I love the way Xinhua refers to the People’s Daily as a “mouthpiece newspaper”, or “the mouthpiece of the ruling party”. For example, in this otherwise boring article that I just read. Recommended if you need to doze off for a quick siesta.

I find all this mouthpiece thing funny in 3 different ways, which I list below:

• It looks like an effort by Xinhua to position itself as an independent source, copying a commonly used expression by the media worldwide, and differentiating itself from the “mouthpiece”. A new variation on the good cop and the bad cop.

• I always understood this word as having negative connotations, and I am surprised every time I see journalists using it in the neutral sense of spokesperson. In any case, speaking of a newspaper the phrase “mouthpiece of the ruling party” normally implies disapproval. I wonder if the editors at Xinhua are conscious of this. Xinhua, watch your steps, this is a 贬义词！(negative word).

• I am also wondering if the People’s Daily knows this and when will it start a feud with Xinhua accusing it of mouthpiece too. After all, a large part of the articles that People Daily publishes are taken directly from Xinhua, including some of those containing the M word!

On second thought, I guess “mouthpiece” is probably a great thing to be called when you are an editor at the People’s. It is extra points with your boss and it works to keep your iron bowl in good shape.

I have been looking carefully at the Xinhua serial feeder today, and it’s been as expected: no news from Beijing. At least now we know who and when (Hu and Wen) attended the conference, but that’s about all they tell us from The Annual Meeting to Set the Tone for the Economic Development Next Year.

So that’s that. The opportunity is lost, no more China rebalancing until 2010. Next.

This week the international observers are observing us with renewed interest: China’s Annual Central Economic Work Conference is being held in Beijing Monday to Wednesday, where the country’s leaders will decide how to maintain a stable economic growth that will “improve people’s livelihood“.

Expectations are high on the meeting that will change the World. The trouble is, it will not. Xinhua has just published a first official explanation from NDRC, containing no news. The 40BRMB for “healthcare, education and cultural undertakings”, or the 280BRMB for housing projects were already announced before the meeting. If anything, note that now they have added the “cultural undertakings” for extra flavour.

What about all the rebalancing of the economy that we were supposed to see?

Wishful Thinking

What began as a series of advice by some economists has evolved into a streak of generalized optimism, as  more people started to believe that Chinese leaders will take the chance now to rebalance the economy. I suspect this very optimistic and profusely quoted World Bank report is partly responsible for this state of mind.

But the rebalancing of China’s economy, including a social safety net, health care, and all sorts of measures to bring into the economy the 900 milion rural residents that have been left out is not going to happen now.  Because it doesn’t make sense.

Here is why:

1- Hu Jintao hasn’t been able to implement his rebalancing policies during the first half of the 11 year plan. It is difficult to imagine that the development hawks in the CCP will allow him to implement them precisely now. Especially considering that things like a health care system are costly and someone needs to finance them. How much power do Hu and Wen really have to oppose the immediate interests of business?

2- Chinese like to save money, that is just the way they are, it is a trait of character. No amount of health care or land reform is going to make them spend more in 2009. How would it make sense that the same people who were saving during an economic boom decide to spend more now that there is fear of crisis?

3- All the social rebalancing and Scientific Development of Hu might be great for the long term, but they will not help China weather a difficult 2009. The real worries of the leaders now are: How well will the system resist the social and political tensions that will arise? And how well will Hu Jintao and an already fragile Social Wen resist them in the Party?

An emergency package

But there is a more fundamental objection to the notion that the stimulus package will implement any serious structural change: it is not its role. It is an effort to save an emergency situation and avoid the worst aspects of the crisis (notably unemployment) getting too serious.

And the sad fact is that great restructurings are not done in advance of crises, they are done afterwards. Hard times comes first, then reform. As an example, a quick look back at one of the historical cases that is most fashionable these days: FDR started his famous New Deal only in 1933, well after the crash of 29. In the meantime what was Hoover doing? Investing in infrastructure, like the Chinese now.

“Social” Stimulus

So will the package improve the livelihood of the peasants? Well, if you consider that buying a new color TV at a discount price is going to change their lifes, then yes. But otherwise, not.

The subsidies to buy home appliances that WSJ mentions here are clever measures, and they will probably be effective to boost the consumption of some farmers in the short term. Which makes sense, because the factories producing those TVs have to keep running, unless someone imagines that a legion of jobless manufacturing workers can be set to construct roads and railways overnight.

