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China Protested U.S. Naval Warship Entering Areas Close to Spratly Islands

Xinhua recently reported that Yang Yujun, the spokesperson for the Chinese Defense Ministry, held a press conference in which he stated that the USS William P. Lawrence guided missile destroyer entered an area near the Spratly Islands in South China Sea. This once again became proof of the necessity for China to continue its defensive construction on the islands. China considered the USS Lawrence’s entry without permission a serious provocation. The Chinese Navy responded by sending two J-11 fighter jets, one Y-8 patrolling aircraft, the Guangzhou missile destroyer, the Mianyang missile frigate, and the Linfen frigate to identify, warn, and expel the U.S. warship. Yang confirmed that China will strengthen its military presence in the region to defend China’s sovereignty.
Source: Xinhua, May 10, 2016
http://news.xinhuanet.com/world/2016-05/10/c_1118841916.htm

Xinhua: The European Parliament Voted against China’s Market Economy Status

Xinhua recently reported that the European Parliament passed a non-binding resolution rejecting China’s bid for market economy status. The resolution mentioned that some EU companies and labor unions expressed deep concern about the threat of potential unemployment and even some EU companies’ survival after granting China such status. The resolution emphasized that China has to first meet the five major EU standards for a market economy before this status can be granted. Current rules for anti-dumping and countervailing investigation procedures remain. However, China is now the second largest trade partner of the European Union. The Parliament said it cannot violate the WTO (World Trade Organization) regulations and that the European Commission should work with other trade partners to come up with a unified interpretation of the term “Market Economy.” The Chinese Ministry of Foreign Affairs responded by insisting that its accession agreement to the WTO provides for automatic Market Economy Status after 15 years and that the EU should not continue treating China unfairly.
Source: Xinhua, May 13, 2016
http://news.xinhuanet.com/world/2016-05/13/c_128979160.htm

After Alibaba Joined the IACC, Tiffany Quit

Well-known Chinese news site Sina recently reported that U.S. luxury brand Tiffany announced its withdrawal from the International Anti-Counterfeiting Coalition (IACC), which is the top international organization leading the fight against counterfeiting. The IACC is currently headquartered in Washington DC with over 250 well-known brands as members. Tiffany quitting the IACC Board and dropping its membership. The IACC accepted China’s largest online shopping host Alibaba as a member in April. That Alibaba got on-board caused a lot of dissatisfaction among IACC members. Before Tiffany, Michael Kors and Gucci had already withdrawn from the IACC. According to a report that China’s State Administration for Industry and Commerce released, only one third of the products sold on China’s largest online shopping site Taobao, which Alibaba owns, were not counterfeits. In previous years, well-known brands such as Gucci, Saint Laurent, and Puma took Alibaba to a New York court. Alibaba refused to accept the accusations but agreed to "try its best" to ban counterfeits on its platform. This promise did not gain trust from any of the victims.
Source: Sina, May 12, 2016
http://tinyurl.com/gtxyjjf
http://www.cankaoxiaoxi.com/finance/20160511/1155021.shtml

China’s Consensus Blog Website: Death of a Young Man

Chinascope recently reported on the death of Wei Zexi, the 21-year-old college student who died from a rare form of cancer after receiving allegedly effective treatment that he found on a Baidu website. Before his death on April 12, Wei wrote a lengthy post on a Chinese website detailing his plight.

Shortly after the news of his death, the Consensus Website, affiliated with a media company based in Beijing, published a blog article about his death. The author raised several sensitive points in the blog, examining the roles played by the parties involved, including Baidu, China’s leading search engine company; the Second Hospital of the Beijing Armed Police Corps; the privately-owned Putian hospital system; and Chen Zhili, a former vice-chairperson of China’s top legislature. According to another blog, which has since been taken down at China’s leading portal Sina.com, Chen owed her career to Jiang Zemin, former secretary-general of the Chinese Communist Party (CCP). She was responsible for China’s highly controversial drive to commercialize education and its public health systems.

The Consensus Website blog author raised the question of how Baidu got to dominate China’s search engine market. Not only was Google’s China presence short-lived, but even a competing search product backed by the CCP’s leading newspaper, People’s Daily, did not have a chance when challenging Baidu.

The author then pointed out that the Second Hospital of the Beijing Armed Police Corps, where Wei sought treatment, was not content with funding from the government. It resorted to increasing its revenue by partnering with Putian hospitals.

The author gave the reasons behind the rapid expansion of Putian, a privately operated chain of hospitals. The chain invited Chen to serve as its top advisor; it relied on paid promotions on Baidu; it opened and operated clinics in brand name public hospitals; and it sought support from top officials. 

