Doing business in China: August 2009 Archives

By BBC World News
August 25, 2009

Police and local government officials in China have swamped a village at the centre of a lead poisoning case in Changqing, which left hundreds of children sick.

Villagers are forbidden from speaking to journalists, and reporters attempting to visit the area are being detained and questioned by the police.

Quentin Sommerville was one of those detained in Bao Ji, a township of Changqing.

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By Francois Bougon | Agence France Presse AFP | via UNCENSORED Yahoo! News
August 23, 2009

HENGJIANG, China (AFP) - The landscape near Hengjiang village offers a picture-postcard view of China, with rice paddies, water buffaloes and rolling green hills. It seems an unlikely spot to find industrial pollution.

But more than 1,300 children in this rural part of central Hunan province have tested positive for suspected lead poisoning, caused by a nearby manganese smelting plant, and parents are worried, confused and scared about the future.

"In late July, the children here started feeling unwell -- they had headaches, they couldn't sleep and were generally quite weak," said one 40-year-old man whose 13-year-old daughter has been affected.

The man, who refused to give his name for fear of trouble with the local authorities, said a group of parents complained to officials at the Wugang Manganese Smelting Plant in Wenping town, but they were ignored.

Now, the factory has been shut down, two plant executives have been detained, one is on the run, and two officials from the local environmental protection bureau are under investigation for dereliction of duty.

Another smelting plant in northern Shaanxi province was ordered to close its doors this month after more than 850 children were found to have lead poisoning, according to official reports.

The twin incidents highlight how China's rapid industrialisation over the last 30 years has led to widespread environmental damage, resulting in some of the world's worst water and air pollution.

Many poverty-stricken regions in China's rural interior have allowed the establishment of high-polluting industries without the necessary environmental standards in a desperate bid to boost economic growth, state media has said.

The manganese plant in Wenping -- which residents say has been spewing black smoke and dust since it opened more than a year ago -- was unlicensed, state media reported.

It is located within 500 metres (yards) of a primary school, a middle school and a nursery, the official Xinhua news agency reported.

In both Hunan and Shaanxi, angry villagers protested, demanding answers.

So far, they don't have any, and they fear for their children's future.

The father of the 13-year-old girl in Hengjiang says the lead level in her blood was 120 milligrams per litre -- surpassing the normal reading of between zero and 100 milligrams. His nine-year-old son so far is healthy.

"Most of the cases so far have not been that serious, but we really don't know what is going on. It's the unknown that scares us," he said.

Another villager, who also asked not to be named, approached, clutching requests sent to four local children to undergo secondary exams at a hospital in the provincial capital Changsha.

"They gave us initial results, and now they want to do new tests -- what does that mean?" he said.

In preliminary tests, 1,354 children -- 70 percent of those under the age of 14 in four villages near the plant including Hengjiang -- were found to have elevated lead levels in their blood.

A reading of more than 200 milligrams is considered hazardous. Children are more vulnerable to lead poisoning, which can harm the nervous system and impair motor skills.

The lead poisoning scare comes less than a year after China was rocked by a massive contaminated milk scandal. Six infants died and 300,000 fell ill after consuming products tainted with melamine, an industrial chemical.

"The reason why children are often victims here is specific to China," Zhao Lianhai, who leads an activist group for parents whose children consumed bad milk, told AFP.

"There is a lack of responsibility, and of willingness to investigate to the end to find out who is responsible. Officials protect each other, and there is a laissez-faire attitude towards their corruption."

Near the Wugang plant, one villager lambasted a local Communist Party boss who criticised the factory's failure to abide by environmental standards in the local press.

"On the day the plant opened its doors, he was there," the man said with visible disdain.

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By Andrew Jacobs | THE NEW YORK TIMES
10 August 2009

China's nascent legal rights movement, already reeling from a crackdown on crusading lawyers, the kidnapping of defense witnesses and the shuttering of a prominent legal clinic, has been shaken by the detention of a widely respected rights defender who has been incommunicado since the police led him away from his apartment 12 days ago.

Xu Zhiyong, 36, a soft-spoken and politically shrewd legal scholar who has made a name representing migrant workers, death row inmates and the parents of babies poisoned by tainted milk, is accused of tax evasion. The accusation is almost universally seen here as a cover for his true offense: angering the Communist Party leadership through his advocacy of the rule of law.

If convicted, he could face up to seven years in prison.

"We're all shocked by his detention, because Xu Zhiyong has always tried to avoid taking on radical and politically sensitive cases," said Teng Biao, a colleague. "His only interest is fighting for the rights of the vulnerable and trying to enhance China's legal system."

Mr. Teng helped Mr. Xu establish the Open Constitution Initiative, a six-year-old nonprofit legal center that the authorities closed last month, charging that it was improperly registered and that it failed to pay taxes.

