1. Reuters: China January foreign direct investment rises in sign of confidence
2. WSJ: China January trade data accurate, ministry says
3. Bloomberg: China tackles $1 trillion data gap as Xi changes metrics
4. NYT: Chinese officials widen campaign against vices
5. Reuters: Asia-Pacific stability depends on success of ASEAN code of conduct: Kerry
6. Reuters: China says Kerry's call for Internet freedom naive
7. FT - Editorial: No time to waste on transatlantic trade
8. WSJ: ‘House of Cards’ does its homework on China
 

9. Xinhua: Xi urges modernization of governing system
10. Xinhua: China again calls for US to handle current solar trade disputes fairly
11. Caixin: Lee Hsien Loong: The politics of doing business

 

1. Reuters: China January foreign direct investment rises in sign of confidence 
China drew $10.76 billion in foreign direct investment (FDI) in January, up 16.1 percent from a year earlier, the Commerce Ministry said on Tuesday, a sign that confidence in the world's second-largest economy remains firm even as growth cools. The majority of the new investment, some $6.33 billion, went into China's services industry, while investment in manufacturing fell 21.7 percent, the ministry said. Ministry spokesman Shen Danyang told a media briefing that China's economic reforms, especially in the services sector, helped boost confidence of foreign investors. "The double-digit growth in FDI in January answered the question of whether China's investment environment remains favourable," Shen said. "We expect foreign direct investment to maintain sound momentum this year."
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2. WSJ: China January trade data accurate, ministry says 
China's higher-than-expected January export data weren't inflated, the Ministry of Commerce said on Tuesday. Worries the monthly figures were distorted by arbitrage-driven false reporting are "speculation and groundless," ministry spokesman Shen Danyang said at a news briefing. "Overall the trade figures are reasonable," Mr. Shen said. Exports of important products including cars and consumer goods made good gains in large markets, he said. Exports unexpectedly jumped 10.6% on year in January—higher than 4.3% growth in December, official customs data show. Growth was ahead of a median 0.1% rise forecast by economists polled by The Wall Street Journal. Strong exports in January last year would make this year's growth appear weak, they had said.
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3. Bloomberg: China tackles $1 trillion data gap as Xi changes metrics 
The gap in reported economic output between China’s provinces and national statistics narrowed for the first time in six years as Communist Party leaders vowed to reduce the focus on growth in evaluating local officials. The combined nominal economic output of the 31 provinces expanded about 9.2 percent in 2013 to 62.9 trillion yuan ($10.4 trillion), according to data reported by local governments since December and compiled by Bloomberg News. That exceeded the national figure by 6.06 trillion yuan, or 10.7 percent, after an 11 percent margin in 2012. The data suggest regional officials are heeding directives from President Xi Jinping and his team to shift their attention toward more sustainable expansion, including reducing debt and pollution. Still, the excess of the provincial total over the national figure remains more than the size of Indonesia’s economy, pointing to the room for further improvements.
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4. NYT: Chinese officials widen campaign against vices 
The Chinese government has widened a crackdown on prostitution, gambling and drug use to major provinces across the country, according to reports on Monday in state-run news organizations. The crackdown is being overseen by officials in the Ministry of Public Security, which manages most police forces in China. Officials in the ministry had already sent a supervisory group to carry out the first step in the nationwide sweep, which began on Feb. 10 in the southern city of Dongguan, according to a statement on the ministry’s website. Dongguan, a manufacturing hub teeming with migrant workers, is sometimes known as China’s Sin City, and prostitution there had long been tolerated as a significant part of the local economy. The statement was posted one day after China Central Television broadcast a program on Feb. 9 that purported to expose the prevalence of prostitution in Dongguan. The program prompted criticism online by a range of people, including women’s rights advocates, who say the police are unfairly singling out prostitutes.
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5. Reuters: Asia-Pacific stability depends on success of ASEAN code of conduct: Kerry 
U.S. Secretary of State John Kerry increased diplomatic pressure on China on Monday to resolve maritime disputes with Southeast Asia based on international legal principles, rather than through individual deals as Beijing prefers. Speaking in Jakarta, Kerry said the stability of the Asia-Pacific depended on achieving a binding code of conduct to help nations peacefully address competing claims in the South China Sea and to avoid conflict in one of the world's most strategically important waterways. The United States has been increasingly uneasy at what it sees as China's effort to gain creeping control over waters in the Asia-Pacific, including its November 23 declaration of an air defense identification zone (ADIZ) in an area of the East China Sea that includes islands at the centre of a dispute with Japan. "It's not an exaggeration to say that the region's future stability will depend in part on the success and the timeliness of the effort to produce a code of conduct," Kerry told a news conference in the Indonesian capital during a trip to Asia and the Middle East.
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6. Reuters: China says Kerry's call for Internet freedom naive 
China criticized U.S. Secretary of State John Kerry on Monday for his "naive" call for more Internet freedom in the country, and wondered why his discussion with Chinese bloggers had not touched upon Edward Snowden. During an approximately 40-minute chat with bloggers in Beijing on Saturday, Kerry expressed his support for online freedom in China, as well as for human rights in general. Chinese Foreign Ministry spokeswoman Hua Chunying said outsiders had no right to pass judgment and misunderstood the real situation. "If China's Internet had not gone through enormous development in the past few years then where would these bloggers have come from?" she told a daily news briefing. "China's affairs must be decided by Chinese people based on their own national condition. Using methods like this to push China in a direction of change they want, isn't that rather naive?" Hua added.
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7. FT - Editorial: No time to waste on transatlantic trade 
US and EU must not lose momentum on the TTIP talks.
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8. WSJ: ‘House of Cards’ does its homework on China 
Not since counterterrorism agent Jack Bauer stormed the Chinese consulate in the fourth season of “24” has there been a major story line about China featured on a mainstream U.S. TV series. U.S.-China relations are front and center in the new season of “House of Cards,” which has scheming U.S. Vice President Frank Underwood, played by Kevin Spacey, backchanneling with a corrupt Chinese businessman. The show’s 13-episode second season was simultaneously released Friday on Netflix Inc.’s online-video-streaming service in the U.S. and on Sohu.com Inc.’s service in China. The first episode of the new season had racked up more than 3.5 million views in China by Monday afternoon. The show deserves kudos for the unusual authenticity of its China story line, which has plot points ripped straight from the headlines. Chinese cyber-theft, currency manipulation, a trade dispute involving rare-earth minerals, and escalating tensions between China and Japan in the East China Sea all make an appearance in the show, rendered in the kind of detail that will ring mostly true with China watchers. “When we created the story lines, we were certainly keeping our eye on what was happening (in China), and the happy result, I believe, is a story line that earns its relevance by resonating with the headlines,” Kenneth Lin, one of the writers on the show, told China Real Time by email.

