Before landing in Washington, DC, the lions’ den where he will hardly see a (truly) friendly face, Hu Jintao will land in Washington State, home of Microsoft and Boeing. This other Washington will give the Chinese president considerably more amicable surroundings in which to launch his "We come in peace" campaign. This from the Seattle Times:

"This Washington is an alternative vision of what the US-China
relationship can be," said David Bachman, a professor and China
specialist at the University of Washington. "Here we have a state
establishment that is almost 100 percent behind encouraging engagement,
and a perception that things are moving well on both sides."

In D.C., by contrast, "the whole view is the relationship is negative," Bachman said.

Too true. Hu’s 26-hour tour of Seattle includes a dinner hosted by the governor at the home of Bill Gates, for which sponsorships have been sold at $20,000 a piece. Before dinner, Hu will have a tour of the Microsoft campus, and the following morning, a tour of the Boeing facilities. At lunch Wednesday he is to give a "major policy address."

All this as a warm-up to meeting with the tough guys in THE Washington, the one where Hu will be faced with some hard questions from politicians looking to score a few election-year points on a big, easy target. Expect Hu to calmly agree with certain outraged senators that something must be done about the current trade imbalance. But don’t expect him to cower in fear. After all, he still has a few hundred billion trump cards up his sleeve, in the form of US Treasury notes.

I fly regularly between Shanghai and Beijing and I find increasingly that Air China is using leased Dragonair Airbus aircraft on the route. This is fine by me, although it is a little disorienting to hear the captain of an Air China flight telling me (in an Australian accent) what his full name is (as opposed to the usual ‘Captain Zhang’), plus useful and believable information on why delays occur and which precise runway we will be using for landing and takeoff.

But the real disorientation is related to ice cream. When I fly to Hong Kong, it is on Dragonair, and I confess the main reason is that Haagen-Daaz ice cream is served. I don’t usually eat ice cream, but I am addicted to the experience of eating Belgian chocolate ice cream on Dragonair flights. As long as it is renting Dragonair planes and flight crews, Air China could consider easing the pain and providing proper ice cream. The meals currently provided suggest there should be some money left in the budget for such a non-extravagence.

I spend a lot of time talking about how China is now a part of the world, leading the way in key areas such as IPR and the environment, and generally racing to modernity and beyond. But there is one daily hassle that I face that is truly reflective of how backward China remains in some ways. It is email.

When I download my emails in China, I find at least once a day that the download is terminated, and I have to go onto the mail server via a web page to delete the email which is blocking the queue. Once I have deleted it, the rest of the emails flow in.

When I am anywhere other than China, this never, ever happens. So it is not a spam related issue, it is totally the result of the keyword filters which the Chinese government has placed on all the mainland’s Internet gateways.

I get a lot of emails containing China news-related content. I plead guilty to this charge. But as a businessman, I have to point out that this email filtering process is wasting a lot of my time. For myself and every other business person who spends any time at all fiddling with emails on their mail server to remove the blockage in the pipe put in place by the responsibly officials in the relevant departments, I have to say: enough. Get real. I can read the emails anyway on the mail server.

To paraphrase Moses: Let me emails go!

Apparently plans are afoot to set up a fifth asset management corporation (AMC) to take over US$12.5 billion worth of bad debts in the northeast of the country held by the four existing AMCs. If anything, this is a sign of how the existing AMCs – Huarong, Great Wall, Cinda and Orient – have failed in their task of clearing US$230 billion in non-performing loans (NPLs).

Debt sales may have increased in the last year but this has yet to compensate for the years of feet-dragging that preceded it. China’s AMCs and debt clearing process as a whole is beset by problems. They include:

1) Future of the AMCs. The AMCs were prescribed no particular post-debt clearing function and so it can be argued they have spent too much time worrying about their futures. There may be a host of NPLs they can dispose of on behalf of the city commercial banks but, based on the quality of the debt pool they received from the Big Four banks, the AMCs seem to believe their commercial futures lie elsewhere. Investment banking has been a popular call.

2) Competition. Was it really necessary to have four separate AMCs and then allow them to compete against each other and buy debts from each other? Korea got by with one state-owned body that was put in place to do a particular job, not add new layers of confusion to an already complex system.