Mr. Xu is not the first rights advocate in China to face the wrath of the authorities in recent years. Gao Zhisheng, a vocal lawyer, vanished into police custody six months ago, and Chen Guangcheng, a blind lawyer, was beaten and then jailed after exposing abuses in China's birth-control program.

Although rights lawyers and grass-roots social organizations have always been tightly controlled here, the pressure has intensified in recent weeks. More than 20 lawyers known for taking on politically tinged cases were effectively disbarred, and the police raided a group that works to ease discrimination against people with Hepatitis B.

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By Vivian Wai-yin Kwok | FORBES MAGAZINE via forbes.com
August 07, 2009

In addition to its cheap labor costs, China has another comparative advantage as the world's factory: Companies often pay almost nothing to pollute China's air, water and soil and to poison its people.

Need pliant workers to handle toxic chemicals? Wages are just $2.60 a day. What if the chemicals contaminate a town? Compensating a family of five costs just $732. Local water supply contamination makes 4,000 people vomit? That's just $7 per household. Cost of bribing local Chinese officials to look the other way rather than adhering to safety standards? Well, that's unknown, but given the frequency of China's pollution atrocities, apparently it is cost-effective.

While companies can get away with pollution atrocities for years, the Chinese government, in the long run, may have to pay a high price for allowing it: political instability triggered by the unanswered grievances of pollution victims.

Ammonia Leak in Inner Mongolia

In the past few weeks, local officials in Hunan Province and Inner Mongolia have been busy trying to control public anger after a spate of serious pollution incidents. In the latest one, 246 people--factory workers, emergency rescuers and nearby residents--were sickened by an ammonia gas leak at a pharmaceutical plant in north China's Inner Mongolia Autonomous Region on Wednesday morning.

Liquid ammonia spilled from a pipe that suddenly burst while a truck was unloading 30 tonnes of the chemical at the Chifeng Pharmaceutical Group factory. The Inner Mongolia government ordered people living within 2 kilometers and downwind of the leak to evacuate, and the local public security, environmental protection and work safety authorities set up a team to investigate the accident, according to China Daily.

An initial investigation blamed old pipes, the failure of emergency valves in the ammonia tanker, and the overloaded truck, as major reasons for the leak, Xinhua reported Thursday afternoon.

Ammonia, which is widely used as a household cleaner, is a corrosive substance. People exposed to very high levels of the chemical can experience severe burns to their skin, eyes, throat or lungs, according to the Agency for Toxic Substances and Disease Registry, a federal public health agency under the U.S. Department of Health and Human Services.

Sewage in the Water Supply

Residents of Chifeng, the run-down mining city in Inner Mongolia where the ammonia leak occurred, had only just recovered from another environmental disaster. Two weeks before the spill, thousands had been sickened when local water supplies were contaminated. More than 4,300 Chifeng citizens fell sick with diarrhea, vomiting and fever after drinking tap water. The city's water supply has yet to be fully restored.

Local officials say the water was contaminated after heavy rains on July 23 caused a power outage at a sewage pump station. The outage allowed raw sewage to flood into the well that supplies tap water to most of the city, various local media reported.

Chifeng citizens could have avoided the danger if they had been notified immediately about the incident. Instead, the local authorities stalled. They didn't alert the public for two days.

After the dirty water sickened the city, two senior officials, including the director of the Chifeng municipal construction commission and his deputy, were sacked. The state-owned water supply company agreed to pay 50 yuan ($7.30) in compensation to each household.

Metals Contamination in Hunan Province

Meanwhile, in the central province of Hunan, desperate citizens in Liuyang City have been trying to take to the streets again this week to protest unsafe operations at a government-protected factory. The pollution has already killed at least five people and poisoned another 500 with toxic pollution from cadmium and indium, metals used at the local factory.

About a thousand villagers from Shuangqiao, Jiankou and Puhua villages besieged a police station and city government headquarters last week to complain that the local government had failed to protect them from the deadly pollution.

This week, they didn't get the chance to protest. Instead, thousands of police officers were deployed to seal off major government buildings in Liuyang to prevent another riot. At least eight journalists who tried to interview villagers or take photos of the factory were detained, and told they could rely on the government to give them all the information they needed, according to the South China Morning Post.

Residents blame the Xianghe chemical plant, which had been illegally producing indium, a metal used to produce thin-film coatings for lamps and for liquid crystal displays (LCDs) in flat-panel video screens. Last week, the riot drew publicity, forcing the government to shut down the illicit plant.

The factory opened in 2004. Workers there were paid 18 yuan ($2.6) a day--about the cost of a McDonald's Happy Meal--to produce the highly toxic chemicals used to make the TVs which sell for more than an average worker's yearly salary.

