Xiongan: the making of a great non-megacity

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In a surprise move that caught most of the country off guard, the Party’s Central Committee, jointly with the State Council, issued a Resolution in the late afternoon of April 1, when people were wrapping up a week’s work ahead of the Tomb Sweeping Festival. The decision, announced through Xinhua, the official news agency, unveils the planned Xiongan New Area, which encompasses three existing counties in Beijing’s adjacent Hebei province. Development of the New Area will be phased: in the short term, a 100 square kilometer start-up area will be built, which will expand to 200 square kilometers in the mid-term and 2000 square kilometers (roughly the size of Tokyo) in the long run.

Though impressive, size was not the decisive factor in the awe that permeated the Chinese Internet. When introducing the resolution, Xinhua made it clear that this was not just another new special zone among an array of similar projects. “Xiongan is a New Area that follows the path of Shenzhen and Shanghai’s Pudong New District. It is an initiative for the next millennium, a major event of national significance.” By elevating Xiongan to the level of Shenzhen and Pudong, Xinhua fanned anticipation to historic proportions. In 1980, the opening of Shenzhen, at that time just a small village bordering Hong Kong, was the decisive moment of China’s Reform and Opening after the country broke away from the grip of Maoist ideology. In 1990, the decision to develop Pudong as China’s new window facing the world symbolized one of Deng Xiaoping’s last major efforts to give momentum to the reform that suffered major setbacks in the late 1980s. Joining the ranks of Shenzhen and Pudong meant that Xiongan would bypass its “older brother” in North China, the Binhai New Area in Tianjin, set up in 2005, as the heir apparent of the Reform. Xinhua’s application of a “millennial” dimension only increased the astonished curiosity surrounding the announcement.

Ever since the kick-off of Reform and Opening under Deng, Chinese society has come to cherish the “invisible hand” of the free market. The memory of shortages still lingers in the minds of those born before the 1980s, when the supply of basic goods such as food had to be rationed. The economic reform has unleashed the creativity and can-do spirit of the Chinese people. It has also reshaped their perception of the state’s role in the economy. Government interventions have since then become a kind of necessary evil to be tolerated, not embraced. Until very recently, catch-phrases such as “Guojin Mintui” (the advance of the state and the retreat of the civilian) represent the nation’s uneasiness with the state’s corrosive touch on the economy. Progress towards an open economy friendly to the participation of a vigorous private sector is seen as the ultimate barometer of the reform’s success.

The reaction to the Xiongan New Area reveals a shifting national psyche. The pageant-like online discussion shows that for a considerable segment of Chinese society, the visible hand is no longer frowned upon. Rather, it is seen as a magic wand that can turn a backwater town into a booming center of innovation and productivity.

 

At least no more tomb sweeping for now. For those with a heightened sense for money-making opportunities, the Resolution let out the assuring fragrance of Renminbi. In no time, the Chinese media were filled with stories about jammed streets and fully booked hotels in Xiongan. Almost overnight, once obscure towns that nobody had ever heard of were transformed into bustling centers of real estate transactions. Urban legends abounded of nouveaux riches from Beijing and Shanxi buying up entire residential compounds with piles of cash.

The scene marked the first public test of confidence in the newborn area. And it was excessively bullish. The cash-wielding house buyers saw the announcement as a clear signal of imminent pouring-in of investment, people and possibly preferential policies from the government, all pointing to a rising real estate market. Bet long on Xiongan, their guts told them. Quite literally, this mood was reflected in the stock market. Stock prices of cement and steel companies from Hebei province soared following the news, to the extent that a few of them had to publicly downplay expectations.

The reaction seemed not what the designers of Xiongan had wanted. Measures were swiftly put in place to quench the fever of apartment hoarding and deter speculators flocking to the place. A freeze on any real-estate trade in the region was announced, which quickly escalated into the arrest and lock up of rogue traders, and resulted in bizarre scenes on the streets of Xiongan, with police officers chasing after real estate agents.

Xiongan’s planners are faced with a tricky task of managing not just expectation but also imagination. And there is visible frustration over the public’s small-minded, reductionist reading of the New Area as a repeat of the real-estate-driven routine of city construction. Wild speculation is “debasing” to the leadership’s vision for the New Area, a People’s Daily article declares. The grand plan, it argues, is an ambitious strategy to explore a new way to overcome “megacity disease”, to achieve a more balanced regional development and to nurture innovative engines of growth. In other words, the speculators are guided by a misplaced enthusiasm, which, according to the article, is a kind of short-sighted “petty wisdom”. They fail to appreciate the designers’ real intention.

The article introduces a few novel terms to the lexicon of urban development. Besides “megacity disease”, it also highlights the primary role of Xiongan as the receiving base for “non-capital functions” to be moved out of Beijing. In case this is not clear, it specifies that such functions include anything that’s inconsistent with Beijing’s self-image as China’s capital, i.e. the political, cultural, international exchange and technological innovation center of the country. Corporate headquarters and financial institutions therefore do not belong to the capital and should be relocated.

The framing provides a powerful conceptual framework to understand Xiongan: it stands against everything that’s wrong with Beijing, the largest megacity in North China today. In addition to its notorious pollution, congested traffic and overheated real estate market (megacity disease), commentators also blame Beijing for its unconstructive role in the region: instead of acting like a sun that radiates warmth to its neighboring towns and cities, it acts like a black hole that sucks resources from them. The relatively healthy symbiotic relationship among Yangtze River delta cities, wherein Shanghai and Shenzhen shine like stars, do not exist around Beijing.

The implied dissatisfaction with the capital’s current situation found resonance in the popular reaction to the announcement. Many people, upon hearing the news, paid homage in their social networks to Liang Sicheng, the defiant architecture scholar who, in the 1950s, insisted that the old imperial Beijing be kept intact, while a new city should be built in its vicinity to accommodate the new capital’s expanding industries, commerce and governmental entities. His vision of Beijing was diametrically opposite to that of Mao, who famously told colleagues that he would like to see chimneys all over the city from the towers of Tiannanmen. His Soviet advisors, at that time, were busy planning a public square in the city center in the fashion of the Red Square. No wonder Liang’s advice was not heeded. Worse, he was fiercely persecuted in later political movements for those very views.

If setting up Xiongan is to some extent a correction to Mao’s extreme vision of the capital as the symbol of China’s industrial might, it is by no means a return to Jane Jacobs’ organically grown city. The effort is as deliberate as the meticulously ranked dancers at the opening ceremony of the Beijing Olympics. And attitudes toward the arbitrariness divide the country into bears and bulls.

 

The pessimistic sentiment is best represented by a Weibo post that inspired thousands of reposts: “Is the government able to make some place prosperous simply by wishing it? What you guys have in mind is not Gov, it’s God.” The author uses the examples of China’s Northeastern rust belt provinces to illustrate the point that the heavy involvement of the state does not necessarily bring desired economic results. Those provinces have enjoyed decades of central government largesse in the form of state-owned industries and the associated public resources. Yet the region’s deepening economic woes since the 1990s, especially in comparison to the vibrant economies of coastal provinces dominated by private businesses, accentuates the limitations of state planning.

A more serious critique is offered by Chen Gong, a senior researcher at the Anbound think tank. He bluntly calls Xiongan New Area “overrated”, and predicts that it won’t imitate the success of Shenzhen. “Both Shenzhen and Pudong saw great influx of investment and talent because China was in the process of integrating into the global economy. There was huge momentum at the time of their opening. All the government needed to do was to lift the restrictions and set free those market forces. ” Xiongan will be different. “Forever gone is the era when government draws a circle, enacts a few policies, and capital automatically flows in to prop up thriving industries.”

The economic new normal means a lack of untapped reservoirs of capital and resources that will replenish a pool as soon as the gate of the dam is open. The arbitrary allocation of “non-capital functions” to the New Area is therefore seen as a zero-sum game. “Enterprises moving out of Beijing will bring down the city’s economic output, reduce its tax revenue, cut consumption and sap part of its service sector,” Chen predicts, “it can become a major depletion of Beijing’s economy and its impact is likely underestimated.”

Drawing on the experience of the Silicon Valley, another commentator is more explicit with his disdain for state-driven efforts in building so-called technopolises. The success of the Silicon Valley, the argument goes, is in stark contrast to the relative obscurity of Massachusetts’s Route 128 today, whose lackluster performance is attributed to its reliance on government contracts, big conglomerates and a top-down approach to innovation.uch deep-rooted skepticism probably won’t disperse until a more definitive assessment of Xiongan’s economic performance can be made.

But this time the pessimists are confronted with an articulated optimism that rivals, if not trumps, the doubt. An FT Chinese piece by long time urban development observer Li Yan is representative of such confidence: “North China hasn’t had such strong and clear anticipation of growth for a long time. The psychological need for such anticipation overrides any rational calculation of real interests.” In other words, simply manufacturing that anticipation is already a brilliant move by the government. Li directs people to look beyond the relocation of “non-capital functions” and pay attention to the other stated objective of Xiongan to become “a showcase of innovative development”. This means the New Area will likely concentrate high-end, rising industries (as opposed to low-end manufacturing), powered by the inflow of new migrants. It will kick-off a “chemical reaction” that reactivates other economic elements in the North China eco-system. Unlike Shenzhen in the 1980s, this time Xiongan will enjoy the backing of a central government with “unprecedented finance prowess and administrative resources.” And it will become the “ultimate test” of a developmental model that puts government mobilization and direction of resources at the center.

The optimism online also comes from agreement with the general strategic direction of redistributing resources between Beijing and Hebei, and confidence in China’s bureaucratic apparatus in delivering such schemes with top level blessing. As Weibo user Li Ziyang, someone known for his bullish views about China, puts it, “China has an army of officials and bureaucrats who know the country well, are proactive in their job and can execute competently. It is one of the secrets of China’s economic miracle.” Both Li Yan and Li Ziyang suggest that the New Area can be China’s chance to articulate and crystallize its homegrown approach to economic success, wherein the state, with its efficient bureaucratic apparatus, are central to its recipe.

For those optimists, details of the Xiongan plan are not as important as its strategic boldness. Or, as Li Yan puts it, people are simply enthralled by the grandeur of setting up a new city from scratch (大手笔). The society’s appetite for boldness is also reflected in the relative marginalized voices that question the procedural integrity of the decision. The fact that a decision of millennial proportion did not go through any public consultation or approval by the National People’s Congress, and was kept under an iron lid up to the moment of its announcement, seems not to have bothered the general public. And people take the drastic crackdown on real estate trade in stride. After all, neither Shenzhen nor Pudong is the product of democratic deliberation.

 

Against the backdrop of public anticipation and confusion, the Party’s official outlets continue to dole out information about how the plan came into being. Through this tiny window, people have a glimpse of how the idea evolved out of the perpetual frustration over the imbalanced and uncoordinated development of the Beijing-Tianjin-Hebei region and how, in as early as Feb 2015, the proposal for a “new city” had already emerged. The concept was further hashed out in a series of follow-up meetings led by President Xi himself, from the March 2016 notion of a “second wing” of Beijing to the May 2016 official designation of the New Area. The vision for the city also became progressively clearer. A Xinhua piece puts Xiongan’s long term population projection at 2.5 million, which is only a fraction of Beijing’s current population of over 20 million, further confirming the point that it’s not going to be “mega”. It also names Japan’s Tsukuba and Israel’s Haifa as role models for the new city. Both are centers of science and technology brainpower for their respective countries, while Tsukuba is also very much a “planned city”. The designers of Xiongan seem determined to act differently from what China’s playbook for economic growth would prescribe. Their determination and the dizzying swiftness of its materialization leaves the country in a state of thrills and disbelief.

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Frenzonomics

frenzonomics
(Picture by: 安小庆)

Over the years, people have come up with various barometers for the Chinese economy, which, due to the opaqueness of official statistics, proves to be a tough nut to crack. The price of pork, the output of coal, the number of windows that light up at urban neighborhoods at night have all been used to take the pulse of the massively complex country. One of the more famous examples of such makeshift indictors is the now legendary “Keqiang Index”, named after Premier Li Keqiang, who, while serving as the governor of Liaoning province during the early 2000s, used railway cargo volume, electricity consumption and the amount of bank loans as surrogates of the official GDP figures which he, as a Communist Party provincial chief, deemed unreliable.

