Buddhist monks, widely respected in Qinghai and in Yushu in particular, where more than 90 percent of the city’s 350,000 residents are ethnic Tibetan Buddhists, led the way. Locals looked to the temples to initiate the mourning process for the thousands of victims. Monks lit sacred yak butter lamps and chanted sutras for the souls of the dead. Gyegu Monastery, which helped collect over 1,000 corpses, held the first mass cremation three days after the earthquake – traditional Tibetan “sky burials,” which expose corpses to predation by vultures, were not employed due to the risk of disease. Lamas laid corpses on a pyre coated with yak butter in a newly dug cave half-way up a mountain to the south of Gyegu. Gyegu Monastery, according to the Ethnic and Religious Affairs Commission of Qinghai Province, donated its entire reserve of yak butter and purchased 200 cubic meters of cedar wood for the cremation. It was then announced that several hundred monks, led by a Living Buddha, would chant scriptures for 49 days, the time period which Tibetan Buddhists believe departed souls spend in limbo between Heaven and Hell, their ascent to Heaven only ensured by constant prayer. “No other organizations could offer such effective spiritual assistance as the monks,” one religious official told Century Weekly. Some monks told reporters that they wanted their contributions to stand as an example of the importance of Tibetan Buddhism to the residents of the quake-hit areas. However, many more have remained silently committed to the relief effort and have largely avoided publicizing their actions. “It is charitable and pious to save people. We are not in this for personal glory,” Phuntsok lama from Gygu Temple, told a reporter from Southern Weekend on April 22.

Outside of Beijing’s prestigious China National Convention Center (CNCC), several international flags flutter gently in the early summer breeze. Located just a stone’s throw away from the world famous Bird’s Nest Olympic stadium, the glittering glass conference facility is a bastion of modern China. Boasting state-of-the-art business facilities and a 420 room hotel, it is the preferred venue for a variety of international and government sponsored events. Yet on closer inspection, all is not what it appears. Amid the perfunctory rows of flowerbeds, several large dark brown banners bear the mysterious slogan, “Reshaping History.” Not an empty corporate message, but rather the ambitious hope of Lu Peng, an influential modern art historian, and curator of a major 10-year Chinese contemporary art retrospective, currently being held at the CNCC. Officially opened on May 4, the exhibition is the first of its kind to be held at the CNCC, a fact not overlooked by Lu during his opening speech, in which he noted, “a definite correlation between the economic reforms of the late 1970s, and the booming success of Chinese art today.” As the exhibition’s lavish opening ceremony proved, like it or not, economics is now an important factor in the evolving fortunes of China’s modern art scene. The exhibition, a comprehensive era defining overview of Chinese contemporary art, features works from renowned Chinese artists living at both home and abroad, as well as works by lesser known emerging talents. A total of more than 200 artists’ works are displayed, with Lu Peng and other two curators, Zhu Zhu, a poet and art critic, and Taiwanese art critic Gao Qianhui, dividing the exhibition space into four distinct parts: “established artists,” “emerging artists,” “Chinese ink and wash,” and “artists from Taiwan.” The exhibition’s location is not the only surprising feature, perhaps more remarkable is the near total absence of some of Chinese contemporary art’s most familiar icons, including the bare heads and oversized smiles of artist Yue Minjun. “I am consciously avoiding such things,” Lu Peng said prior to the opening of the exhibition, “I told the artists we need more unseen works, and they have been equally willing to exhibit fresh creations.” Yet such rigid conditions have been criticized by many as an attempt to “rewrite art history,” with some artists openly condemning the event for its narrow selection policy and self-aggrandizing attempts to define what constitutes “historic.” Despite the criticism, Lu has pressed on, later self-defining as “fighting for the legitimacy of Chinese modern art.” The phrase, an apparent attempt by Lu to remind younger generations that contemporary art is by no means free from official constraints, has aroused significant debate over the integrity of Chinese art, especially in light of the exhibition’s overtly official setting. NewsChina met with Lu Peng to talk about such criticisms, the idea behind the exhibition, and his views on the current state of Chinese contemporary art. NewsChina: What were your requirements when selecting artists and their works for the exhibition? Lu: To be honest, I didn’t really have too many standards or requirements. What I did was ask artists to bring a selection of their latest works. I was looking to avoid works that featured threadbare subjects and images. NewsChina: Art critics have attacked a number of well-known Chinese artists over their alleged lack of creativity and refusal to change. Did you encounter similar feelings while selecting works for this show? Lu: Many people expect new artists to be “subversive,” toppling everything that came before. But in our daily artistic lives, there can be few such changes. That’s not to say we don’t welcome subversive change. But when artists fail to deliver such massive and eminently noticeable changes, we should begin to pay more attention to the “fine-tuning” taking place instead. NewsChina: But some artists are simply repeating themselves, aren’t they? Lu: That is true. But there are numerous factors behind this phenomenon; first, it’s due simply to market demand, and secondly it’s due to the demand from art museums looking to add “hallmark” styles to their collections. Many artists are understandably more than willing to meet these demands. Of course this runs counter to an artist’s creativity, but that’s not a big problem. The important thing is whether he or she is still continuing to produce creative works in addition to meeting the demands of the open market. NewsChina: In organizing this exhibition, you are in fact preparing to write a book examining the last 10-years of the Chinese contemporary art scene. However, some people have viewed your selection process for this exhibition as an early indication of which artists you deem worthy of inclusion in your book. You once said that art history shouldn’t be a roll of honor but a roll of questions. However, this exhibition looks suspiciously like a hand-picked roll of honor. How do you respond to such allegations? Lu: Of course such allegations are entirely wrong. I can, however, safely say that by entering into this exhibition artists will have a better chance of being scrutinized by history. I don’t care if my writing is right or wrong. That too will be judged by later generations. I only care whether or not I have managed to express my personal views on modern art. Of course, as an art historian, I do hope my judgment is accurate. NewsChina: Cai Guoqiang (the fireworks designer at the opening and closing ceremonies of the Beijing Olympics) is not included in this exhibition. It seems that he is the only famous contemporary Chinese artist to have been excluded from the show, why is this? Lu: Cai’s Rent Collection Courtyard and Borrowing Your Enemy’s Arrows are not bad. But in my view, his works after 2000, especially the fireworks, should not be considered art. That is my attitude. He is popular with foreigners, but I don’t want to publicize these kinds of artists. That’s not the point of this exhibition. NewsChina: You have described the exhibition as “fighting for the legitimacy of Chinese modern art.” How would you define legitimacy? Lu: At a young critics’ seminar a couple of days ago, I found that the majority of young critics still had no clear idea over what exactly constituted “legitimacy.” Simply put, it means a system under which modern art is subject to the rule of law alone, and immune from all other forms of interference and censorship. Today, Chinese artists enjoy much more leeway when expressing themselves. But they still lack a sense of security. This is what the phrase means. NewsChina: You once said that the marketplace has saved Chinese modern art. The works in this exhibition are also going to be sold, aren’t they? If so, how will you strike a balance between guaranteeing artistic quality and the demands of the market? Lu: Yes, I never turn away from the market. The relationship between market demand and artistic quality is a very simple one, and can be summed up in one word: priority. All my selections are made according to artistic quality. I don’t care who is going to buy these works. If the art works can be sold, let them be sold. At this exhibition, there are some installation pieces and video works which have cost a lot of money to construct. But these pieces are unlikely to be sold on the open market. NewsChina: The title of the exhibition Reshaping History has been accused of sounding too aggressive, and self-important. Who’s going to reshape history, you? Lu: It is indeed aggressive. Our show was originally going to be named Making History, but the term is overused. So we changed it to Reshaping History. In truth, I don’t really care what the title is, or says. It could just as easily be another title. I only hoped the title would have something to do with the term “history” because I am an art historian, and I hope that this exhibition will make visitors think about history, and their role within it.