Indium compounds are highly toxic, and can damage the heart, kidney, liver or embryos of those exposed to it. Cadmium, also used at the plant, can cause short-term lung damage in humans who inhale it. Prolonged exposure to cadmium causes chronic kidney disease. The U.S. Environmental Protection Agency says exposure to cadmium probably causes cancer too.

China is the biggest producer of indium, contributing over 40% of the global supply. Indium prices averaged about $685 per kilogram in 2008, down from a peak of $946 a kilo in 2005, based on the estimates by United States Geological Survey, which forecast a supply deficit for indium for at least another year.

High indium prices gave Xianghe an incentive to produce it illegally, probably with the cooperation of corrupt officials. A former Xianghe worker told the South China Morning Post that local environmental inspectors visited the plant occasionally, but that plant's management was always alerted ahead of time.

The factory and the local government tried to appease residents by providing free medical check-ups to the 2,888 residents living within a 1.2 kilometer radius of the factory plus compensation of about 5,000 yuan ($732) for a family of five, according to a report by AFP.

After the medical checks showed abnormally high concentrations of cadmium and indium in nearly a fifth of the area residents, local officials could no longer deny that Xianghe had discharged life-threatening pollution. In July, several villagers died, and autopsies showed their bodies contained massive amounts of indium.

Those who have been poisoned are demanding free medical treatment, and untested residents who live further from the factory demanded the government provide medical tests. After authorities sent sick villagers back home, protesters rioted last week.

The tension between citizens and the government is increasing, and thousands of police are monitoring villagers in an effort to prevent further riots.

A Plea From Environmentalists

Meanwhile, two environmental advocates aren't just counting on the Chinese government to stop pollution. They are taking a different approach, trying to publicly shame Western firms buying from Chinese polluters.

Green groups Friends of Nature and the Institute of Public and Environmental Affairs called on Timberland to monitor two Chinese suppliers the non-profits say have repeatedly breached China's pollution limits.

The two Timberland suppliers are Shanghai Richina Leather, which has been fined by pollution watchdogs since 2004 for producing emissions higher than the legal limits, and Falcon Tannery in Guangdong, which violated water pollution limits for three years, according to the South China Morning Post.

>> Original source

By Edward Wong | The New York Times
August 06, 2009

Human rights advocates are calling on the Chinese government to cancel the criminal trials of two men who pushed for official investigations into the causes of widespread school collapses during the devastating 2008 earthquake in Sichuan Province.

The trial of one man, Huang Qi, began Wednesday but adjourned without a verdict. Mr. Huang, a well-known blogger and civil rights campaigner, is accused of possessing state secrets, which carries a sentence of five years to life. The second defendant, Tan Zuoren, a writer and also a prominent rights advocate, faces a potential five-year sentence for subversion and is to go on trial Wednesday.

"These trials are not about a reasonable application of the law, but about silencing government critics whose work has considerable public benefit and sympathy," Sophie Richardson, the Asia advocacy director at Human Rights Watch, an advocacy group based in New York, said in a written statement released Tuesday. "The government is likely seeking to squelch those who cause it embarrassment, but in the process it is undermining domestic and international confidence in its ability to cope in a transparent way with natural disasters."

Mr. Huang's wife, Zeng Li, said in a telephone interview that her husband's trial began at 10:30 a.m. and continued for three hours. It was unclear Wednesday night when the trial, closed to the public, would resume.

The May 2008 earthquake was the most devastating natural disaster in China in decades, killing nearly 69,000 people and leaving about 18,000 missing, all presumed dead, according to official estimates. Initial reports from the official news media said about 7,000 schoolrooms collapsed and as many as 10,000 schoolchildren might have died. In May, the government released the first official toll of students killed in the quake, saying 5,335 students were dead or missing.

Many of the schools collapsed even though buildings next to them remained standing, which grieving parents and advocates attributed to shoddy construction and corruption. Officials in Sichuan blamed the earthquake itself, not bad construction.

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By SHARON LaFRANIERE and JOHN GROBLER | THE NEW YORK TIMES
01 August 2009

Namibian prosecutors investigating allegations of kickbacks on government contracts with China have expanded their inquiry to include a Chinese contract to build a key railroad link, investigators said Friday, indicating that they suspect a pattern of corruption on deals with China.

Earlier allegations of bribery involving a contract to supply Namibia with scanners at security checkpoints raised alarms in both Namibia and China because the company that makes the scanners, Beijing-based Nuctech Company Limited, was headed until late last year by the son of Hu Jintao, China's president. Although there is no suggestion that President Hu's son, Hu Haifeng, knew of the Namibian dealings, Chinese government censors have blocked China's Internet users from reading or searching for any reference to the case.

Investigators have said they want to question Mr. Hu as a witness, not a suspect, in the case. Hu Haifeng was Nuctech's president when the $55.3 million contract to supply the scanners was signed in May 2008, according to the company. He had been promoted to the position of Communist Party secretary of Tsinghua Holdings, which runs Nuctech and about 30 other businesses, by early this year, when Nuctech is accused of having paid $4.2 million in kickbacks to a Namibian front company.