Jokes are to official statements what the Keqiang Index is to GDP numbers. Nowadays, The best online jokes are about the overheated housing market that since late 2015 have preoccupied the nation. “Today’s HR gauges a candidate’s hireablility by asking if he or she owns real estate. A person without an apartment is often pessimistic and cynical about the society. Those having to pay mortgage tend to be loyal, not itching for job change.” Another version has a more real-life feel to it: “Engineers who own more than one apartments in Beijing are unmanageable in the office, always ready to fire their boss, sell an apartment and go travel the world with the money; engineers who own one apartment are completely demotivated, as they are basically set. The raise they earn through harder work would be rendered pointless by the rising house price. Those without an apartment are anxious to go into the finance sector or do an MBA and won’t spend a single minute on perfecting their engineering skills. The housing market is shaking the Republic’s foundation!”

Ever since the 2009 post-financial-crisis government stimulus of 4 trillion RMB, which kick-started a massive housing market boom, anxiety about skyrocketing housing prices has filled the pages of the country’s newspapers and cadres’ speeches. Premier Wen Jiabao’s numerous promises to keep housing price “reasonable” during his last few years in office still resounds. But the jokes today capture something new in that anxiety. The rallying market is reshaping people’s psyche as much as their pockets.

One of the most cited expressions of concern in the Chinese media today is Longview Economics CEO Chris Watling’s comparison of the current housing price hike to the Dutch “Tulip Fever” that happened almost 400 years ago. The London-based consultancy lists Shenzhen, the Chinese city that borders Hong Kong, as the world’s second most expensive housing market, next only to San Jose in California. According to the firm, Shenzhen’s housing price has risen a whopping 76 percent in a single year, surpassing longtime real estate strongholds, its sister city Hong Kong, and even inner London.

It is debatable if China’s housing boom today is as economically shaky as the Tulip Fever or even the housing boom in the United States before the financial crisis, fueled by subprime mortgage. As recent as in Jun this year, bullish advocates for the Chinese property market, such as star developer Ren Zhiqiang, a Weibo celebrity, were still arguing that the rise in housing prices is driven by the unabated pace of urbanization and population inflow into cities. The large amount of down payments, backed by actual saving of the Chinese consumers, not credit, makes the boom qualitatively different from the subprime mortgage driven US housing market before the crisis.

But concerns with the sustainability of the current boom is only part of what people have been fretting about. Yes, the prospect of a spectacular crash in the fashion of the stock market last year is scary. However, to many people, the alternative, a market that continues to rally in the foreseeable future, looks as troubling if not more fearsome. The engineer joke is an embodiment of such concern: an ever booming housing market is going to eat into the very foundation of a robust, creativity-based economy that China is so eager to become.

A much more articulated version of this fear appeared on the Financial Times Chinese website on Aug 29. The author enumerates a few dire consequences of an ever enlarging housing bubble, including financial risks and depleted capitals for the “material economy” such as manufacturing. More piercingly, he observes that with the housing price spike, the “landlord mentality” that historically haunts China has been rekindled among the Chinese nouveau riche. “Many rich investors have accumulated a large amount of real estate in their hands to collect rent or simply the additional value generated from more rise in price. One the other side, more urban proletarians, those workers who can never afford housing, are created in the process.” For a regime that, more than 60 years ago, gained support by wiping out the landowning class through collectivization, the current situation seems ironic.

To illustrate their increasing uneasiness about where real estate is leading the country, commentators need to borrow an entire vocabulary from a place where the dominance of property developers have agonized a society, Hong Kong. An article that warns about the mainland cities slipping toward “Hong Kong-ization” characterizes the autonomous metropolis as having three distinctive features: sky high property price and living costs, huge income inequality, and increasing conflicts between the natives and newcomers. The author attributes the problems to the Hong Kong government’s laissez-faire approach to real estate profiteering, whose unbridled growth squeezes the space for small and medium businesses (through expensive rent) and exacerbates social inequality (property owners vs. those who can never afford).

Nothing highlights the mainland’s resemblance to the Hong Kong case better than the 6-square-meter apartment in Shenzhen that causes a stir in the public conscious. On Sept 24, news had it that a developer was selling a set of ultra-mini flats in Shenzhen with a jaw-dropping per-square-meter price of 150,000 RMB (roughly 22,000 USD). As a reference, monthly average salary in Shenzhen is about 5000 RMB (746 USD). The mean salary is lower. Reporters visiting the place as potential buyers were shocked to find a packed scene: people were rushing there to get hold of the deal. A woman reportedly wept after her apartment slipped away to another buyer just because of a minute of hesitation.

Commentators were quick to refer to those mini-apartments as “pigeon cages“, a term once used to describe the horrible hellholes immigrant laborers and poor residents inhabit in Hong Kong. (To be fair to the developer, those Shenzhen apartments are actually much more spacious than their registered 6 square meters.) They become the symbol of the property frenzy, 880,000 RMB for literally a jail cell in the middle of a city.

There are people who see it differently. Again, Hong Kong provides the inspiration. They call such small apartments “Get-on-the-bus-property“, meaning that the relatively low total cost (because of the tiny space) allows cash strapped consumers to embark on the “bus” of property ownership. The housing boom makes it perfectly clear to many that property has become the watershed of one’s fortune. Ownership means a quick accumulation of personal asset, a defense against inflation and access to cheap credit. Without it, you are doomed with the dwindling value of cash in the bank or under your bed. To buy or not to buy, it’s not a question. That’s why when Hong Kong developer Cheung Kong Property released a 16 square meter mini-condo for RMB 1.32 million back in 2014, the Hong Kong media dubbed it “mercy to the poor“. Mainland observers bring up this anecdote with sarcasm and resignation.

The exacerbation of already severe income inequality through this recent episode of housing price spike, which spread to second and third tier cities, is the most disturbing aspect of this property market rally. As one commentator puts it, “without denying their hard-working, the property owning upper middle class should attribute most of the build-up of their fortune to property price increase. Today’s housing boom is not primarily hurting the anxious middle class, but the desperate lower classes that won’t share a penny of this market. Observers who do not acknowledge this sad fact, or even watch with amused indifference, should go into the hall of shame.”

Not just the cold-blooded spectators are to be shamed. The above-mentioned Financial Times commentary also points the finger directly at central ministries and local governments, which, as the author claims, willingly hijack a top leadership policy of clearing housing inventory and turn it into a call for re-stimulus. The result is rapidly increasing leverage of households and the simple shift of debt from the balance sheets of property developers to those of individuals. Local governments benefit tremendously from land sales and taxation on transactions while families bearing the financial risks. They are becoming “super landlords”.

