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CAIXINMEDIA

Caixin is a hub for financial and economic news in China. Serving high-quality and original content, Caixin.cn focuses on key financial and economic information.

Urban Exodus? First Signs Of A Move Out Of The World's Cities

CAIXINMEDIA

Hannah Steinkopf-Frank

Urban Exodus? First Signs Of A Move Out Of The World's Cities

When the coronavirus hit, Valérie, a rising business executive used to a grueling daily commute into Paris, realized her life needed to change. Now, she and her husband have revived a long dormant dream: a house in Normandy with an ocean view.

"We have the impression of advancing — finally," she told Le Monde, adding "We're giving ourselves two years to make our transition, keeping a cool head and putting emphasis on finding work."

In the past months, millions of urban dwellers around the world, from New York to Nairobi to Paris escaped to the countryside to ride out the quarantine closer to nature and far from city crowds. Now, some might never return. Urbanization has been the leading demographic trend for decades, with around 55% of people globally living in cities in 2018. But exactly what made these areas appealing — work opportunities, access to art and culture and sporting events — have little value in a global pandemic as much of daily life as we know it is put on hold.

And what happens when travel bans are lifted? Some say the urban/rural divide is bound to start looking very different — with the first signs popping up in real estate markets. As Glenn Kelman, CEO of real estate brokerage firm Redfin told CNBC, "Rural demand is much stronger right now than urban demand, and that's a flip from where it's been for the longest time, where everybody wanted to live in the city. We'll see how it comes back, but there seems to be a profound, psychological change among consumers who are looking for houses."

When coronavirus first hit cities, rural regions were immediately appealing, given the decreased amount of contact between people when they aren't literally living on top of one another. The potential for self-sufficiency from gardening and raising animals (see the run on baby chickens) might also encourage rural preppers, given how coronavirus has exposed the fragility of global supply chains and high risk of infection for meat plant and agricultural workers. On a purely practical note, the cost of living in many rural areas is significantly cheaper, which could be an important pull factor as economies continue to tank.

Dacha is a traditional Russian country house with a yard for summer. — Photo: Evgeny Sinitsyn /ZUMA.

On a more existential level, the pandemic is making some question their life choices. Many who are now working from home might never have to return to that downtown office and can have increased freedom in where they choose to settle. The rise of online cottagecore among young people presents an idealized and aspirational image of this rural living. On a hopeful note, cities might experience new life after so much death, becoming more affordable to the artists and other creative types who have been pushed to the edges.

Despite having shaped the public image and desirability of cities, they are now unable to afford rent. In New Orleans, Amsterdam and Barcelona, the rich buying investment apartments and the rise of short-term vacation rentals have created ghost cities. In these revived urban areas, proposals to limit disease spread through increased bike and pedestrian accessibility and larger green spaces might just bring a bit of the country sensibility to concrete jungles. Here are some examples from around the world of people adapting to rural life.

In the UK, estate agents are experiencing a rise in potential homeowners looking for properties in market towns and fishing villages as either second homes or permanent residences. Inverness in the Scottish Highlands is the location that has seen the highest increase in searches from last year.
In Japan, 36% of young people say they aspire to change their career and move to sparsely populated rural areas, according to a survey in the Chinese news outlet Caixin. The main motivation for changing jobs is to avoid being infected with coronavirus in an overcrowded megacity like Tokyo. The Japanese daily Nishinippon Shimbun recently pointed out that the response to COVID-19 showed local mayors to be much more responsive and accountable than the central government, which may lead to further appreciation of social structures "being sparse instead dense," moving "from centralized to decentralized."
Interest in rural recreational properties in Canada are also increasing, with cities ranging from Vancouver to Toronto seeing the real estate industry slow significantly, CBC reported. While the number of properties for sale in Quebec dropped 20% in April, real estate agents outside of the greater Montreal region have seen a peaked interest especially among younger people for land, chalets and country houses.
In Russia, an estimated one-third of the urban population has fled for rural country homes and cottages known as dachas, according to Le Monde. The pandemic has hit cities hard, with approximately half the nation's cases in the Moscow region. Many of the dachas feature large vegetable gardens (a relic from the Soviet era), allowing for increased self-sufficiency. The issue now, the city transplants note, is how to get internet to the countryside.

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A girl waves a Chinese flag while seeing off visiting medics from in Wuhan on Monday.

CAIXINMEDIA

Coronavirus: What's The Real Death Toll In Wuhan?

Determining how many people really died in the Chinese city where COVID-19 began may help to understand what the toll will be elsewhere. But are authorities telling the truth?

WUHAN — In the Chinese city where the coronavirus outbreak began, the most severe quarantine measures are beginning to ease. But life is hardly returning to normal in the capital city of the province of Hubei. The most painful question for locals is being closely followed by the entire world: How many people died in Wuhan?

While the Chinese government's official number of deaths caused by COVID-19 in the city is 2,531, many have suspected that the toll may be much higher. Since last Thursday, survivors have been allowed to collect the ashes of their loved ones, and Beijing-based Caixin newspaper reports long lines at all eight major funeral homes.

Suspicious of the official number, Chinese-language opposition news outlet The Epoch Times did the math.