3) The way in which the NPLs were transferred. Keen to make their books look good to foreign investors, a large proportion of the banks’ NPLs were transferred to the AMCs at close to full book value. There is no way the AMCs have or will be able to settle or sell on the NPLs for anything like that amount. This leaves the banks holding IOUs which the AMCs will never be able to cover without significant government bail-outs.

4) The qualit of the assets. Some of the distressed assets on sale are, to put it frankly, distressed beyond recovery. It has been suggested that, of the NPLs they couldn’t clear on their own, the AMCs bundled up the best ones and sold them off. Goodness knows what stake some of the NPLs still lurking on the books are in.

5) Unreasonable price demands. Largely because they took over the distressed debts at such high prices for the sake of banking reform, the AMCs have been demanding unrealistically high prices for them at auction. This has put off foreign investors looking to enter the NPL market.

It’s unclear what will happen to the distressed debts and the AMCs that hold them. But is creating a new corporation really the answer? It has been said that the new AMC would relieve itself of the debts by securitizing them – but this depends on having something that customers think it is worth buying into.

Surely, in the back of the regulator’s mind, there must be a little voice saying, ‘Why oh why can’t we just use the forex reserves to wipe out the legacy NPLs and consign these irritating AMCs to the dustbin of history?’

One thing is certain: any future bad debts the Big Four come up with should be cleared in-house. A bank can only behave in a truly commercial manner if it takes responsibility for resolving its own slip-ups over loaned money. And the Big Four should have instigated sufficient internal governance standards that this won’t prompt a repeat of past corruption problems.

The Rolling Stones played Shanghai on Saturday night, their first performance in mainland China. The show was a professional rock masterpiece. Jagger and Richards are characters who helped define the rock hero in the 1960s, and while most of their contemporaries have faded, died, or shifted into total retread golden oldie mode, the Stones that Shanghai saw was a vital and relevant demonstration of how to do a rock show today.

I grew up with this music, I remember when Paint It Black was first issued. I am not a hard-core Stones fan, but the opening notes of Gimme Shelter or Satisfaction make my blood surge with both the memories they generate and the power they still possess as masterful demonstrations of how to do pop music hooks, with all the tension and release mechanisms that have made rock such a long-lived musical form.

It made me proud, being there, to be a part of the generation of English males that created this artform, and puzzled that it has yet to be superceded by something else in the same way as big bands and be-bop and other earlier pop music forms were tossed aside. You look at the rock bands on MTV today and you see the same line-up as the Stones in the mid-1960s, the same drum / bass / chord approach to the songs, the lead singer projecting the same attitude that Jagger created 40 years ago.

So here he was in communist China, Mick Jagger singing Sympathy for the Devil. I was waiting for the line: "I rode a tank / Held a general’s rank / When the blitzkrieg raged / And the bodies stank", wondering if he would do it straight, and he did. But I think I can guess what Mick was thinking as he delivered this line in Shanghai.

There was one special element to the concert, and that was for the ballad Wild Horses. Jagger welcomed onto stage Cui Jian, the Godfather of Chinese Rock, to sing and play with him.

Now there’s some history here to relate. The first time Cui Jian ever played with a rock band, it was at a rehearsal of my band, the Peking All-Stars, in Beijing in 1983. He wanted to join the band. He was a young trumpet player with a state variety troupe, but he just didn’t have the rock feel, so I turned him down. Plus at the time, I felt it was unwise to allow a Chinese kid to play in a foreign rock band as there was a government campaign in progress against "Bourgeouis Liberalism".

Cui Jian went on to figure out a way of getting into rock on his own. But my boast that "I rejected Cui Jian for my band" is true, and it means there was a tenuous connection between me, him and Mick on that stage in Shanghai.

But I was disappointed with the way Cui Jian handled the opportunity. He appeared really nervous, and when given the chance to sing a few lines of Wild Horses, as I am sure had been arranged at least a couple of hours earlier, he sang English, when I think he should have sung anything he wanted in Chinese.

At the end of the song, he said a few words: "I hope that the Stones will come back before too long and play in Beijing." Or words to that effect. By taking that approach, he turned his back on the title of Godfather of Chinese rock and limited himself just to the Chinese capital. He should instead of have said something which addressed China as a whole rather than just Beijing.

But I understand. For anyone who has grown up in with rock as a part of their lives, the Stones and Jagger are daunting in the extreme. Cui Jian is still unique and also a great guy. I just hope that when he gets to be on stage with the Stones in Beijing, he says something about Shanghai.