As the country’s top propaganda organ, the People’s Daily weighed in on Sep 26 with an opinion piece, reflecting the graveness of the current situation. Titled “Losing the hard-working spirit, we will still be homeless with all the properties”, the article devotes much of its content to an uneasiness about the ascent of a opportunist, speculation mentality, in the same vein as the engineer joke, but with a notable twist at the end: it calls on individuals to cling to their faith in self-improvement and to not get lost in the housing pageant. The commentary was met with disbelief and ridicule. In no time, another joke starts to spread on the Internet. It applies a light touch to the original title of the People’s Daily article: “Losing all the properties, we will still be homeless with all the hard-working.”

Crime and Punishment of a Search Engine

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Does a search engine have the ability to kill a person? After being bombarded by the news about the death of a 21-year-old college student called Wei Zexi, many Chinese have come to the conclusion that it does.

Like numerous online debates about scandals of late, the incident devolves into an exercise of guilt rationing on a massive scale. With the absence of an impartial arbitrator, public opinion takes up the role of fact-finding and responsibility allocation, with implications hard to pin down at this very moment. The story puts Baidu, China’s largest search engine company, at the epicenter of the controversy, bearing the brunt of online criticism, which is guided as much by a complex set of moral convictions as by a vision of technology’s role in the society.

According to Wei’s own account posted on zhihu.com two months before his death (as an answer to the question “what is the greatest evil in human nature?”) , he was diagnosed of a rare tumor, synovial sarcoma. Major hospitals he visited all threw up their hands and told him no effective therapy was available. Desperate, he resorted to Baidu, and initial searches quickly rendered amazing results: a bio-research center based in one of Beijing’s well-regarded hospitals (affiliated with the People’s Armed Police) claimed that they had an advanced therapy (DC-CIK) that could help. The doctor there told him it was “Stanford technology” and promised to extend Wei’s life by “another 20 years at least”. The family invested almost its entire fortune into this last ditch effort, only to find that cancer quickly spread to his lung. Later, well-intentioned individuals on the internet helped Wei find out that DC-CIK was a shelved technology in most parts of the developed world due to limited effect in clinical application. Yet precious time and money was wasted. Wei, the only son of a Xi’an family, died on Apr 12th.

The personal tragedy of Wei Zexi puts a key business component of Baidu under a scorching national spotlight. It is called P4P (pay for performance), whereby customers bid for premium advertisement placement alongside “natural” search results of selected keywords. Although other factors such as quality of content also affect positioning of promoted links, bidding price carries significant weight in the formula, giving high-paying customers good chance of occupying prime locations on Baidu’s search page. The search engine does put a “promotion” mark under sponsored search results, but in a way that is probably not as visually distinguishable as critics and regulators want. The subtlety of the mark can get lost on eyes less experienced with Internet surfing, or those who are eager to find something.

With this background, it may be understandable that the first wave of criticism came for Baidu, even though in both Wei’s original account and the initial investigative piece that directed public attention to the case, the blame fell squarely on the Internet company and on the bio-research center, as well as the invisible yet mightily present state that loomed over the two.

In an era when books like Nudge populate bookstore shelves and people believe in step-counting mobile phone apps to keep themselves fit, the idea that search engine results determine the fate of individual users is only the natural offspring of a faith in the efficacy of technological interventions. It is further enhanced by the towering image of the do-no-evil Google, whose upholding of “enlightened” technology becomes a shining exemplar that shapes the Chinese public’s view of Baidu.

So the conversation swings back and forth between Baidu and Google. Some goes so far as to suggest that Baidu is the “fundamental culprit in dragging down the informational infrastructure of the Chinese society”, by abusing its virtual monopoly in the search market to set up roadblocks on the information highway, profiting from a slowed traffic and a misguided crowd. Google’s Adsense, its core advertising instrument, is upheld as being non-intrusive and responsible. Tales of Google’s efforts to ensure the quality of medical-related search results attracts the attention (and imagination) of Chinese netizens. Very specific ideas proposed by prominent opinion leaders, such as listing ads in a separate column on the screen, are clearly influenced by widely held perceptions of Google’s practices. But it is worth stressing that nowadays Google also puts some ads in the same column as natural search results (with clear marking as “Ads”). More sophisticated industry observers have also pointed out that the growth of Google’s business in China, back when it was still allowed to operate inside the country, was also partially driven by traffic generated by the same kind of search result tricks that Baidu deploys.

Pressed for a response, the Internet firm released a statement through one of its Weibo accounts on Apr 28: it had double-checked the paperwork submitted by the hospital and found it completely legit. This may be true, if your scrutiny stays at hospital level. Move one level below, to the department level, disturbing signs start to emerge. When investigative journalists dug deeper into the bio-research center, they came up with a shadowy web of private entities that had basically “taken over” lucrative departments in military-affiliated Chinese hospitals and ran them like joint-ventures. The public would learn of a so-called “Putian clan”, a group of businessmen who shared the same origin in Putian, a town in southern China’s Fujian province. Lurid, unverifiable stories about the ascent of this group of medical entrepreneurs spread widely on the Internet. As the story goes, they got hold of their first bucket of money in the early days of China’s economic reform. In those years, guerilla clinics prospered in street-side budget hotels, ripping off patients of venereal and skin diseases who were too ashamed to go to proper hospitals. With initial capital in hand, those “bare-foot doctors” began to eye more systematic, legitimate ways of money making. Cash-hungry public hospitals became their natural partners and a new model of “contracted departments” spread like wild fire. In order to bring in more patients, the Putian businessmen took up online marketing, taking advantage of the stellar reputation of hospitals that were hosting them. Baidu’s emergence as a dominant search engine and its offering of P4P handed them a perfect platform to reach out to an anxious, sometimes desperate, clientele. In the process, many patients like Wei Zexi fell victim to sub-par treatments.

The entering of the Putian businessmen into the scene makes the ethical water of the Wei Zexi case much muddier. How much blame should a search engine share if much larger malign interests are motivated to take advantage of its playbook and win access to premium ad slots? As Baidu has always claimed, it only collects and sorts information, not generating it. It acts like a mirror: the reflection is only as good as the Chinese society can be.

An event in 2015 seems to indicate that relationship between Baidu and the Putian clan is less than amiable. At that time, an industry group representing Putian medical interests called for a boycott of Baidu P4P services, claiming that the latter had used its dominance in the market to rip off Putian-controlled hospitals by unilaterally raising prices for promotion. Baidu search results have become a major channel through which such hospitals bring in patients. According to the industry association, P4P expenditures occupy an increasing chunk of those hospitals’ profits, in some cases as high as 60-80%. One the other side of the equation, medical advertisement makes up to 25% of the search engine’s ad revenue, making the relationship of the two parties a love-hate symbiosis. Baidu’s account for the unpleasant stand-off was completely different. It claimed that the industry group was threatening boycott because its crackdown on deceptive medical advertisement was hurting Putian interests. “The threat will not soften our resolute to keep false medical information out of our search results.”