Wuhan's eight crematoria have a total of 86 incinerators. The largest among them, the Hankou funeral parlor, was previously reported to be in operation 24 hours a day with the capacity to incinerate 576 corpses per day.
Epoch Times estimated that the total number of corpses burned in Wuhan during the 40-day peak period to be 66,048.
Another funeral parlor has stated it will distribute 500 boxes of ashes per day, hoping to finish the distribution in 12 days, in time for Tomb-Sweeping Day, the equivalent of the Christian All-Saints Day, on April 4th. This means that a single crematorium will incinerate 6,000 corpses. Again, the official city-wide death count is 2,531.
As deaths begin to pile up in other countries, having the most accurate information on the human toll of the virus is crucial to knowing what policies and treatments worked elsewhere.

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Police officers on duty in a railway station in Wuhan

CAIXINMEDIA

Zhou Dongxu

China To Its Citizens: Go Ahead And Film The Cops

BEIJING — China's Ministry of Public Security has weighed into a national debate about citizens filming police actions with an attention-grabbing video of its own.

The video, released last month, confirms the public's right to film or photograph police with the caveat that citizens must "not affect the execution of normal law enforcement." It also explains that police should "consciously accept and be accustomed to this supervision by camera" and not forcibly "interfere with the filming."

There is no law in China expressly forbidding the public from filming law enforcement. And yet, as many observers point out, individual police officers often prevent citizens from doing so — either for reasons of confidentiality or just to exert control. To safeguard their interests, in other words, police stubbornly resist the idea of being filmed.

That's why the Ministry of Public Security video is such a big deal, say people like Zhang Chao, an associate professor at the Henan Police Academy. "Now there's a relative standard, a guideline establishing where the boundaries lie" for both the public and the police, he explains.

At the same time, Zhang Chao expects that some police will ignore the rules and continue forcing people to put their phones and cameras away. There are certain aspects about the video, furthermore, that could be open to interpretation. As many academics have noted, the stipulation that citizens "not affect the execution of normal law enforcement" leaves plenty of gray area.

To properly enforce the principle of transparency among police, the state ought to issue a handbook as well, along with more specific regulations clarifying when filming is and isn't allowed. More detailed rules wouldn't just benefit the public, but ultimately would be in the interest of law enforcement too.

Allowing the public to film police actions makes law enforcement more accountable, and poses a direct challenge to their propaganda machine. But it can also present police in a good light provided they carry out their functions in accordance with the law. It serves as a powerful incentive, therefore, for law enforcement to perform professionally and appropriately.

In today's information age, the roles and definitions of media are constantly evolving. Police must adapt to the new situation. "Reforming the way the police operate forces the traditional system to improve," says Zhang Chao.

The Ministry of Public Security video is a major first step. What remains to be seen is how much courage and wisdom the police down on the street demonstrate in honoring the policy decision from the top.

Chinese gymnast Hao You after a fall at the Rio Olympics on Aug. 16

CAIXINMEDIA

Chen Hongmin

China's Olympic Flop, "Planned Economy" Sports System To Blame

-Analysis-

BEIJING — As the Summer Olympics in Rio de Janeiro come to an end, the Chinese delegation's "failure" seems to be a foregone conclusion. Even in gymnastics, where it had excelled in the past, China won only two bronze medals, making it the worst performance of the past decade.

The first reaction of the Chinese media was to blame the judges for Chinese athletes' poor results. But following the Chinese team's significant setbacks in swimming, shooting and other events where judges don't decide, China's official media was finally obliged to face the reality.

Gold medals indeed should not be the only goal we pursue. The spirit of the Olympics is to participate and to strive for excellence. Still, the failure to meet expectations in Rio has revealed a longstanding lack of progress in China's competitive sports system.

Though China has been reforming and opening up for three decades, our competitive sports remain largely in the era of the strictly planned economy. The government fully finances the athletes, while the athletes' only purpose in life is to win medals in the various international competitions. Entrusted with the mission of "bringing glory to the nation," they expect gold medals to directly affect China's international status. The major national sports resources are all injected into this massive structure of the national team.

An Olympics team set up under such a system and such a guiding ideology has but one goal: winning gold medals. Every four years, China's national team — nicknamed by the public "the sports propaganda song and dance group" — is called on to perform. Official media touts the delegation and focuses on those vying for gold.

"Winner takes all" is the philosophy. This explains why this year is considered a failure, when China dispatched such a large expeditionary force to harvest so few golds.

Reaching the masses

In the face of such a setback, instead of blaming bias of foreign judges or a coach's bad tactics, China should instead reevaluate the nation's fundamental strategy on the sporting front. The country's athletic structure no longer reaches the mass of people, and has failed to play an effective role in promoting mass sports and public health.

Even in table tennis, where China still reigns supreme, and in which it used to boast a huge following, the performance is subtly but steadily getting weaker. When the state injects impressive sums of taxpayer money into competitive sports, the output should be more than a "show" that comes every four years.

From the overall environmental perspective, even if the government would like to insist on continuing to rear a batch of selected "good seeds" in a confined ground, the opportunities of the open market economy will gradually overtake such a practice.

One of the key reasons why Chinese athletes have struggled in Rio is because they are more and more knowledgeable about, and tempted by, the market economy. Today's sportsmen and sportswomen have much wider horizons and are much more open-minded. It's also hard to stop a talented youth from accepting sponsorship deals: Young stars know that they must accumulate as much wealth as possible while they are still under the spotlight. They have definitely heard the stories of their predecessors who won a dozen gold medals, only to end up jobless a couple of years later. This is obviously a good lesson for them to learn.

