Overcapacity is Not Harmonious

China and the European Union are meeting these two days, and it is hoped that with the newly-elected president of the EU, Van Rompuy, the EU will finally have one voice and figure out its China policy.

Nevertheless, the meeting of the 12th China-EU Summit in Nanjing has had a bit of a rocky start with the EU Chamber of Commerce in Beijing releasing a report late last week claiming that China's industrial overcapacity is sparking trade tensions and raising the risk of bad loans.

According to the study by the chamber and Roland Berger Strategy Consultants, China's 4 trillion yuan ($586 billion) stimulus package is worsening capacity, especially in steel, aluminum, cement, chemical, refining and wind-power equipment industries.

Basically, in order for China to maintain its economic momentum this past year, it has propped up the above-mentioned industries with subsidies, keeping business as usual even though orders overseas are way down. And because domestic demand for these goods are not high enough, many of these things are dumped in other countries at extremely low prices. Which is why we are seeing so many tariffs being slapped on Chinese-made goods.

"The Chinese stimulus package has poured credit into increasingly questionable projects," the report said, without specifying them. "The global impact can already be felt in the form of growing trade tensions."

It also says that China is the main "victim" of its own overcapacity. The chamber said lower profits means companies lack money to invest in research and development, to create value-added goods. Businesses are also forced to cut costs, leading to slower wage growth and thus less consumption.

"This is a major obstacle on the government's path to become both an innovative and sustainable economy," the report said.

It recommends the Chinese government cut overcapacity by lowering subsidies, raising interest rates to curb easy credit, and investing more in the social security net so people feel more free to spend. It also says costs for utilities like electricity and water should be raised so there will be less wastage and impact on the environment.

However, China will not take any of these recommendations, at least not right away. Currently it is painting itself as a victim of all these tariffs and its people cannot understand why China has good relations with say the United States when they are slapping tariffs on all kinds of Chinese-made goods.

What China should have done a year ago was seriously restructure its economy, especially state-run enterprises, cutting the excess fat, as they are not even as close as productive as privately-run companies, consolidate companies -- do you really need some 40 car manufacturers? And it needs to seriously invest in innovation. We're not talking about making the tiniest computer or developing more games on cell phones, but things that are not yet on the market.

Instead the country is dragging its feet, preferring to just continue on the same path it has always been on and hope that the rest of the economies around the world pick up again so it can continue being the world's factory.

Speaking of which, the Ministry of Commerce has produced a 30-second commercial I saw once today on CNN where the government is trying to promote that China manufactures all kinds of goods, from gadgets to clothing to airplanes. As if we didn't know that already.

It is the perfect illustration of how behind the government is in realizing what is going on outside the country and trying to get a step ahead instead of just trying to keep up.

Making the Case for Two

A professor from a university in Tianjin says the government should revise its family planning policy, and allow couples to have more than one child.

Yuan Xin, a professor with the Population and Development Institute of Nankai University says by adjusting the one-child policy, there will be less of a gender imbalance and more younger people to look after a fast-growing aging population.

Currently, the average gender ratio in China is about 117 to 120 boys for every 100 girls. The world average is about 107 boys for every 100 girls. That means in 20 years there will be 30 million men who will never be able to marry or have children.

In the last few years there have been tweaks to the family planning policy. For example minorities are allowed to have as many children as they wish, which explains why Tibet has a normal gender birth ratio. For Han Chinese, if the first child is born disabled, couples are allowed to try again. In the rural areas, if the first child is a girl, they may try again for a boy. And in the last few years, couples, both of whom are the only child in their family can have two children.

China's family planning policy began in the 1970s and the government claims it stopped 400 million births which it proudly says helped slow down the consumption of the world's resources.

But by the same token, the country has been criticized for its cultural preference for males and now it doesn't have a big enough working population to finance the aging one.

Yuan has suggested family planning be loosened in the 12th Five-Year Plan (2011-2015) which is in the next two years. However, by around that time, almost every young married couple will be eligible to have two children because those born in the late 1980s and onwards definitely come from one-child families.

So what's the problem?