With more information surfacing about the Putian clan, a push back against Baidu-bashing quickly collects momentum. People begin to question the society’s proclivity to blame the safer, easier and more exposed. For them, the focused attack on a publicly listed Internet company is a sign of the collective laziness of Chinese Internet. “The Putian businessmen are happily off the hook now,” as some would proclaim. The despicable deal between public hospitals and the nouveau riche, and negligence of their supervisors, can easily escape public scrutiny under the cover of an outcry directed entirely at Baidu. As a veteran Caijing journalist puts it, what the public should really chase is the regulators who turned a blind eye to the rampant, irresponsible monetization of public hospital reputations. Not only is Baidu a minor consideration in this whole scheme that condemns Chinese patients, so is the Putian clan, whose fortune is determined by the whims of powerful regulators. He predicts that a campaign-style crackdown on private interests in the medical sector would ensue to placate the public, without touching the fundamentals that have allowed the situation to spread in the first place. “It is a way for power to routinely discipline private interest groups, preventing them from growing too big, while reminding them to be more active in paying their rent.”

More methodical minds try to lead people out of this ethical swamp by actually ranking the relative moral responsibility of the parties involved: the biggest share of blame goes to the military-affiliated hospital that knowingly sold its reputation and standing for profit, while being in the best position to judge the medical merit of the technology that its “contracted” bio-research center is promoting. Second comes the center and regulators. Baidu ranks at the bottom of this ethical ladder, for “it is also in relative disadvantage when it comes to medical expertise”. Its only problem is choosing to pursue profits in this category in spite of its own blind spot.

But there are people who resist this way of assigning responsibility. They see it as a distraction or even an intentional tactic to deflect pressure from Baidu, at a point when intensive public questioning is just about to make a dent on one of China’s largest internet firms. The sentiment roots in a deep frustration over a string of Baidu-related controversies (including the one in January this year where it attempted to sell off management authority of an online patient support group to commercial interests), which the Internet giant have all weathered with impunity. “We don’t have the ability to change the root cause of the problem, but at least we can change Baidu with a concentrated effort.” This line of argument contains, at once, a deep sense of powerlessness and a great faith in public opinion: criticizing the power behind the whole corrupt situation won’t bring you much change. It’s a dissipation of precious energy. But the search engine will ultimately bow to such public pressure.

The powerlessness manifests itself in a different reading of Wei’s death. What killed him seems to be a carefully weaved web of sub-lethal elements: acting individually, no element, whether it’s the search engine or the hospital, is potent enough to bring death to a person. Yet collectively, their grip turns out inescapable for an ordinary Chinese like Wei. In the end, each individual element can deny accountability for the collective consequence.

On May 10, China’s Internet authority handed down its verdict on Baidu: it has to change its algorithm for search result presentation, give more weight to credibility, less to bidding prices. Plus, no more than 30% of a page should be given to promotional results. It is a rare occasion where the country’s web regulator publicly dictates change, albeit a noble one this time, to an Internet company’s core business, its algorithm. Earlier, commentators already made a careful-what-you-wish type warning about a more empowered Internet police coming out of this case. But for most part of the cyberspace, vindication is the predominant mood.

The complexity of Baidu’s response to the whole saga is best captured by an article published on the company’s intranet days before the final result. While pledging to collaborate with regulators, it also questioned why the bio-research center could obtain all the certificates and official documents. “As a great enterprise, we sometimes have to shoulder responsibilities that once belong to the state and the medical industry, because with more power comes more responsibility.”

Das Evil Kapital

wangshi

(China Vanke Chairman Wang Shi)

Speaking of the pot calling the kettle black, nothing sounds weirder than a Chinese real estate developer accusing a private insurer of bringing in sinful capital, which incidentally pushed up the former’s stock price to a historic high.

In what has become one of China’s most spectacular melodramas of the year, the attempted hostile takeover of China’s largest home builder, China Vanke, by a little known insurance conglomerate, Baoneng, creates a sense of intrigue so intense that it almost redefines how a corporate deal could be received by the Chinese society. In the process, it reveals the multi-layered, fantastic imagination that the society attaches to capital and those who wields it.

The substance of the event is pretty simple on the surface. In the time span of less than half a year, the Baoneng conglomerate has acquired tens of billions RMB worth of Vanke’s share through the stock market. Quietly, the insurer had become Vanke’s largest shareholder with 22.45% of its total shares by Dec 17, a dramatic increase from only 5% four months earlier.

Nothing in the public domain suggests that Baoneng’s operation violates any written rules. This is reflected in the authority’s largely ambivalent attitude toward the deal up to this point. China’s securities watchdog has openly expressed its willingness to “leave the matter to the market”, while its supervisory body for banking is “looking into” potential exposure of local banks to risks involved in the deal. But what Baoneng essentially does is disrupting Vanke’s carefully maintained shareholder structure that has been in place for two decades. The essence of that structure is highly dispersed shareholding that allows senior management a freehand in steering the company. Until Baoneng emerged on the horizon, China Resources, a state-owned conglomerate friendly to the Vanke management, had been Vanke’s largest shareholder owning about 15% of its shares. Other major shareholders held less than 6% combined.

This explains why those most unsettled by Baoneng’s move are Vanke’s senior managers, specifically its chairman, the 60-year-old Wang Shi.

In an internal speech made public on Dec 18, Wang makes it clear that he does not welcome Baoneng as Vanke’s no.1 shareholder. He sneers at the new comer’s business as risky and irresponsible, which will tarnish Vanke’s stellar reputation as China’s most credit-worthy home builder.

According to details revealed by the Chinese media, Baoneng financed its 40-billion-RMB stock market advancement on Vanke largely through margin financing, layers of collateralized loans leveraged by money from its sales of Universal Life Insurance that is often marketed as short-term investment products. In his speech, Wang blasts the financing model as excessively risk-taking. He is not without his points. Equity investment as a long-term investment strategy would put pressure on Baoneng’s short-term based money line. In an event of large-scale redemption of the ULI product or unexpected regulatory intervention, the insurer will face serious liquidity problems.