What it means is that our athletes are obliged to spend more and more time on non-training and non-sports activities when they step off the podium. In short, whether it's from a national or a social point of view, China's system for closed and conservative competitive sports management operations is outdated — though what comes in its place remains to be seen. Then Chinese can return to their favorite sport: counting Olympic gold medals.

Both Didi and Uber were taking aim at traditional taxis

CAIXINMEDIA

Liang Jianzhang and Huang Wenzheng

Why The Internet Giants Can't Crack The Chinese Market

No, it's mostly not about censorship ...

-Analysis-

BEIJING — The Didi-Uber deal this month was huge business news around the world. It's the story of a local Chinese brand that acquired the entire assets, including the rights, the business and the data, of the American deity of digital car hiring.

The accord marks another defeat for global Internet titans, mostly American, by Chinese companies in their home market. Previous examples included Microsoft's MSN defeat by Tencent's QQ in instant messaging, Yahoo crushed from the outset by Sina, eBay beaten back by Alibaba's Taobao, and Expedia falling by the wayside to Ctrip, an online travel services provider.

So why do these Internet companies enjoy success in other regions and countries outside of America, such as in Europe or Japan, but not in China? The answer is not as simple as one might think.

The scale effect

Two basic factors ultimately determine the success of online services. First is the technology advantage, the other is size of the market that the enterprise relies on for its growth. Meanwhile, demographics and economic development levels within any one cultural, linguistic and political boundary determines the market size. As long as the local market has a sufficient scale, then the advantages possessed by a local enterprise can offset the technology advantage from a foreign competitor.

In comparison with the standardized production of industrial goods, Internet businesses have to offer personalized services and solutions. This highlights the importance of Internet business' ability to adapt to a local market. So even when a new technology or business model rises, the key for an Internet company doesn't simply depend on the level of the technology itself, but rather on whoever possesses the best market adaptation so as to be the first to achieve the scale effect.

So, suppose a new Internet business model requires a scale of 10 million users to survive. In China, as long it can penetrate 1% of its total population, a business will be able to survive. By comparison, an American enterprise in such a sector would need to reach 3% of the population, and a Japanese firm 10%, to survive.

Alibaba founder Jack Ma in Hangzhou in 2014 — Photo: Ju Huanzong/Xinhua/ZUMA

This also explains why in the past the United States has been favorably positioned in the Internet industry, since it's the most populous nation in the advanced world. With a market far bigger than any other developed country, America's high-tech firms need a relatively low penetration rate to exist. And, once they succeed in America, they can rely on first-mover advantage to launch abroad.

Change of rules

But China's rapid rise has changed the rules of the game. Taking into account both population and economic development, China has become the only market larger than the United States. For example, the number of broadband Internet and smartphone users in China easily surpasses that of America. This signifies that, given the same conditions, China's Internet firms can reach economies of scale earlier than their counterparts in the United States, and thereby succeed more easily.

In the more distant past, China's smaller middle-class population meant that American Internet giants were able to seize the initiative when entering the Chinese market. As China's middle-class population tops America's, the balance will gradually tilt toward both Chinese innovators and imitators. If the technical threshold is too high or America's innovation is too far ahead, Chinese companies will fail to effectively copy. But if not, Chinese enterprises will learn and reproduce rapidly, and eventually overtake their American rivals with the help of a bigger market.

Chen Yidan (C), one of the founders of Tencent, one of China's leading Internet companies in May 2016 — Photo: Li Peng/Xinhua/ZUMA

That great firewall of China?

Some people tend to attribute Chinese firms' local success to China's regulatory measures. For certain technological fields this is true, because foreign companies are more restricted and cannot fully compete with Chinese companies. But this is clearly not the explanation for the success of companies like Didi.

As a matter of fact, strict Internet control does more harm than good to Chinese companies' growth. China's fast rise of the last three decades is in fact largely attributed to its reform and policy of opening up to the world. A more open Internet would help China to learn advanced technology, allow Chinese enterprises to participate more deeply in global competition and raise their level in competition at home.

The value of the Internet can be measured in the exchange of information among different individuals. The larger the number of individuals connected, the larger each individual's scope of choice and the higher the average communication frequency and quality. Thus the value of the Internet has a positively accelerating relation with the network node number. Meanwhile language and culture are the Internet's main boundaries, which explains why demographics play an ever increasing role in competitive advantage. Not only does China have a huge market, but also the biggest pool of talent, and countless young people with entrepreneurial aspirations. Once the favorable elements of an innovative economy are put together, China's eventual and overall rise will be inevitable.

Breaking through

Of course, complacency can also turn Chinese companies' advantage in their domestic market into a disadvantage. A huge market at home limits Chinese companies' ambitions in exploring abroad. For instance, though WeChat (Weixin in Chinese), a cross-platform instant messaging service, is probably even more powerful in function and convenience than WhatsApp or Line, its number of users lags behind the latter two, and it remains used mainly in China. To be invincible in the long term, Chinese companies have to be more enterprising and target a larger market. This is one more reason that loosening Internet controls would benefit development.

All that said, an even more worrying factor is China's dangerously low birthrate and aging population today. Due to the one child per family policy, China's population has shrunk by 32% over the last 20 years — from 219 million people born after 1980 to 147 million born after 2000. At this rate, America and India are destined to overtake China. Yes, as much as politics and technology, economic prospects are largely determined by demographics.

