Monday, August 17, 2009

Chongqing Cabs and Municipal Budgeting

Anonymous reader raised an interesting point: "I have to say its not very logic to link the gangster investigation and Chongqing's bankruptcy together. The additional CNY1500 income from taxi driver even can't afford the interest from Chongqing government's CNY1 trln debt. However, it is true that the government will make some "action" if it finds out someone not following its order.But I think every government around the world will make similar decision, right?"

Let's do some math: 1500/cab/month*12=18000/cab/year. Let's say there are 3000 cabs in Chongqing. This would make 54 million in additional income per year. Now, that's not a large amount, but it can pay interest on a much larger loan. As a government, Chongqing can borrow cheaply from banks, probably in the 5-6% interest rate loan. An additional 54 million in income would allow Chongqing to take out a loan worth 900 million RMB. Now we are talking about somewhat real money. Also, most local governments would not even try to impose such a fee on mafia controlled taxi companies. They would prey on normal residents. Chongqing, due to the connections of the party secretary, can do both.

In Mexico City theCity Government politicians run an informal tax scheme on "unregistered" taxi drivers. The amount of cash is astounding and is used to finance political schemes and other illegal activities. Basically the official government is financing itself off of a secondary shadow government scheme exploiting taxi drivers. I would not be surprised to learn that the same thing has happened in China. Its not gangsters--but bag men for government officials that made the whoel thing function.
the troubling hole is just getting more and bigger under the unique conpelling “net” in China's everywhere. poor majority little people.
Dear Professor,

I'm just feeling somewhat confusing about the centralization or decentralization by China's technocrats faction during this economic crisis compared to the Asian Financial Crisis. Actually the technocrats faction basically made the decentralization decision since this crisis, rather than centralization as those did in Zhu's team, referring to the logic in your book.

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Sunday, August 16, 2009

More on Chongqing Gangs and Wen Qiang

First of all, I just did a radio interview on Moneytalk with Bob Brinker. If you are interested on my views on everything related to China (45 minutes worth), my sister has kindly recorded and put the clips on-line: http://www.thefacebookera.com/victor/

Second, 21st Century Business Herald did an excellent investigative report on the Wen Qiang case in Chongqing. Apparently, the whole thing began with the taxi strike back in June, which was caused by a fee Chongqing wanted to collect. The private entrepreneurs/mobster behind the taxi company called the strike, which necessitated Bo Xilai to crackdown on them, which led to their protector, Wen Qiang.

In truth, I am somewhat sympathetic to the gangsters, who were unfortunate enough to run into a bigger gangster, Bo Xilai. Basically, where property rights are not secured, a private businessperson has to secure by some means, including bribing officials or cultivating a gang. The problem of course is that once you have acquired those resources, you further use it to gain a monopoly, thus stifling competition. But all this is pretty normal. So, why was Bo Xilai trying to get an additional 1500 RMB in taxes from each taxi in Chongqing? Because Chongqing is broke! It has leveraged itself up the tilt with the formation of 8 major investment companies which have borrowed nearly 1 trillion RMB from the banks. Interest payments alone is in the tens of billions, if not over 100 billion a year. Land sales is still lagging due to still not very robust real estate sales. So, Bo has to be a bigger gangster to concentrate more economic resources.

来源:21世纪经济报道  2009-08-16 09:14:30  作者:木村


























1992 年9月,文强调任四川省重庆市公安局任副局长。据知情人士介绍,1990年代初期,文强尚在巴县任职时,曾在西南师范大学举办的研究生课程进修班在职学习两年,“那时候提拔干部学历是很重要一个指标,而警界当时高学历者少,这段学习经历,成为文强到市局任要职的重要砝码。”






该人士举例说,1999年5月27日重庆市石桥铺派出所民警芦振龙,在辖区抓捕犯罪嫌疑人过程中,身中21刀,因伤势过重身亡,年仅26岁。该案非文强亲办,但在嫌疑人被抓获后,他坚持要到看守所去见识一下嫌犯。见到嫌疑人后,他飙了一句脏话,大致意思是“你也太黑了 ”,言毕便顺手将刚买不久的价值 4000多元的手机,砸向嫌疑人,拂袖而去。














而此后的民营公交收编事件,则使地方恶势力对政府政令的抵制态度更加明显----因民营公司经营的“7字头”公交车管理散乱,事故频发,多次改革不见成效,市政府终于决定在今年5月31日前,将全市380多辆“7字头”收归为国有,而“民营公交公司提出的收购要价达到 1亿多元,与政府谈判时的态度非常强硬”。




















2000 年发生的重庆“白云湖事件”,就是一个典型案例。当时有王渝男等十多人合资在璧山县白云湖度假村开设“百家乐”地下赌场,长期聚众赌博,非法敛取钱财—— 案发后,原重庆市公安局治安总队总队长李某等四名警员被一同抓捕,罪名为“利用职务之便,为王渝男等提供保护,甚至通风报信”。












I have to say its not very logic to link the gangster investigation and Chongqing's bankruptcy together. The additional CNY1500 income from taxi driver even can't afford the interest from Chongqing government's CNY1 trln debt.
However, it is true that the government will make some "action" if it finds out someone not following its order.But I think every government around the world will make similar decision, right?
"every government around the world will make similar decision"?! Dear Anonymous No.1, do you really think China is the world?
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Saturday, August 15, 2009

The SCMP did a couple of interesting articles on the Chongqing case, one generalizing the role of gangsters. Well, I guess now the "businessmen" on Bo's side can run things in Chongqing....

South China Morning Post Aug 15, 2009 Saturday He Huifeng p.5

Organised crime calls the shots when it comes to doing business in Chongqing

Organised crime has terrorised the commercial world in Chongqing for so long that it has become part of everyday business. Gangsters have gradually infiltrated many sectors and made their presence felt through blackmail, extortion and loan sharking, local businessmen said. "For most businessmen in Chongqing, you can't survive if you don't submit to the gangsters," said Hu Shuang , whose father runs a lumber company. "Surrender is the only way to protect ourselves. The gangs and officials are together, so revenge would come if you called the police."

Huang Wei , head of Chongqing's Private Economic Promotion Association, said usury was the most common tactic gangs employed to acquire assets from legal businesses. Mr Huang said gangsters would lure businesses with seemingly reasonable rates of interest, and then fail to provide the agreed amount of cash while still demanding full repayment. The deadline for repaying money was also very tough, sometimes only a matter of days, he said. "If you pay it late, they will smash your office with knives and clubs," he said.

Ordinary people and even soldiers have suffered from the gang violence. In March, a soldier standing guard outside a garrison in Chongqing was killed and his machine gun was stolen. The authorities treated it as a terrorist attack at first but later discovered it was the work of organised crime. In November, five amusement arcade workers were killed in a fight at the establishment. Local reports said more than 20 gangsters armed with knives and batons had clashed with the employees.

"Chongqing has a deeply rooted tradition of armed gangs," said Yao Shibo, who runs a trading company. He said many munitions factories had been built in the area when it was the wartime capital of the Kuomintang and "homemade" knives and firearms were readily available in rural areas. He said gangs were widely active, especially in taxi companies, farm produce markets and commercial property construction sites. "The gangs have thousands of youngsters and unemployed men as reserves," Mr Yao said. "They would fight for anyone. You just need to pay them 100 yuan [$113HK] each per attack. Being a hoodlum is a way to make a living."

In Beijing's development blueprint for western regions, Chongqing was pitched as an export and trade base and the major city in the west. But the revelations of gang activity are putting a stain on the municipality's image as a place gearing up for international business. An intercontinental rail line linking Chongqing to Rotterdam is scheduled to be completed by 2012. The rail link has been touted as a way to gradually resolve the economic imbalance between the mainland's prosperous coastal areas and the poorer interior regions.