But Wang’s criticism of his fervent bidder goes beyond finance. His account of his first face-to-face encounter with Yao Zhenhua, the man behind Baoneng, betrays a hint of contempt: “He appeared not able to control his mouth… Nobody has heard of such persons before. They came out of nowhere and suddenly got very rich using leveraged money.

Unlike his “nobody” adversary, Wang has been the torch bearer of Chinese entrepreneurship for as long as “entrepreneurship” is valued in China. Being the founder of Vanke, Wang has led the legendary company for 31 straight years. Vanke was the second earliest stock ever listed on China’s Shenzhen Stock Exchange, with its trading code 000002 as a badge of honor.  Over the years, Wang has cultivated a larger-than-life public image that sets him apart from the typical “Chinese businessman”. He is adventurous, spending his leisure time climbing Mount Everest, kayaking in the torrents of western China and flying gliders over the sky. He radiates wisdom, taking three years off his corporate chairmanship to ruminate about Japanese history at Harvard; He advocates for a business culture that sounds refreshing for a Chinese audience: He claims that Vanke never bribes anyone to get business deals in China; He promotes high-quality, sustainable architecture and neighborhood; He serves as WWF US’s board member and delivers inspiring speeches at the world’s most prestigious green events.

The stark contrast between the public images of Wang and Yao creates an interesting tension that defines initial reaction to the Vanke-Baoneng conflict. Specters were somehow led to believe that there are two kinds of businesses, those that are benign and decent, and those that are hostile and crooked. Wang’s internal speech certainly helps create this impression by invoking the “barbarians at the gate” image, which spreads across newspaper headlines in the following days. The narrative was also enhanced by Wang’s influential admirers, the most excessive of which declares that “Vanke can lose Wang Shi. But China can’t lose him.” As a former chief editor of one of China’s most popular business newspapers puts it, Wang’s Vanke represents the “truthfulness, goodness and beauty” in the Chinese business community for its uphold of basic business ethics and rationality. The editor “shed tears” after learning about Wang’s current difficulties.

Whereas 30 years of relatively robust business does speak to the strength of Vanke’s business model and Wang’s leadership, whether it is a sign of its moral superiority is debatable. Actually many people were put off by Wang’s overtly ethical criticism of Baoneng, seeing it rather as a kind of biased arrogance. For Wang Shi, introducing the ethical argument into a corporate deal cuts both ways. While he can once again brand Vanke’s cleaner-than-thou business culture, some questions Wang’s fundamental business ethics of openly rejecting a perfectly legitimate major shareholder who may actually improve Vanke’s performance in the stock market. Interestingly, Baoneng issued a public statement on Dec 18 confronting Wang on the ethical question head on: “Where is the conflict between the pursuit of optimal, efficient capital deployment and an open, transparent social order?” In his speech, Wang speaks highly of Vanke’s regard for its hundreds of thousands of small shareholders. However, people also point out the contradiction that the management never did anything to boost the company’s stock performance, even when they had the chance to do so through a stock buyback in 2014. It turns out to be a fateful decision not to do so, as it hands Baoneng an opening (80% of Vanke’s shares were outstanding in the stock market at that time).

As financial observers are debating the wisdom of Vanke’s business decisions, and more importantly, the disturbing trend of insurance money flooding the securities market shopping for real estate equities, wider discussions about the deal are turning decisively “Olympian”. The dramatic clash between business titans teases out a deep-seated suspicion that big capitals are but proxies of more powerful interests behind them, and therefore their conflict must represent power struggles on a much higher level. In other words, this is modern China’s financial Trojan War, where the Greeks and Trojans are fighting on behalf of their rivaling Gods.

The theory goes that both Wang Shi and Yao Zhenhua are front-men of their respective political patrons, who belong to adversarial cliques of the Party. Wang’s unspecified patron controls the China Resources conglomerate (Vanke’s biggest shareholder before Baoneng’s bid), which has recently been disciplined under the anti-corruption campaign (its chairman was arrested last year). Baoneng’s attempt to seize control of Vanke is another assault on the big boss behind Wang Shi from its political rivals. The intriguing participation of Anbang Insurance in this financial drama further fuels this line of speculation. As Baoneng was making strides in the stock market, Anbang, a company widely associated with prominent “princelings,” quietly increased its stake in Vanke to over 6%, making itself the “swing vote” between the two fighting camps. If Anbang represents the will of another God which may decide the fate of Troy, is it Athena or Apollo?

A cautious mind would notice that this political reading of the Vanke-Baoneng deal shows signs of stretching reality to fit an imagination about the politics of Chinese elites. It assumes that the supposed political enmity among powerful party figures extends naturally from the political arena to the corporate realm through “proxies”, and that large Chinese corporations, no matter how complicated their financing is, can be neatly assigned to particular political figures who are involved in a zero-sum power game.

But this kind of alternative narrative does broaden the base of the story’s audience, as it proves to be something more “entertaining” than cold financial details. The abundance of conjectures and the shortage of ascertainable facts also make the story much more social-media-friendly, leaving most serious media outlets high and dry. One observer senses the irony in the popularity of the story: as something fundamentally non-relatable to most Chinese watchers, it manages to create an almost magnetic theatrical effect.

The vulgarization of the story does not stop at political gossips. Both Wang and Yao’s personal lives were added into the recipe to make it more flavory. In particular, Wang’s once high profile love affair with a young actress was held against him as indication of his sluggishness in recent years, which supposedly led to his unpreparedness in response to Baoneng’s ambush. It fits well into a misogynist tradition of Chinese classic stories, where the fall of a male hero is often blamed upon a seductive female partner. “All of a sudden many people jump out to teach Wang Shi, and everybody, a lesson: how women cost ambitious men their world.”

On Dec 21, Vanke applied for the suspension of trading in its stocks for as long as three months, citing “significant asset restructuring” as a reason. The move was widely read as a way to strike back at Baoneng, which faces liquidity pressure on its leveraged debts. A recent Caixin report reveals that Wang has been busy approaching potential equity investors to improve Vanke’s shareholding structure. But given the fact that very few shares outstanding remain on the market, it will not be an easy job.

Two days later, the mysterious Anbang Insurance issued a statement publicly supporting “the stability of Vanke’s senior management”, essentially busting the conspiracy theory that Anbang, and the political forces behind it, are set to overthrow Wang Shi’s real estate empire. With Anbang’s more than 6% share on Wang’s side, the situation improves almost overnight for Wang’s team. But Anbang’s real intention with Vanke remains unclear.