Despite living in New York for well over a decade, celebrity artist Cai Guo-qiang is still unable to bring himself to fully trust Western medicine. Standing in a Beijing quadrangle courtyard, Cai places a handful of capsules – a varied assortment of traditional Chinese herbs and remedies, into his mouth and swallows. “So, I’m plainly a farmer,” says a grinning, if slightly under-the-weather Cai, deliberately deploying the common Chinese metaphor of the farmer as ignorant and out-of-touch. Yet judging by his recent exploits, Cai’s affinity with rural life runs deeper than his mistrust of modern medicine. Having gathered together a group of real farmers, Cai has set about redrawing the boundaries separating rural and modern life. Selecting the Shanghai river front – the symbolic apex of cosmopolitan modernity, Cai has opened an exhibition entitled Cai Guo-qiang: Peasant da Vincis, a showcase of 12 different farmers’ highly creative yet coarse inventions. To collect these inventions, Cai traveled to eight provinces throughout China, a journey that covered nearly half the country and took 6 years to complete. Having read numerous curious reports of weird rural inventions in Chinese newspapers, Cai began to take an interest in what he calls the “rural imagination.” Yet it wasn’t until near the end of 2004, when he saw a picture of a hand-built submarine called Twilight No.1 that his own imagination really began to stir. So impressed was Cai by this makeshift “offensive weapon,” that he immediately contacted its builder Li Yuming, a farmer from Anhui Province, and convinced Li to sell it to him. Cai’s collection quickly extended to include a wide variety of grand and imaginative home-made contraptions, including airplanes, robots, aircraft carriers and even a flying saucer. According to Cai, he was not only attracted by the inventions themselves, but by the inner connection between himself and this group of people. “You will be fascinated to see how romantic and utopian these people are,” commented Cai, explaining that the farmers are as curious and pioneering in their creations as he is in the arts. “In fact, I see elements of myself in them.” Despite being the son of a historian and artist, Cai considers himself to be an “Asian farmer to the core.” Born in 1957 in Quanzhou City in the coastal province of Fujian, Cai observed the rural hardships endured by Chinese farmers from an early age; in smaller cities such as Quanzhou, traditional rural lifestyles mix almost obdurately alongside fast-paced urban development. But it is unlikely that it was farming’s decidedly lowly sociopolitical status that stoked Cai’s interest. More probable is his notion of “utopian romance,” a sentiment that according to Cai was shared by an entire generation of artists born in the era of Mao. However, the purpose behind Cai’s latest exhibition is to “display Chinese people’s individual existence.” As a successful artist who was invited to assist in both the Beijing Summer Olympics in 2008 and the 60 years anniversary celebrations of the founding of the PRC in 2009, Cai realized that in eyes of the West, China remained a frightening stereotype. “Why’s that? It’s because there are no individuals in our image, only the nation, the collective.” he explained. However, despite Cai’s prominent role in China’s grand pageants of recent years, he is totally absent from the Shanghai World Expo. Yet, coincidently (or perhaps intentionally), Cai’s Peasant da Vincis show, which is situated close to the Expo site, appears to satirically mimic the event’s slogan “Better City, Better Life,” with the promotional message “Peasant – Making a Better City, a Better Life.” While individualism and creativity are evident throughout the exhibition, Cai has attempted to avoid obvious rural imagery. The flying saucer hovering over the rooftop of the museum is dubbed with a gigantic calligraphy slogan, “never learned how to land,” read by many as a reminder of China’s feverish economy. In the aircraft carrier, two documentaries narrate space exploration as viewed from within the former Soviet Union. While farmer Wu’s robot workshop (see November Edition, Robot Farmer) sees new robots constantly being built and rebuilt. Trained in set design in Shanghai in the early 1980s, Cai went to Japan in 1986 where he experimented with gunpowder in his drawings. That eventually led to his experimental and signature “explosion events” incorporating fireworks and other large-scale pyrotechnics. In 1995, he moved to New York, where he has lived ever since. His stunning “footprint” fireworks displayed at the opening ceremony of the 2008 Beijing Summer Olympics gave him widespread fame throughout China. With hundreds of thousands of Chinese rushing to explore the nearby Expo, NewsChina sat down with Cai Guo-qiang for a chat about his “utopian romance.” NewsChina: There have been countless rural inventions in recent years, how did you choose your collection? Cai: There are normally three different criteria. Firstly, I want to see my own reflection in the work. For example, the airplane which looks like a dragonfly resembles a wooden model I made when I was a child. Secondly, I want the story behind the invention to touch me. Like the airplane made by farmer Tan Chengnian from Shandong Province, which was a birthday gift he made for his wife. However, tragically, Tan later fell out of the plane and died. The third criterion is that it’s an interesting project that despite financial constraints, still succeeded. NewsChina: What is your role as an artist in the exhibition? Cai: When I first started to collect the inventions, it was merely for fun. There were no grand aims or plans for an exhibition. I decided to do it only after the Rockbund Art Museum (the exhibition venue) invited me to do their inaugural exhibition. As it coincided with the Shanghai World Expo, the exhibition was an opportunity to show China’s individuals and their personal feelings. The Expo exhibits the city and I exhibit farmers. All the fancy buildings in the city were built by farmers. My role in the exhibition is subtle. If I overdo it and turn these inventions into beautiful installations, then these works are no longer the works of the farmers. On the contrary, if I do nothing to these works, the exhibition will be merely a show of folk crafts. Therefore I processed these works in an artistic and philosophical way while retaining their original appearance. NewsChina: Do you tell the farmers that you are an artist when you contact them? And do you explain your intentions in the exhibition? Cai: Not at all. They don’t care who you are or what you’ve done for the Olympics. To most people, I’m a nobody. When I first contacted them, some of them didn’t even bother to meet me in person. And they certainly don’t think of themselves as artists, though their works are now exhibited in an art museum. They think of themselves as scientists, and so they should. Most of them dream of commercializing their inventions. They hand out their business cards while they explain their inventions to the visitors. I want them to be respected here. Only respect brings equality. In the villages, many of them are seen as loafers or fantasists. But here they are given respect. NewsChina: At the same time as your Peasant da Vincis opened in Shanghai, the Reshaping History exhibition opened in Beijing (see page 59) You are the only famous artists not to participate in that exhibition. The curator of the exhibition says he thinks many of your works, especially the fireworks, do not constitute art. Can you accept that? Cai: Of course I can. Everyone should be entitled to his own opinion of my work. What’s more interesting is the fact that people such as you are commenting on the absence of my work from the exhibition.

“There was a time when I was lost, some time before 2005. I would just buy whatever I wanted,” explains Gu Yan, the chief curator and founder of the newly opened Yuan Art Museum in Beijing. Sitting quietly in the museum’s lobby, it’s hard to picture Gu, a stylish and composed woman, among crowds of mindless consumers. But so she continues, “eventually you find these things do not bring lasting enjoyment. Often the excitement would last only a few minutes. Sometimes it would be gone before I’d even had the chance to unwrap the package.” Of course, Gu’s life is different now, and though it might sound clichéd to attribute her apparent epiphany to art, it wouldn’t be far from the truth. The extraordinary story of the new Yuan Art Museum can in fact be traced back to mid-2009. Gu, who had set up the space some months previously, was suddenly diagnosed with a brain tumor. Knowing the extremely high risks she was going to face during surgery, Gu temporarily broke off connections with the art world and shut the gallery. It wasn’t until after recovering from the operation that Gu decided to break with tradition. Encouraged by the success of the surgery, Gu took the step of registering the Yuan Museum as a non-profit organization (NPO). The move meant that while the direction of the museum would remain private, the property rights, and subsequent ownership, would be transferred into the hands of the public. Renaming it “Yuan Art Museum,” which according to Gu, “(Yuan) represents both the origin of the universe, as well as representing a chance for things to start anew,” the museum was officially reopened on March 21 this year, a date chosen to coincide with the Spring Equinox, a good time to start anew. The museum’s opening exhibition showcased works by 12 contemporary Chinese artists, including well-known personalities such as Chen Danqing and Ma Kelu. In addition, the museum also hosted “Seal Point,” a collection of works by the renowned English painter John Walker. However, unlike in the West, privately owned non-profit museums remain relatively rare in China. In addition to Yuan, there is just one other NPO registered art museum in Beijing, a city of some 18 million residents. What then is the future for this small, modestly funded art space, and what can it possibly hope to achieve? Inception of Private Museums Currently Beijing plays hosts to around 40 art museums, including four that are State-owned (open to the public, with a minimum ticket charge), over 35 privately owned semi-independent commercial museums, and hundreds of privately owned galleries. Fueled by an influx of overseas capital into China’s avant-garde art movement, the Chinese art market experienced an unprecedented boom in the late 1990s. Domestic collectors, many of whom had made fortunes in real estate, also began investing heavily in contemporary Chinese art. The combined influence of this sudden injection of investor capital saw the creation of China’s first privately owned commercial museums. In October 1998, real estate developer Chen Jiagang established the Shanghe Art Museum in Chengdu. It was the first private museum inside China to display contemporary Chinese art works. Two months later, the Teda Contemporary Art Museum was founded in the northern municipality of Tianjin. This was followed one year later by Dongyu Art Museum in Shenyang. However, for many of these private art museums, the initial euphoria was short-lived. Only two years after their introduction into the market, Shanghe and Dongyu both closed, allegedly due to a combination of bad management, lack of sustainable funding and support from the government. Teda was also forced to suspend operations in 2000, and although the museum later reopened, it has yet to resume full operations. However, despite their turbulent conception, this first group of pioneering private art museums provided Chinese contemporary art with a much needed launch-pad. Many of today’s big names in the art scene like Zhang Xiaogang, Fang Lijun and Yue Minjun all had their early works collected or exhibited in this first group of private art museums. Change It was for this reason that Zhang Zikang, curator of Beijing’s Today Art Museum, decided to register the art space as a NPO. In doing so, he hoped to enhance the museum’s long-term sustainability. The Today art museum was founded in 2002 by Zhang Baoquan, an amateur artist and also the CEO of China’s top real estate company Jindian Group. “What is an art museum all about?” asked Zhang Zikang during an interview last June with Sohu.com, one of China’s major web portals. “It’s about social causes, rather than personal acts.” According to Zhang, the traditional attitude of relying on financial support from one or several entrepreneurs, while aiming to make a profit, was simply untenable. Moreover, if an art museum is geared towards making money, “what is the difference between a museum and a commercial gallery?” he asked. When Zhang Zikang, a former publisher, accepted the position of curator at the Today Art Museum in 2004, the museum’s operation was in chaos. “I decided to run the museum in accordance with international practice,” explained Zhang. After visiting several well-established art museums in the United States and Europe, he realized the importance of academic and educational roles. “What we ran was not a real art museum,” he declared, believing that the ill-defined purpose of many of China’s private museums was a prime contributor to their eventual failure. “However, we found that our ‘art museum’ didn’t fit into pre-existing registration categories” he said. “People didn’t know what it was.” The museum was finally registered as a non-profit organization, with the registration number “001.” Gu Yan, curator of the Yuan Art Museum, wasn’t aware that a museum could be both privately owned and a registered NPO until a chance encounter with Zhang Xinjian, the vice chief of the culture market department of the Ministry of Culture. “We had been actually operating as a non-profit museum since day one,” said Gu Yan. “The government showed a positive attitude towards what we do. They also wanted to help. But the situation is also totally new to them.” Ma Kelu, a well-known artist and art director of the Yuan Art Museum, agreed with Gu, suggesting that as Chinese society has become increasingly sophisticated, the government has been forced to adopt a policy of “loose management” in order to cope with the ever changing situation. Problems The biggest problem now faced by Gu Yan is linked to the museum’s funding. While operating the old Yuan Art Center, the monthly cost stood at around 500,000 yuan (US$72,000). “I had to regularly sell personal assets to keep the center going,” she said. Gu’s financial problems were further compounded by the cost of museum’s opening exhibition, which cost Gu a total of 500,000 yuan (US$72,000). In addition to the museum’s funding issues, Gu also faces ongoing problems due to a lack of official regulation. “We cannot even hang banners and flags on the walls of our museum. If we do, we would be fined by the urban administration authorities for ‘setting up illegal advertisements.’” “We are trying our best to follow accepted international standards,” explained Gu. However, operating in accordance with international standards is no easy task. “For example, most of our exhibitions run for more than two months, which means during this period of time we’re unable to collect income that would otherwise be generated from renting out our exhibition space.” “We are exploring,” said artist Ma Kelu. Public art education is still rare in China. Currently, State-owned public art is restricted due to its close links to government policy. It is therefore expected that private museums will assume this function. “Relevant policies need to catch up with the changing situation,” said Zhang Zikang, curator of Today Art Museum. “We need soil to grow. And our soil is nothing but favorable government policies, support from society at large and people’s understanding of the role and social functions of art museums.”

At an April 24 meeting in Urumqi, capital of the Xinjiang Uygur Autonomous Region, the Central Committee of the Chinese Communist Party (CPC) announced that Wang Lequan, after 15 years as Party Secretary for Xinjiang, was to be transferred to Beijing. It was also announced that Wang would be replaced by Zhang Chunxian, currently Party Secretary of Hunan Province in central China. This major reshuffle sees Wang, a longtime advocate for a tough stance on ethnic unrest, replaced with a political moderate as the region struggles to develop itself. Wang’s removal was announced in a nationwide broadcast by China Central Television by two senior government figures, Xi Jinping and Li Yuanchao, both members of the Politburo of Central Committee of the Communist Party of China (CPC), China’s highest political body, making this one of the most high-profile government reshuffles in recent memory. Observers claim that Wang’s reallocation signifies a major change in Xinjiang policy. This vast, largely Muslim region bordering Afghanistan and other central Asian states has been plagued by ethnic conflicts for decades, most recently with widespread violence in 2008 that left hundreds dead. ‘King of Xinjiang’ Born in Shandong Province, Wang first took office in Xinjiang in 1991, serving as the regional vice Party chairman. In 1995 he was promoted to the position of Party Secretary, becoming the de facto governor of the entire region. When Wang began to preside over the affairs of Xinjiang in the early 1990s, the so-called “three forces” (separatism, terrorism and extremism) were all on the rise following the collapse of the former Soviet Union, and the region plagued by a series of lethal terror attacks by Xinjiang separatists. Wang dealt with these challenges with an iron fist, enforcing a series of zero-tolerance policies that made social stability the region’s top priority. The apparent success of Wang’s hard-line stance, which saw incidences of terrorism fall to zero between 1997 and 2008, earned him an appointment to the Politburo, China’s highest governing body, in 2002. His tight grip on power earned him the nickname “King of Xinjiang,” which is also a play on his surname which means “king” or “lord” in Chinese. However, crackdowns on separatism led to the stagnation of Xinjiang’s economic development, with a per capita GDP trailing far behind the rest of the country. As businesses owned by Han Chinese are often the main beneficiaries of Xinjiang’s limited economic development, ethnic tensions, especially between Han Chinese and the Muslim Uygur, Xinjiang’s largest indigenous ethnic group, became a flashpoint for social unrest. Concerned by escalating ethnic tensions, in October 2007 Wang Lequan pledged that the Xinjiang government would make greater efforts to promote economic and social development. However, before substantial policy changes were made, Xinjiang was rocked by some of its worst violence in decades. In July 2008, just one month prior to the Beijing Olympics, two Uygur separatists launched a bomb attack against armed police in Kashgar, killing 16 people. More seriously, bloody ethnic rioting erupted in Urumqi on July 5, 2009, in which more than 200 people were killed. In the wake of the rioting, President Hu Jintao visited Xinjiang. In a speech to local officials, Hu stressed that reform and development were as vital as maintaining stability. This was seen as a public refutation of Wang’s policy priorities. The subsequent removal of Urumqi’s mayor Li Zhi led to speculation that Wang himself would be removed. The rumors were confirmed nine months later with the former “King of Xinjiang” reallocated to Beijing. “It is natural that changes of personnel follow a reorientation of policy,” Li Xuejun, a Party school pundit, told NewsChina, also adding that more reshuffles were expected. Sowing Stability Wang’s removal marks the end of his blanket policy of “stability at all costs.” It is expected that the new leadership will adopt a more balanced approach toward both maintaining stability and developing Xinjiang’s economy. Wang’s replacement, 57-year-old Zhang Chunxian, is widely considered a gentle political pragmatist. In 2002, Zhang distinguished himself as China’s youngest-ever minister during his tenure as Minister of Transport. In 2005, he was appointed Party Secretary of Hunan Province, earning praise for his ability to deal with complex issues and effectively managing social conflict. However, some local officials have concerns about Zhang’s unfamiliarity with Xinjiang’s complex ethnic makeup, believing this may lead him to adopt a soft-touch approach towards separatism and terrorism. Other officials counter doubts over Zhang’s credentials by referring to his previous position as assistant to the Party Secretary of Yunnan Province – China’s most ethnically diverse region. “The important thing for Zhang to do is balance his approach,” Jiang Zhaoyong, a Xinjiang expert, told NewsChina. Jiang said that the new leadership should focus on fighting corruption in order to appease resentful locals, particularly the Uygur majority. He also urged reform of the current preferential policies towards ethnic minorities. Instead of granting preferential policies according to ethnicity, such policies should be area-based, to minimize institutional division between ethnic groups. In his view, effective law enforcement, good governance and a marked improvement in the standard of living will be indispensable to the new leadership in winning over Xinjiang’s diverse population. While Zhang’s experience may have been called into question, his backing from the central government is beyond doubt. Since late 2009, the central authorities have sent various taskforces to Xinjiang to conduct policy studies, and have made attempts to redress the region’s massive income imbalances by compelling 19 more economically developed provinces to contribute a percentage of their annual revenue to support impoverished localities. The official line is that every effort will be made to make Xinjiang a “moderately prosperous society” within 10 years. In mid May, the central government convened a special meeting to discuss Xinjiang poicy, attended by a number of the country’s top leaders, including President Hu. In his keynote speech, Hu again stressed that “comprehensive development” is the foundation for stability in Xinjiang, reiterating the departure from the one-track development policies of Wang Lequan’s administration. During the meeting, Hu set a target to increase Xinjiang’s per capita GDP to the national average by 2015, and to make Xinjiang a “moderately prosperous society” by 2020. However, freshly appointed to one of China’s most challenging government positions, Zhang Chunxian has yet to reveal his personal vision for Xinjiang.

It’s a year probably best remembered for the release of Nelson Mandela, the reunification of Germany and, for Muscovites, the first opportunity to purchase a Big Mac inside of Russia. But 1990 was momentous for other, lesser celebrated reasons too, especially if you happened to be a fisherman in the small coastal village of Pudong, on the east of Shanghai’s Huangpu river. Fast forward 20-years to 2010, and the once sleepy village is unrecognizable, gone are the shabby wooden houses, reed ponds and paddyfields, and in their place sits rows of glittering skyscrapers, shopping malls and neat tree-lined boulevards. By the end of 2009, the Pudong New Area, as it is now officially know, was home to 556 financial organizations from both home and abroad, while its GDP had reached an estimated 370 billion yuan (US$53.98 billion), roughly equal to that of Slovenia. A Late Start For any recent visitor to Shanghai, it may come as a surprise to learn that the city was not included among the first batch of Chinese cities to “open up” to the outside world. This role was reserved exclusively for the newly created special economic zones (SEZs), experimental trading hubs in coastal cities such as Shenzhen, Zhuhai, Shantou and Xiamen. Shanghai, it was decided, would be temporarily shielded from these free market experiments – its economic potential reserved for use at a later date. In the wake of the 1989 political turmoil and the dramatic changes taking place throughout Eastern Europe and the Soviet Union, China found itself in a position of political and social uncertainty: would the country’s tentative economic reforms continue, or would China once again retreat from the world? Deng Xiaoping, China’s paramount leader and the architect of the reforms answered that, faced with such challenges China would “be even more open than before.” It was at this time that the Shanghai authorities, still frustrated at being held back while the SEZ cities raced ahead, proposed the development of the Pudong area. In Deng Xiaopeng’s eyes, Shanghai was China’s “trump card” – to be played only at the right time. He later revealed his “order of play.” The first SEZ cities were windows facing Hong Kong, Macao, Taiwan, and Southeast Asia; but Shanghai, the ace, was a window facing the Pacific Ocean and, beyond, the rest of the world. A New Shanghai On May 3 1990, thousands of people gathered at 141 Pudong Avenue for the inauguration ceremony of the Pudong Development Office and the Pudong Planning and Design Research Institute, which marked the official launch of Pudong’s development plan. Six months later, companies in charge of developing the Lujiazui Finance and Trade Zone, Jinqiao Export Processing Zone and Waigaoqiao Free Trade Zone in Pudong were founded. Development was in full swing. However, disputes over the ideological essence of the development plan hindered the area’s initial progress. An article in the September 1990 issue of Seek Truth magazine, asked sternly: “Is an ideology capitalist or socialist by nature, if the same ideology prohibits people from questioning its essence? “ Ideological infighting was further aggravated due to issues of capital shortages and poor infrastructure. Seeking to draw a line under this potentially damaging debate, Deng Xiaoping used a speech during a tour of the SEZ cities in early 1992 to suggest the argument itself was meaningless, and that the country’s top priority remained the development of its economy. In the wake of Deng’s speeches, the Chinese Communist Party’s Pudong Work Committee and the Shanghai municipal government’s Pudong Management Committee were founded in order to help accelerate development. With all ideological shackles removed, Pudong’s development took off. Between 1993 and 1996, more than 3,000 sites were developed. Towering skyscrapers sprang up one after the other, followed closely by the arrival of a host of major international companies. “The number of staff at the Pudong Development Office also increased from 100 to 800,” said Zhang Hao, an IT engineer from the Pudong Development Office. “Everyone was full of passion and confidence.” The momentum was soon halted, however, with the onset of the Asian Financial Crisis in 1997. As Pudong’s most developed area, the Lujiazui Finance and Trade Zone shouldered the brunt of the impact. Reference News, sponsored by the State-run Xinhua News Agency, reported that only 20 percent of the commercial space in Lujiazui had been sold or rented out. “Few lights were on at night and the whole place was shrouded in darkness,” remembered Yang Zhouyi, head of the Pudong Reform and Development Institute. In order to provide a shot in the arm to Pudong’s slowing development, the Shanghai government decided to relocate the city’s commodity exchange, grain and oil exchange, the property exchange, and Shanghai Stock Exchange across the river to Pudong. The positive effect of the move was near instantaneous, and its legacy can be evidenced by the fact that today, the spacious office buildings are running over capacity, with plans now afoot to expand the Lujiazui Finance and Trade Zone from 1.7 square kilometers (170 hectares) to 3.2 square kilometers (320 hectares) by 2015. Keeping Momentum These days, the speed of Pudong’s growth is causing problems of its own. Wang Zengwei, director of the Pudong Reform and Development Institute, told NewsChina that Pudong is now caught between a modern economic system and an aging political set-up. By 2005, after 15 years of development, the size of the Pudong government’s staff had expanded to more than 10,000 employees. The highly dynamic engine was now being controlled by a clunky bureaucratic apparatus. Moreover, now that the initial advantages of favorable policies have been lost, Pudong’s development is beginning to slow. Yu Zhengsheng, Shanghai’s Party secretary, commented, “Shanghai is not as passionate and zealous as it was during the time of Pudong’s early development. The urge to be Number One is getting weaker.” A Pudong government official speaking on condition of anonymity told NewsChina that after a period of such rapid development, Pudong should now proceed more cautiously with reform. “An established middle-aged man definitely thinks differently from a young man who has little to lose,” he said. Li Jianeng, former chairperson of the Pudong Committee of the People’s Political Consultative Conference, suggested otherwise. According to him, Deng Xiaoping’s 1992 remarks that people should be bolder, more open and advance at an ever-faster pace still hold true for Pudong’s development today.

“Some people will get rich faster than others.” Thirty years after this famous sentence helped unleash a surge of entrepreneurialism, the country’s private sector is again in retreat. Income disparity, long a divisive issue in China, is no longer confined to a simple rich poor dynamic. In today’s China, a widening income gap is fast emerging between workers in different sectors and industries, especially between those in the private sector and those working in State-monopolized industries, such as oil, energy, steel and telecommunications. Funded by government money and enjoying a monopoly of public resources, State-owned corporate businesses have thrived in recent years. In 2006, an online news report revealed that the annual pay of a meter-reader worker in a State-owned electricity company stood at 100,000 yuan (US$14,700), several times higher than the average non-State income. According to Bu Zhengfa, former vice-minister of labor and social security, the average salary of an employee working in a State-owned corporation is three times higher than in other industries in 2006. During this year’s annual sessions of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) held in March, various issues related to China’s State-owned businesses dominated much of the discussion. This led to the government promising to take measures to “adjust the distribution of social wealth.” The Privileged Addressing the country’s alarmingly wide income gap has been on the government’s agenda as early as 2006, when the Political Bureau of the Chinese Communist Party Central Committee set up a policy objective to “increase the income of the poor, enlarge the size of the middle-income group, and regulate the income of the rich.” However, according to figures released last year by the Jiu San Society, a non-Party political organization and a consultative body for the central government, the average employee at a State-owned corporation with a monopoly market share such as those working in the oil, electricity, public utilities, finance, and tobacco industries, can expect to enjoy a salary five to 10 times higher than those working in similar privately-owned industries in 2009. Furthermore, the income gap within these monopolizing businesses has also widened. According to Zhang Shiping, a member of the CPPCC National Committee, the relative difference between the average salary of a senior executive and a frontline worker rose from 6.72 in 2006 to 17.95 in 2008, based on the annual reports of 208 listed companies. In 2002, the State Council issued a document decreeing that the annual salary of high-ranking executives in big State-owned businesses must not exceed 12 times that of the businesses’ rank-and-file workers. But, in the face of rapid increases in senior executives’ pay, the cap was raised to 20 times in September 2009. During the same period, workers whose pay had remained unchanged for five years or more accounted for 20 percent of the combined businesses’ workforce, according to Zhang Shiping, a member of the CPPCC National Committee and director of the Auditing Committee under the All-China Federation of Trade Unions. Apart from capping the salaries of high ranking executives, many analysts are now advocating that profits from monopolies be requisitioned as government revenue. According to the current regulations on profits derived from State-owned businesses, issued in 2007, businesses operating in sectors covering natural resources, utilities and telecommunications are required to turn over just 10 percent of their net profit to the State. The policy rationale for this fractional profit turnover is allegedly due to the competition Chinese businesses face from foreign multinationals. “[Big State-owned businesses] should keep the lion’s share of their profit at this stage of their development for future investment.” said Wang Zhongming, director of Supervision and Administration Commission of the State Council, in an interview with China Central Television (CCTV). The policy seems to be working. In 2009, 43 Chinese companies were listed among Fortune magazine’s Global 500. All but one of these 43 companies was State-owned. Among China’s 500 leading companies, two thirds are State-owned. But for the public, profits generated by State-owned businesses theoretically belong to the State and by extension, the people. According to a widely cited report, three State-owned big businesses, China National Petroleum Corporation, the Industrial and Commercial Bank of China, and China Mobile, recorded profits totaling over 300 billion yuan (US$44 billion) in 2008, yet turned over just 20 billion yuan (US$2.9 billion) to the central government. Much of the rest, in the absence of effective monitoring, is believed to have ended up in the pockets of company executives, or converted into employee benefits. “The big State-owned businesses should turn 90 percent of their profits over to the State to help finance the overall welfare of the people,” Li Yongzhong, a NPC deputy, told NewsChina. The Jiu San Society also submitted a proposal to the CPPCC advocating that profits from big State-owned businesses be incorporated into the government’s annual revenue. On April 7, the Ministry of Finance issued a document outlining priorities for the year ahead. This included, “increasing the turnover of big State-owned businesses.” However, the document failed to offer a specific percentage or a timetable of action. Equal Access? State-owned big businesses not only have free access to resources and benefit from a monopoly market share, but also enjoy relatively low tax rates, diminishing the competitiveness of the private sector. According to a report compiled by the magazine Investors’ Daily, the average tax rate of 992 publicly traded State-owned big businesses is just 10 percent, 14 percentage points lower than the tax rate applied to publicly traded private companies. Such inequality becomes especially controversial in the context of the global economic downturn, a period in which China launched a 4 trillion yuan (US$587 billion) stimulus package, much of which is thought to have been awarded to State-owned businesses. Xu Xiaonian, a well-known economist, said during the recent 2010 Boao Forum for Asia that investment in the public sector increased by 40 percent in 2009, while investment in the private sector only increased by 20 percent. Many hope that the heated discussion over this issue during this year’s NPC and CPPCC sessions will lead to more effective policies. Currently, the National Development and Reform Commission are drafting two initiatives that are aimed at resolving these problems. One is a detailed directive to “realign the pattern of social redistribution of wealth,” while the other is aimed at promoting the development of private companies. It is speculated that the regulation will allow private companies to conduct business in some industries traditionally monopolized by big State-owned businesses, including public utilities, financial service and infrastructure. Both initiatives are expected to be launched within the year.

Eight months have passed since Yukio Hatoyama, head of the Democratic Party of Japan (DPJ), was sworn in as prime minister with an election pledge to “re-examine [Japanese] ties with the United States.” This has led to speculation that Japan’s foreign policy, previously dominated by ironclad ties with the US, may be about to cuddle up to its big neighbor to the east. “The DPJ is quite different from the Liberal Democratic Party [LDP]. The DPJ is more inclined towards policy reform,” political observer Kenzo Tanaka told NewsChina. “It is natural for the DPJ to shift its foreign policy focus back onto Asia.” January 19 marks the 50th anniversary of the Japan-US Security Treaty, a document that effectively set the precedent for Japan’s East Asian defensive strategy in the post-WWII era. Still reeling from the financial crisis, Japan is looking to redefine its relationship with its closest ally in the light of East Asia’s changing political landscape. However, despite a number of overtures to China, Hatoyama is still calling for a “close and equal” Japan–US relationship. Although it has not explicitly opposed Hatoyama’s much-vaunted proposal to develop an East Asian Community, the US is losing patience with its Asian ally. A major sticking-point has been wrangling over the relocation of a US naval base in Okinawa. According to Japanese media reports, US Defense Department officials have reiterated their commitment to the terms of a 2006 relocation scheme agreed upon with Japan’s previous administration, under which the US Marine Corps airbase at Futenma would be relocated to a less populated part of the island, with around 8,000 marines relocated to Guam. Since taking office, Hatoyama has frozen the plans, a preliminary step in his campaign pledge to potentially move the unpopular base out of Okinawa altogether. In an apparent U-turn, the prime minister now appears to be courting support from local residents to maintain at least part of the US military presence on Okinawa. This issue has severely tarnished Hatoyama’s public image. A survey by The Asahi Shimbun, a national daily newspaper, showed that public disapproval has reached 75 percent, with rumors persisting that the prime minister is under pressure to resign over his handling of the Okinawa issue. A cooling of relations with the US has been matched with a sudden thaw in Sino-Japanese ties, with frequent high-level exchanges between the two countries, including Chinese Vice President Xi Jinping’s visit to Japan in December 2009. Xi’s last-minute audience with Emperor Akihito criticized in Japan as a breach of official protocol, was widely seen as an attempt to curry favor with Beijing. Hatoyama’s perceived “snub” of President Barack Obama during the mid-April Nuclear Security Summit in Washington was also labeled by press as an indication of a change in the air. In contrast to a ten-minute conversation with Obama during a state banquet, Hatoyama spent 50 minutes in talks with President Hu Jintao of China. This marked the second time in which the Japanese prime minister has chosen to meet the Chinese president ahead of the US president, a similar snub catching media attention during the September 2009 G-20 Summit in Pittsburgh, PA. Consequently, some political observers have suggested that Japan is seeking to align itself with China due to the continued erosion of US dominance in East Asia. Decades of rule by the unshakably pro-US LDP, in the eyes of many Japanese observers, failed to give the country a voice in international affairs, forcing Japan into the shadows politically, despite its economic might. Despite his shaky approval rating, many believe Hatoyama has inherited his family’s flair for Asian diplomacy, especially regarding China. His father Iichirō served as foreign minister in Prime Minister Takeo Fukuda’s cabinet between 1976 and 1977, and was the chief negotiator of the groundbreaking Sino-Japanese Peace and Friendship Treaty. Before being sworn in as prime minister, Yukio Hatoyama was vice chairman of the Japan-China Friendship Association. In addition, his wife Miyuki was born in Shanghai. We sat down in Hatoyama’s Tokyo office to talk about what he sees as Japan’s role in East Asia’s new political landscape. However, ever the diplomat, the 63-year-old prime minister proved difficult to pin down on policy. The following is an excerpt of the interview. NewsChina: The recent election of the DPJ effectively ended a half-century of virtually unbroken governance by the LDP. When it comes to China policy, what is the difference between the two parties? Hatoyama: The DPJ respects different values, and we are actively seeking common ground in which to cooperate with China and our other Asian neighbors. Since my government took office last September, we have held high-level exchanges with China. I have personally met with President Hu Jintao and Premier Wen Jiabao, and we have reached a consensus on developing a mutually beneficial strategic partnership. NewsChina: What are the key problems for current relations? Hatoyama: Existing bilateral issues include food safety and natural resources development in the East China Sea. We need to face disputes head-on and handle them objectively, rather than try to sidestep them. Based on mutual respect and the recognition of differences, and with the spirit of fraternity as our common point of departure, I would like to push forward constructive cooperation on specific matters with my Chinese counterparts in order to reach mutual agreement. NewsChina: Some people in Japan are worried about the rise of China. Are you anticipating a crisis? Hatoyama: As far as Japan is concerned, the steady development of China in harmonious coordination with the international community is an opportunity and not a threat. As a matter of fact, economic growth in China has brought tremendous opportunities both to Japan and to other members of the international community. As the 2008 Sino-Japanese Joint Declaration on Fully Promoting Strategic Mutual Beneficial Relationships states, Japan and China have an important influence on peace, stability and development in the Asia-Pacific region. Japan expects China to get actively involved in addressing regional issues such as North Korea’s nuclear ambitions, the development of an East Asian Community and global issues such as international economics and the environment. NewsChina: In what economic areas can Japan and China cooperate? Do you have any specific ideas about reaching a mutual free trade agreement? Hatoyama: In recent years, the interdependence between our economies has deepened. More than 23,000 Japanese companies have commenced operations in China, and China became our largest trade partner in 2007. This trend is expected to continue in the years to come. I believe China’s economic development offers an opportunity to Japan. However, I also think the two countries need to address issues such as food safety and intellectual property rights protection, which not only benefit the sustained development of both Japan and China, but the global economy as a whole. As far as free trade is concerned, research will be conducted by government officials, enterprises and academics from China, South Korea and Japan. In addition, investment agreement negotiations are already underway in order to promote and protect corporate investment in all three countries. Through these efforts, Japan will further strengthen its economic ties with China. NewsChina: The APEC (Asia-Pacific Economic Cooperation) summit will convene in Yokohama in November. As a host country, what message does Japan hope to convey to the world? Hatoyama: The theme of this year’s summit is “Change and Action.” Development in the Asia-Pacific region is of vital importance to our economic recovery and the eventual development of sustainable growth. As the host nation, Japan will play a constructive role in making APEC an effective platform to promote the development of member economies and the region as a whole. Ideas of change will be formulated by APEC and put into action. NewsChina: Japan is caught between two huge neighbors - China and the United States. What stance do you think Japan should take? Hatoyama: The Japan-US alliance is the bedrock of both Japan’s foreign policy and her national security. The United States is the only ally we have that shares our basic values and strategic interests. This year marks the 50th anniversary of the Japan–US Security Treaty. Both myself and President Obama have reaffirmed that Japan and the US will continue to strengthen their cooperation both globally and in the Asia-Pacific region, and deepen our alliance in a way that will meet 21st century challenges. It is only through the Japan-US alliance that Japan is able to strengthen its cooperation with other Asian countries, including China. That said, our friendship with China is one of Japan’s most important bilateral relationships. I believe the reinforcement of strategic ties between the two countries while continuing to strengthen our trust and understanding is not only of far-reaching significance to both individual parties but indispensable to the international community. Our aim is to shorten the distance between us and our neighbors while deepening our alliance with the United States.

