Who’d be a foreign-listed Chinese firm right now? Assailed on all sides by short-sellers, regulators and politicians during recent months, Chinese companies had no respite this week. Their week began with demands from Singaporean investor groups for tougher rules for foreign-listed companies, with the aim of chasing down and prosecuting fraudulent Chinese firms. On Tuesday, rating agency Moody’s raised a financial red flag over its current piñata of choice, Sino-Forest. The agency also raised concerns over West China Cement, thereby adding it to the ever-growing list of potential piñatas. John Tsang, Hong Kong’s Financial Secretary, joined in the fun during his trip to Canada on Wednesday, calling for a fresh investigation into Sino-Forest and greater transparency from the company. Given Moody’s assessment the day before, and that almost anybody who cared to know about the firm’s more dubious dealings already knew, Tsang really kicked the proverbial downed man.
China’s internal affairs are also facing more scrutiny. Concerns over ballooning debt and falling liquidity – especially at the local level – have forced Chinese officials to prepare stress tests for its fragmented brokerage industry – even though Citic Securities, the country’s largest brokerage, reported that profits increased 13.1% in the first half of 2011.
Meanwhile, Chairman of the US Joint Chiefs of Staff, Admiral Mike Mullen, moseyed on into town this week, as senior US and Chinese military officials met to discuss issues including tensions in the South China Sea. Sadly, things don’t seem to have gone that well. First the Admiral sparred very publicly with counterpart General Chen Bingde, Chief of the General Staff of the Chinese People’s Liberation Army. Chen upbraided the US for its military exercises with Southeast Asian nations, chiding that it should be “more modest and prudent in words and deeds.” Then on Wednesday, state media revealed that China should begin testing its first aircraft carrier in the near future, undoubtedly adding to Mullen’s comfort. Coming on the back of a report arguing that China’s satellite surveillance capabilities now rival those of the US, this provides plenty of new ammunition for American foreign policy hawks. Finally, even China’s sop to US demands for transparency managed to backfire. Mullen and several US journalists were allowed access to air force and army bases, and Mullen was photographed sitting in the cockpit of one of their advanced SU-27 fighter aircraft. The photo was splashed liberally across domestic media, and the Chinese couldn’t resist taking a swipe at their detractors. “See how open we are?” General Ma Xiaotian, China’s deputy chief of general staff, said afterward. “Next time I go to the US, I want this kind of transparency. I want to be able to get into a plane’s cockpit, instead of just looking at the plane surrounded by red ropes 60 feet away.” As a cunning ruse to get to sit in a US fighter jet, it seems a bit convoluted, but it just might work for him.