2008: The Year in Review

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By Andy Scott

SHANGHAI, Dec. 31 – As is customary at this time of year, we would like to take a moment and look back at the year that was, reflect on the news stories that captured the public’s attention, and highlight some of the achievements that took place over 2008.

Three major events shaped the world’s perception of China (and China’s perception of itself) in 2008: the riots in Tibet, the earthquake in Sichuan, and the Olympics in Beijing.

The Tibetan riots
When ethnic Tibetans rioted in Lhasa and several other Tibetan cities on March 14, many inside China seemed confused and angered by the ensuing coverage of the Western press. While ignoring the singular question of why the Tibetans were rioting, many Chinese became fervently nationalistic, viewing the event and its aftermath as an attempt to “keep China down.” The riots gave way to a highly politicized Olympic Torch relay (despite claims to the contrary) with many stops degenerating into full anarchist theater complete with tear gas and angry counter protests. It was not what the planners had had in mind. It was yet another example of what James Fallows described in the November issue of The Atlantic. “How can official China possibly do such a clumsy and self-defeating job of presenting itself to the world?” Fallows asked. “I have rarely seen a governing and ‘communications’ structure as consistent in hiding the good sides and highlighting the bad.”

The Olympics
As spectacularly bad as the Olympic Torch relays turned out to be around the world, the actual Olympic Games in Beijing were a resounding success. There was drama, medal count controversies, upsets and disappointments, a dolphin named Michael, one insanely fast man named Usain, a massive opening ceremony, clean air, and some truly stunning architecture. Billed ad nauseam as China’s coming out party, the Games of the XXIX Olympiad saw 43 new world records and 132 Olympic ones. Following China’s record performance, they will continue to be a source of national pride for the nation as it now looks to defend its medal haul in London.

The Sichuan earthquake
On May 12, an earthquake measuring 8.0 on the Richter scale struck Wenchuan County, Sichuan Province, killing at least 69,227 people. The Chinese government reacted immediately, and within 90 minutes of the quake, Premier Wen Jiabao had flown to the area to oversee the rescue work. The horrific toll of the earthquake, especially among children whose sub-standard school buildings collapsed on top of them, brought forth massive charitable donations from individuals and countries throughout the world. In China, donations to charities involved in the relief efforts poured in, and the State Council declared a three-day period of mourning for victims of the quake. It was the first time a national period of mourning had been declared for something other than the death of a state leader.

Besides  these big stories, many other notable events took place in China over the last year, here we review some of them.

Winter storms grind travel in China to a halt
The biggest winter storm to hit many parts of Central and Eastern China in 50 years brought down buildings, closed train stations and left millions stranded throughout the country just days ahead of the Chinese New Year holiday season in late January. Nearly 8,000 travelers were held up in Kunming as rail travel in and out of the city was affected while in Guangzhou, a reported 600,000 passengers were stuck at the railway station as national routes remained delayed or canceled. In Shenzhen the story was the same, with no trains moving northward from the Central Station. Coming as close as it did to the Chinese New Year holiday, a time when nearly 2.2 billion trips are made by bus, rail or air in China, the winter storm caused many to remain in limbo, uncertain of departure or arrival times. This most severally affected the low-income migrant workers of Guangdong, many of who had arrived at the train station with just enough money to board a train north. They suddenly found themselves stranded and destitute. City governments had to scramble to provide food and shelter for the millions of passengers left waiting for trains and planes.

China’s new labor and tax laws
From a legal and tax perspective, the year started off with two major pieces of legislation: the Corporate Income Tax Law and the Labor Contract Law. Both of these were landmark laws that will change the face of business in China for years to come. While unifying the tax rate at 25 percent, the new tax law did away with many of the tax incentives that foreign companies operating in China had become accustomed to enjoying. The Contract Labor Law meanwhile, codified individual employee rights while throwing many foreign-invested companies into disarray by changing or modifying labor requirements for both employers and employees, forcing many to review labor contracts, benefit packages and salaries.

The financial crisis hits China
I knew that the credit crisis was really starting to affect China when the amount of calls I was getting from financial advisers selling their services to me started to fall off. The year had started off strong – China’s GDP grew 11.4 percent in 2007 to US$3.43 trillion and by July of 2008, had only cooled one percentage point to 10.4 – but by autumn, exports had nosedived and the mainland’s stock exchanges were all but shattered. The Shanghai Composite Index, which tracks all the stocks trading on the bigger of China’s two stock exchanges, dropped 65 percent, the biggest annual decline since Bloomberg News started tracking the data in 1996.

China’s reform and opening up, 30 years on
After a year of ups and downs, China came together to celebrate the 30th anniversary of Deng Xiaoping proclaiming that to get rich was glorious. When Deng decided to create the country’s first special economic zone in the small fishing village of Shenzhen, China was just waking up from its Mao-imposed slumber. Thirty years later, the boomtown that Shenzhen has become mirrors the economic rise of the entire nation. And while an ever widening gap between the country’s richest and poorest and the effect that all of this runaway growth has had on the environment continues to be a concern to the central government, China’s economic miracle is changing lives both inside and outside the country, and it is all mostly for the better.

China Briefing
Here at China Briefing we also had a full year. In addition to being on the ground, reporting on many of the events above, we also produced eight new titles in our growing library of business guides, reprinted three technical guides with updated information, produced 10 issues of the China Briefing magazine, as well as issues of our sister magazine India Briefing and issues of our newest magazine Vietnam Briefing.

In books, we put out revised editions of our guide to setting up representative offices, our guide to joint ventures, and our guide to China’s taxes. We also produced two new titles for our technical guide series, one on mergers and acquisitions, and one on intellectual property rights which we published in association with the Austrian government. In November, we released a five book set of regional business guides to China, covering Beijing and Northeast China, Shanghai and the Yangtze River Delta, South China and the Greater Pearl River Delta, Central China and West China. We also brought together a long-running series on the countries bordering China into a companion book, “China’s Neighbors.”

As we have done since 1999, we continued to publish the China Briefing magazine. In addition to the English language edition, we also produced versions in French, German, Italian, and Spanish. We continued to publish the India Briefing magazine, releasing two issues in both English and Chinese, and we launched a new magazine, Vietnam Briefing, publishing two issues on legal, tax and FDI matters in the country. China Briefing, India Briefing and Vietnam Briefing also published, on a daily basis, news, analysis and industry reports available on their respective websites.

Along with China Briefing, India Briefing and Vietnam Briefing, we also continued to produce the emerging Asia blog, 2point6billion.com. We re-launched China Expat with a new look and feel, allowing the site to become a portal to some of the tons of information available on China. Finally, we launched the website Communist Tax Lawyer as a news, research, and discussion platform for monitoring the evolution of Communist and ex-Communist countries to market economies.

It’s been a very active and interesting year here at China Briefing, and we want to thank all of our readers for making it all worthwhile. 2009 promises to bring more excitement and developments here in China and across Asia. As always, we’ll be here to bring it all to you.

Happy New Year, from all of us at China Briefing.