Sino-French relations, which blossomed under former President Jacques Chirac, who served until 2007, have frozen over since his outspoken successor Nicolas Sarkozy drew the ire of Beijing due to his perceived support for the Dalai Lama. In an attempt to smooth relations, the French President and his glamorous wife made a high-profile visit to China to coincide with the opening ceremony of the Shanghai World Expo. After stopping off in the historic city of Xi’an, Sarkozy arrived in Beijing on April 28, where he met with top Chinese leaders, including President Hu Jintao, Chairman of the Standing Committee of the National People’s Congress Wu Bangguo and Premier Wen Jiabao. Front-Row Seats Sarkozy was among a handful of world leaders to attend the opening ceremony of the Shanghai Expo. Political observers noted the tactful timing, with Sarkozy’s show of support for China’s latest international prestige project aimed at amending the damage caused by his 2008 remarks on Tibet. Sarkozy’s grand reception from the Chinese authorities and his place of honor to the right of President Hu and International Exhibitions Bureau President Jean-Pierre Lafon during the Expo opening ceremonies also appeared to be an acknowledgement of a thaw in relations. According to State media, President Hu heralded a “new era” of bilateral cooperation, stating that his “candid, friendly and productive” meeting with Sarkozy had allowed both sides to reach a number of “important agreements.” A less effusive Sarkozy reiterated France’s commitment to the one-China policy, acknowledging Tibet and Taiwan as integral parts of China. The visit was designed to draw a line under a two-year political and economic standoff between the two leaders which began in the run-up to the Beijing Olympics. Trade Snub China’s perceived handling of riots in Tibet in 2008 sparked widespread anti-Chinese protests in Europe, particularly in Paris. Amid the furor, the Paris City Council made the Dalai Lama an “honorary citizen,” and the Olympic torch relay was severely disrupted by Parisian demonstrators. Riding the wave of public opinion, President Sarkozy called on Chinese authorities to open a dialogue with the Dalai Lama’s government in exile, regarded by Beijing as a dangerous separatist clique. In response, anti-French demonstrations took place in Beijing, with protesters encouraging consumers to boycott the French retail giant Carrefour. At the height of the 2008/9 financial crisis, Chinese Premier Wen Jiabao embarked upon a “confidence-building tour” of Europe. His itinerary, including Switzerland, Britain, Germany and Spain, conspicuously bypassed France, an action seen as a rebuke for Sarkozy’s stance on Tibet. China’s resulting European shopping spree saw total investment in European economies of US$15 billion, with France missing out on a share of the profits. This humiliation at a time of crisis for the French economy sent a powerful message to Sarkozy’s administration about the need to repair relations with one of the EU’s major trading partners. In April 2009, President Hu and President Sarkozy held an informal meeting on the sidelines of the China-EU summit in London. After the meeting, a joint statement was released which reaffirmed French support for the one-China policy and its opposition to the Tibetan independence movement. Last year saw further high-level exchanges. Former French Prime Minister Jean-Pierre Raffarin, former President Jacques Chirac and Speaker of the French National Assembly Bernard Accoyer all paid high-profile visits to China. In response, China’s State Councilor Dai Bingguo and Commerce Minister Chen Deming paid return visits to France, brokering contracts with French companies in aviation, power and transport. French Prime Minister Francois Fillon also made an official visit to China, laying the groundwork for Sarkozy’s arrival in 2010. At a press conference on December 23, he told NewsChina that his talks with Chinese officials were “a milestone in Sino-French relations.” During Fillon’s visit to Beijing, a number of business deals were signed, including a supply of jet engines for China’s first large passenger aircraft, and the opening of the Taishan nuclear power plant, a Sino-French joint venture in Guangdong. Fillon’s visit smoothed the way for Sarkozy’s arrival this April, finally thawing relations with the Chinese leadership after a two-year chill. Pragmatism According to Jian Junbo, associate professor at the Institute of International Studies at Shanghai’s Fudan University, Sarkozy has been forced to repair relations due to China’s strengthening economy and its growing role on the world stage. “The rising international influence of China in international affairs has prompted Sarkozy to mend relations,” Jian posted on Asia Times Online. “A person supporting China in a new world economic order will enjoy an influential position,” he added. Next year, France will host both the G-8 and G-20 summits. France will use these two meetings of the world’s richest nations to boost its international image as a world power, especially with regard to its influence over the European Union. To cement this position in the face of competition from Germany and Britain, France needs China’s support. Sarkozy has repeatedly expressed his intention to make international currency reform a major issue during his country’s 2011 presidency of the G-8 and G-20. The French president is pushing for a broad multi-currency system of international trade which would weaken the century-old supremacy of the US dollar. In Shanghai on April 30, Sarkozy openly opposed US criticism of China’s trade surpluses with the West, and refuted US accusations that the Chinese government manipulated the value of the Chinese yuan. He also said that it was important to make Chinese leaders aware of the need for a new international monetary system. Sarkozy’s remarks found favor with Chinese leaders who remain under intense pressure from the US and other trading partners to revalue the Chinese currency. Aside from seeking Chinese endorsement for his international ambitions, Sarkozy is also making overtures to China’s vast consumer market. Accompanying Sarkozy on his visit were executives from France’s 20 biggest multinationals, and the French president used his Beijing meeting with President Hu to make a sales pitch for French nuclear technology. Experts said that though no business deals were signed during Sarkozy’s visit, France’s status as an important global supplier of nuclear, rail and green technologies, all high-priority items on China’s national agenda, will most likely lead to further commercial ties. In addition, President Hu accepted an official invitation from President Sarkozy to visit France “at a mutually agreeable time.” Opportunism Many believe that Sarkozy’s 2008 saber-rattling with Beijing was an attempt to ride a wave of anti-Chinese sentiment in France. During the 2008 riots in Lhasa, Sarkozy called upon Beijing to open dialogue with the Dalai Lama, stating that a failure to do so would lead to a boycott by European leaders of the Opening Ceremonies of the Beijing Olympics. However, despite his ultimatum not being met by the Chinese authorities, he later reversed his decision and attended the ceremony, claiming that France’s holding the rotating presidency of EU obliged him to make an appearance. While acknowledging that both China and France have put the dispute caused by Sarkozy’s meeting with the Dalai Lama behind them, Caroline Puel, Beijing chief of the French magazine Le Point, told NewsChina, “It cannot be assumed that misunderstandings between the two countries have been completely cleared up.” Critics noted that the two countries have already clashed over the value of the Chinese yuan and the nuclear arms races in North Korea and Iran. They speculate that the latest visit by Sarkozy is simply an act of political expediency to reap short-term political and economic benefits, with the French president remaining an opportunist at heart.

