Yunnan drought damage intensifying
The rain and snow that fell across northern Yunnan last week was not nearly enough to relieve the record drought that has left Yunnan with countless water shortages, forest fires, and failed crops. Government projections now have the drought lasting into early summer.

Estimates now stand at almost six million people and 3.6 million livestock in Yunnan lacking normal access to water—including 1.8 million people in the Kunming area alone—along with 2.5 million hectares of cropland affected. The number of people lacking normal access to drinking water could rise to nearly eight million in March without further rain.

The drought is now also affecting shipping traffic on the Mekong River.

After years of Chinese civil engineering projects such as dredging channels and blasting shoals, the upper Mekong River, known in Yunnan as the Lancang River, has become a major freight conduit between China, Laos, and Thailand, carrying oil shipments and other cargo up and down the river.

Reuters is reporting that the river is at half of its usual level for this time of year and China has halted the operation of 21 Chinese boats and stopped issuing border crossing permits to cargo boats seeking to enter China from the south.

Additionally, the drought has hit Yunnan and neighboring Guangxi's sugar farmers hard, leading to a 12 percent decrease in national sugar production for this growing season compared to last year. This development could drive up national prices if China begins to import more sugar.

Kunming apartment rents rising fast
If it seems that your landlord is trying to bleed you dry when you re-sign your lease this year, you might take consolation in the fact that other renters across Kunming are being similarly squeezed.

According to a Xinhua Net article, rental prices for small-sized family dwellings in the downtown area have increased by 10 to 15 percent in recent weeks as a surge of outside workers return to Kunming from Spring Festival vacations and a new crop of college graduates begins to flood the rental market.

The increase comes on the heels of rising prices last year.

Viewing China's stimulus package through Chenggong
A Financial Times article that appeared on Sunday used the example of Kunming's Chenggong new area to examine whether rapid development, China's economic stimulus package, and property speculation have caused a national property bubble.

The article focuses on the breakneck pace of residential construction in Chenggong, which for the moment is home to row upon row of mostly uninhabited apartment blocks and other buildings.

Kunming, however, has a rapidly growing population and very little space remaining around the original city center. With government offices and universities preparing to relocate there, it is difficult to imagine Chenggong remaining a ghost town for long.

Image: Sina News

It's official: this month Kunming will launch direct flight services to Dubai, joining a small handful of other Chinese cities with air links to the Middle East.

China Eastern Airlines announced last week that it will launch flight services between Kunming and Dubai on February 22. The thrice-weekly flights include one direct Kunming-Dubai flight and two with stopovers in Dhaka, Bangladesh.

The direct service, MU755/6, will depart Kunming at 4 pm and arrive seven hours later in Dubai. MU2021/2 will also leave Kunming at 4 in the afternoon, arriving in Dubai around eight hours later after stopping in Dhaka.

The new air connection is expected to boost already booming non-oil trade between China and Dubai. Additionally, Yunnan is home to one of China's largest Muslim populations, after Xinjiang, Ningxia and Gansu – which should lead to more Yunnan Muslims visiting the Middle East as leisure and religious tourists.

The addition of flight services to Dubai is another step in Kunming's evolution into an international air hub. Since the end of 2007, Kunming has added flight services to Kolkata, India and Kathmandu, Nepal.

The biggest step forward in Kunming's emergence as an international aviation hub will be the opening of Kunming's new airport. The 12 billion yuan (US$175 million) airport is scheduled to open in 2011.

The airport will be located about 30 kilometers northeast of downtown, just past the town of Dabanqiao (大板桥镇). Considerable progress has been made on the airport since construction began in 2008, with the steel skeleton of the airport terminal nearly completed and base earth layers ready for the runways.

The new airport and other infrastructure projects outlined in Kunming's ambitious 12-year development plan, which was unveiled in 2008, promise to bring major changes to the city. Alongside construction of the airport is a four-lane expressway that will link the new airport with the eastern end of Dongfeng Dong Lu via interchanges at the second and third ring roads.

