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Huanqiu: China and Japan Should Be Rational in Bilateral Relations and Not Let the U.S. Benefit

In an opinion article, Lian Degui, deputy director of the Asian Pacific Research Center at the Shanghai Institute of International Affairs, said that the U.S. has always been dividing China and Japan and that dividing China and Japan is a geopolitical need for the Unites States. Lian observed that the United States is now using the "China threat" theory and the TPP (Trans-Pacific Partnership) to block Sino-Japanese cooperation. It asks Japan to cooperate militarily and politically with the U.S. in its Asia-Pacific rebalancing strategy, acting as a pawn of the United States. 

As for how China should understand Sino-Japanese relations, Lian expressed the belief that Japan has three important attributes in relation to China. Japan is one of China’s most important neighboring countries; it is one of China’s most important regional powers; and it is one of China’s most important trade partners. [China] should recognize the fact that, although the Sino-Japanese relations are currently at an impasse, the reality of the China and the "Abe" relationship is not equivalent to the entire Sino-Japanese relationship. 
Lian concluded that China and Japan should make a rational assessment of their own interests. They should avoid pushing the other side in the opposite direction so they do not become chess pieces of an extraterritorial nation on the [U.S.’s] strategic chessboard and let the third party [the U.S.] benefit. 

Source: Huanqiu (Global Times), September 23, 2014 
http://news.xinhuanet.com/mil/2014-09/23/c_127020412.htm 
http://mil.huanqiu.com/observation/2014-09/5146600.html

China Uncovered $10 billion in Fraudulent Entrepot Trade

At a press conference on September 25, 2014, the State Administration of Foreign Exchange (SAFE) discussed its investigations into entrepot trade, a trading post where merchandise can be imported and exported without paying import duties. SAFE stated that its investigations confirmed that the amount of China’s entrepot trade using false documents had reached $10 billion. 
Wu Ruilin, Deputy Director of the Management Inspection Division of SAFE, stated that, since April of last year, SAFE has conducted special investigations of entrepot trade in 13 provinces and cities. In 2014, the effort has expanded to include 24 provinces and cities. 
Wu further explained that these investigations found that entrepot trade has become a speculative arbitrage tool because many companies use forged or altered commercial documents, re-use property documents, or use the import declaration documents for general cargo trade. 

Source: State Administration of Foreign Exchange, September 25, 2014
http://www.safe.gov.cn/resources/wcmpages//wps/wcm/connect/safe_web_store/safe_web/whxw/ywfb/node_news_ywfb_store/d258558045990e0ba668aed2d1baac76/

Sinosteel’s Revenue Decline May Result in a Default

Beijing News published an article in which it reported that Sinosteel may not be able to meet its obligation to pay an amount due that totals tens of billions of yuan. According to the article, the liabilities to asset ratio for Sinosteel has remained between 90 and 95 percent since 2009. Prior to 2009, the business model for the State-owned steel companies involved importing ore and doubling or tripling the price when re-selling the ore to domestic downstream steel mills. In late 2009, these downstream steel mills were allowed to import ore, thus eliminating the high profit margin for large State-owned companies. Sinosteel’s revenue dropped from 180 billion yuan in 2010 to 140 billion yuan in 2013. Another reason for the financial loss is that it has failed in a series of investments overseas.

Sinosteel is under the China’s State-Owned Assets Supervision and Administration Commission. It has 86 subsidiaries, of which 63 are in China and 23 overseas. Their functions include developing and processing metallurgical mineral resources, trading and logistics of metallurgical raw materials and products, related engineering technical services, and equipment manufacture. 
Source: The Beijing News, September 24, 2014 
http://www.bjnews.com.cn/finance/2014/09/24/334968.html

Huanqiu: U.S. Accuses Chinese Military of Hacking U.S. Military Contractors

Huanqiu (Global Times), a publication under the auspices of People’s Daily, published an article refuting a U.S. Senate report released on September 17. The report alleged that, 20 times within a period of one year, hackers associated with the Chinese military infiltrated the computer systems of the U.S. military’s private contractors for transportation services. Chinese Foreign Ministry spokesman Hong Lei said that Chinese law prohibits hackers from conducting any destructive attacks. China urges the United States to stop its irresponsible attacks and accusations against China, stop its acts of large-scale, systematic network attacks against other countries, and do things that are helpful to maintaining peace and security in cyberspace. 