Dramatic tale of triad fighter's fall from grace
Ng Tze-wei Ibid., p. 5

From triad-buster to police chief, from police chief to target of triad-buster - the story of Wen Qiang is no movie plot, but no less dramatic. Mr Wen, director of the Chongqing Justice Bureau and formerly deputy police chief for 16 years, was placed under internal party investigation last Saturday for allegedly shielding the rampant and growing triad forces in the sprawling municipality of 30 million. The 54-year-old Chongqing native started working right after high school, and slowly climbed up the ladder with the police force in Sichuan , the province Chongqing belonged to before becoming an independent municipality in 1997. Mr Wen became vice-chief of the Chongqing police in 1992, and deputy party secretary in 2003. Mr Wen shot to fame by solving several high-profile robberies in the early 1990s, and became a household name when he caught the infamous crime boss Zhang Jun after a six-year pursuit. Zhang was caught by Mr Wen in 2000, faced charges ranging from armed robbery to murder, and was executed the year after.

During his tenure as police chief, Mr Wen slowly gained a reputation for his close involvement with the rich and powerful, and the darker side of the city's business deals.

In the few months before his fall from grace, three billionaires close to Mr Wen - two were also local legislators - were arrested. Property developer Chen Mingliang , motorbike businessman Gong Gangmo and Li Qiang , the second-richest man in the municipality's Banan region - with interests from property to transport - were among more than 100 people taken away during a 50-day assault on organised crime in Chongqing.

When former Liaoning party chief Bo Xilai was transferred to Chongqing in 2007, he swore to fight crime gangs that were growing out of control in the booming industrial municipality. In July last year, he parachuted Wang Lijun , a well-known triad-buster from Liaoning province, in to take Mr Wen's position. Mr Wen was transferred to head the Justice Bureau, an apparent promotion.

Mr Wang, 40, in his 20 years as a policeman has reportedly sent 800 criminals to their execution. His long-term battle with the triads also gave him at least 20 scars from knife and bullet wounds, and a 10-day coma. He is now rumoured to have a seven-figure price on his head.

Last month Mr Wang said the triads in Chongqing were known for "having a long history, wide coverage, deep connections, huge membership, high quality, and vicious influence".

Above all, "some of the organised crime gangs already have a 'legal' coat, and are using business to support triad activities, and using triad activities to enrich their business".

Many legitimate businesses have fallen victim to organised crime, and have complained about the high extortion fees they pay to survive.

Mr Wen was the most senior official brought down since Mr Wang's drive to crack down on this mingling of power, money and crime.

Public administration professor Mao Shoulong of Renmin University said collusion between police and organised crime was not uncommon around the world, but in China the situation was somewhat different. "The collusion is not so much between police and organised crime gangs. The Chinese police are still quite effective in combating crime," Professor Mao said. "The collusion is more between police and a growing number of businesses using triad-like methods to conduct their affairs."

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Thursday, August 13, 2009

I am now on twitter

Dear Readers, my sister just dragged me kicking and screaming into twitter and its universe of 100 characters limit (wish that was 100 Chinese characters!). If you twitter, click on twitter.com/vshih2 or search for me by my name.I will do my best to update with various views and links. I will probably twitter a lot during conferences!

On another note, Bo Xilai is further cleaning house in Chongqing. After the arrest of former vice police chief Wen Qiang, many of his "business" associates were also arrested. Now, we can say that Bo Xilai has complete control over Chongqing. The question is: to what end? This could be a Li Ruihuan strategy of planting factional followers up and down the city bureaucracy so that he maintains residual influence on the city for years down the road.....

重庆多名民企老板涉黑被抓 其中不乏亿万富翁
来源:南方都市报  2009-08-14 07:56:36  作者:

  本报讯 重庆市政府新闻发言人周波昨日称,重庆在50多天内打掉14个横行该市多年的黑恶势力团伙,19名首犯全部落网,100多名黑社会性质组织骨干成员全部缉拿归案。在严厉打击黑恶势力的同时,警方在查封、扣押涉黑人员的企业资产账号时给企业保留下生产经营资金,保证企业正常经营活动不受影响。




周波称,不久前重庆市司法局局长文强因严重违纪被双规,充分证明了重庆市委市政府打黑除恶的决心是坚决的,不管背景有多深、关系有多复杂、经济实力有多大,只要侵害了党和人民的利益都将一查到底、绝不手软。     中新

In fact, you can write Twitter entries in Chinese characters and get a lot more across. Just depends on the audience. See you in Twitterville. @gwbstr
and its 140 characters, not 100.
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Wednesday, August 05, 2009

Not all 100 millionaires in China are princelings!