The general public probably will never know what actually happened behind the scene during these hectic days and nights of December 2015. No one is there to write the Chinese version of “The Barbarians at the Gate”, which is a lamentable fact for long-time observers of the country’s finance reporting scene. (Only Caixin’s detailed investigative report on the case is probably an exception.) No matter who emerges in the end as the winner of this bid for the control of China’s largest home developer, the loser is already visible: it’s the idea of “philosopher-king capitalists” as the progressive force to change China. The Vanke drama has revealed the fragility of the public image that Wang Shi and an entire class of so-called progressive Chinese capitalists have built for themselves. To the Chinese public, not only are their moral positions dubious, their independent agency is also under question. The widespread public perception that they are just puppets of much more powerful masters provides a real valuation of their moral capital in this country and how shaky their moral high ground really is. Expecting entrepreneurs like Wang Shi to provide the kind of moral leadership that can lift the society out of its value vacuum is almost like betting on Hector to win the Trojan War.

Li Ka-shing’s Indignation

李嘉诚

What on earth can agitate the steely Superman? It turns out all it takes is an article written by some dubious “researcher” from a Chinese institute.

On Sept 29, the 87-year-old Hong Kong billionaire Li Ka-shing, nicknamed “Superman Li”, broke his cool by releasing to the Chinese media a statement in response to a controversy that had been raising eyebrows all over the country in the past two weeks. It started with an article titled “Don’t Let Li Ka-shing Run Away” that appeared on the WeChat platform of a major think tank run by the state-owned news agency Xinhua. In that article, author Luo Tianhao accused Li of being ungrateful and opportunistic by cashing out his real estate properties in mainland China and moving investments to Europe. It then moved on to instruct Li to do three things, with a tone at once condescending and menacing: invest in lower profit industries in mainland China; hold on to “symbolic” properties in the mainland and Hong Kong as a token of his loyalty and confidence; do more philanthropy. The author also spent a good portion of the article belittling Hong Kong’s business tycoons and highlighting their relative “dispensability” compared to the early days of China’s reform and opening.

As many Chinese observers have pointed out, the significance of that particular article is probably overblown by its somewhat unfortunate pick-up by the Xinhua-affiliated think tank. Likely what happened was that some inexperienced editor in charge of its WeChat account innocently carried it without realizing the potential explosiveness of its content. Commentators also dug out the bogus nature of the author’s numerous self-claimed titles, revealing that he was nothing but an aggressive self-promoter.

In a society where the ruling elites are accustomed to communicate in codes and hide political intentions behind cryptography, the probability of the signal-hungry public to misread or over-interpret things runs high. But even if this is a classic example of overreaction to an essentially trivial piece of opinion, the waves it stirred up and the fact that people so naturally associated it with some sort of high-level intention speaks to a deep-rooted concern that had been fermenting over this past summer.

Economists were among the first to cry foul of the mentality embodied in the article. They dubbed it “anti-market” and maintained that Li Ka-shing’ accumulation of wealth in the mainland was essentially a market phenomenon and should be encouraged. Applying moral judgments on market transactions (including cashing out) is going to affect the business community’s confidence in the system itself. The same sentiment also defines the reaction to the government’s botched effort to rescue a sliding stock market in the summer. Instead of “letting the market play a decisive role”, the authority displayed an assortment of administrative weaponry: suspension of IPOs, banning short selling and arresting a journalist whose exclusive report about the possible wrapping-up of governmental rescue efforts sent the market downward again. In both the Li Ka-shing and the stock market cases, observers sense the ominous encroachment of the logic of power into the sanctity of the marketplace, the former features demagogy, mass mobilization and coercion, while the latter run under the principles of contractual spirit, mutual consent and free will.  People satirically refer to the authority’s stop-running-away mindset as “the foundation of this strong nation” and a “panacea” to every conceivable problem the country faces.

But as business writer Wu Xiaobo writes, in the case of Li Ka-shing, as in many Hong Kong tycoons of his generation, the line between politics and market is never that clear-cut. He even considers Li the symbol of a business philosophy that treasures and embraces the partnership with an ascending power. By supplying the power with much needed capital and support, Li got handsome returns from his investment and therefore became the “biggest winner of China’s transition.”

That ambivalent relationship with power becomes an original sin that Li’s critics exploit. The author of the original article argues that since real estate development in China is almost impossible without some forms of governmental “benevolence”, Li’s cashing out is no less than an equivalence of betrayal. His status as the richest Chinese man on earth (only recently taken over by Wanda Group’s Wang Jianlin) also means that every move he takes carries a symbolic meaning beyond the transaction itself. As early as 2013, when Li’s initial shift of his portfolio to outside mainland China and Hong Kong drew public attention, Wang Shi, president of one of China’s largest real estate developers, sent out a Weibo post reminding everyone: “The very shrewd Mr. Li Ka-shing is selling properties in Beijing and Shanghai. This is a signal. Be careful!” And when China’s economic troubles make business transactions, be it stocks or real estate properties, an issue of allegiance, Li finds himself caught in a spot utterly uncomfortable.

It is particularly unfortunate that Li, a man who builds his life time of business career on optimally timed transactions on a global scale and an extreme prudence in cash flow management, would have to respond to morally charged allegations of ingratitude and disloyalty. Li’s Chinese biographer, Xu Zhiyuan, once compared Li with the likes of John D. Rockefeller, Henry Ford, Bill Gates and Akio Morita, all of whom were short-listed for the London Times’s 1999 award of the “Entrepreneur of the Millennium.” Unlike his great peers who had either enjoyed large home markets or generous government support, Li launched his business from a tiny free port city. From the very beginning he had to face the global market or perish, and up until this point his global portfolio still stands out among Chinese businesses.

His relationship with mainland China has also been complicated. Originally coming from Guangdong province, he spent a good part of his adolescent years sending back money to his mother and siblings who remained in the mainland while he struggled to make ends meet in Hong Kong, where his father died abruptly of tuberculosis and he himself almost died of the same disease. It was this attachment to his hometown that brought him back in the 1980s to set up the first university in the region of Chaoshan, so that kids from the same modest roots as his could receive first-class education. A 2013 profile of Li in a Chinese magazine also took note of his interactions with then Chinese leader Deng Xiaoping. Even though Deng individually received Li twice in 1986 and 1990, an absolute privilege, it was until after Deng’s 1992 speech in Guangdong that finally inject confidence in Li of China’s future. As a perfect example of his signature prudence, Li only started large scale investment in the mainland after that point, which sets him apart from Hong Kong’s other pro-Beijing tycoons who got into the game much earlier.