Chinese military expert Li Jie told the reporter from Huanqiu that, in the current situation, the United States’ pace of returning to Asia is very slow. There is nothing much it can do right now. The reason that it frequently accuses China of hacking is to find an excuse to promote its agenda of advancing to the Asia-Pacific, to generate public opinion within the United States and the world to enable it to improve its defense capabilities, and to deploy a large number of weapons in China’s frontier regions. Li Jie believes that this is even a smoking gun of the United States to prepare for the next step, which is to attack China’s network. Emphasizing that Chinese military hackers are conducting such an invasion further revealed the U.S. intention of guarding against China’s military. 
Source: Huanqiu, September 19, 2014 
http://news.xinhuanet.com/mil/2014-09/19/c_127005057.htm 
http://world.huanqiu.com/exclusive/2014-09/5142810.html

Ministry of Finance: State-owned Enterprises Have Liabilities to Asset Ratio of 65 Percent

On September 22, 2014, China’s Ministry of Finance released the economic performance report on State-owned enterprises for the period of January through August. 

The report showed that, as of the end of August, the value of State-owned assets exceeded 99 trillion yuan, with total liabilities at nearly 65 trillion yuan; the ratio of liabilities to assets was 65 percent. The central government owned enterprises showed high financial expenditures. In the first eight months of the year, these grew by 22.4 percent. 
The report also showed that, compared to the same period last year, the rate of growth of both the revenues and profits in these State-owned enterprises continued to decline. Costs, however, continued to increase faster than revenue. 
 Source: China Business News, September 23, 2014 
http://www.yicai.com/news/2014/09/4021971.html

Xinhua: Testimony from the Court Trial of Uyghur Separatist Ilham Tohti

On September 24, 2014, Xinhua published some of the testimony from the court trial of Uyghur economics professor Ilham Tohti, one of the few moderate Uighur dissidents within China. The court in Urumqi sentenced the Uyghur scholar to life in prison for “inciting separatism,” stripped him of all political rights, and seized all of his assets. 

According to the Court testimony, Ilham Tohti denied that he had engaged in “splitting the country deliberately or leading and organizing a criminal group.” None of the articles published on his website “Uighurbiz.net” called for separation. The court showed a video of Ilham Tohti’s lecture in class and charged him with “the crime of promoting separation in public.” His attorney claimed that the damage was not big since not many students were in his class. “Defendant Ilham Tohti argued, ‘I (should) have the right of academic freedom and freedom of expression.’” The video “evidence” of his “separation speech” in class included his words, “Does Xinjiang belong to your Chinese people? No, I am a Uighur in the first place. We belong to the Central Asian ethnicity first of all.” “I am not a Chinese because I am a Uighur. Our pride is the great Turkistan.” In court, Ilham Tohti repeatedly said, "I have expressed my view on autonomy very clearly." "I’m a pro-autonomy (person)." [That means] "I want Xinjiang to remain inside China in the form of a federal district."   

Source: Xinhua, September 24, 2014
http://news.xinhuanet.com/politics/2014-09/24/c_1112614703.htm

Foreign Ministry Spokesperson on the Sino-Russian Military Alliance Issue

On September 17, Hong Lei, the spokesperson for the Foreign Ministry, was answering reporters’ questions. A news reporter asked, “Yesterday, a Russian congressman suggested that the Western’ sanctions against Russia will push Russia and China to establish a military alliance. What is China’s response?”

Hong replied, “The Sino-Russian comprehensive strategic cooperative partnership will not have an alliance, we will not confront each other, and we will not target third-parties. China will adhere to its strategic cooperative partnership position. [China will,] with Russia, continuously increase our strategic trust, promote mutually beneficial cooperation, and strengthen our cooperation on international and regional affairs.”

Hong also stated, “On the Ukraine issue, sanctions will not solve the problem. The issue will ultimately be handled through a political resolution.”

Source: Xinhua, September 17, 2014
http://news.xinhuanet.com/world/2014-09/17/c_1112522728.htm

People’s Daily: Housing Prices Cooling Down

People’s Daily recently reported on the housing market data that the National Bureau of Statistics just released. According to the official statistics, out of seventy large and medium sized cities, sixty-eight saw a month-over-month housing price decline. One city broke even and another had an increase. The seventy-city average price for new real estate fell by 1.2 percent month-over-month, which is the biggest decline in ten years. Traditionally, September is the peak month of the year for the housing market. However there is no sign of recovery as of now. Market analysts thought that it was the high inventory level and a significantly lower demand that had caused the decline. Several provincial governments have come up with new local policies to “rescue” the housing market. It is widely expected that at least ten more provinces will follow suit. 
Sources: People’s Daily, September 19, 2014
http://finance.people.com.cn/n/2014/0919/c1004-25690606.html
National Bureau of Statistics, September 18, 2014
http://www.stats.gov.cn/Tjsj/zxfb/201409/t20140918_611639.html