Sunday, November 29, 2009

Cutting off Black Taxi’s Fingers

Sun Zhongjie, a company driver for a construction company in Shanghai, set off to pick up a co-worked getting off work on the night of October 14. Along the way, he was stopped by a man in the street who was shivering, said he had been waiting for 1 hour for a taxi, and was trying to get somewhere urgently. As the location was along his route, Sun agreed to take the man.

A key aspect of this, from my perspective, is that it occurred in the former Nanhui District of Shanghai, now absorbed into the increasing massive Pudong (with a population of over 4 million by the end of 2009). This is an area often called a “suburb” by geographers of China—it is far from the city center, and outside the “Outer Ring Road”. These areas are often sparsely developed, and have their own “district” taxis that are not allowed inside the Ring roads. Further, a license plate, which in Shanghai 2009 goes for over 30,000 yuan at auctions, is much cheaper if one buys one that is valid outside the Outer Ring only. That, plus a cheap QQ automobile, selling for about 20,000 RMB, allows one to operate a business as a “black” (illegal and unlicensed, not paying taxes) taxi driver. This occurs not only in Nanhui, but in Minhang, Songjiang, Zhabei, and other areas far from the center of “urban” Shanghai.

Another key aspect of the context for this incident is a current drive to eliminate black taxis before the World Expo by the Shanghai government. On the news nightly there are stories and reports about how black taxis clog the roads and are difficult to catch (since the passenger does not admit they are paying the driver, and the driver doesn’t admit he [mostly male] is being paid to drive.

Hence the method for catching black taxi drivers is to “fish” (diaoyu) for them. Typically, this means an enforcement officer will “hire” a taxi to take him somewhere, sometimes the traffic enforcement station, then pay the driver. After which, the officer arrests the driver and fines them 10,000 RMB.

On October 14, Sun was not a black taxi and did not solicit his rider. Instead, the passenger rode with Sun for a few kilometers, then threw money at him and took his keys. The company van was impounded in lieu of the fine.

Sun was distraught. At his dorm that night, to prove his innocence, he cut off his little finger.

The fallout has been a backlash against this type of “fishing” enforcement (it is literally fishing, 钓鱼, in Chinese but can be translated as entrapment in English).

Unmentioned, and in my mind more important, is unnecessary campaign to eliminate black taxis. In Shanghai, there are close to 50,000 taxis. The top five companies and their colors are Dazhong (aqua), Qiangsheng (yellow), Bashi (green), Haibo (blue), and Jinjiang (white). They are all owned by the local Shanghai government. There are also small company and individual proprietorship taxi companies. However, the taxis are concentrated in the city center—since center residents are wealthier, and there is more demand. The lack of sufficient transportation infrastructure and taxis in the “surburban” areas, outside the Outer Ring Road, outside the core urban area, leads to a need for black taxis.

Instead of satisfying this need, the campaign is targeted at eliminating the supply. This lead to the loss of Sun Zhongjie’s finger, as overzealous enforcement of something demanded by ordinary people and operated by hardworking black taxi drivers (mostly migrants) lead to a tragedy.

Background of story from China Daily:

Disney’s Land in Shanghai

The area of land approved for Disneyland in Shanghai is contained in a document issued by the Shanghai Municipal Planning and State Land Resources Administration Bureau. The document is numbers Shanghai No. 480, and targets the area of Chuansha Town (this area is close to Shanghai Pudong International Airport, and is only known to me because if you take a taxi from Pudong International and say that you are going to “Chuansha”, the taxi queue manager will give the driver a ticket to skip the queue upon return since Chuansha is too close to the airport, and taxi drivers wait from 4 to 8 hours for a customer from the airport).

An announcement on the document can be found here (in Chinese):

According to publication, the total area is 4.12 million square meters, of which 2.23 million are awaiting requisition, meaning that people are still living there. Interesting, after the public announcement of Shanghai Disney, there has apparently been a flurry of building in the area designated for development. Farmers in area view this as an opportunity to increase the amount of compensation owed them, since compensation for relocation is often based on the total area of housing.

Story from Shanghai Daily on Shanghai farmers building on Disney’s land, post-announcement:

This should dispel the idea that farmers being kicked off there is a one-sided process where innocent rural subjects are deprived of land and life by a totalitarian or authoritarian government. Clearly there are multiple tactics, illegal in this case, that farmers adopt to slow and make difficult the process of urban development.

Denouement on Yide and Zhou Xiaodi

Once ranked on the Hurun Report as one of China’s biggest philanthropists, Zhou Xiaodi has finally been sentenced to serve 14 years in jail as the result of real estate dealings in Shanghai. The sentence was handed down on November 5, 2009.

See the news article from the Shanghai Daily here:

Interestingly, as well, is that his sentence included a fine of 300 million RMB, or 44 million USD.

The story dates from the days of rural Shanghai and lax oversight of property market in Shanghai. In 2001, Zhou’s real estate company “bought” land from Shanghai County (which was subsequently abolished and absorbed by Pudong New Area) in the Sanlin area. This area has been left undeveloped for 8 years, precisely because of dealings overtaken by Zhou. His position of influence with the local government allowed him to elude government land development requirements.

After his obtaining of the use rights for the Sanlin area, Zhou then sold off parts of the land to investors from Zhejiang and Jiangsu, keeping only one part of the land—designed as land for housing people dislocated by the Shanghai Expo—for himself. Despite paying for their shares in a Shanghai property market often closed to outsiders, the Jiangsu and Zhejiang investors were never given legal rights to build on the land. Years later, Zhou again sold the right to develop and manager property on the land.

In total, Zhou made hundreds of millions of RMB as a result of obtaining land use certificates from the government. The spectacular thing is that Zhou did not invest any of his own money, or actually do anything with the Sanlin land, in making this money.

His legal troubles occurred when he hired migrant workers to beat a representative from the Zhejiang investor who was trying to get compensation from their investment back. Yin Minghua, the victim of the beating, had already helped the Jiangsu investor sue for a return of their original investment. A full investigation was undertaken but has not been publicly disclosed due to the connections to multiple levels of city government, importantly including the PSB, to the case.

As is often true of wealthy entrepreneurs in China who obtain their wealth by shady means, Zhou undertook a multitude of socially responsible actions. Besides donating large amounts of money, which put him on the Hurun list, he also set up a university and hospital, both affiliated with prestigious institutions in Shanghai, in Pudong.

Zhou’s company still has a website that can be found here: