If you have any questions or concerns please respond to toni.zhou@ogilvy.com
The Daily China News Update is produced by Charles Silverman
(03/11/13)
Business & Economics
Newswire
Analysis: Meat prices add to China's inflation, policy risks (Reuters) ........................... 5
China's ragtag shale army a long way from revolution (Reuters) .................................... 6
Taiwan regulators, feet to the fire, talk tough on China-linked media deals (Reuters)
............................................................................................................................................................... 9
Skype's Been Hijacked in China, and Microsoft Is O.K. With It (Bloomberg) ........... 11
Analysis: U.S. concern on China currency fades as yuan grinds higher (Reuters) . 13
Print
China's economic model has its roots in the West (South China Morning Post)...... 15
Online
How Social Media Usage Among China’s Digital Natives Is Evolving (allthingsd.com)
............................................................................................................................................................ 16
Doomsday Warning Can’t Damp Bubbly Enthusiasm for China Property (THE WSJ
CHINA REAL TIME REPORT BLOG).......................................................................................... 18
‘Iron Man 3′ Blasts Away at China Co-Production Myth (THE WSJ CHINA REAL
TIME REPORT BLOG) ................................................................................................................... 19
HTC Calls ‘Mayday’ As Phone Sales Fall (THE WSJ CHINA REAL TIME REPORT BLOG)
............................................................................................................................................................ 20
China’s “Black” Public Relations Industry (pekingduck.org) ......................................... 21
Tencent Adjusts E-commerce Subsidiary Structure In China (chinatechnews.com)
............................................................................................................................................................ 22
Motorola Mobility Axes More Chinese Employees (chinatechnews.com) ................. 23
Who To Read On China’s Economy? (chinalawblog.com) ................................................ 23
Adidas in China: reaching out (The FT Beyond BRICs Blog) .......................................... 24
After Chávez, will China still be financing chavismo? (The FT Beyond BRICs Blog)
............................................................................................................................................................ 24
EM trade boosts China exports (The FT Beyond BRICs Blog).......................................... 26
Guest post: China investors should bet on urbanisation (The FT Beyond BRICs Blog)
............................................................................................................................................................ 26
Chinese travellers leave frugality at passport control (The FT Beyond BRICs Blog)
............................................................................................................................................................ 28
Travel China in Video Games: Western Developers Increasingly Looking to China
for Game Settings (techinasia.com) ....................................................................................... 30
Qihoo’s Search Engine Market Share Up 2%, Mainly at Expense of Baidu
(techinasia.com) ........................................................................................................................... 31
Car Sharing Startup iCarsClub Raises $482,000, Expands to China (techinasia.com)
............................................................................................................................................................ 32
Why Sogou’s Input Method Search Could Change the Chinese Internet (and More)
(techinasia.com) ........................................................................................................................... 32
Chinese Government Rep Says E-Commerce Sites Have Evaded Billions in Taxes
(techinasia.com) ........................................................................................................................... 34
China Unicom is Tracking Your Mobile Browsing History, and Now You Can Check
Their Database .............................................................................................................................. 34
FedEx Agrees To Ship Special Cargo from China (chinasourcingnews.com) ........... 35
Sogou Bundles Search Service with Input Software, bypassing Browser
(technode.com).............................................................................................................................. 35
Will China Follow the Valley’s Lead in Enterprise Tech? (techrice.com) ................... 37
Politics & Law
Newswire
China eyes residence permits to replace divisive hukou system (Reuters) .............. 39
Analysis: Bellicose North Korea forces China to shift stance on old friend (Reuters)
............................................................................................................................................................ 41
UN Imposes Sanctions on North Korea as Country Threatens Attack (Bloomberg)43
China investigates 30 ministerial-level officials within five years (Xinhua)............. 45
Print
China Unveils Government Agency Shake-Up Proposal (The Wall Street Journal) 46
China Collapses 2 Major Ministries (The New York Times) ........................................... 48
China Calls for Global Hacking Rules (The New York Times) ........................................ 49
US main source of cyberattacks against China (China Daily) ........................................ 49
China adjusts approach to North Korea (The Financial Times) ................................... 51
Online
Socialist Ghost Haunts Reform Prospects in China (THE WSJ CHINA REAL TIME
REPORT BLOG) .............................................................................................................................. 52
Good Lord: In China, Christian Fundamentalists Target Tibetans (Time World Blog)
............................................................................................................................................................ 53