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9. Xinhua: Xi urges modernization of governing system 
President Xi Jinping on Monday said the ruling Communist Party of China (CPC) and the government must constantly improve the level of governance and promote socialism with Chinese characteristics. Xi made the remarks while speaking at a workshop at the CPC Central Committee Party School on the comprehensive advancement of the reform, as demanded by the third plenary session of the 18th Central Committee of the CPC. Attendees of the workshop are leading officials of provincial-level regions and ministerial-level officials. Xi, also general secretary of the CPC Central Committee, told the workshop that the Party's mission is to find a "stable and effective" system for development, the wellbeing of the people and society's long-term stability. An effective governing system will only happen if Party and officials' integrity, capability and skills are improved and the efficiency of Party organs, government departments, public institutions, enterprises and civil organizations are raised, he said. The CPC must rule in an "scientific, democratic and legalistic manner," he said.
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10. Xinhua: China again calls for US to handle current solar trade disputes fairly 
China’s Ministry of Commerce yesterday reiterated its calls for the United States to objectively and fairly handle ongoing solar trade disputes after the latter initiated another probe into Chinese products. The comments came after the US International Trade Commission last week approved anti-dumping and countervailing investigations on crystalline silicon photovoltaic products from China, paving the way for the Department of Commerce to set preliminary duties in the months ahead. The trade panel ruled that there was a reasonable indication that a US industry was materially damaged by imports of such products, the ITC said in a statement. An anonymous ministry official said the probe, launched on January 23, were aimed at “broadly restricting Chinese exports of silicon photovoltaic products,” which had already been hard hit by US anti-dumping duties and anti-subsidy duties on solar cells.
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11. Caixin: Lee Hsien Loong: The politics of doing business 
Singapore's PM says the TPP could be as big for China as joining the WTO was, despite the changes some would be forced to make.
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12. WSJ: Mary Kay set to acquire Shanghai office building 
U.S. cosmetics company Mary Kay Inc. is in talks to buy an office building in Shanghai as part of its expansion plans in China, bucking the trend in a country where rivals have eased back. The Texas-based direct-sales beauty company said in an emailed statement that it is in negotiations to buy the Point Jingan, an 11-story building in Shanghai's central Jing An District. The price could total 820 million yuan ($135 million), said people who have been briefed on details of the talks. "Because of the growth we've experienced in China and in many of our other markets around the world, we constantly evaluate our facilities and offices to make sure we have the right resources to sustain our growth," said Coco Zhang, a Shanghai-based spokeswoman for Mary Kay in China
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13. WSJ: Hong Kong Disneyland to invest in third hotel 
Hong Kong's Disney theme park said it is investing US$550 million on a third hotel, after record attendance helped deliver the park's biggest annual profit since it opened in 2005. Hong Kong Disneyland's new hotel, with an "exotic locations" theme, will increase the number of hotel rooms at the resort by 75% when it opens in 2017. The park is the smallest of Disney's global resorts.
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14. Bloomberg: China said to plan tighter direct-sales rules amid Nu Skin probe 
China plans to tighten rules on how direct-sales companies train sales staff and introduce products, as authorities probe allegations of abuses by Nu Skin Enterprises Inc. (NUS), said two people familiar with the matter. China’s State Administration for Industry & Commerce is drafting rules that would regulate sales-force training, monitor marketing meetings and tighten application procedures when direct sellers seek to enter new regions in China and offer new products, said the people, who asked not to be identified as the matter isn’t public. Tighter restrictions stand to affect the China operations of companies including Amway Corp., Herbalife Ltd. (HLF) and Avon Products Inc. The probe into Nu Skin led the company to promise a review of operations in China, where it got more than half its revenue in the three months ended in September, and postpone its full earnings release.
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15. WSJ: China's Goldleaf Jewelry to buy Texas energy firm ERG 
Retailer to pay at least $665 million for oil-and-gas operator.

