Walter Hutchens’ Blog

The State Archives Administration of China (SAAC) (the department in charge of dossiers) has issued a nationwide alert to be on guard against people impostering SAAC officials in order to swindle money out of subordinate levels of the “archives” bureaucracy.

The notice warns that recently the SAAC has received “a series” of reports from local archives administrations indicating that “illegal elements” are impostering SAAC officials to extort money. Using the names of SAAC leaders, the crooks seek to “borrow money” and “sell printed materials.”

The SAAC states this has caused serious harm to the reputation of the SAAC and interfered with the work of subordinate levels of the archives administration. They proclaim that no SAAC official will engage in such activities and that incidents should be immediately reported.

Previously, the CSRC has warned that people are running scams based on impostering CSRC officers, as I wrote about here.

Observing this pattern, it occurs to me that in order for people to be taken in by these scams, they’d have to imagine that a central government office might shake them down for money, and they’d have to further think giving in would be the best best course when confronted with such petty extortion. It reflects the increasing openness of China that notices about such problems are public and not “nei bu” secrets, but unfortunately it also seems to say something about contemporary PRC social expectations when people can run a which is predicated upon people assuming that senior government officials might seek soft ways to squeeze money out of subordinate officials.

The SAAC Notice (available here in Chinese) is titled 国家档案局中央档案馆办公室关于警惕假冒以国家档案局中央档案馆名义进行诈骗的通知.

For a while I have been using WordPress as my blogging software. Like most blogging applications WordPress doesn’t run from my personal computer. It lives on the server where my blogs are hosted. When I want to use WordPress, I access it through a web browser. I just point the browser towards an address for the “administrative” part of my blog. That launches a WordPress session for creating and editing posts or making adjustments to the appearance of the blog.

In fact, because WordPress doesn’t allow you to easily update multiple blogs through a single installation, I have separate WordPress installations for each of my blogs (this public blog, my private online journal, a private blog I keep about my daughter and some other blogs I’ve created but not yet really used for specific research projects.

Generally I am pretty happy with WordPress. Not ecstatic–but it’s quite serviceable, and it’s free.

But tonight I’ve been looking at some alternative blogging clients. I’ve come across several that claim to work with WordPress. Specifically, I’ve found and already downloaded RocketPost, WB Editor and Qumana.

So far, RocketPost is the clear winner. I’m using it to create this entry. I already like several things about it.

1. WordPress has a row of buttons above the text entry field, but they are somewhat cryptic. RocketPost has graphical buttons that more clearly signal what they do (for instance, numbering this list). That’s a small but nice thing; it improves the transparency of the tool.
   

2. The WordPress text editor is not really WYSIWYG. RocketPost appears to be.
   

3. WordPress requires me to type three hyphens “- – -” to get an em dash “–”, whereas I can get one with RocketPost in the conventional way, by typing just two hyphens.
   

4. RocketPost counts words as you type.
   

5. Better still, I have already used RocketPost to download all the entries from my public blog. The now appear inside RocketPost and are saved on my local hard drive. Having been through a few traumas when something caused my blogs to “break,” I like the assurance of having a local copy of all my posts. I had to try a few times before I got all the entries to appear, but now they all seem to be safely downloaded
   

6. I easily inserted some photos in this entry by simply dragging into this editing pane the photo icons that appear in the “My Pictures” folders in Windows. RocketPost then made the thumbnails below, which will apparently be linked to fuller versions when I post this. Pictures are important, and WordPress doesn’t currently handle them so smoothly. I must use a WordPress plug-in. That involves more clicks than dragging photos into this panel. Also, the plug-in doesn’t provide an easy way to add code to center a photo or “float” it left or right.
   

7. I easily created a table with RocketPost. I love tables, but I rarely use them in blog posts because it’s tedious to try to code tables with html, and I’ve had uneven luck creating tables in MS Word or FrontPage and then pasting that code into a WordPress entry. For the table below, I just hit the RocketPost tables button, then drug the photo thumbnails into the table. Wow!

Image	Caption
	Helen Running
	Maggie & Helen
	Helen Salutes

RocketPost is expensive at $99, but after this short test drive I am essentially ready to plunk down my money. I’ll first confirm this post uploads smoothly, and I’d like to import the entries from my private blog and be sure it doesn’t have problems working with that password-protected site.

