The heart of China

Wuhan officials embarrassed by a critical BBC documentary about the city

Hingis of Switzerland and Pennetta of Italy pose for photographs with their trophy after winning the women doubles final match against Black of Zimbabwe and Garcia of France, at the Wuhan Open Tennis Tournament, in Wuhan

In case you haven’t guessed yet, the tournament was in Wuhan

Wuhan’s ambitions for global status reached a new milestone on September 21 when the city hosted the first Dongfeng Motor Wuhan Open. For the past 37 years, the ladies tennis tournament has taken place in Tokyo. Supplanting it represented a major coup for Hubei’s capital, given that it now hosts one of the five prestigious WTA tournaments that rank just below the sport’s four grand slams.

In many ways Wuhan is a fitting setting for the event since it is the birthplace of China’s tennis superstar Li Na. And the city government made sure it has a venue to match – investing in a $200 million, 15,000-seater stadium, reports Bloomberg.

The government has high hopes that the tournament will help Wuhan hold court on a global stage. Although it is often compared by the Chinese to Chicago, few have heard of Wuhan outside the country, even though its population is five times larger than the Windy City.

In fact, the Optics Valley International Tennis Centre is just one of many infrastructure projects the city has been completing under a planning blueprint running through 2020. Planners hope this will transform Wuhan from a leading second-tier city in China to one that rivals Shanghai and Beijing in domestic and global consciousness.

“Wuhan to the world, let the world know Wuhan,” is the city government’s slogan.

By 2020, Wuhan’s current population of 10 million (including migrants) is expected to swell to 17 million as it absorbs up to 12 satellite cities nearby, linking up with them on a hub-and-spoke model. In doing so, Wuhan hopes to use its central location to cement its status as the transport gateway to inland China. But the speed of its transformation and the amount of debt it has taken on to achieve its ambitions means Wuhan is often held up as one of the most extreme examples of China’s investment-driven economic model. And for the second time this year, that model has been thrust into the spotlight. That’s because the nation’s slowing economy (China grew just 7.3% in the third quarter) is sparking vocal debates about the merits of renewed stimulus measures.

The first occasion that Wuhan’s development model came in for wider attention was in February when the BBC’s economics editor, Robert Peston, travelled there to make a documentary called How China Fooled the World.

In it, Peston asked many of the same questions that economists have been debating since China launched its record-breaking Rmb4 trillion stimulus in 2008. Principally: will the government-engineered boom turn to bust as the country’s debt burden starts to unravel?

The documentary was well received in the UK but somewhat less so in China, where it is now available in DVD stores.

Domestic commentators have been vocal about Peston’s programme, viewing it as another example of the Western media’s tendency to “sing pessimism about China” and more evidence of its failure to grasp how China is different.

In the programme Peston concluded that there “are no exceptions to the lessons of financial history. Lending at that rate leads to debtors being unable to meet their obligations and to large losses for creditors. The question is not whether this will happen but when and on what scale.”

A commentary in the Shenzhen Daily disagrees. Its author argues that China has “successfully steered clear of many seemingly unavoidable crises and will continue to do so in future”.

But the biggest gripe for many of the Chinese commentators seems to be the loss of face experienced by local officials who agreed to appear on the programme in the first place.

In particular, they cite Tang Liangzhi, Wuhan’s mayor, who greeted Peston surrounded by an impressive retinue of staff, and hosted him at grand new government buildings.

The programme has now backfired on the city’s administration to the extent that netizens have joked Peston’s documentary should be renamed ‘How the BBC fooled Wuhan’.

“When the BBC came to Wuhan, the city only saw the international aura over its three letters and its dream of becoming an oriental Chicago,” one blogger writes on April Media (an online forum first set up to highlight perceived anti-Chinese bias during media coverage in the run-up to the 2008 Olympics). Clearly, the city government thought that cooperating with the BBC would help spread its message to a global audience, said the blogger.

Instead, Mayor Tang found himself on the receiving end of questions about the sustainability of the city’s economic model.

Such naivety demonstrates that not everyone in Wuhan can be jiu tou niao. The phrase, which means nine-headed phoenix, is often attributed to Wuhan locals, whose intelligence is said to match that of a fabled phoenix worshipped by their ancestors over 2,000 years ago.

But April Media’s blogger describes the BBC as a wolf and says it is embarrassing that the city government had no inkling of the broadcaster’s agenda.

“Because they’re so confident in their control of the Party-run media, they thought they’d control the foreign media in the same way to suit their propaganda purposes,” the netizen writes. Accordingly, the bureaucrats were unprepared for the British channel’s editorial approach.

“How can a swimmer trained in a pool fight against the waves in the sea?” the blogger wondered.

Peston’s documentary concluded that China is likely to be swamped by debt in the third wave of the global financial crisis, which began with the collapse of Lehman Brothers in 2008.

There has been enough negative data lately to signal that problems are afoot. In September, industrial production figures hit a 68-month low driven by declining demand and inventory corrections. The auto sector for which Wuhan is particularly famed did worst of all, decelerating to 8.5% year-on-year growth compared to 12.8% the month before.

That has lead to calls for further stimulus at a national level, although finance minister Lou Jiwei has said that Beijing does not intend to make any major policy adjustments (i.e. more stimulus) because of changes in the economic indicators. Central bank advisor Chen Yulu concurred that the government will stick to its existing tools to fine tune the economy and has not got to the point where it needs to consider more drastic measures.

But the government has taken steps to improve liquidity by setting up an Rmb500 billion ($81.73 billion) lending facility with the country’s five major banks. Analysts says this is the equivalent to cutting reserve requirement ratios by 50 basis points. News that mortgage-backed securities are to be encouraged has also been interpreted as a potential boost for home loans and the flagging real estate sector (see Talking Point).

The China Securities Journal also says the central government is considering new tax cuts too, while city governments have been trying to revive property sales by removing previous restrictions and reducing the downpayments required.

So far this year Wuhan has seen residential sales by gross floor area drop 11% (which places it in the middle of the pack for cities categorised in China as ‘second-tier’).

Yet Wuhan’s grand plans for 2020 continue apace. This week it also held a lighting ceremony for its Han Show Theatre, one of a number of venues being constructed as part of a giant cultural complex. The plan includes the world’s first indoor movie theme park, the design of which resembles Wuhan’s treasured bronze bells (these date back to the Warring States era). Both buildings are part of a citywide network that’s set to provide waterway connections between Wuhan’s six lakes.

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