An oil derrick located in central California's Kern County. Chinese retailer Goldleaf Jewelry is in a deal to buy U.S. energy company ERG Resources, which has assets in California and its home state of Texas. Agence France-Presse/Getty Images
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16. Bloomberg: Diageo targets China businessmen as Xi’s austerity drive bites 
Diageo Plc (DGE), the world’s biggest distiller, is targeting wealthy Chinese businessmen to boost sales at its local white-liquor unit as an austerity drive by President Xi Jinping dries up government orders. Sichuan Swellfun Co., the Diageo unit making the white spirit called baijiu, will focus on selling more to walk-in customers and online buyers, James Rice, Swellfun’s managing director, said in an interview. He said the distiller also plans to expand its product line to attract retail consumers. Xi’s crackdown on extravagant spending by government officials has hurt sales by domestic and foreign liquor makers including Kweichow Moutai Co. and Paris-based Pernod Ricard SA. (RI) Six of the 14 white-liquor makers listed in China are set to report losses or lower profit for 2013, according to company forecasts compiled by Bloomberg News. Swellfun may report a loss of at least 124 million yuan ($20 million) in 2013, the company said in a Jan. 20 statement.
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17. Bloomberg - William Pesek: China digs itself deeper into dollar trap 
In "The Dollar Trap" the Cornell University economist doesn't paint the U.S. Treasury secretary or Federal Reserve chairman in sinister terms. Prasad's argument is that for all the worries about U.S. policies and debt, and the many efforts to build up an alternative, the dollar's linchpin role is only strengthening. What struck me most, though, is that China still can't see that it's the dupe in this giant pyramid scheme. China's $3.8 trillion of currency reserves are the largest stockpile ever amassed. Economists have long seen that money as a strength -- the ultimate rainy-day fund should China's shadow-banking system blow up. Trouble is, the value of those holdings depends on China's $1.3 trillion of U.S. Treasuries. If they plunge in value, all hell breaks loose and officials from Beijing to Brasilia will scramble to exit the American bird cage. The concept of such enclosures has great significance in feng shui. In the late 1960s, Macau tycoon Stanley Ho designed his Lisboa casino -- featured in a James Bond film -- to be a huge bird cage. The symbolism was obvious: We've got you and your cash trapped. China is looking like a big-money gambler who just knocked over a casino and can't use the loot because it's all in marked bills. If the mainland ever tried to spend down its Treasury holdings, the global financial system could collapse.
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18. NYT: Nobel winner’s frank advice to China’s leadership 
A. Michael Spence won the Nobel Memorial Prize in Economic Science in 2001 for esoteric research on how people make decisions when critical information is hard to obtain. But by that time, after more than a decade and a half as an academic dean at Harvard and Stanford, many of Mr. Spence’s colleagues had begun referring to him as a “former economist.” Mr. Spence, who turned 70 last year, begs to differ: He learned to become a better, “older” economist, he countered. He seems to have learned fast. In recent years, Mr. Spence has become something of an expert on the Chinese economy after being invited by Beijing, along with Edwin Lim, a former chief World Bank representative in China, to put together an unaffiliated advisory group, supported by the Cairncross Economic Research Foundation. The group has met intensively with the Chinese government’s key planning and economic officials and conducted what those officials have called an unprecedented study of China’s development challenge. While Mr. Spence has come away impressed with how “curious and open” Chinese officials are, he also doesn’t mince words about how serious China’s problems are. With the global economy increasingly dependent on China, the danger is that the nation is “on a collision course with its own growth model,” he said in an interview. The Chinese must move beyond low-wage exports and “generate a fair amount of demand domestically, or they’ll fail.”

A. Michael Spence, a 2001 Nobel Prize winning economist, is an expert on the Chinese economy. Angel Valentin for The New York Times
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