China’s Mounting Municipal Debts and its Impact on the Future Australia Commondities Demand

(Credit: Remko Tanis)

Corporate accounting scandals, subprime mortgage crisis and European sovereign debts concerns aside, the next looming overseas financial crunch to hit Australia and where it can really hurt is China’s mounting municipal debts. The FT and Citibank estimated the bad debts to be around USD 294 billion -350 billion respectively. While there is little doubt that China can cope with this debt, how the Chinese Government is going to reduce the local governments’ bad debt exposure. Could this reduction avoid massive demand cuts for Australia’s commodities that could (directly) impact up to 10% of Australia GDP?

At the start of global financial crisis (GFC), the Chinese government announced a 4 trillion yuan (USD 586 billion) national stimulus plan, with 38% of the stimulus allocated to infrastructure projects. Local banks lending limit were lifted, and urged to support the country’s growth in midst of the GFC. The market became awashed with easy money and local governments embarked a massive infrastructure spree. Many such projects were being financed through quasi-independent companies. Some of such companies were created by local governments in order to subvert lending restrictions imposed on Central government.

Last week, these practices finally hit the headlines when Liu Jiayi, the Head of the National Audit Office, in a report to the National People Congress (report in Chinese), cast doubt whether those over-exposed local government has the means to repay their loans or would ended up as bad debts?  The State Council (China’s Cabinet) responded by ordering all provinces to review all debts, cease illicit local financing and investment and detail a financial health report by end of 2010.

Undoubtedly this directive would result less infrastuture projects and decrease demand for Australian commondites. The Australian mining industry and the Australian Bureau of Agricultural and Resource Economics (ABARE) will want to incorporate this development in their mid-term growth forcast in light of the weakness in the global banks.

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Sunday arvo around Sydney Harbour Bridge and the Royal Botanic Gardens

It was another clear blue fine wintery Sunday day in Sydney and I cannot resist taking pictures of this beautiful city. I lived here for almost three years and I maintained a love-hate relationship with this place. As a student, I depend on much on public facilities for most services and Sydney’s public transport and infrastructures is absolute basket case.
However each time just when I want to give up on this city, around the corner there will be an quintessential Sydney scene or experience that reminds me what a fantastic city can be particularly if you are affluent and do not depend on woeful current state government.
This weekend I took pictures from the Sydney Opera House, the Royal Botanic Gardens (Sydney Botanic Garden) including views from Mrs Macquarie’s Point.  Hope you like the small selection and be encouraged to view the entire set.

1-Blue-staturated-Sydney-Opera-House 9-Mare-and-Foal-by-Arthur-Jacques-LeDuc-Sydney-Royal-Botanic-Gardens 011-Commerce-sculpture-Royal-Botanic-Gardens-Sydney-Australia

Summary and reflection on China’s Internet policy

(Credit: Tim Yang)

On 8 Jun 2010, the China State Council published its Internet policy white paper. The white paper (available in English) was written for an international audience explaining China’s domestic Internet development and the state’s role in the management of Internet in China. On one hand, the white paper demonstrated a contemporary understanding and support and acceptance of the Internet’s contributions and impact on China’s economy and societal development. However on the other hand, the heavy rhetorical tone in sections of the paper masked the government’s internet policy inadequacies and blanket approach legislature response to manage the flow of information via the Internet.

The paper is divided into six sections. First, it introduced the historical origins of the Internet in China, the massive ICT infrastructure development undertaken since 1997 and the government’s target to raise Internet accessibility to 45% of its population by 2015. Next, it described the upcoming Internet-related economic growth sectors and briefly discussed the government e-governance efforts to satisfy the information demand of the country[1]. The section goes on to elaborate the role of the Internet particularly in among its urban population – currently the largest constituent of China’s Internet population.[2]

The third section iterated the Chinese government’s support to the development of news communication over the Internet. This support was in alignment to its citizen’s right to freedom of speech, access to a full range of information and societal participation “in accordance with the law”.  The Chinese government also recognised the Internet’s role as a conduit to facilitate communication between the government and its citizens. The government singled out the vibrancy of the citizenry societal discussion on BBS (bulletin board system) which enabled the leaders to become more aware of the grassroots situation[3] and indirectly increased the citizens’ supervision of the government.

The fourth section outlined a litany of legislations and regulations to enable the government “scientific and effective Internet administration by law”. These legislations and regulations covered the administration of Internet network infrastructure, the dissemination of illegal information online, online safety for minors, the protection of digital intellectual property rights and citizen’s online privacy. It also outlined a sweeping list of prohibited content online, established by the National People’s Congress[4]. While this list of content may looked comprehensive, the definition of these prohibited content are often loosely defined. The lack of clarity behind these terms and a non-independent judiciary hindered an accurate understanding how these offences may occur.

The fifth section highlighted “cyber security” as a crucial area of interest to the China government. The Chinese government recognised that the Internet is an important infrastructure for the entire country and therefore internet security is a matter of state security and public interest. Within Chinese territory, “the Internet is under the jurisdiction of Chinese sovereignty.” Therefore, all PRC citizens, foreign citizens and organisations within Chinese territory must obey the laws and regulations of China.