The People's Daily today carried an interesting article rebutting the well-cited figure that 90% of the 100 millionaires in China are children of high level cadres. It carefully traced the source of the rumor and found experts to rebut it. To be sure, such a figure is impossible to derived from conventional survey instruments. As someone who is trying hard to track the influence of princelings, I can tell you that it is hard, and figuring out their wealth would be even harder. So, I am sure the official rebuttal has some merit. However, clearly, the reason why this figure is so widely believed is that there is a pervasive popular and elite belief that it takes connections to get rich!


2009年08月05日15:38 来源:人民网-时政频道
【字号 大 中 小】 打印 留言 论坛 网摘 手机点评 纠错

  人民网北京8月5日电 记者唐维红 张玉珂 常红报道:近日,关于“高干子女占超亿元富豪人数91%”的信息和议论在网上广为流传。8月4日,记者在百度上输入“高干子女占超亿元富豪人数91%”这一标题,显示相关网页2810余页,而仅仅在两天前,网页的数字还是2650页。与此同时,传统媒体也陆续推出以此数据为由头的时评、专论,引起广泛关注。


  数据拼凑嫁接 信息以讹传讹



  记者称:他 “查阅了几组权威数据显示,中国财富的确在以全球最快的速度流入富人钱包。” 随后,该记者在报道中写道:“据国务院研究室、中央党校研究室、中宣部研究室、中国社科院等部门一份联合调查报告的数据,截至2006年3月底,中国内地私人拥有财产(不含在境外、外国的财产)超过5000万元以上的有 27310人,超过1亿元以上的有3220人。在超过1亿元以上的富豪当中,有2932人是高干子女。他们占据了亿元户的91%,拥有资产20450余亿元。”







“权威数据”不权威 中宣部、中央党校、国务院、中国社科院等相关部门纷纷辟谣







  记者还搜索到了英文时事杂志《远东经济评论》(Far Eastern Economic Review)2007年第4期上的一篇文章,文中也提到了这些数字。文章原文为:“Article after article pores over the potential economic reasons for
the increase in income inequality in China. We ignore the fact that of
the 3,220 Chinese citizens with a personal wealth of 100 million yuan
($13 million) or more, 2, 932 are children of high-level cadres.”



 警惕“刻板印象” 关注舆论热点














So I guess the PD article is supposed to be something like the (T)ruth? Whether it is 70% or 90%, this trend is equally problematic, and based on the "razor's edge" kind of approach or the simple math of compounding, the accumulated wealth of the elite will 1) probably grow more quickly than the that of laobaixing because of continuing preferences and patronage, and 2) remain as large or even grow as a proportion of total national wealth. Not a promising sign no matter how we slice it. This is the path to the social stuctures of old.
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Tuesday, August 04, 2009

SMEs Electricity Usage Plunges by 50%!

Wow, it is breath-taking that first half 2009 electricity usage by small-medium enterprises in China dropped by 50% compared with the same period last year. However, it should not be interpreted as SMEs facing mass bankruptcy. In fact, I think slowing and stopping production is a very healthy reaction on the part of many SMEs, which allow them to survive the crisis financially intact. With orders slowly picking up in the second half, some SMEs in Zhejiang are opening up production again. I think this story is significant for the growth story in China this year, which will reach 8% due to massive state investment and bank loans. However, it should not be interpreted as the annihilation of the private sector, which is still resilient in the short run. In the long run, massive state money may crowd out private investment, which is a worry.

本文来源于《财经网》  2009年08月03日 18:57 共有 0 条点评















  (《财经》记者 王晶)

After the 60th anniversary of the Communists takeover of China in October the bubble pops.
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