One thing that these players have in common, observed the blog author, is that they are all good at packaging their true [profit-seeking] motives. In hospitals, and in the rhetoric of "connecting people with services" in Baidu, they used high-sounding slogans, such as "saving people’s lives" and "the world’s leading technology and medicine."

The author is optimistic that, with the advent of social media, such outright dishonesty in misleading the public can hardly be sustained. In Wei’s case, two female journalists were able to raise awareness of Wei’s misguided treatment through Weibo (i.e. mini-blog) and WeChat (a popular mobile messaging service), completely bypassing traditional media.

Sources: The Concensus Website
http://www.21ccom.net/html/2016/zhoushuo_0504/3868.html
Blogs at Sina.com
http://blog.sina.com.cn/s/blog_70282b520102wbr2.html                                                                          
                                                                                                              

Xi Jinping’s Talks about Officials’ Taking Care of Their Families

On May 8, 2016, China.com, the website of the State Council Information Office, published a collection of Xi Jinping’s speeches in which he gave advice to officials on taking care of their family members. Some quotes from his speeches follow:

From the speech given at the Meeting of the Sixth Plenary Session of the 18th CCDI, on January 12, 2016:

"Looking at the recent corruption cases, family member’s corruption is a key reason that has led officials to violate the law and discipline. Many officials not only trade power for money themselves, but they also encourage their family members to collect money covertly. Their children leverage their parent’s name to run a business to make money [using unfair competition]. Some officials use their ‘connections’ and ‘favors’ that they have accumulated throughout their government service to let their children make money."

"I am here, with a kind intention, to tell you all: You need to pay attention to this. Things might have happened at your home while you were not paying attention. You should prevent these wrong things from happening at a low level. Don’t protect your children [if they are doing something wrong]."

"The children of officials need to guide their own behavior by following the law and discipline. They should not think that because they are the children of officials that no one will bother them. If they have violated the Party’s regulations or the state law, they will be punished, and they must be severely punished, to show it to the public."

From the speech given at the 10th Meeting of the Deepening Reform Leading Group, on February 27, 2015:

"As far as officials’ spouses, children, or their children’s spouses running companies, there are clear regulations from the state law and the Party regulations. The important thing is to implement them so that they will really be effective."

Source: China.com, May 8, 2016
http://news.china.com.cn/2016-05/08/content_38405673.htm

Offshore Companies and Hong Kong Residence Status Scandals Involving Top Level Officials

The Panama Files have revealed that several top level Chinese Communist Party (CCP) officials, including retired officials, have had their family members set up offshore companies.

Recently, four Hong Kong media, after receiving documents from ICIJ (the International Consortium of Investigative Journalists) regarding the related Panama Files, conducted investigations of those relatives of top officials and found several of them had Hong Kong residence status. These four media are Mingpao, South China Morning Post, Next Magazine, and Hong Kong 01.

The related officials are:

Liu Yunshan (刘云山), current Politburo Standing Committee member: Liu’s daughter-in-law Jia Liqing (贾立青) is the shareholder and board member of an offshore company. She obtained her Hong Kong residence card in 2001.

Zhang Gaoli (张高丽), current Politburo Standing Committee member: Zhang’s son-in-law Li Shenpo (李圣泼) is a shareholder in three offshore companies. Li and her wife Zhang Xiaoyan (张晓燕) have Hong Kong residence status.

Li Peng (李鹏), former Premier and former Politburo Standing Committee member: Li’s daughter Li Xiaolin (李小琳) is a shareholder and board member of an offshore company. She has Hong Kong residence status.

Jia Qinglin (贾庆林), former Politburo Standing Committee member: Jia’s granddaughter Li Zidan (李紫丹) owns an offshore company. Both Li Zidan and her father Li Botan (李伯潭) (Jia’s son-in-law) have Hong Kong residence status.

Zeng Qinghong (曾庆红), former Politburo Standing Committee member: Zeng’s brother Zeng Qinghuai (曾庆淮) is the shareholder of an offshore company.

Deng Xiaoping (邓小平), former paramount leader: Deng’s niece Li Xiaobing (栗小兵) and her husband Yu Yiping (俞一平) became Hongkongese in 1994.

Two other officials are related but their relative’s companies were either closed or are not active:

Xi Jinping (习近平), current top leader: Xi’s brother-in-law Deng Jiagui (邓家贵) was the shareholder and board member of two offshore companies. Deng closed the companies in 2012 when Xi became the top leader.