CAIXINMEDIA

Jiang Han

Why China's Middle Class Is Suddenly Being Squeezed

BEIJING — Chinese people watching American television series are exposed to an enviable image of an average middle class American family. Bound for a leafy neighborhood in the suburbs, a Chevrolet leaves the bustling city and rolls into the driveway of a wooden home on a quiet street. Two or three kids are playing on the lawn, and an elegant woman walks outside to give a hug and kiss to her man on coming home.

Like their peers in America, China also features a demographic that is well-educated, works a stable job and has a family. They own their own hous, possess strong expertise and professionalism, and have a certain household spending power.

According to Wacai.com, an online banking platform, in China, a person classified as middle class is an adult under 45 years old, with invested financial assets of between 150,000 and 2 million RMB ($22,000 to $299,000), whose food spending accounts for less than 30% of total household expenditure. It's estimated that China currently has 180 million such people, accounting for 13% of its population.

However, when it comes down to real life, many of China's middle class feel that they are far behind their U.S. peers, who seem to be enjoying their lives in a much more leisurely way.

One recent Chinese post on the Internet said: "I'm a white-collar city person. I'm called middle class and I have a life many others envy. Yet I'm always anxious. I worry that I may be laid off tomorrow. Though I am healthy today, will I become poor if I have a serious illness one day? How much further can I climb up? And who will support my old age? One big-scale layoff, a possible pay cut, a fluctuation of the stock market, an adjustment of the tax rate or even just the housing subsidy fund can keep me up at night."

In a traditional definition, "middle class" means the part of population midway up the social pyramid. They are those who are mostly engaged in white-collar work, and are well-educated, with a stronger vocational ability, as well as corresponding household purchasing power. They also have more time to pursue leisure activities and travel associated with an elevated "quality of life."

Among all these measures, the pursuit of leisure is probably the most unattainable. Today in China, social resources are certainly not concentrated in the hands of the middle class, but the middle class are trapped between the upper and lower classes. In other words, it's a zero-sum game in which the middle class strive in an extremely intense competition, and try desperately hard to climb the ladder of success at risk of sliding down to the bottom of society.

Compared with a decade ago when middle-class Chinese were significantly better off than the working class, and were able to enjoy more leisure time, as the Chinese economy developed these people are gradually losing what they used to have.

Due to the slowdown of the Chinese economy and the tightening of various government policies, the majority of China's middle class are transiting from a leisured class to a group who mostly find themselves working overtime. The pressure comes from mortgages, education costs, health care, social security and rising living expenses, limiting free time and extending working hours to make ends meet.

There are pertinent questions raised by Japanese economist and corporate strategist Kenichi Ohmae in his M-Form Society theory, referring to a polarized society with extreme rich and extreme poor: Does your housing loan create tremendous pressure? Do you dare not get married or raise children because of your economic situation? Do you worry for your children's education? As long as your answer of one of these questions is yes, then you are not a bonafide member of the middle class, but what we call the "sandwich class."

Root of anxiety

By some estimates, to be a Chinese middle class not facing constant stress, one must have cash deposits of at least 5.5 million RMB ($822,000). This is not at all realistic for most of those who nonetheless think of themselves as middle-income.

But when you ask them, they are indeed worried about the potential spending in the years to come: children's education, savings for medical care and a pension, the cost of their children's marriage, personal career training, as well as car or house replacement.

China is the world's largest developing country, and as such lacks of fully established welfare state. Most daily needs are to be assumed by families themselves and thus a serious illness or an incident in life can suddenly make people very vulnerable.

For China, a stable middle class will be the key in determining whether the country will move towards a consumption-driven society that achieves social stability. It will be imperative to improve the welfare system and social security so that most working people are truly well-off, able to enjoy leisure time and dare to partake in the national consumption that can form the county's backbone.

Graduates at the Guangdong University of Foreign Studies in Guangzhou

CAIXINMEDIA

Jiang Han

In China, Where 15 Million Graduates Face Poor Job Prospects

BEIJING — China established a policy for increasing university enrollment in 1999 in order to boost the economy and spur employment. By 2002, some 1.45 million students were graduating each year in China. This June, 7.65 million got their college diploma, yet another record high.

The growing number of college-educated people is good news for the country. But for the individual young graduates, bad news lurks ahead.

Every year over the past few years, people have called it "the hardest year for graduates to find a job." Yet, the stunning truth is that there is no such thing as "the hardest." It just gets harder and harder — and the situation has shattered the self-esteem of young people.

In addition to college graduates, if you count technical and high school pass-outs, China has an army of 15 million young people looking for jobs, according to data from China's Ministry of Human Resources and Social Security.

But there's a slump in the Chinese economy. Many companies are recruiting less so there are fewer jobs available to graduates. Movies portray a romantic image of graduation. In reality, large numbers of students gloomily trudge between job fairs and interviews in the months leading up to graduation. Finding employment has grown harder and colleges are increasingly becoming job training camps.

Why is this?