But nobody should be fooled: these are no social measures. They are measures to help the manufacturing companies to find a substitution market for the failing exports.

Another related “social” measure which might be hidden in the stimulus budget is an emergency fund to cover the possible cases of layoff riots. Victor Shih estimates it in his blog to be around 120BRMB in the worst of cases. I don’t think the government would be announcing this fund publicly, as it is a signal for disaster. But if 120B are missing in the 4Trillion package, now you know were to look.

Conclusions

It is all very healthy to dream, but I am afraid the largest part of China’s money in 2009 will go to help the companies resist the crisis and to mitigate the effects of it. The leaders are nervous, and the time is not for experiments.

But enough of stimulus already. Too much has been said, and I have the feeling that there are more important things to watch right now. Namely: Unemployement and Currency.

I have done enough tea leaf reading in my posts as of late, so I will leave these two subjects for next time. But if you want to know what 2009 is going to bring us in China, make sure keep an eye on them.

Now that inflation seems under control, unemployment has been identified by most as the real threat to Chinese stability in 2009. The risk of massive layoffs and social unrest is so obvious that you hardly need an economist to identify it. My blue taxi driver was telling me about it only a minute ago.

In the media and the specialized blogosphere we’ve seen many articles lately discussing the problem of closing factories. Mostly wondering how bad the situation really is, or how the government will be able to deal with it. Interestingly, opinions come in waves, one week exaggerating the damage, the week after dismissing it as seasonal closings.

Which just comes to show that, in times of crisis, bloggers and economists are all equally clueless.

The World Bank, Economists and Chinese Characteristics

The other day I commented the latest World Bank Quarterly Report, and I raised the issue that it does not take into account some obvious non-economic factors. Today, after reading the latest post on All Roads I went back to the WB report and performed a search for “unemployment”.

The number of results for this search in the 23 pages report is: 0.

Fair enough, there are 5 instances of “employment” (think positive), but most of them are explaining how the Magic Stimulus Plan is going to solve all the problems. The more I read it, the more I see this Report as loaded with Chinese Characteristics. It has been done in Beijing, by a mostly Chinese team… and like I said, it carries a highly suspicious 7.5% projection.

In spite of this, the WB report is an informative read, and one can hardly be surprised that an international institution tries to avoid conflict with one of its member governments. But what I did find quite surprising is that econoblogger Brad Setser’s analysis of the report doesn’t even mention unemployment either.

This is what made me think that we are going to need something more than economists if we want to see clear in the China 2009 scene.

Recommended Reads for the Fall

So, with all due respect, I have to desagree with Mr. Setser’s advice: If you only read one thing on China this Autumn, do NOT read the World Bank Report.

But then, what to read? Who knows really what’s going on in China?

Let’s analyze the root of the problem: China is not a transparent System. Even worse, unlike other non-transparent countries that we are used to deal with, China is a highly influential country. And it is in a position to not only hide the facts behind a painted veil, but also actively manipulate information and have hundreds of experts around the world scratching their heads.

So the answer to the question “Who knows China?” is:  A bunch of old men that are sitting in Zhongnanhai.

Now, forget your google, you will not find the Politburo Standing Comitee Blog, they will not take your phone calls to arrange an interview or explain their actions.

But what they actually DO every day is leave lots of traces, from the articles on the Chinese press to their announcements in economic policy. And these traces we can track down to the real intentions and the real information that they’re handling.  So it is by reading between the lines of People’s Daily, Xinhua and the likes that you can get a clue of what is going on here.

In conclusion, to understand China, economics is not enough: we also need politics.

Political Economics

So if you are only going to read one thing on China, I suggest you look for a political economist.  For example the blog of Victor Sish, which I discovered recently. He is a professor of political science at Northwestern University specializing in Chinese politics, and he also writes on Nourini’s monitor. He has a keen eye for interpreting the news from a Chinese government perspective. Don’t miss his last post on unemployment. For my part, I’m adding him to my Roll.

In fact, I am opening a new section on my Blogroll for Chinese politics and economy, and I would be grateful if you can recommend some other Crisis Watching sites, in English or Chinese. I am looking for sites that focus on making sense of the Chinese government’s moves.

Any more missing Links? Tips welcome. Thanks.

Picture credit: The shade of Zhongnanhai by Zhongnanhai 10毫克.

Today was a pretty stressful day in the office, but in between meetings I was able to join a lively discussion on the Fool’s Mountain about the latest Dalai incident.