Hu Yaobang (胡耀邦), former CCP General Secretary: Hu’s son, Hu Dehua (胡德华) was the shareholder and board member of an offshore company, Fortalent International Holdings, Ltd. Hu Dehua explained that he registered that company to help his other company to go through an IPO in Hong Kong, so his registration used all real information, including has name, Chinese passport, and address. The Hong Kong IPO didn’t work out. He hasn’t run any business through Fortalent since, nor does Fortalent have any assets. He just felt there was no need to close the company.

Sources:
1. BBC Chinese, April 6, 2016
http://www.bbc.com/zhongwen/simp/china/2016/04/160406_panama_papers_china_capital_outflows
2. RFA, May 4, 2016
http://www.rfa.org/cantonese/news/hk-secretfiles-05042016095619.html
3. South China Morning Post, April 8, 2016
http://www.nanzao.com/sc/national/153f3d1c34c61cb/ba-na-ma-wen-jian-pu-li-an-gong-si-hu-de-hua-tang-tang-zheng-zheng

Why a College Student’s Death Led to Baidu and a Beijing Hospital Being Punished

The death of Wei Zexi, a college student from Shaanxi Province, who received false information from Baidu on treatment for his cancer, has stirred up a big anti-Baidu wave in China.

Wei Zexi had synovial sarcoma, a rare form of cancer. When he searched on Baidu, the search engine showed him that the Second Hospital of the Beijing Armed Police Corps offered effective treatment. Wei decided to forego another treatment which had some, but not very high chance of a cure, and went with the Armed Police Corps Hospital. His family spent 200,000 yuan (U.S. $30,000), depleting the family’s entire saving and even borrowing money, for the treatment.

It turned out that the Baidu search result for the Second Hospital of the Beijing Armed Police Corps was a paid advertisement. The hospital was, in fact, making a false claim. However, since the hospital paid Baidu a large fee, Baidu displayed its claim among the top search results. As Baidu did not differentiate between its paid ads and its regular search results, it misled Internet users into thinking paid ads were authoritative results.

The Second Hospital of the Beijing Armed Police Corps had been widely collaborating with "Putian doctors." "Putian doctors" are people from Putian City, Fujian Province, who may or may not have had a medical education, but claimed they were doctors and rented hospital’s offices to offer medical services. "Putian doctors" count for 80 percent of the private medical practices in China.

The hospital’s treatment offered no help to Wei Zexi who eventually died on April 12. Before his death, he posted his story on the Internet. A wave of public denunciation of Baidu for its lack of moral standards flooded the Internet and the media.

The State Internet Information Office led an investigation over Baidu’s role in this death incident. It recently required Baidu to carry out the following corrections:

1. Overhaul all its commercial services for the medical practice industry. Take offline any information violating regulations, and do not promote any medical institution that does not have proper medical practice qualifications.

2. Change its search ranking algorithm from paid fee based to reputation based; add a mark to indicate those that are paid ads; and limit paid ads to less than 30 percent per result page.

3. Establish a netizen’s rights protection mechanism. Speed up the process to handle Internet users’ cases; immediately put a stop to all information that violates the law, regulations, or netizen’s rights; compensate netizens for their losses due to inaccurate ads on Baidu.

The Second Hospital of the Beijing Armed Police Corps was ordered to stop all services to the public immediately. It was also ordered to make the following corrections:

1. Immediately stop cooperating with Shanghai Claison Bio-tech, which offered the cancer treatment solution to Wei Zexi.

2. Overhaul all false information and medical advertising. Review the medical qualifications of every medical practitioner and take proper actions.

3. Punish medical practitioners involved in Wei Zexi’s case, including revoking the doctor’s certificate and taking legal action.

4. Carry out legal and disciplinary education; improve the hospital’s management.

Sources:
1. BBC Chinese, May 9, 2016
http://www.bbc.com/zhongwen/simp/china/2016/05/160509_weizexi_investigation_second_hospital
2. Xinhua, May 20, 2016
http://news.xinhuanet.com/fortune/2016-05/10/c_128973832.htm

Xinhua: CMCCDI Dispatches Discipline Teams to CMC Branches and Theater Commands

Xinhua recently reported that the Chinese Central Military Commission (CMC) dispatched teams from the military Commission for Discipline Inspection (CDI) to all branches of the CMC and all five military theater commands. This is the first time in the communist army’s history that the CMC has “stationed discipline supervision” in various military branches. A total of ten stationed military CDI teams have been dispatched. A concentrated two-day training of all military CDI team members was conducted in Beijing. Deputy CMC Chairman Xu Qiliang pointed out in the training that the goal of this new reform is to establish a new anti-corruption prospect in the entire military system. The training focused on discipline inspection and supervision, case proceedings, and inspection patrols. 
Source: Xinhua, May 5, 2016
http://news.xinhuanet.com/politics/2016-05/05/c_1118808497.htm