When Christian Murck, the incumbent president of the American Chamber of Commerce in China (AmCham-China), first arrived in Beijing in 1996, discussion abounded over whether foreign-funded companies would be granted permission to trade on the Chinese stock market. However, almost fifteen years on, foreign companies are still absent. Yet despite such a seemingly endless hiatus, foreign investors are once again buzzing over a possible breakthrough. In mid-April, the State Council, China’s cabinet, issued a package of 20 guidelines on how to better use foreign capital, including a renewed pledge to support foreign firms’ listing in China. This is the first time that the idea of setting up “an international board”– the long-anticipated venue for foreign firms to float A shares in China, had appeared prominently in a top government document. Before the official announcement, high-ranking officials, including Chen Deming, Minister of Commerce, and Wang Qishan, vice premier in charge of financial affairs, had already expressed their intention to back foreign firms wanting to debut on domestic exchanges. Although the State Council did not specify which of the country’s two stock exchanges (Shenzhen and Shanghai) would be home to foreign companies, Shanghai is widely tipped as the preferred destination, given the central government’s publicly stated intention to develop Shanghai as a globally influential financial center by 2020. According to media reports, Fang Xinghai, the director of Shanghai’s Financial Service Office has confirmed that the Shanghai Stock Exchange is ready to launch its “international board” by the end of this year. Banks Make a Buzz A number of international banks, including the Hong Kong and Shanghai Banking Corporation (HSBC), the Bank of East Asia (BEA), and Standard Chartered are reportedly among the first companies preparing to float A-shares. HSBC Currently has the largest presence in China, with branches expanding from a dozen in 2006 to more than 100 today. Company executives have been widely quoted by the media as saying that the company is keen to be listed in Shanghai. Recently, Michael Geoghegan, chief executive of HSBC told NewsChina that he did not see any obstacles in the way of HSBC’s pending A-share listing. According to Geoghegan, Hong Kong and the Chinese mainland combined contribute 40 percent of HSBC’s net profit. “This is the fundamental reason why we are committed to returning to the region,” said Geoghegan. In recognition of the importance of emerging markets like India and China, HSBC moved its chief executive’s office from London to Hong Kong in February this year. Guo Tianyong, a professor at the Central University of Finance and Economies told NewsChina, that a number of big banks, both domestic and foreign, have an inherent interest in increasing their capital to meet new stricter regulations, especially in regard to risk control during the recent financial crisis. Guo added that many foreign banks now realize the tremendous potential of China’s financial services market. However, they now need to raise significant domestic capital in order to expand their business network nationwide. Brand recognition and rising capital remain key attractions for foreign companies, however, according to Murck, few AmCham-China member companies have plans to issue A-shares. Murck explained to NewsChina that the primary concern among AmCham members is China’s restrictions on capital flows. Such restrictions mean that the pricing of different shares of the same company simultaneously traded in US, Hong Kong, Shanghai and other bourses are likely to differ markedly, adding volatility to share prices. Foreign companies need to decide between listing only their China operations, or the entire company, said Lester Ross, managing director of the Beijing Office of the international law firm WilmerHale. According to Ross, if a company lists their entire stock, they need to think carefully about their “ability to take their funds out of China.” A Justified Ambition Share floating and trading did not emerge in China until the mid 1980s. In spite of its late inception it has evolved rapidly, with the country setting up two stock exchanges in Shanghai and Shenzhen respectively in 1990. There are currently an estimated 140 million stock traders in China today, or to put it another way, roughly one out of every 10 people in China is trading stocks. However, to the disappointment of ambitious Chinese officials, neither Shanghai nor Shenzhen is recognized as an international financial center, despite their ever-increasing economic might. To catch up with Hong Kong, commonly regarded as Asia’s leading financial center, as well as other financial hubs in the West, Shanghai has to enhance its ability to draw on capital markets. Regulators, however, remain caught in a dilemma between openness and the strict management of foreign exchange. In addition, other technical problems regarding accounting standards and corporate information disclosure are yet to be addressed. Experts noted that the authorities will examine both domestic and international financial conditions and revise current regulations as soon as possible. According to Professor Guo, the introduction of foreign shares onto the Chinese market could help boost Chinese companies’ reforms in corporate governance and information disclosure, as well as protect the interests of small- and medium-sized investors. The creation of an international board will also expand new investment channels for domestic stock traders rather than restrict them to domestic shares, which has resulted in a higher share-pricing level in Shanghai and Shenzhen than in Hong Kong. But, this does not mean China will throw its doors open to all foreign companies. Experts anticipate that there will be high thresholds in place to only let in foreign companies committed to development in the Chinese market, and shut out speculators who simply view the Chinese stock market as a cash cow.

Decades of expensive advertising has sought to convince motorists that their choice of car is much more than a simple economic decision. From hot-rod convertibles to family sedans, the car, or so we are led to believe, is the ultimate reflection of a person’s true personality. With this philosophy in mind, visitors to this year’s Beijing International Automotive Exhibition (BIAE), which opened on April 23, may be forgiven for assuming Chinese motorists are a very green bunch indeed. Gone was the show’s usual stage-grabbing assortment of monstrous people carriers and gas guzzling SUVs, and in their place an array of over 90 new types of energy efficient cars, including hybrid, ethanol and electric. In reality, the reason for the show’s sudden change in theme has far less to do with Chinese motorists’ environmental awareness, and everything to do with market economics. In the 19 years since its inception, the BIAE has been plagued by a woeful lack of competitiveness. Despite its relatively large size, the event pales in comparison to more established shows in Detroit and Geneva. Not so, this year. Themed around the title, “For a Greener Tomorrow,” organizers had hoped to capitalize on growing public interest in energy efficiency by positioning the event as one of the leading showcases for green automotive technology. A Green Collection Debuting at this year’s show, Bentley’s new white Continental Supersports was thronged by reporters and auto enthusiasts. Running at a maximum speed of 202 mph, the shiny coupe is powered by both gasoline and bio-ethanol. “It is actually achievable to realize functionality while protecting the environment,” Zheng Shunjing, director of Bentley’s China operations, told NewsChina. By 2011, 80 percent of Bentley’s models will adopt hybrid technology, according to Zheng. Figures from Bentley show that 421 Bentley cars, seen as prestige vehicles, were sold in China in 2009, outperforming sales in Germany for the first time. The statistic places China as Bentley’s third largest market after the United States and Britain. Registering total sales of 13.5 million units in 2009, an increase of 40 percent year-on-year, China has overtaken the United States to become the biggest car market in the world. In an attempt to secure a bigger share, global automotive manufacturers are lining up to lure Chinese motorists with newer, sleeker and more efficient models. Although still smarting from earlier safety scandals, Toyota chose this year’s BIAE to unveil its new hybrid model: the FT-CH. Observers noted that such a car would have traditionally made its debut at the Tokyo auto show, a venue noted for showcasing green cars. Not to be outdone, Volkswagen brought its E-UP!, VW’s first fully commercial electrically-powered vehicle. Moreover, in an apparent demonstration of the company’s commitment to developing green technology (as well as the China market as a whole), members of the VW board of directors made their first collective appearance at the BIAE. Mitsubishi Motors introduced its small electric car, the i-MiEV, which according to the company’s president, Osamu Masuko, is to be mass-produced by 2012. Honda, the world’s No 2 hybrid car manufacturer after Toyota, also announced plans to launch its hybrid vehicles, the Insight and CR-Z, in China by 2012. Dieter Zetsche, Daimler’s chief executive, said the company would launch an electric car for the Chinese market together with its Chinese partner BYD in 2013. “It will be a Chinese car for the Chinese market,” he promised. Chinese car makers, aware that new energy efficient vehicles offer a golden opportunity to catch up with foreign competitors, are even keener to develop such models. Daimler’s local partner and a private battery manufacturer-turned-automaker, BYD, unveiled three new hybrid models at this year’s BIAE. According to BYD’s PR manager, Yang Zhao, the company has signed a contract with the Shenzhen municipal government to deliver 100 E6s, an all-electric vehicle, by the end of May to be used as taxi cabs throughout the city. The E6 covers 300 kilometers (186 miles) on a single charge, said Yang Zhao. More interestingly, BYD Chairman Wang Chuanfu announced last month that the company would launch the E6 in the United States later this year, with an estimated retail price of US$40,000. The State-owned Changan Automotive premiered four new energy-efficient models at BIAE. Changan’s EV01, an all-electric concept car with a plug-in battery, has an ability to recharge to at least 80 percent of capacity in five to 10 