To wit, the French President said he will meet the DL in Poland during a ceremony in honour of Lech Walesa. China immediately threatened EU with cancelling the 11th EU-China Summit this week, and has indeed cancelled it. BBC tells it here. Also see the reaction of Chinese netizens to Pomfret’s article and the account of Xinhua.

Here are my thoughts as posted on the Mountain (minus rants and comebacks):

Is China using France?

Is China using France strategically, as a wedge to divide EU, following the classic “divide and win” from SunTzu’s Art of War?

Could be, but this is nothing new, all the world powers use this old trick when negotiating with EU. The fact is China will listen or not to EU representatives depending on the power it perceives they have, and depending on China’s own interests. For economic aspects such as tariffs, EU does have power and will be listened. In other fields it can be completely ignored. Points to keep in mind:

1- The EU has a problem with unity, and this has nothing to do with China’s policies.

2- China has a problem to deal with DL, and this has nothing to do with the Sarko meeting.

3- Universal Rule in International Relations: If you need to distract attention bash the French.

4- DL is not a terrorist. Comparing him to bin Laden is low and slanderous.

5- China is crying for nothing: In Europe anyone could speak with the equivalent of DL.

For example, the president of the Basque Country (who actively demands independence from Spain) has met up with authorities of many countries and sends representatives regularly to support Basque industry in Shanghai. No whining from Spain, why? because unlike bin Laden, he does NOT support violence.

What are the consequences of this incident? And the real Reasons?

In fact, there shouldn’t be any serious practical consequence of missing this Summit. The real meeting is the one that will happen in April when the G20 + Obama meet to speak of the Crisis.

This little conflict with the French is just a classic IR trick to create some noise. Perhaps Zhongnanhai have decided that it’s time to rally the people in advance of the social shocks of the Crisis. Or perhaps they are preparing the way for a conflictive period in foreign affairs when China tries to implement protectionist/low RMB policies, strongly opposed by the West.

Chinese leaders are well known for thinking one step ahead. Hopefully I am wrong with this one.

Please comment. No swearwords.

The China blogosphere brought us some disturbing news again today. This time it’s about Foxconn, aka the Hon Hai Precision Industry, based in Taiwan. The rumour has it that it’s planning to lay off 100,000.

You might remember Foxconn from the funny episode of the IphoneGirl that became world famous for a day. It might also ring familiar because this is the company that manufactures the new iPhones and iPods.

What you might not know is that Foxconn is:

• • The largest exporter in China, according to their website.
  • The biggest electronics manufacturer in the World.
  • Employing close to half a million people only in PRC.

Now, I don’t want to come across as a rumourmonger, but I think it is worth to have a closer look at this. Because if it is true the social and economic impact in China will be seriously felt this time.

First, what is the source of this info? Mostly a rumour among the workers in the Shenzen megafactory, reported by local press. To be noted also the Hong Kong stock market sharp fall of Hon Hai shares earlier in November (and those guys in HK know a lot about Shenzen).

Second, how likely is it to be true? Well, I guess we will know soon enough, but there is something in this rumour that sounds very real for anyone that has been following Chinese affairs.

It follows the typical pattern: Local press report, buzz on the internet, Xinhua press ignore and downplay.  It is very suspicious that English Xinhua hasn’t witten a single word about Foxconn (the biggest exporter!) since these good news they reported in July. This is scary, because it’s exactly what the Chinese PR geniuses do when they see trouble coming.

Like I said yesterday, fasten your seatbelts, it looks like we are going to live in interesting times.

I am quite excited about the new 2009 Growth Forecast for China issued by the World Bank, because it gives exactly the same figure  I estimated 2 months ago on my Crisis Page.

OK, granted there is a bit of luck in there. But, if you think of it, it was an obvious number to come up with. It is exactly the Yearly Growth marked as an objective in the 11th 5 year plan. Don’t forget that China is still a planned economy and that the objectives of the 5 Year Plans are very present in everyday business life and in the minds of all politicians.

Of course, I am not suggesting that World Bank economists draw their forecasts from 5 year plans. But in times like these, predicting the future is a sticky business, and one 5Y Plan can be about as accurate as applied statistics. And then, rounding up a 7.2% to a 7.5% will harm nobody, and will keep Wen and Hu happy for a while.

Michael Pettis writes that this is only the beginning, and that we’ll see the forecasts slide every time as the crisis spreads to every aspect of China’s economy over 2009. He bases his prediction on the method that is used to calculate these forecasts, which does not take into account the passive side of the balance sheet.