The number of Chinese college graduates has risen faster than the ability of the Chinese economy to absorb them. Since the end of the 1990s, the government stopped taking responsibility for allocating jobs. Jobs in the information economy are fewer and fewer. As a developing country, China has both an information technology industry as well as traditional manufacturing. Blue-collar jobs with lower incomes and poorer work environments do not attract college graduates. But the jobs provided by modern financial and services industries, including internet businesses that have been in the limelight in recent years, are simply not enough to absorb the growing number of young job hunters.

Chinese students grow up with the philosophy that, "The worth of other pursuits is small, only study can excel them all." This kind of thinking, promoted by schools and parents, has convinced students that the only way to succeed in life is to study. Many Chinese parents believe that entering university is a passport to climb up in life.

The majority of Chinese graduates want a job in large cities or the coastal areas and prefer government work or employment in large public and private enterprises. Parents, who have made a huge investment in their offspring from kindergarten to college, also expect a return on investment. In these cases, both parents and children are disappointed when faced with unemployment.

China's policy reflects a disconnect between the real economy and education. The majority of Chinese universities offer curriculum that is oriented toward elites and can be out of touch with real market needs. The education model churns out batches of young adults who are highly educated but lack practical skills and experience. Even if the graduates get employed, their new workplaces still have to spend a lot of money to train them.

China's young adults were born at the best of times but are dealing with the worst of times. It will take a lot of effort for them to build up their own capability and develop real competitive advantage at the workplace.

CAIXINMEDIA

Dong Dengxin*

How U.S. "Diploma Mills" Are Duping Chinese Students

Trump University isn't the only questionable American higher education institution. Other self-proclaimed universities are virtual scams, and China is a prime customer.

-OpEd-

BEIJING — Until the 1990s, studying abroad had been reserved for the elite. But since the beginning of this century, and particularly since the financial crisis of 2008, going overseas for education, tourism or shopping has become increasingly common in China. Many students are now directly applying for undergraduate studies abroad, not first obtaining their bachelor's degree from Chinese colleges as has traditionally been the case.

According to data published in March by the U.S. Immigration and Customs Enforcement, out of 1.2 million international students in American colleges and universities, 353,000 are Chinese, making China the number one country of origin for foreign students.

But two problems lie behind this figure. Chinese students are likely becoming the accomplices of America's "Yeji universities" — the Chinese term for so-called "diploma mills." ("Yeji" means "wild chicken.") And these youngsters are unlikely to be integrated into America's mainstream society, and will instead remain isolated.

In America, the opening of schools is based on a system of registration. Anybody is free to run a school, and colleges are certified by civil institutions. According to the Constitution, each state government is responsible for the approval and registration of various types of higher education institutes.

Typically, American colleges and universities are not only legal but most are also accredited by a list of six regional accreditation organizations. The so-called Yeji colleges are, instead, unaccredited. Many of these colleges are effectively just a postal box address. In certain U.S. states, educational institutes are just like any other consumer good and are market-driven. Whether American or not, one can complete the entire process to open a college by paying $6,000 of intermediary fees, and by registering the university as a company.

As such, it is legal to run a Yeji college. It is only a violation to issue unaccredited diplomas and use them to apply for a job.

Yet, due to the fact that many Chinese are xenophiles, mills churning out so-called bachelor's or degrees like the MBA, executive MBA or Doctor of Business Administration have mushroomed. And whether or not these diplomas are junk, candidates with these certificates in hand are often popular with Chinese firms.

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Stairs to nowhere? — Photo: Will Fisher

Who's buying junk diplomas?

America has more than one thousand of these diploma mills accounting for more than half of the world's total. And according to some estimates, 95% of these fake diplomas are sold to the Chinese. They find their way to three types of clients: those deceived by intermediary agencies promising overseas study, those who go abroad to pursue a legitimate degree but couldn't manage to obtain it, and the ones who voluntarily buy junk diplomas. The third category of people is, in general, made up of older people working for China's state-run enterprises. They buy these fake diplomas mainly to get promoted.

In recent years, some of these diploma mills have tied up with international education agencies to set up teaching points directly in China. They invite famous Chinese professors to be their figureheads. Numerous Chinese education agencies provide support to sell their fake diplomas. This complete "one-stop" industrial chain employs as many as 100,000 people.

A fake undergraduate diploma is sold for between 30,000 to 80,000 RMB ($4,560 to $12,160). A doctorate degree costs more than 100,000 RMB ($15,200). There are no real courses or studies involved in gaining these certificates. One can obtain a diploma as long as one pays for it. A few years ago, one Canadian diploma mill said it organized 15 sessions in China's southern city of Guangzhou and churned out over 500 "graduates."

One of China's catchphrases over the past two years goes like this: only the rich can afford to compete. Many people blindly follow fashion and love trying to outdo their friends. Parents thus force their offspring to go abroad just because their friend's children do so. Such "democratization" of overseas study naturally results in students with a rich dad or mom going to a foreign university or, at the very least, buying a fake diploma. Those who don't manage to buy the fake diploma call such foreign trips a "study tour" and comfort themselves that they had "spent money in buying experiences."

A lot of Chinese students don't master enough language skills to adapt to life in a new country, and end up sticking solely to a circle of Chinese people and speaking only Chinese.

Thus it is no wonder when you begin to encounter youngsters who are supposed to have studied abroad for quite a few years but don't really know anything. Not only do they return home without speaking a foreign language, they also struggle to find simple jobs. All of this actually says much about the current state of China's education system, but, perhaps, even more about the state of mind of Chinese parents.