minutes, according to Liu Taigang, Changan’s chief engineer in the development of new energy vehicles. In addition, major domestic brands such as SAIC (Shanghai Automotive Industry Corporation), FAW (First Automotive Works), Brilliance Auto, Chery and Geely all displayed energy efficient cars at the show. According to the BIAE’s figures, more than 50 brands showcased 95 new energy efficient models on the first day of the auto show, close to 10 percent of all the models displayed. Competition “The auto markets in the United States and Europe are very much glutted,” said Jia Xinguang, former chief analyst of the China Automotive Industry Development Institute. In comparison, the Chinese market has great potential to grow. Statistics from the China Association of Automobile Manufacturers (CAAM) indicate that there are fewer than 10 vehicles for every 100 Chinese families. Even in Beijing, China’s largest auto market, there are no more than 36 cars per 100 families. The first season of this year saw the production of 4.55 million cars and sales of 4.61 million units, an increase of more than 70 percent respectively, according to CAAM. During this year’s session of the National People’s Congress in March, Premier Wen Jiabao stated in his government work report that breakthroughs should be made in the area of energy-efficient technology. Wen’s words have been interpreted by industry insiders as a signal that the central government views the development of the green car industry as a key national strategy. Prior to Wen’s report, the Plan on Adjusting and Revitalizing the Auto Industry, a report released by the State Council last year, outlined plans to boost the capacity of domestic manufacturers of energy efficient vehicles to 500,000 units per year by 2011. To support the plan, 10 billion yuan (US$1.47 billion) has been allocated to sustain the development of energy efficient technologies between 2011 and 2014, according to a report from China Radio International. However, concerns are growing over the delayed release of the New Energy Vehicle Development Program, drafted by the National Development and Reform Commission. The report is believed to detail plans for providing subsidies for the purchase of new energy-efficient vehicles. On April 22, Xu Changming, director of the Information Resource Development Department of the State Information Center, told the media that the government may give subsidies to customers who buy green cars and will eventually subsidize manufacturers producing energy-efficient vehicles. In the meantime, local governments are growing impatient, with many announcing their own subsidy plans. Shanghai, the home of SAIC, GM and VW, announced subsidy plans in late 2009. Chongqing, home to automaker Changan, announced in early April that the individual buyers of the Changan hybrid model, the Jiexue, would be generously subsidized. In the long run, pressure on petroleum supplies are expected to further push up gas prices. On April 14, the retail gas price in China reached 6.92 yuan per liter (US$3.85 per gallon).

While Apple’s ceremonial unveiling of its new e-reader was met with excitement at home in the United States, in China the response was decidedly muted. This should not, however, be mistaken for a lack of enthusiasm for the new technology, in fact, the opposite is true. Rising demand for e-readers among Chinese consumers has led to a boom in homegrown alternatives, with Hanvon-brand readers, designed by the Beijing-based Hanwang group, leading the pack. The first domestically produced e-reader, or tablet, dates back to more than a decade ago. But it wasn’t until 2008, that the e-reader really began to take off in China. The Hanvon reader, which last year purportedly sold as many as 500,000 units, leapt to the public’s attention thanks largely to a near ubiquitous advertising campaign. According to Liu Yingjian, Hanwang’s founder and chairman, the company, which now accounts for as much as 95 percent of the Chinese e-reader market, spent in excess of 100 million yuan (US$14.7 million) advertising Hanvon e-readers in 2009, and plans to invest an additional 150 million yuan (US$22 million) in 2010. However, having made a modest net profit of just US$12.6 million in 2009, such a large advertising budget is not without its risks. As Liu put it, “We are a privately-held company and need to be careful with every penny we spend. Luckily, our sales revenue is currently bigger than our advertising expenditure.” Such boldness, however, would appear to have been rewarded. Since becoming listed on the Shenzhen stock exchange on March 3, the company has seen its share price rise 96 percent from its initial public offering of 41.9 yuan (US$6.1) to close at 82 yuan (US$12) on the first day of trading. Although the company currently dominates the e-reader market, the success of Hanwang has helped foster a new generation of domestic competitors, with companies such as Tianjin Jinke Electronics, and Guangzhou E-View Electronics now aggressively looking to expand. A Quick Take-Off According to Display Search, an information provider on display supply chains and display-related industries, the sales of e-readers in China will grow from 800,000 units in 2009 to 3 million in 2010, taking up 20 percent of the global market. Industry insiders went further still, predicting that China will replace the United States to become the world’s largest e-reader market by 2015. In addition to traditional market players like Hanwang, which focus on hardware and e-paper technology, many other players, such as mobile carriers, publishing entities, and online content providers, are also being lured into the sector, eager for a share of the rapidly expanding market. By contrast, foreign brands appear indifferent towards the Chinese market. Amazon, makers of the popular Kindle e-reader, told NewsChina that they were closely observing China’s e-reader market and reading habits, but stopped short of saying when it would launch the Kindle in China. However, a lack of foreign competitors does not appear to have dented the growth of the Chinese market, this year alone, the number of e-readers on the market is expected by some optimistic estimates to reach 400, compared with less than 30 in 2009. Tapping Business Content is a key factor in the e-reader market. Technology companies, lacking content resources, have to cooperate with a variety of content developers. According to media reports, Hanwang has agreements with more than 100 such companies, including publishing houses and newspapers. However, according to Hanwang’s Liu Yingjian, Hanwang still has insufficient content resources. Unsurprisingly, cooperation between publishers and e-reader manufacturers is not always as smooth as both sides would like. According to Liu Chengyong, general manager of the China Publishing Group Digital Media Co, traditional publishers place less and less trust in e-reader manufactures. “Experience shows that the rights of traditional publishers will become increasingly fraught after they transfer copyright to e-readers,” he said. Publishing companies are inclined to launch their own e-readers, rather than share profits with fledgling technology partners. For example, the Shanghai Century Publishing Group and the China Publishing Group launched their own e-readers in March and April respectively. According to Liu, the China Publishing Group is planning to set up an online publishing platform to bring other publishers into an alliance. “Content providers need to be unified when bargaining with hardware providers, only then will they be able to claim back the real value of the content resources they provide.” Newcomers While content providers and traditional e-reader manufacturers are trying hard to seize the market, mobile telecoms are fast becoming a “third party.” In September 2009, China Mobile, the country’s dominant mobile telecom carrier, announced plans to invest 500 million yuan (US$73.3 million) over the next five years, to establish a so called “reading base” in Zhejiang Province. The reading base is in fact a consortium of content providers, including the China Publishing Group, the China CITIC Press, Zhejiang Publishing United Group, and Shanda Literature, China’s leading online publisher. China Mobile later joined with Huawei Technologies, the country’s largest telecom equipment provider, to design tailored handsets, the first of which became available on the market earlier this year. In early May, the telecom operator announced a plan to fully engage in the e-reader market and launched a host of new reader phones. Gong Tianhua, general manager of the Zhejiang Mobile, a subsidiary of China Mobile in charge of the concrete operation of the e-reader business told media, “We don’t expect to see a profit in the next three years,” adding the primary focus for the time being is to accumulate a readership. Zhang Yanan, a senior analyst with Analysys International, an Internet information service provider, believes that telecom carriers have a competitive edge in the e-reader market due to their advantageous position in integrating content resources, business channels, phone handsets and users. According to media reports, the country’s two other telecom carriers are also weighing up the benefits of entering into the e-reader market. China Telecom is apparently planning to set up a reading base in Zhejiang, while China Unicom is looking at doing the same in Guangdong. The huge subscriber base of China’s combined telecom network, estimated to be more than 600 million, offers a tantalizing prospect for prospective partners. Hanwang chairman Liu Yingjian is also worried about the potential monopoly posed by the entry of China Mobile. “TD-SCDMA technology, a homegrown third-generation mobile telecommunications technology developed by China Mobile, will bring massive changes to mobile use, and may consolidate the mobile carrier’s dominant position in the market,” he said. According to a survey by Analysys International examining mobile phone use among Chinese consumers, only 9 percent of respondents use e-reader devices, while only 14 percent say they are paying attention to this new trend. However, should consumer habits change, the potential purchasing power of 600 million mobile users would no doubt tempt a new raft of investors, businesses and technology manufacturers. In such a scenario, it would only be a matter of time before Western competitors renew their interest in the Chinese market, but by then, of course, the horse may have bolted.