To further lend support for the case of internet security, the paper provided an unsubstantiated statistical reference (“incomplete statistics”) to more than 1 million IP addresses in China were controlled overseas.[5] A series of agencies, laws and regulations concerning administration of the Internet security in China were also mentioned. Interestingly, the government is placing the onus of monitoring the users’ usage and content on the ISPs “to prevent the transmission of all types of illegal information”[6] [7].

In the last section, the Chinese government outlined its willingness to engage multilateral and regional organisations to share the responsibility of maintaining global Internet security. It specifically expressed its support for the ITU (a United Nation agency) to hold the role of International internet administration and also provided a list of exchanges and agreements with regional organisations with ASEAN, Shanghai Cooperation Organization, Interpol and specific countries like the UK and the US. In this section, China demonstrates an acceptance to norms of international internet administration.

In conclusion, the Chinese government demonstrated a contemporary understanding of the Internet and is eager to take advantage of its information sharing economical benefit, societal development, and electronic governance capabilities. But at the same time, it also highlights an uneasiness undertone with the wide availability of information exchange. In response to information which may fall under its list of prohibited content, the government employs a long list of laws and regulations to administer the Internet but questionably placing the heavy burden of responsibilities onto ISPs to monitor the users’ data. On the international front, the government expressed its willingness to support and cooperation in multilateral organisations to administrate and promote Internet security and development.

This piece was written in my personal capacity.

[1] The haphazard references to e-governance may indicate a lack of established formal e-governance policy.

[2] The white paper did not include specific ICT policy for the rural population.

[3] From the author’s personal perspective, middle level Chinese authorities have a tendency to micro-manage situations particularly those involves senior level authorities. This tendency which may led to “astro-turf” participation during the occasional senior level authorities consultations.

[4] Within the IV section of the white paper quoted, “The citizens’ freedom and privacy … is protected by law, which stipulates at the same time that while exercising such freedom and rights, citizens are not allowed to infringe upon state, social and collection interests or the legitimate freedom and rights of other citizens.” In absence of an independent judiciary, there is no institution apart from the CCP in China to determine the boundaries of the State’s interests.

[5] Researchers from University of Toronto and US’s Shadowserver Foundation uncovered a vast online espionage network based in China, (The Globe and Mail)

[6] The Sydney Morning Herald reported the Australian Federal Government proposed new ISP regulation to retain the private users’ certain web usage data. In doing so, the government may be able to bypass the need for court warrant to access these data, (The Sydney Morning Herald)

[7] Are private entities (ISPs) in the position to be trained and resourced to monitor private users’ data? Should they actually get involved in monitoring their customers?

A watch wearing river crab: Internet Democracy in China

I actually believe that China society at the grassroot is actually more open than under-reported by the international media. Nevertheless, I marvelled at the efforts and creativity of the Chinese netizen trying to overcome state censorship.

While researching on the state’s internet policy in China and the online civil society, I came across references to the terms and images of “river crab” and “wearing a watch” (and “grass mud horse” – a vulgar term involving one’s mother). These euphemistic terms were invented to avoid censorship that were established along the lines of state construct of a “harmonious society” (héxié shèhuì) and the ideology of “Three Represents” (sāngè dàibiǎo).

River Crab
The term “river crab” (héxié) which sounds similar to “harmony” is used when one’s posting had been subjected to online censorship (or being “harmonised”). Such is the popularity and acceptance of this term, that it made the leap from the internet and into mainstream lingo.

Wearing a Watch
The wearing of a watch (dàibiǎo) is pronounced in the same tone as “represents”, an acknowledgement of “The Three Represents”. The Three Represents mark an acceptance of the “advance productive forces” (other economical forces present in the Chinese socialist-market economy) in the CCP.

This phenomenon illustrates a missing meaningful and effective societal space in China to engage with the local and Central authorities. This gap forced the Chinese netizens to go underground to musk their opinions and grievances and often in doing so the complaint’s objectivity and purpose got lost in midst of this translation.

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An illustration of the Green Dam Youth Escort (a state-sanctioned censorship software) with Caonima (Source: Wikipedia)

A Day out at Cockatoo Island – 17th Biennale of Sydney

Over the Queen’s Birthday long weekend, I spent the afternoon at Cockatoo Island, the major venue of the 17th Biennale of Sydney. Even before getting to the island,  the scenic ferry ride from Circular Quay across the Sydney Harbour to the island certainly raised the anticipation. Cockatoo Island was a very unique setting to experience contemporary art because its was also former prison and shipyard.  Many of these buildings and workshops’ content still remains.

Below are some of the photos I took on the island, while here is the link to the entire collection.

6-Cai-Guo-Qiang-Inopportune-Stage-One-2004- 013-Rohan-Wealleans-He-with-Glands-of-Wasp-Sydney-Biennale 4-Entering-into-the-unknown-by-Berno 015-Industrial-crane-port-Cockatoo-Island

8 Jun 2010 – Politics, Philosophy and Economics Daily Linkages