Qumana looked promising, but I immediately rejected it after a test post with it because when I opened the test post from within WordPress I discovered not the content I’d sent them but rather just a link to a Qumana site. Let some third party keep my content? Hell no!

WB editor is cheaper than RocketPost, but it’s interface doesn’t look as nice from the screen shots. I’ll download it and compare, but right now I think RocketPost is going to be the tool for me.

The New York Times has published a story on a Shanghai blogger who 1) dances provocatively in front of a webcam (her face, but not much else, concealed) and also 2) claims to be a Communist Party member (so that’s Party girl, as well as party girl).

When people talk about the importance of blogs (博客 bókè) and podcasts (播客 bōkè), they often talk about disintermediation—the removal of intermediaries like editors and traditional publishers from the publishing process. With these new tools, an individual can reach the masses. That’s an important change.

In China, editors and publishers in main stream media (MSM) are supplemented by an overlord intermediary—the Chinese Communist Party. The Party exercises prior restraint of speech (through PRC government administrative controls including requirements that publishers register and obtain government approval prior to publishing). The Party also sometimes intervenes after the fact to punish and suppress publication of ideas it deems unacceptable. This of course creates a lot of self-censorship as people try to stay well clear of (unstated) limits.

Thus, in China disintermediation is threatening not just to established MSM but also to the ruling regime.

China makes some efforts to monitor and fight the onslaught of uncontrolled publishing. Within China they have a variety of ways to do this, as partially described above. With regard to bloggers beyond their borders, they have tried to erect a new Great (fire)Wall to keep out undesirable content. I am frequently frustrated that while in China I cannot access blogs on blogspot.com (owned by Google) or blogs on typepad.com’s site. Millions of blogs are on these two hosting sites. Precious few of them have anything to do with China or even contain content considered verboten here. But the government just crudely blocks the entire sites. Consequently, I cannot (easily) access a variety of blogs on mobile technology (for example, jkontherun.com). This stupidity also reaches wikis and even the wordpress.org codex!

But as the Chinese say, when there is policy from above their is counter-reaction below (上面有政策下面有对策, shangmian you zhengce, xiamian you duice). While I cannot visit many blogs directly, I can read them through RSS feeds and sites that aggregate RSS feeds. Like the sclerotic Qing dynasty, Beijing conservatives may be able to delay but probably not ultimately halt changing times.

A whole bunch of PRC agencies—ten, specifically—have jointly promulgated the Provisional Administrative Measures on Venture Capital Enterprises (创业投资企业管理暂行办法, Chuangye touzi qiye guanli zanxing banfa), designated “Measure No 39.” The rules become effective March 1, 2006.

These are not the first rules on venture capital enacted in China. There have been many other policy statements and regulations addressing venture capital, including local regulations in Zhongguancun and Shenzhen and previous measures on establishing foreign-invested venture capital funds.

The gist of this new regulation is support of a home-grown, government-funded v.c. industry.

A Financial Times report, available from the China Daily website here, indicate officials noted the dramatic returns some foreign v.c. investors have obtained on PRC investments and devised these rules to try to capture such profits domestically, as well as to encourage innovation and general economic growth.

In the US, where modern v.c. approaches are most robust, the basic model is that a fund invests money in an early-stage business. The fund may give millions of dollars to college drop-outs who have no other tangible assets or prior business experience (Apple and Netscape are two examples). In exchange for the funds, the v.c. investors get a minority ownership position (through shares with special rights) in the new business. The entrepreneurs then work to develop the business, with some advice and support from the v.c. investors. After some number of iterations of this process (v.c. injections of funds and efforts to develop the business), the business (usually) fails or (sometimes) is sold to another company or has an IPO. In cases leading to successful M&A or IPO exits, the entrepreneurs and venture capitalists may get rich, earning returns dramatically larger than their initial capital investments.

Now, just about everybody wants to get rich, and most every nation wants to benefit from innovation. But the v.c. model depends on a lot of “background” things. The formation of v.c. funds, their portfolio investments, the development of valuable intellectual property and the hoped-for exits through a sale or IPO all depend on a complex of institutions that China is still developing.

Government support through funding is not a bad thing, but it won’t be enough to give China a flourishing v.c. ecosystem. A lot of work has gone on in China to make private contracts more enforceable, protect intellectual property and build capital markets. But I think most Chinese analysts would agree much remains to be done.