Xu, his biographer, noticed a sort of “unsophisticated patriotism” in Li. “His generation has experienced violent turbulence (in modern Chinese history). They have a special craving for a wealthy and strong China, and a deep affection for its traditional culture. For them, China is not only just a market. It’s an identity and a place where they can help change.”

This probably explains the tone of Li’s response to the article which sounds hurt and indignant. It is already quite unusual for the old man, who largely stays out of the spotlight, to make such a statement to begin with. The brief press release to the Chinese media contains a distinct personal touch of Li Ka-shing. In response to allegations of him being “unpatriotic”, he listed contributions to the mainland through his multi-billion dollar foundation, in particular the Shantou University endeavor which he dedicated more than a quarter of a century of his time. He quoted Su Shi, the poet from a thousand years ago, to describe his own sense of belonging: “Where my heart finds its inner peace, I call it my homeland.”

He strikes back at the article as “chilling” and representing a “cultural revolution mindset.” Yet while he defends his business decisions as based on a sound and common-sensical logic detached from political considerations, he also makes a gesture that shows his acute sense of his place: “We should not let this meaningless fight over words to become the focus and a distraction from the important message that President Xi tries to send through his state visit to the United States.” The old man, the second richest Chinese on this planet and a self-described “compassionate lion”, is following the thousand-year-old tradition of the Chinese merchant class: showing his subordination to his King.

People’s Uber

Uber

It is probably more than a simple play of words that Uber China names its low-end line of service “People’s Uber” (人民优步). The egalitarian connotation sets it in contrast with its Chinese competitors, who invariably give their equivalent services a sense of privilege, calling them “exclusive car services” (专车).

Egalitarian or not, all these smartphone-based, internet-powered car-hailing services are subversive forces that are now sweeping through Chinese cities, upending the old, inefficient order of taxis and their government-backed companies.

In recent months, the struggle between the old order and the new forces has escalated into a national feud with the outbreak of taxi driver strikes in many Chinese cities, violent clashes between taxi drivers and Uber drivers, and ground-breaking lawsuits that try to define the legality of such services.

It is a situation that proves thorny for the government. As recent cases show, Uber and other copycat services are so wildly popular with an urban, tech-savvy class profoundly dissatisfied with the taxi services that any moves against the Ubers induce vocal discontents online, at a time when the top leadership is trying hard to woo the support of this group. But on the other hand, the interests that Uber threatens are also highly organized and entrenched. Their response to the advance of the Ubers can easily turn massive and nasty.

Two cases last week vividly illustrate the above dilemma. On May 21 the Beijing transportation administration carried out a major crackdown on what they considered “black taxis”, which involved private cars running Uber-like services. When pictures of the crackdown emerged on the internet, showing enforcement officers using hammers to forcefully break into cars and drag out drivers, they were greeted with an outburst of indignation and ridicule. Liberal commentators questioned the legality of such actions; Public figures, including well-known stand-up comedian Joe Huang and movie star Yao Chen, used their Weibo accounts to express discontent and disbelief. Tough-in-the-cheek Weibo personalities readily made fun of the authority by teasing them about “why not using the anvil as well.”

On the same day in Tianjin, a mega-city two hundred kilometers away from Beijing, taxis drivers took matters into their own hands. One of them solicited an “exclusive car service” as a customer, and then brought the car to a pre-arranged destination, where a group of taxi drivers waited to “give the driver a lesson”. Apparently, the Uber driver was not easily intimidated. He sent out a WeChat alert to his community of similar drivers, and in no time, hundreds of them came to his rescue. A major stand off and violent clash quickly ensued, which in the end required police to help disperse.

Caught between the wild popularity of internet car-hailing services among urban middle class consumers and the intransigent taxi interests, the central government’s position so far has been stubbornly ambiguous, if not outright self-contradictory. In Nov 2014, the spokesperson for China’s Ministry of Transportation publicly declared that internet-based car services “should not be killed with one strike of the rod.” It was widely read as a half endorsement of the Ubers until, four months later, the Minister himself hardened the Ministry’s stance by famously saying that “private vehicles should NEVER be allowed into the commercial services”, citing safety concerns as the main consideration.

But Uber and its sister services continued their aggressive expansion unabated. Part of the reason might be the existence of a mixture of seemingly authoritative signals which are subject to all kinds of favorable interpretations. Only recently, China’s Premier Li Keqiang has been advocating the concept of “Internet+”, a vision to upgrade China’s economy to a more information and data powered platform. And early this year, while numerous local governments were ramping up their campaigns against the Ubers, China’s central news agency Xinhua and the party’s no.1 propaganda outlet People’s Daily were publicly supporting such services with a series of widely circulated opinion pieces. For a nation so accustomed to reading the “tea leaves” of the coded signals from the top, such an environment is fertile for over-enthusiastic (mis)judgments.

Kenneth Lieberthal, an influential China expert in the US, once observed that it is difficult for outsiders “to determine with confidence which outcomes reflect strategic decisions by China’s national leaders and which instead reflect inherent dynamics of the political system that are beyond the control (and some-times against the wishes) of those leaders.” The Uber situation is a typical illustration of this challenge as at times you can’t tell whether matters are manifestations of the political will from the top, or mere reactions prompted by local power dynamics. Take the above mentioned Tianjin for example, on the one hand the municipal government announced all internet-based car-hailing services “illegal” a few months ago, on the other hand it has thenceforth only penalized eight “illegal” vehicles. It is likely that such actions were mere tokens to placate the protesting taxi interests, which were particularly vocal in Tianjin. There the ownership of taxis belongs to individual owners rather than large taxi companies, the former being much more financially vulnerable. Such a unique local set-up produces interactions that project uncertainty onto the national level where every development is closely watched by many.

The raw subversive power of Uber is creating problems for regulators all over the world. While the Chinese authorities are not the only ones scratching their heads, they do face a peculiar challenge of lacking institutionalized means to negotiate a legitimate compromise with the numerous interests involved. When an official from China’s central planning agency (NDRC) got interviewed for the Uber question, he made a typically dialectic instruction to the local governments: seriously take into account the need of the public, while at the same time handle the historically accumulated problems (i.e. taxis) with grace.

Not very instructive.