*The author is director of the Finance and Securities Institute at the Wuhan University of Science and Technology.

CAIXINMEDIA

Huang Zhilong*

What's Hit The Brakes On China's Foreign High-Speed Rail Ambition

-OpEd-

BEIJING — On June 9, U.S. company XpressWest suddenly announced that it would end the joint venture agreement that it had signed with China Railway International to build a high-speed rail linking Las Vegas and Los Angeles.

The U.S. firm said its decision to terminate the relationship with China Railway International was based "primarily upon difficulties associated with timely performance and CRI's challenges in obtaining required authority to proceed with required development activities."

XpressWest ended the deal despite China's clear cost advantages in rail construction. According to a 2014 World Bank study titled "China High Speed Rail: Construction Cost Analysis", the average cost of high-speed rail construction worldwide is about 203 million yuan per kilometer. At 110 million yuan per km, China builds rail at about half the price. This is mainly due to three reasons: the lower cost of civil engineering, the prevalence of high-speed rail network across China that brings about fixed repayment of capital investment and lower labor costs.

So why would XpressWest end the agreement? It could be one of many cases in which non-economic factors played a role. In recent years, political hurdles have repeatedly disrupted Chinese companies' foreign railway construction sales. In the case of the Sino-US rail project, it's most likely the result of a disagreement among America's political parties.

"Do Washington DC policy makers have the courage and vision to support this high-speed rail project?" XpressWest had questioned Republican makers who were against the deal.

In a similar case, Thailand's military government appears to have manipulated the court into ruling that a rail project that had been approved by the country's parliament was actually unconstitutional. In Mexico, opposition party objections brought China's bullet train project to a halt.

China's foreign railway contracts have also frequently encountered complex labor, environmental, cultural and religious issues. In 2015, China beat Japan in winning Indonesia's railway construction project. But the project has never taken off because of resettlement and environmental issues.

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China High Speed Railway on Fast Track Exhibition in Jakarta — Photo: Afriadi Hikmal/ Zuma

It's due to such construction delays that the urban light-rail project in Saudi Arabia has cost a Chinese company 4.2 billion yuan in losses. The fact that Chinese contractors do not understand the local laws and customs have doubled the labor cost of this project.

As China's main rival of railway sales abroad, Japan offers attractive deals. For the Indonesian project, for instance, the Japanese company offered a loan at a 0.1% interest rate and a repayment period of 40 years. The Chinese firm won the project by saying the Indonesian government didn't need to provide a credit guarantee. But by doing so, China is running the risk of not recovering the loan if the railway operation is poorly managed.

China couldn't even compete with Japan when it came to India. A Japanese company offered India 80% of the construction loan — about $12 billion — at a 0.1% interest rate with a repayment period of 50 years. It also signed a technology transfer agreement with India. But it's not just these favorable terms that made Japan win the bid.

India is wary of China building strategic infrastructure. The two Asian giants relationship has been characterized by rivalry, not cooperation.

Japan, on the other hand, has a warmer relationship with the country. India is the biggest beneficiary of Japan's official aid. Tokyo set up a $12 billion fund assisting Japanese firms that support and invest in the "Make in India" program and provided $5 billion to push forward 13 infrastructure projects in India.

So although China appears to be the cheap option, it's actual capital cost remains high. It looks like China will continue to face risks and challenges in its high-speed rail ambitions.

*Huang Zhilong is the director of the Macroeconomic Center at the Suning lnstitute of Finance.

Chinese President Xi Jinping and Nigerian President Muhammadu Buhari in Beijing on April 12

CAIXINMEDIA

Lu Ruquan

A Roadmap For Future Chinese Energy Investments In Africa

BEIJING — China has received a string of recent visits from African government and business officials, including Nigerian President Muhammadu Buhari, in April, and Mozambican President Filipe Nyusi, who came in May accompanied by officials from his national petroleum company. The president of the Algerian national oil company also made a trip to China of late, as did the minerals ministers from Sudan and South Sudan.

All of these officials have the same objective: to deepen cooperation with China in the energy sector. The countries they represent have been hit hard by low oil prices, and they're desperate for greater Chinese investment. The situation is a favorable one for China. To make the most of the opportunity, however, China needs new thinking and new measures.

China began its cooperative development of oil and gas in Africa in the mid-1990s. Things expanded quickly. Investment rose, new reserves were identified and tapped, production levels surged, pipelines were opened, and overall trade increased — all to the point that by the first decade of this century, oil and gas became the cornerstone of Sino-Africa cooperation as a whole.

More recently, however, that momentum has been curbed somewhat by political turmoil in both West and North Africa, and by the independence of South Sudan. Still, Chinese oil companies now have a total capital expenditure in Africa of more than $35 billion, and an annual production capacity of 50 million tons of oil and gas.

State oil operators in China tend to work in a coordinated and "integrated" way with the producer countries. But China also provides these countries with "package solutions" to help them improve their oil industries. PetroChina has followed this investment model in places like Sudan, Chad and Niger.

In the coming years, African countries will continue to seek Chinese investment money. Chinese oil companies should oblige, but also improve their investment approach and expand it to other countries, such as Mozambique, Tanzania, Uganda and Algeria.

In doing so, they should keep in mind the particularities of the various countries and areas, which differ not just in terms of resources, but also things like language and religion.

Africa is divided into five areas that are not very interrelated. North Africa is composed of Muslim countries where people mostly speak Arabic. Egypt is the area's dominant nation. But Algeria, Libya and Sudan all have key oil and gas resources.

Most West Africans are also Muslim, but tend to be French speaking. Nigeria is the area's most resource-rich country, followed by Niger and Chad.

The largest country in Central Africa is the Democratic Republic of the Congo. It is French-speaking and mainly Catholic, and has rich oil and gas resource potential.

East and South Africa are made up of mostly English-speaking countries and are Catholic or Protestant. East Africa's leading country is Kenya. The richest in terms of resources, however, are Mozambique and Tanzania. South Africa, a political and economic powerhouse, has only limited energy resources

In the next five years, China should adopt the aforementioned "integrated" and "packaged" approach to North and West Africa, where the industrial base is obsolete and the market is underdeveloped.

In Nigeria and Angola, where China has already made significant inroads, it should enhance cooperation in downstream refining and natural gas.

And in East African countries like Kenya and Mozambique, where the oil and gas market is relatively high-end, China can actively explore the engineering services market. One good option may be to enter into joint ventures with large multinationals.

China should be wary of the so-called "resource curse," which refers to the high levels of corruption and relatively low levels of economic growth of some resource-rich countries. When doing business with those countries, Chinese oil companies should abide by international norms and local laws to ensure compliant operations.

China will also have to tread carefully when it comes to France and the United States. France, once the dominant foreign player in much of Africa, continues to maintain major business and political interests there. Ideally, China should adopt a joint venture model with French and local companies, and set up tripartite consortia in French-speaking countries to share risks and revenue.

With regards to the United States, currently the most authoritative and influential power in Africa, competition with China is inevitable. But rather than challenge U.S. companies head on, China might want to enter into joint projects with the American oil giants.

CAIXINMEDIA

Liang Yingfei

In China, Going Home After 23 Years Of Wrongful Imprisonment

Chen Man's release from prison has historical significance, writes Liang Yingfei.

MIANZHU — As Chen Man returns home from prison, freedom is no longer a mirage, it's more like a soft mist, invisible but real. At seven in the morning, he will go to the local market to do his food shopping. On the way home, he will buy a fresh bunch of gardenias. When it feels a bit chilly, he can stretch out in the sun. All these thoughts remind Man that, after 23 years behind bars, he is finally free.

In 1988, Man gave up a steady job working for the local government in his hometown Mianzhu, a small city in China's southwestern Sichuan province, to seek his fortune with some friends in booming Hainan, China's southernmost island.

Man's parents are intellectuals. His father is a scientific researcher and his mother worked for a hospital. As honest and meticulous as he was, with an upbeat demeanor, Man was not the sort of person anyone could ever imagine being wrongfully imprisoned.

In the exasperated words of his mother, "He couldn't even kill a chicken, let alone a person!"

Yet in 1992, police accused Man of murder and arson after those crimes were committed in the apartment he had rented in Hainan. In 1994, in spite of a lack of evidence, Man's repeated insistence that his confessions were obtained under torture, and proof of his alibi on the night in question, he was sentenced to death with reprieve. In China, this form of punishment commutes death row inmates' sentences to imprisonment if they commit no further crimes in two years after their day in court.

Man's parents fought long and hard to appeal for their son. Convinced of his innocence, they tried to help him in all sorts of ways: by making inquiries and researching the facts of the case, searching for expert advice, hiring lawyers, and by sending letters to various courts, the Procurator-General of the Supreme People's Procuratorate, and all relevant political and legal committees every month. These appeal letters were all fruitless. At every level, the Chinese legal system rejected their pleas.

It was only in 2004 that Cheng Shirong, a former colleague of Man's father, researched Man's case and became convinced that there had been a miscarriage of justice. He decided to take over Man's elderly parents' heavy burden with the courts.

It took many more years of twists and turns before in 2013, the case finally reached a turning point as the story came to the attention of the "Grievance Relief Network," a volunteer group composed of lawyers, forensic investigators and journalists. They convened with other legal experts and organized an investigative seminar in Beijing, in addition to launching letters of appeal to the relevant judicial authorities on Man's behalf.

At last, in 2015, the Procurator-General finally lodged a complaint with the Supreme Court, and on February 1, 2016, the Zhejiang High People's Court finally pronounced Man's innocence.

Over the past three months, Mianzhu, a small town at the edge of Chengdu, has suddenly been flooded with journalists from all over the country. This is the first time since the founding of the People's Republic of China that the Procurator-General's demand for a retrial led to the accused's release from prison. Thus, the "Chen Man case" has important historical significance.

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In Hong Kong, China — Photo: Sarah Joy

Meanwhile, Man is seeking peace of mind amidst all the hustle and bustle. There are so many things he must learn. He bought a laptop computer, but still can't manage a simple operation such as cutting and pasting text. He had to re-learn his way walking home: After 23 years, the fields around his parent's house had turned into blocks of buildings. Man is also trying to fix the tape recorder his parents have kept for him all these years, so he can play his collection of dozens of cassettes, since no technician is capable of or interested in repairing this museum piece anymore.

The array of new things dazzles Man, who is nevertheless motivated to learn. His bedside is stacked with books about Chinese culture and how to succeed.