While parents and the government are trying desperately to push young people to get married and have children, how can couples afford to have babies if they can't even afford an apartment? Property prices are so high now that everyone's savings have to be scraped together to buy a small home. Some young women refuse to marry their supposed beloved if they can't afford an apartment.

The government should be doing more to control property prices (ie cut down on the unscrupulous practices of property developers) so that people are more confident about entering the real estate market and from there they can plan their lives.

If they don't even feel secure about buying a home, how can they even afford to have a child?

As for the 30 million single men... unless the government and society is more open to accepting interracial marriages, they're going to remain bachelors...

Christmas German Style

Today was the annual Christmas bazaar at the German embassy a few (big) blocks from where I live. I read in a magazine that it is a very popular event and the article advised people to bundle up as they'd have to wait outside for a while to get in!

It started at 11am so I started off just before 10:40am, got on a bus for two stops. But when my bus approached the bus stop, across Dongzhimen Wai Daijie 10 minutes later, there was a massive line snaking down the block where the German embassy was and overflowing onto the next one!

So I stood at the back of the line where the European Union embassy was, and many people lined up behind me. Most of the people were German, as I heard many speaking German, or with Chinese people who could speak German, along with some Canadians and Americans.

After 11am the line slowly started moving and we inched forward every 30 seconds or so -- but literally inching. By the time I arrived at the entrance, it was 11:50am -- an hour waiting to get in.

Everyone had to show their passport and then get a quick sweep of a wand by security guards, open our bags and then were basically allowed in.

There were little booths set up in the courtyard, many selling things like gingerbread cookies and houses, stollen, sausages, pretzels, apple cider, beer, champagne, and a huge selection of cakes and pastries. People could eat hotdogs, bratwurst with potato salad, or roast pig.

But not all were edible -- there were also Christmas cards for sale, advent calendars (OK those involve chocolate), Christmas candles decorated with fir and pine, small wreaths, and jewelry.

Some people played O Tannenbaum on the trumpet, and later a choir in red complete with Santa Claus sang a few Christmas carols in German.

It was a really festive atmosphere, everyone keeping warm drinking cider, children decorating gingerbread cookies, or waving their long balloon swords around.

What was perhaps most interesting was a different kind of lost in translation, as most of the signs or descriptions of products were in German than Chinese and even then it was hard to decipher what exactly they were.

Nevertheless, it was the perfect event for families with kids and people catching up with friends. Isn't that what Christmas is about, anyway?

Fact of the Day: Best Investment of the Year

What is the best-performing asset this year?

Gold? Steel? Copper? Oil?

It's something of a more pungent edible bulbous nature -- garlic.

In some parts of China, garlic prices almost quadrupled to as high as 9 yuan ($1.32) per kilogram since March.

Some think it's because farmers lost money last year with too much garlic on the market, so they decided to scale back by planting less.

Others think that because of the A(H1N1) influenza virus spreading, many believe that eating garlic helps keep people healthy, so an extraordinary amount of garlic is being consumed.

The BBC quoted garlic seller and eater Jiang Haiqu as saying, "Every dish needs garlic and it's a good disinfectant. People who eat it live longer than others."

Guo Dongliang, a garlic seller also said that with the rise of oil prices, transportation costs also contributed to higher prices of garlic.

Some even think there are people hording the white bulbs to intentionally raise prices.

But whatever the theory may be, China produces three-quarters of the world's garlic. So you may eventually have to pay small fortune for a pungent (and healthy) flavour.

Memories Can Betray the Truth

Last night I went to hear author Wang Gang (王刚) talk about his book English, which was released in English in April. It was originally published in Chinese in 2004.

Wang is considered an acclaimed author, born and raised in Xinjiang Uygur Autonomous Region.

Dressed in a sweater and a long scarf elegantly draped around his neck, Wang apologized to the audience if he sounded sleepy as he had met up with a friend from Xinjiang the night before and they drank heavily so he was hung over. But he spoke poetically in a low voice in Chinese that was immediately translated into English.

His father went to Xinjiang in 1949, met his wife there and Wang was born in 1960. He learned how to play classical music on the flute and started writing stories. "I've lived 22 years in Beijing, but Xinjiang is my home," he says. "I don't dream about Beijing streets, but of my hometown of Urumqi."