Also, the timeline for construction of light rail line number six, which will run from downtown Kunming to the new airport, has been pushed forward, with construction beginning next year. The light rail was originally going to be extended to the airport by 2020 and is now projected to be completed within five years.

Photos of the new airport expressway and airport construction site:



Dubai image: Dubai Travel Guide

Last Friday while much of the world was nursing the hangover of a decade of war and terrorism, economic turmoil and environmental degradation, China and its Southeast Asian neighbors took a big step toward regional integration with the launch of a new free trade area (FTA). The long term implications for Yunnan are massive.

China and the Association of Southeast Asian Nations (ASEAN) have now entered the first phase of an FTA, eliminating tariffs on around 7,000 items including fruits, vegetables, textiles and machinery. These goods represent roughly 90 percent of trade in the new economic bloc, which is the world's largest in terms of population and third-largest after the EU and NAFTA in terms of GDP.

The first phase includes China and the more developed ASEAN members: Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand. On Friday these countries also launched the first phase of an FTA within ASEAN itself. The remaining members – Cambodia, Laos, Myanmar and Vietnam – will join the ASEAN China FTA in 2015.

Although it does not directly border any of the first phase countries, Yunnan has much to gain from the FTA's launch. It has water, air and highway connections to Thailand plus air links to Malaysia and Singapore, all of which are expected to become even busier trade routes. The launch of the FTA has long been viewed as a major milepost in the rise of Yunnan as China's gateway to Southeast Asia.

As some observers note, the FTA is more than just a step toward trade integration, it is also a major strategic achievement for China, whose political power in Southeast Asia already greatly surpasses that of regional rival India and is also seriously challenging American influence in the region.

China's soft power in Southeast Asia will undoubtedly grow in step with trade within the FTA, and much of this influence will be projected from Yunnan.

In the coming decade, China and Southeast Asia will become increasingly connected by a vast network of highways and rail which will provide cities in Yunnan with cheap overland access to markets in Myanmar, Laos, Vietnam, Cambodia, Thailand, Malaysia and Singapore. Seated at the northern end of this transport web, Yunnan is poised to become an increasingly important international trade hub.

The initiation of the ASEAN China FTA is a modern revival of the ancient tea and horse caravan routes from centuries ago known as the South Silk Road, which linked China with Southeast Asian markets as well as Tibet and India.

Total trade between China and Southeast Asia was US$100 billion in 2004 and US$231 billion in 2008, but this is just the beginning. Bilateral trade – much of which will be passing through Yunnan – is expected to double over the next decade.

Difficult as it may be to imagine, Yunnan's days as an economic and political backwater are officially over.

It's official, the Yunnan Honghe Bulls (云南红河奔牛) have been booted from the China Basketball Association (CBA) for the coming season as punishment for failing to pay wages and debts, according to a post on China Sports Review.

Zhang Xiong, the director of Chinese basketball governing body Chinese Basketball Management Center bluntly criticized the club's manner of conducting business.

"Yunnan's poor business operation last season resulted in unpaid wages for players and coaches and a negative impact on the league," Zhang said.

The Bulls joined the CBA in the 2004–2005 season, after winning the championship of the second-tier National Basketball League in 2004. Yunnan Honghe's ejection leaves the CBA at only 17 teams, while leaving the city of Mengzi with a large basketball arena that no longer has a tenant.

Hundreds of angry shop owners brought traffic on Huancheng Nan Lu to a standstill Saturday morning to protest the pending demolition of Luosiwan market, according to a ChinaNews.com.cn report.

At the height of the disorder, a car was smashed and rocks were thrown at police by shop owners who were eventually dispersed with tear gas. Police instructed the protesters to air their grievances with a group of government officials that had been sent hastily to Wuhua Stadium.

Protestors told reporters that they were demanding compensation for shops they had bought in an auction in 2006 at an average cost of two million yuan. The market's property rights are owned by a group of more than twenty shareholders representing investment from mainland China, Hong Kong and Taiwan.