In the last few days, news that Man has received state reparations totaling 2.75 million yuan (about $41,811,135 at current exchange) has once again propelled him into the media spotlight. As he walks down the street, passers-by whisper, recognizing him as "the guy who got 2.75 million."

This new label has also attracted a lot of strangers to Man. Some offer him investment opportunities. A woman also called him up to say she'd "like to be his friend." When Man declined her proposal, expressing interest in a more natural meeting with someone he could get to know over time, the woman shouted at him over the phone, telling him to go to hell.

At this stage, Man has only an inkling of what his future might hold. His priority is to keep his parents company and to restore his health. He is now 53 years old, and his long and painful years in prison gave him chronic gastritis, gallstones, colitis, hemorrhoids, and numbness in his legs and feet.

His parents are both over 80 and belong to the older generation of intellectuals known for their tenacity. But after decades of fighting injustice, they suddenly felt physically and mentally exhausted when their son finally came home. Even a glimpse of a news report about their son reminds them of the agony they experienced for years. Man's mother, who used to be so patient in answering journalists' questions, collapsed in a recent interview, saying that she no longer wishes to remember this unbearable ordeal.

That justice arrived so late is the family's greatest regret.

Contrary to what has appeared in some press reports, Man is not seeking to receive higher compensation or punish those responsible for his wrongful imprisonment. These are more other people's wishes than his own, he says. All he wants is to look ahead and start a second life. There is no time to waste.

Bullying has intensified to frightening levels at Chinese schools.

CAIXINMEDIA

Deng Xueping

Why Bullying is Getting Worse In China

Amid more and more incidents of bullying in China, schools and the legal system appear to be doing very little to stop it.

-OpEd-

BEIJING — Last May, eight middle school girls beat up a first-grader in China's Shandong province, and uploaded a video of the assault online. A month later, in Nanjing city, a group of high school boys in their senior year thrashed a junior, dragged him into a toilet and forced him to eat feces after he refused to give them money. His attackers also filmed the act and sent the recording to other students as well as the victim's parents.

These kinds of assaults, better known as bullying, a process where students intentionally intimidate others physically, verbally or online, have intensified to frightening levels at Chinese schools in recent years, prompting the State Council's Education Steering Committee to recently issue a notification requiring all primary and secondary schools to pay attention to bullying on their grounds.

A 2002 survey conducted by the psychology department of Shandong University found that 14.9% of all schoolchildren have been subject to some form of bullying, which, in turn, research shows, hampers a minor's mental and physical health, and could become a life-long nightmare for some individuals.

Despite the serious consequences of bullying, China lags behind other countries in dealing with this problem. The Minors Protection Act, or the Law against Domestic Violence, for instance, is limited to adult violence against minors. No law relates to insulting behavior or violence of children against other children.

Moreover, our legal threshold for penalizing acts of violence and obstruction of personal freedom is too high. Only those acts that cause physical injuries or illegally restrict the physical movement of a person for more than 24 hours can be prosecuted as crimes of intentional assault or illegal detention. As for verbal abuse or slander, only those actions that result in "serious consequences" can be considered crimes. Even the onus of proving the crime falls on the victim as is the decision on whether to take the perpetrator to court.

Criminal law is rarely applied to offenders when it comes to bullying. Instead, those above the age of 14 and under 18 are typically subjected to lighter punishment while those aged under 14 are sent to their parents or guardians to be disciplined. The idea that minors are entitled to special protection because they are mentally immature is a legitimate one. But the victims of these crimes, who are also minors, need equal protection. This can't be one-sided.

Schools are part of the problem. When a child is bullied on school property, the head teacher is scolded and, in more severe cases, faces disciplinary action. The administration rarely reports the case to police because the school's reputation as well as the careers of staff members is at stake. In such scenarios, the administration tends to sideline parents who insist on legal action. Instead, it often chooses to stand on the side of the bully's parents in the hope of reaching a peaceful resolution. But, by choosing to do so, the administration encourages lawlessness and schools become a breeding ground for bullies.

In China, little has been done to create a safety net for bullied students. Due to a lack of experience and development, schoolchildren often lack the ability to cope with bullying. They need to be provided with accessible and trusted assistance that is available at any time. Schools need a strictly standardized response to bullying and need to be held legally responsible for what happens on their property.

Our neighboring country, Japan, was at one time plagued with school violence. In 2013, the Japanese parliament passed a slate of measures to prevent bullying. The law judges "from the victim's position" on whether or not the offender's act constitutes bullying. Teachers are graded on how they handled this problem in their performance evaluation. Schools are now required to set up an Advisory Committee and a Schoolchildren Safety Measures Support Room made up of professionals. When perpetrators are suspected of illegal acts, police are contacted immediately to assist in the investigation. In the United States, law enforcement agencies are called in at once when an assault occurs. In South Korea, a student can apply to the school or education department for personal protection, and a security guard is dispatched in response. In order to avoid isolating the student because of the protection service, these guards often go undercover.

Monitoring bullying in schools is now a global trend. But apart from moderate legal punishment, more focus should be on preventing violence and providing protection. These are broad-brush requirements. Each school has to find out their own specific support measures. Bullying in schools is a secretive and longstanding practice. In order to ensure that the Education Steering Committee's recent notification to schools is enforced, it's crucial that their requirements are crystallized in the form of legislation.

*The author is a lawyer at the Capital Equity Legal Group, a law firm