The new regulation is available in Chinese here.

The ten agencies promulgated the measures on Nov. 15. The State Council approved them on September 7 (I’m not sure what the sequence didn’t work the other way, since the State Council is the uber-organization of the administrative departments of China’s central government).

The enacting agencies are:

1. National Development and Reform Commission (NDRC)
   国家发展改革委
2. Ministry of Science and Technology (MOST)
   科技部
3. Ministry of Finance (MOF)
   财政部
4. Ministry of Commerce (MOFCOM)
   商务部
5. People’s Bank of China (PBOC)
   中国人民银行
6. State Administration of Taxation (SAT)
   国家税务总局
7. State Administration for Industry and Commerce (SAIC)
   国家工商行政管理总局
8. China Banking Regulatory Commission (CBRC)
   中国银监会
9. China Securities Regulatory Commission (CSRC)
   中国证监会
10. State Administration of Foreign Exchange (SAFE)
    国家外汇管理局联合发布

I once wrote in an aside to an article that the essence of Chinese law might be expressed as 未经批准不可 (weijing pizhun buke, or, “you can do nothing without [govt.] approval.”

Of course that’s an exaggeration. Not everything requires government approval in China. Just a staggering number of things.

Today I came across a fresh and striking example in a new regulation about live broadcasts. The regulation declares that it is illegal in China to broadcast “major events” live without prior approval from the State Administration of Radio, Film and TV. This prohibition applies “especially” to major events “attended by comrades from the central leadership.”

The provision appears in a SARFT Notice titled 广电总局关于切实做好广播电视现场直播报道管理的通知 dated September 10 (but that only appeared in a common PRC legal database about 10 days ago). The specific provision reads:

一、各级广播电视机构的重大活动大型现场直播报道，特别是对有中央领导同志出席的活动进行现场直播报道，必须报国家广电总局批准。

The China Securities Regulatory Commission (CSRC) has offered for public comment a draft opinion on listed companies’ use of their equity to incentivise officers and employees. This is an important government signal that PRC-listed companies can use stock options and other equity-linked incentive plans to induce managers to work for the benefit of public shareholders.

In any system that splinters ownership into shares and then separates that dispersed ownership from daily control, the interest of public shareholders and corporate insiders can diverge. This is true in all stock markets but has been a particular problem in China. This inherent problem to stock markets is amplified in China because a special characteristic of PRC stock markets is that most shares of most listcos are not listed. Rather, most shares remain illiquid as legal person or state-owned shares (in either case generally in government hands, directly or indirectly). This means holders of listed, publicly tradeable shares are a minority; holders of non-tradeable shares can out-vote them. Thus the interests of public shareholders (holders of listed, tradeable, liquid shares) often get ignored or abused by majority shareholders who own illiquid, non-listed, not-easily-tradeable shares. So this problem endemic to stop markets is made worse in China because of the capital structure of its listed firms. But that’s not all. The problem is made even worse because China hasn’t had good mechanisms to control this problem. In other jurisdictions shareholder lawsuits, statutory protections and stock options may be used to discipline insiders/majority shareholder and better align their interest with public shareholders. But for years these mechanisms have been ineffectual or non-existent in China.

With China’s stock markets trading near 8-year lows, many PRC regulators “get it” and are working to address the problems. Recent changes allow public shareholders to vote as a class to approve certain fundamental matters; programs are in place to make non-tradeable shares tradeable (to “fix” the capital structure problem) and now with this draft opinion the CSRC is offering its “opinion” (yijian) on how to “standardize” (guifan) the use of stock options and other equity-linked incentives to align the interests of insiders and holders of publicly tradeable shares.

Of note, only companies that have already made illiquid shares tradeable are eligible to use stock option incentives. To date, 240 firms are in that category.

The draft opinion is titled 上市公司股权激励规范意见 (shangshi gongsi guquan jili guifan yijian) and is posted in Chinese on the CSRC website here. The draft opinion can also be downloaded as a word-processing “soft copy” from a link at the bottom of the page.

The period for public comment is only one week—a time period shockingly short by U.S. standards. But China still lacks an administrative procedure act that requires any public notice and comment period whatsoever before enactment of a regulation, so the CSRC’s frequent solicitation of public comments is to be praised even if the comment periods seems too truncated.