However, when he was six years old, the Cultural Revolution began and for him and many of that generation, that decade has marked them in a different way from the generation before him. And his memories of that turbulent and violent period were recorded in the semi-autobiographical novel English.

He points out that those from the older generation write about the Cultural Revolution differently than him and his peers. "They describe it as the bad guys bullying the good people, which is basically them," he said, referring to the older generation. "They felt they were the victims. I on the other hand was six years old. I still felt guilt in my heart. They think to confess is not their business. But I think a child should confess."

When the Cultural Revolution began, Wang's parents were put in jail and he and his older brother wandered the streets as the schools were closed. They didn't have food so they would steal it. Sometimes they were caught and beaten up for it.

He says that the Cultural Revolution in Xinjiang and Beijing were the same -- except in Xinjiang there are Uygurs and 12 other minorities where everyone suffered together.

"I saw people beating up my dad and a Uygur who was a leader," Wang recalls. "Violence may happen to anyone. Everyone beat everyone. Then they all say they are victims. And then they ask, 'Why did it happen?'"

Wang says it was hard for him to remember what happened. "It took me eight years to write the novel [English], waiting for the details in my memory to surface," he said.

"Outside our window at home we could see the Ba Yi Middle School. Everyday I saw children older than me, about 14 or 15-years-old, beating their teachers. One female teacher was beaten to death. They left her body there and her husband came to collect it," he said.

"Not far from our house is the Urumqi River. And I saw a coffin on the bank of the river. It seemed huge in my memory. And I always saw someone kneeling next to the coffin. I never knew who was inside the coffin," he recalled.

Wang shrugs and says they just grew up like that at the time. "I can't helping thinking we were the freaks born during the Cultural Revolution," he said with a smile.

When he was told the Cultural Revolution was over, he wasn't even sure it was over. He said there was about five years of violence, which then calmed down. When he was 11, he learned to play the flute, playing pieces by Mozart, Tchaikovsky and Chopin. He said he was lucky that Mao's wife, Jiang Qing like instruments like this, as it gave an opportunity for poor kids to learn an instrument.

"For some writers, it is important to write about violence," he said. "I want to write like Mozart with tears in my eyes."

An audience member asked him about his reaction to the July 5 riots in Urumqi. In a roundabout way, Wang said he was very shocked, because when he was a child he played and fought with Uygurs, went to their homes to eat their food and knew some of their folk songs. He said he had many Uygur friends, even a next-door neighbour who was the vice mayor of Urumqi. They taught him about all the different trees, how to pick edible mushrooms and made him feel Urumqi was the brightest town in China because of the oil lamps Uygurs lit at night.

However, after the riots erupted, he called his Han Chinese and Uygur friends and heard different versions of what happened. He thought this contrasted with the Cultural Revolution, where everyone suffered together and after the tumultuous decade they lived peacefully together.

"Another friend called the other day from Xinjiang to say that Han Chinese don't eat at Uygur restaurants anymore and Uygurs won't go to Han Chinese residential areas," Wang reported.

He recalled two years ago going to Urumqi where he went to a bar and invited the people there for a round of drinks. Vodka was brought out and more drinking and dancing, together with Uygurs. In the end Uygur college students visiting from Beijing took him home. "Were they the same ones? I'm especially afraid of seeing blood, because of the Cultural Revolution," he said. "I don't want to face bloodshed again."

He sympathizes with many Uygurs who are so poor and work hard, only earning 1,000 RMB ($146.42) a year. "Who would have a peaceful life with 1,000 yuan a year?" he asked. While he hopes to see more of a middle class emerging in Xinjiang, he admits that perhaps material goods will not make them happy, as those in Beijing with what seem like good lives are not happy.

Han Chinese and Uygurs complain to him, he says, but points out the Uygur minority are the weaker group of people.

However, when asked if Wang could speak the Uygur language, he answered in this way:

"After July 5, some journalists interviewed me. They asked, 'If you treat Uygur people as your friends, why can't you speak their language? Why do they speak Chinese?' I was ashamed. It's unfair," he said.