Luosiwan is the largest comprehensive wholesale market in Yunnan province. With average foot traffic of 100,000 visits daily and more than 10,000 vendors, it does roughly 10 billion yuan in business annually. It is one of the 10 largest markets in China.

"The government is forcing us to demolish, yet we're not getting compensated," one shop owner who purchased his shop three years ago said.

"Where's our compensation? Everybody's gotta make a living!"

A new Luosiwan market is currently being built southeast of downtown Kunming on the way to Chenggong. The new market - a small section of which is already open - will be several times larger than its predecessor and will have its own hotel attached to it.

Image: ChinaNews.com.cn

A plan by Kunming's municipal government to remove more than 200 outdoor billboards within the city has drawn severe criticism from advertising agencies, according to a China Daily report.

Yesterday the China Youth Daily reported that the Kunming urban administration bureau had issued a notice to advertising companies in July that 245 outdoor billboards would be dismantled by the end of November.

Officials in the bureau said that 207 of the billboards did not have installation licenses or had expired licenses but that licenses for 38 of the billboards were valid. According to an unnamed advertising professional quoted in the story, nearly all of the billboards have been torn down.

Lei Qiang, deputy general manager of Fengchi Media Corporation, a major advertising company in Kunming, said that his company had already suffered from previous government campaigns against billboards. Last year when the government dismantled billboards inside the second ring road, Fengchi had to fire 30 percent of its staff and reduce salaries by 15 percent, Qiang said.

"The city government's arbitrary decision to tear down all outdoor advertising billboards in the urban area is not based on any domestic law or regulation," Qiang said. "Many of our billboards had licenses and permission before being installed, but we cannot survive after the authorities' series of crackdowns."

Executives at other ad companies also reported having billboards torn down despite having obtained proper licenses, with their appeals to the government falling on deaf ears.

Ad execs aren't the only people voicing concern about the Kunming government destroying billboards that have valid licenses, Phoenix TV deputy director Cao Jingxing said the city should honor legal agreements made in the past.

"What's happening in Kunming has already happened earlier in other cities, in order to give the city a makeover the billboards were demolished – if this is what the average person wants, then of course it's a good thing," Cao said.

"But when demolishing billboards, one should first ask 'When these billboards were erected, had they been approved by the city?' 'Did they or did they not satisfy regulations and laws at that time?' If they were legal and were approved, and the billboards were demolished only because the city wants to revise its rules from years ago, then the city should be responsible for the losses incurred [by the advertising companies]."

Telephone calls by the China Daily to Kunming's urban administration bureau were not answered.

It may be 2009, but it appears that in some sectors of corporate Yunnan, other companies' intellectual property rights mean very little.

Yunnan-based coffee producer Hogood Coffee (云南德宏后谷咖啡有限公司) is playing the victim after government employees confiscated Hogood non-dairy creamer which was illegally using the "Coffee-Mate" (咖啡伴侣) name, which in China is a registered trademark of multinational food and beverage giant Nestlé.

On September 3, around 12,000 bags of Hogood-produced non-dairy creamer packaged under the name "Coffee-Mate" were seized by Industrial and Commercial Bureau employees in the Panlong district. Panlong officials confirmed the next day that the confiscation was a response to a complaint filed by Nestlé.

However, on September 15 a Nestlé China public relations manager reportedly claimed that Nestlé had filed no such complaint. The source of the complaint is currently under investigation by the Panlong government.

Hogood CEO Xiong Xiangru (熊相入) told reporters after the confiscation that the company had no idea that Coffee-Mate was a trademark – despite it being clearly marked as such on all Nestlé Coffee-Mate products.

Xiong's denial seems more implausible considering that Hogood has been a supplier of beans to Nestlé, which it grows on farms in Dehong in southern Yunnan.

The Yunnan Coffee Industry association is standing behind Hogood, insisting that Nestlé should not continue to "monopolize" the Coffee-Mate trademark and that Nestlé should let Chinese companies use the name on their own products.