He is surely right on that, but I think there are also non-economical reasons. China’s political influence is rising very fast with the Crisis, and nobody wants to upset her now that she is going to save the World. Least of all the World Bank, which is very likely to end up with a Chinese boss pretty soon, after what was agreed in the Washington G20s meeting.

Nobody cares (some actually take pleasure) when some terrible macro figures are posted about failing economies in times of crisis. But few serious institutions today will be willing to publish a face-losing digit for the Chinese government, and all will measure their steps cautiously. As a result, official predictions will lag behind the actual knowledge.

So that’s it, we are here. We’ve reached the 7.5%  psychological barrier. There will be no more psychological barriers until the 3.8% growth of 1990. We are touching the Wall.

Ladies and Gentlemen fasten your safety belts, we are getting ready to land.

This weekend the leaders of the most powerful countries in the world met up in Washington to discuss how they are going to pull us out of the big economic mess where we are stuck deeper day after day. After a refreshing dinner in the white house including quail, lamb and Vermont brie, the leaders were in a position to promise “vigorous efforts” to fight against the crisis.

Looking at the the reactions from within and without the Summit, it is surprising how peaceful it has been compared to others in the past. No protesters on the streets, no colourful accusations of irresponsibility, nobody even remembered to mention Irak or bash the French. The leaders of the world have understood that the time is not for funny gags. The financial crisis is looming on each of our countries, and we have to stand united. Are we turning the page into a new phase of collaboration in the international community?

For the moment,  these are the main points agreed upon:

• Stabilize banks and boost growth – This includes bailouts and Economic “stimulus”. There is no more than a general statement in this Area, no commitment by any of the States.
• Better Regulation of Financial Markets – Supervision of banks and credit-rating agencies, scrutinize executive pay, tighten controls on complex derivatives, etc. This one was pretty obvious.
• IMF Reform – This is were China and the other developing countries put pressure to have a voice in the exclusive US-EU club. It is likely that they will succeed, and IMF will gain some credibility from that (but gain in efficacity does not not necessarily follow)
• Commitment to an open global economy  – Free market, no barriers to trade or investment. A point that all countries big and small have agreed upon. Hopefully their policies will remain consistent with this statement.

In conclusion, nothing to write home about. What with all the Bretton Woods II measures that where going to change the economy of the XXI Century? Not yet. There will be a follow-up meeting in April 09, and by then some specific plans may be ready for discussion. There hasn’t been time to mature any serious ideas. And anyway, he who shall be in charge of leading the effort could not join the party this weekend.

Indeed, together with the Brie cheese and the lamb, there was a hot potato served for dinner last Friday. And one that nobody is eager to open up, but rather roll on swiftly from plate to plate until it gets to its final destination, president elect Obama. The minute he steps into his office in January it will be there waiting for him, wrapped up in Christmas paper.

In this sport of potato rolling, the Chinese have long been masters. Their words are measured and dictated by wisdom. Thus spake President Hu Jin Tao:

• Reform [of the international financial system] should be conducted in a comprehensive, balanced, incremental and result-oriented manner.
• A comprehensive reform is one that has a general design and includes measures to improve not only the international financial system, monetary system and financial institutions, but also international financial rules and procedures.
• A balanced reform is one that is based on overall consideration and seeks a balance among the interests of all parties
• An incremental reform is one that seeks gradual progress
• A result-oriented reform is one that lays emphasis on practical results.

This sounds very much like Deng’s “Groping stones to cross the river”, an approach which was very effecive to tackle a delicate process of transition like China’s, but not necessarily to avert a crisis. Some famous analysts have long been speaking against this kind of solution.

And then, one wonders how this fits with the aggresive stimulus package that was supposedly launched last week. That was certainly not an incremental announcement. But who knows, it is not for us mortal bloggers to understand the ways of the Popular Repubic.

I don’t think I could ever deal with the stressful rhythm of Shanghai without my old lane, my house and my garden. An oasis of common sense where the bamboos and mandarin trees grow in silence. The place where I can fall back to breathe some air and chat with real people when the noise of the metropolis is too loud to hear myself.

From the table in this garden I am writing now, as I wrote most of the content in this blog. Welcome to visit, take a seat and feel free to comment. Here’s the Archives.

My Shanghai

And meet Linder, this beauty of a bike, key element of my Shanghai logistics. It is a modern ’07 Yongjiu, manufactured exactly in the same way and with the same materials as those millions of Yongjius that powered urban transport in the good old times of self-reliance.

Linder never disappoints you, except when it breaks. And it breaks so consistently and in ways so unknown that you are never disappointed. Linder has a special place in  my garden.

I will be writing once in a while about my garden, my street and my neighbours. Perhaps even about myself.

There comes times when I’m tired of always watching my Xinhua reader for the line that will change the world.  And then it feels good to just sit back, relax and look at the little China that evolves around me. In these occasions when I’m not on the front page, you can probably find me in my garden section here.

Just as I was writing the previous entry, I came across this article on the NYT about the packet of fiscal measures that China is taking to the upcoming G20 meeting in Washington. The $586 Billion Stimulus Plan has been announced today on the government website. I was surprised I hadn’t seen it come on Xinhua, but here it is.

It is good news that China, as opposed to the Bush administration in the States, is taking measures to prevent the Crisis before their system has actually started to melt. It proves that, while they continue to give a reassuring image of solidity to the outside, Chinese policy-makers are well aware of the delicate situation of the economy and the risk of the crisis hitting them badly. Hopefully, the rest of the world will take note of this and stop believing that China is going to solve everybody’s problems.

After cutting interest rates and loosening up the credit conditions last week, China is following up with a plan to spend 4 trillion yuan over the next two years on 10 different areas, including infrastructure, tax-cuts, environment, technology and social welfare (in unspecified proportions). It is difficult to imagine how China can increase even more its investment in infrastructure when already every road and township in the country is a construction site. Still, with their margin of action in monetary policy limited by their own currency regime, fiscal is clearly the way to go.

More interesting in the long term is the investment in environment and social welfare, which should work together with the announced land reform to bring all those millions of Chinese peasants into the economy. As I said in my previous post about the Crisis, this move, which is very much in line with Mr. Hu’s and Mr. Wen’s harmonious political ideas, will hardly have an effect rapid enough to prevent the crisis. But it is nevertheless good news that, from these times of economic turmoil,  something good will come to the dispossessed.

After all, it might very well be that a serious crisis is actually needed in this country for some people to realize the importance of equality, solidarity and justice.

Finally, it looks like the Chinese authorities are going to get serious about internet addiction. My favourite Xinhua reader on the sidebar just brought in the scoop, straight from the medical research labs.

Internet addiction in China is a well known problem, and it has been quite present on China blogs these last weeks, following this much commented article by Robert Vance, an English teacher in China.

It is a good thing that the government has decided to address this growing problem, but I have some concerns about how they are going to go about it.

Will we be tested for internet addiction at the mandatory medical test? Will it be added as one of the questions in the immigration form at the airport, right next to “do you have AIDS?” And more seriously: will the Chinese authorities make use of this new disease as an excuse to restrict even more the access to free information on the internet?  Here is the report:

Chinese doctors released the country’s first diagnostic definition of Internet addiction over the weekend, amid efforts to address an increasing number of psychological problems that reportedly result from Internet overuse.

Tao Ran, a medical expert at Beijing’s Military General Hospital, where the definition was developed, said it was also the first time for China to officially designate hospital psychiatric units to treat such cases.

Symptoms of addiction included yearning to get back online, mental or physical distress, irritation and difficulty concentrating or sleeping. The definition, based on a study of more than 1,300 problematic computer users, classifies as addicts those who spend at least six hours online a day and have shown at least one symptom in the past three months.

“Eighty percent of addicts can be cured with treatment, which usually lasts about three months,” said Tao. He did not describe the treatment, however.

One of the main problems with the approach of the Chinese authorities is that it doesn’t seem to differentiate between addiction to the internet and addiction to online games. It is clear to anyone that has ever stepped into a chinese internet cafe that the real addiction problem here is to games, and not to the internet itself.

I always thought that if the government has not yet taken any serious measure against this well known problem, it is for a reason. In a way, the legions of Chinese young men immersed every night in their online games constitute a Harmonious force. How? Well, just imagine what all those idle minds would be doing with their spare time if they weren’t busy shooting aliens. Probably not studying the famous Scientific Development Concept of President Hu.

It remains to be seen if anything serious is going to be done against this real addiction, which affects the productivity of the chinese workforce in these difficult times when it will be most needed. And hopefully, they will leave alone the real internet community, the one that has created over the last few years a whole new world of Chinese free opinion.

One clue: Note that it is a Military Hospital that has developed the special psychiatric units to treat the disease. Who will be the first lucky user to get a ticket for the three months of rehabilitation with doctor Tao? He might be reading this blog right now.

Today was the opening ceremony of the 7th China International Aviation and Aerospace Exhibition of Zhuhai, the main fair of the industry in China. These last days, my Xinhua reader at the bottom of the page has been spitting some interesting news for the occasion, and international media have been quick to follow.

Everybody in China seems to be speaking this year about the development of a Chinese aircraft industry, that is, when we are not busy speaking of baby milk, olympics and taikonauts. Rumours abound of some brand new A320s bought by chinese companies which mysteriously disappeared from the market, and reverse engineering is in everybody’s mind.

In any case, the clear aim of the chinese government is to enter by 2015 the exclusive club of large commercial aircraft manufacturers, adding a third leg to the industry dominated by Airbus and Boeing, and trying to take a slice of the $3.2 trillion market expected over the next 2 decades.

The big news of the day is the signature of a contract for the supply of 5 ARJ21 medium size regional aircrafts to GE, one of the world largest lessors of commercial airplanes, with an option to acquire another 20 units under unspecified conditions. Xinhua highlights the headline China to sell 25 regional jets to U.S. market, but in fact GE will be leasing the 5 acquired units to chinese airlines, so the planes will be flying locally.

In case someone is surprised by the daring move of GE, it might be useful to explain that GE is also one of the largest airplane engine manufacturers, and China one of their most promising markets. Sure enough, China is making use of its market power, in a similar way as EU and US have used theirs in the past to support their flag aviation companies.

It is just as well, of course. It is clear by now that only a company counting with the support of a world economic superpower can make it in the difficult industry of large commercial carriers. But even with this support, the road shall be long and difficult for the Chinese.

In the first place, they have a long way to go in R&D, and many have serious doubts that they will manage to have their jumbo jets in the market by 2015. However, I wouldn’t expect this to be the major obstacle. Chinese have proven to be extremely fast in re-developing complex technologies, especially when they are already existing in the market. Some planned acquisitions of undisclosed foreign companies by the end of this year will grant even faster access.

The main objection from my point of view has to do not with technology, but with the tricky world of free consumer choice. A field which has typically proven more elusive to chinese reverse engineering than  advanced rocket science.

If there is a market where pristine reputation is essential, and especially in the areas of quality and safety, that is the market of commercial aircrafts. It is probable that by cutting into an oligopolic situation, and counting on some dumping practices, the chinese manufacturers can slash the current prices of Boeing and Airbus for similar airplanes. But who will be buying them? In other terms, who wants to fly in a chinese brand airplane, even at a discount fare?

The problems with safety of chinese products are very present in the world , with various scandals being uncovered every year. Made in China was already a synonym of cheap and unreliable, now it also means unsafe. It will take many years before this world spread perception can change and anyone feels comfortable enough to fly in a chinese airplane. Much longer than it will take to reverse engineer an A320.

Add to this that the major players in the industry, with strong lobbies in the 2 largest economies in the world, will make sure that everyone has a clear perception of the risks involved. And for all its political clout, China is still astoundingly hopeless at pulling the thin threads of international media to play her game, as James Fallows brilliantly explains in this much commented article.

In the field of image and communication, one First blunder can already be noted: on the day of the 7th Zhuhai fair, the Company (or companies) still doesn’t have a Name.  Indeed, the confusing conglomerate of state owned companies that develop the different models of airplane are completely unknown to the world, and even to most chinese. Note, for example, that the Xinhua article refers to the nascent jumbo aircraft company as COMAC, whereas the AP and Bloomberg reporters linked above call it CACC (!). Both are tentative efforts to simplify the original: Commercial Aircraft Company of China.

There is some serious branding work to do now, and it should be done as soon as possible. Hopefully China has learnt her lesson, and she will not be calling her new aircrafts “The Great Wall Aviation Company”, as in this hilarious old post that I found over at Imagethief.

Whatever they do, It seems clear that for a long time the airplanes will be limited to the chinese market, and only at a second stage they might manage to make it out of the country in any significant quantities.

It is a very long term bet, which is not based only on its uncertain economic returns. Clearly, political, strategic and military considerations enter the calculation of the chinese government. All things taken into account, the move can be a good one for China and for the rest of the world, ultimately improving the conditions for the final consumer.

It has been said many times that the large aircrafts market can only support two players in the world, justifying the near monopoly situation of Airbus and Boeing. It is very possible that in the long term China proves them all wrong, and many business books will need to be rewritten.

But before we get there, some things will really need to change in this country.