So even while Wang, who was born in Xinjiang, grew up with and knows many Uygurs, believes the Han Chinese and Uygurs on the whole got along with each other. He still does not fundamentally understand the plight of Uygurs who want the freedom to practice their religion and culture and not be subjected to Chinese rule.

An audience member pointed out that Wang has a romanticized view of Xinjiang, and it seems he only wants to remember it that way, than see the brutal reality.

Nominal Reinvention

Chinese mainlanders used to be easily spotted in Hong Kong for their fashion sense, or lack of, but now they are trying to reinvent themselves in the former British enclave even further.

The South China Morning Post in Hong Kong recently reported that more mainlanders who live there are legally changing the spelling of their names to avoid discrimination.

A lawyer said his firm was seeing more mainland Chinese wanting to change the romanized spelling of their name to look more like Hong Kong residents.

For example, some Putonghua-speaking mainland clients would ask to have "Zhu" changed to "Chu", and "Zeng" to "Tsang".

"Some names in Putonghua pronunciation start with X or Z and many new migrants from the mainland want to change the spelling of their names in order to sound like a Hong Kong citizen who grew up in the city," the lawyer, Raymond Tang told the newspaper.

"Some whose names are only two characters also want to change them to three, as names with two characters are more common on the mainland," he was quoted as saying.

Statistics from the Immigration Department showed there was a monthly average of 105 name-change applications in the first nine months of this year, higher than in the previous four years.

Transforming a two-character Chinese name to three is almost like creating a new persona. And unless these mainlanders are from Guangdong and can speak perfect Cantonese, it's hard to see how these people can claim to have Cantonese-spelling names.

Perhaps later on they will also follow the Hong Kong trend of having English names.

Many years ago in Hong Kong I met a girl called Roach. I've also heard of Neon, Apple, Cinderella... Creamy and even Hitler!

Wonder what kinds of names mainlanders will come up with...

A Master of Two Literary Worlds

Yang Xianyi (��益), a well-known translator of Chinese and English literary works died this morning. He was 94.

Born in Tianjin of a wealthy family where his father was head of the Bank of China there, Yang was educated at home by a tutor in the Chinese classics before he attended a missionary school in one of the city's foreign concessions. It was then that Yang fell in love with English literature, reading everything from Joseph Addison to Oscar Wilde, and even attempted to translate John Milton into Chinese verse.

His interest in Greek led him to study abroad in London, where he went to Merton College in Oxford. There he studied two years of classics followed by English literature. There he met his future wife, Gladys Tayler, the daughter of missionaries in China, at the Oxford China Society.

The couple returned to China in 1940 and got married in Chongqing and worked as teachers and translators. After the Japanese were defeated, they moved to Nanjing. And even though they were offered seats on a plane to Taiwan when Chiang Kai-shek was defeated in 1949, they didn't even think about leaving the mainland.

In 1952 the couple joined the Foreign Languages Press in Beijing, in charge of translating all the most important works of Chinese literature into English. While they were faithful to the original work, they managed to translate them into readable English. In the end they translated more than 60 titles, including Homer's The Odyssey, George Bernard Shaw's Pygmalion, The Dream of the Red Chamber, and selected works of Lu Xun.

However, they were persecuted during the Cultural Revolution, labeled as anti-Communist "foreign spies" for their connections with diplomats in the 1940s and were jailed for four years. But that was not all -- their son became mentally disturbed after being sent to a factory during the Cultural Revolution and later committed suicide.

But after Mao's death and the Gang of Four were jailed, the Chinese authorities apologized to the Yangs for their "unwarranted arrest" 10 years earlier. Yang became chief editor of Chinese Literature magazine and published more translations.

In the 1980s their apartment became an informal salon for Chinese writers and western journalists. However, after June 4, Yang became critical of the government, describing to the BBC that the government had become worse than past Chinese warlords or Japanese invaders.

His wife died in 1999. During his retirement, Yang penned the following couplet to sum up his life:

少时了了，大未必佳；中年昏昏，老而无耻

"The bright youngster may not become a genius: muddle-headed in middle age, he is shameless -- or toothless -- when old"

Over the years countless numbers of students have read the Yangs' translations, and thanks to them they have helped broaden China's view of the world through literature.