Yunnan Coffee Industry Association vice secretary-general Hu Lu (胡路) put the following argument forward for why Nestlé should rescind the trademark that it has successfully built up in China and throughout the world:


Other Chinese coffee producers have been fined for violating the Coffee-Mate trademark in the past, according to the report.

Acknowledging that Nestlé was one of the main driving forces behind the development of China's coffee market, Hogood CEO Xiong pleaded to "big brother" Nestlé to rescind its Coffee-Mate trademark in order to bring "fair competition" to the Chinese coffee market.

The main questions that this particular episode of intellectual property rights violation raises are:

1. Should Nestlé or other companies with trademarks that have entered everyday parlance as a term representative of a certain type of product (think Coke, Hoover, Xerox) be forced to give up their trademarks because they've been marketed successfully?

2. If Nestlé were to bow to the weak logic of the above arguments and revoke its Coffee-Mate trademark in China, what would prevent the trademark being snapped up by a Chinese company who would prevent other companies from using it in China?

3. Is it possible that a company calling itself "Hogood" in English is unwilling to invest the necessary resources into the development of its own corporate identity and product branding, preferring rather to whine about "fair competition" after blatantly violating a registered trademark almost eight years after China's accession to the World Trade Organization?

The most significant confidence-building exercise between neighbors China and India – the annual joint military training operation known as 'Hand in Hand' which was to be held in China later this year – will not take place, suggesting that while economic exchanges between the two countries continue to grow, the political relationship could continue to lag in the short term.

"We have not held any meetings to plan out the drill," a senior Indian army officer involved in the exercises told the Kolkata-based Telegraph. "It is unlikely that there will be an episode of the exercise this year when our soldiers would have been expected to visit China since they were here last year."

The first 'Hand in Hand' exercise between the two countries' armies was held in 2007 with the Indian army's 15 Jammu and Kashmir Light infantry joining Chinese counterparts for eight days of war games as well as drinking and dancing in the mountains outside of Kunming.

Last year, a 130-strong contingent from the People's Liberation Army conducted drills with the 8 Maratha Light Infantry in Belgaum, a city in southwest India's Karnataka state.

The reason for the early demise of the confidence-building exercises between the militaries of the world's two most populous countries – which went to war in 1962 – is not fully clear.

Complaints by a senior Indian military official to the Telegraph about the high costs of the exercise hint that maybe there was not enough mutual interest in continuing Hand in Hand to justify the expenditures involved. But it is also possible that a recent cooling in the political relationship between China and India is a factor.

China is India's largest trading partner and India one of China's larger trading partners – bilateral trade between the two reached a new high of US$51 billion last year – but the 3,500 kilometer border separating the two rapidly growing economies has yet to be fully demarcated.

This year there have also been several reports, some confirmed and some unconfirmed, of recent border tensions. Earlier this month Indian general Deepak Kapoor announced that China had been active in areas claimed by India, with a Chinese helicopter landing in disputed territory. India's national government has played down the border issue and has aggressively refuted Indian media reports that shots were exchanged over the border in July.

In August of this year, much to the chagrin of politicians in India's ethnically diverse northeast, New Delhi decided to scrap its plans to rebuild the Indian section of the Stilwell Road, a World War II supply route connecting Assam state with Kunming via northern Myanmar. Some Indian politicians viewed the renovated road as the most viable option for injecting dynamism into the laggard economy of the country's northeast.

For some Kunming businesspeople, political and military tensions need not get in the way of expanding China-India business ties. Guo Hongbo, leader of a 12-member trade delegation from Kunming visiting Kolkata, Bangalore and New Delhi last week, told Express India while in Kolkata that business was the only thing on the delegation's mind.


Despite a large Chinese population in Kolkata and the Indian city's only direct air link to China being direct flights to Kunming, Guo's delegation was unable to meet with any high-ranking officials from the government of West Bengal, of which Kolkata is the capital. The same delegation also had a lukewarm reception in Bangalore, where it was attempting to attract Indian IT investment in Kunming.