On Friday, anticorruption investigators confirmed that they were investigating allegations that China National Machinery & Equipment Import and Export Company, or CMEC, had agreed to pay the same Namibian company 10 percent of the final contract price for help in sealing a deal to build a 38-mile-long rail link. The Namibian company, Teko Trading, was controlled by one of the nation's public service commissioners, Teckla Lameck, and an associate, Kongo Mokaxwa. Investigators say the company existed only on paper.

Namibia's acting head of railways protested at the time that non-Chinese competitors were willing to do the job for one-fourth of CMEC's initial price of $144 million. When Namibia threatened to use competitive bidding procedures, CMEC agreed to lower its price to $61 million and this year was awarded the contract.

Ms. Lameck and her partner were jailed in July in Windhoek on charges of fraud, bribery and corruption stemming from the Nuctech contract. Their lawyer has denied any impropriety, describing payments to their bank accounts as "just business."

A Chinese citizen, Yang Fan, was jailed on the same charges. He listed himself on government applications as Nuctech's Africa representative and as Teko Trading's marketing manager.

Investigators charge that once Nuctech received its first installment of money from Namibia, it transferred $4.2 million to Teko Trading. The two Namibians went on a spending spree, court records suggest. Mr. Yang, who is accused of receiving $2.1 million, bought property in South African golfing estates and transferred money to various accounts, the records indicate.

The payments from Nuctech to Teko Trading came to light under a new Namibian law that requires banks to report transfers of more than about $135,000. In an affidavit filed in court, a Namibian prosecutor said Nuctech had promised to pay Teko Trading an additional $8.6 million for bogus services related to provision of the scanners.

Financing for both contracts under investigation came largely from a long-term $100 million loan to Namibia from China's Ex-Im Bank. President Hu offered the loan when he visited Namibia in February 2007, according to media reports.

Much like similar development loans from some Western countries, China's financing required that Namibia pick Chinese companies for projects financed with loan proceeds. Some Namibian officials have said that requirement effectively stifled competition for the railway contract.

China has emerged as a major financier and developer of infrastructure projects in Africa.

Sharon LaFraniere reported from Beijing, and John Grobler from Windhoek, Namibia. Jonathan Ansfield contributed research.

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By Andrew Jacobs | The New York Times
31 July 2009

In the realm of potential threats to China's stability, an organization that advocates on behalf of people infected with hepatitis B would seem to be low risk.

But on Wednesday, the group's director, Lu Jun, found himself squaring off against four security officials who were trying to cart away stacks of literature they claimed had been printed without official permission.

In the end, Mr. Lu scored a partial victory. After eight hours looking through drawers and photographing volunteers, the inspectors walked off with 90 pamphlets, but Mr. Lu prevented them from delving into the group's computer files. "I fear this is not the end of it," he said Thursday.

The raid on Mr. Lu's organization, the Yi Ren Ping Center, comes at a precarious time for China's nongovernmental organizations, many of which operate in a kind of legal gray zone. Two weeks ago, officials used a bureaucratic infraction as the reason to shut down the country's pre-eminent legal rights center, Gongmeng, or Open Constitution Initiative. The closing followed a separate disbarment of 53 lawyers known for taking on civil rights and corruption cases. Just before dawn on Wednesday, the founder of Gongmeng, Xu Zhiyong, was taken into police custody, and he has not been heard from since.

"The permissible space in which civil society groups can operate was already small, but right now that circle is getting smaller and smaller," said Sharon Hom, the executive director of Human Rights in China, which is based in New York. "If an organization is creating an independent voice, putting together a newsletter or organizing people in any way, it's going to feel the full brunt of the authorities."

Although it is unclear exactly why the government is tightening its grip on such organizations, legal experts and rights activists generally agree that it may be related to the celebrations, three months from now, of the 60th anniversary of China's Communist revolution. A similar clampdown took place in the months before the 2008 Summer Olympics, when security officials in Beijing stepped up the harassment of dissidents and encouraged thousands of migrant workers to return to the countryside.

"It's basically a foolish attempt to make the year as peaceful and uneventful as possible," said Jiang Tianyong, a lawyer who was among those blocked from renewing their licenses.

Another explanation, Mr. Jiang and others say, is that some powerful segments of China's leadership feel threatened by the rise of independent entities working to advance causes like labor rights or clean water, or in the case of the Yi Ren Ping Center, protection for people with hepatitis B.

There is widespread trepidation over hepatitis B in China, a fear that has been intensified by an explosion in advertising for medical testing services and sham cures. Even though it is preventable with a vaccine -- and most of those infected will not become ill -- state-owned companies, medical schools and food-processing plants have come to believe that it is sensible policy to bar the infected.

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