Chinese Student Kills American Overseas, Posts $2 Million Bail (chinasmack.com)
............................................................................................................................................................ 55
Gauche Graft: Official Corruption And Conspicuous Consumption
(beijingcream.com) ..................................................................................................................... 58
Reporter Asks Emotional Three-Minute Question About The Environment,
Receives No Response From NPC Delegates (beijingcream.com) ................................ 59
NPC Delegate Zhong Nanshan: What Good Is The World’s Highest GDP If The People
Can’t Breathe? (beijingcream.com) ....................................................................................... 60
After Young Family’s Arrest, Tension Between Street Vendors and China’s City
Officers Comes to Fore (tealeafnation.com) ........................................................................ 61
Is the ‘China Dream’ Really a ‘Strong Military Dream’? (tealeafnation.com) ............ 63
The Words That Cause Skype to Spy on You, Snitch to Chinese Authorities
(techinasia.com) ........................................................................................................................... 64
Online outrage over fruit seller's run-in with China cops shows power of social
media (NBC Behind The Wall Blog) ........................................................................................ 65
Miscellaneous
Newswire
In China, public anger over secrecy on environment (Reuters) .................................. 67
Print
China Plans Overhaul of Railway System (The Wall Street Journal) ........................... 69
Film buffs thrilled after China unblocks IMDB movie database (South China
Morning Post) ................................................................................................................................ 71
Online
Hyundai, Buick dealer apologize in wake of Chinese baby social media incident
(autoblog.com) .............................................................................................................................. 72
Women Gain Ground in China. Or Do They? (THE WSJ CHINA REAL TIME REPORT
BLOG) ................................................................................................................................................ 72
Popular Topic: Beijing Pollution (chinahearsay.com) ...................................................... 73
Chinese netizens turned their noses up at The Times’ description of the Chinese
middle class (offbeatchina.com) .............................................................................................. 74
Seth MacFarlane is Big in China (theatlantic.com) ............................................................ 75
Winning in China: Henry Winter's Story (theatlantic.com) ........................................... 76
How to Succeed in China Without Really Trying (theatlantic.com) ............................ 77
Today's Chinese Air-Emergency Info Source (theatlantic.com) ................................... 81
Malware In China, Part 2: iOS Users Are Vulnerable, Too (beijingcream.com)........ 82
Hong Kong Viewers Irate At Pretentious TVB Travel Show Featuring This $360,000
Tourbillon Phone (beijingcream.com) .................................................................................. 84
Born Rich in China: Explaining the Disdain for ‘Fu’erdai’ (tealeafnation.com) ....... 84
Business & Economics
Newswire
Analysis: Meat prices add to China's inflation, policy risks (Reuters)
By Lucy Hornby
BEIJING | Sun Mar 10, 2013
http://www.reuters.com/article/2013/03/10/us-china-economy-inflation-idUSBRE9290GM20130310
(Reuters) - Diners looking for some beef hotpot on a chilly evening in Beijing pay more per pound than their
counterparts in Boston, a discrepancy that shows the challenges China faces in reviving growth as inflation
pressures make an untimely return.
China's consumer price index rose 3.2 percent in February from a year earlier, a 10-month high, official data
released on Saturday showed. The pick up in inflation from just 2 percent in January was driven by a 6 percent
increase in food costs.
Prices that rise too much could jeopardize a government preference to allow economic growth to stabilize after it
eased in 2012 to its weakest full-year pace in over a decade. Growth only started to pick up in the fourth quarter
after a seven-quarter-long slide.
But if policymakers move too quickly to dampen inflation, they could equally jeopardize the very growth they are
trying to nurture. It is a dilemma China's incoming leaders Xi Jinping and Li Keqiang may have hoped they would
not have to face so early in the economic recovery.
"This year I think there are three priorities - to stabilize economic growth, which is not too big of a problem, and
to stabilize the prices of goods, where already it looks like there could be some pressure," said Zhao Xijun, deputy
director of the Finance and Securities Institute at Renmin University. Zhao says the third priority is to reduce the
risk from hidden debt, such as off-book wealth management products.
There are already indications China's central bank is shifting its policy focus to inflation from growth. China needs
to control inflation as a priority, the central bank said in its fourth-quarter policy report in February, shifting from
a pledge in its previous report to support the economy above other needs.
POLICY DILEMMA
Pressures on China's meat prices highlight not only the challenge of bringing inflation under control but also in
shifting the economy more towards consumer-led growth, Beijing's stated goal after decades of export-led
expansion.
Food prices typically rise ahead of the Lunar New Year holiday -- which occurred in February this year. But since
the holiday ended, meat prices, especially for beef and lamb, have stayed elevated.
"Accelerating food prices mean less growth in spending on other goods and services in the economy," Carl
Weinberg, the China-watching chief economist at New York consultancy High Frequency Economics, wrote in a
client note.
Retail beef prices in Beijing city markets are higher compared with supermarkets outside Boston. Pork, China's
staple meat, is about 50 cents/kg below the U.S. price, a Reuters comparison of standard retail prices show.
That's a direct hit on the spending power of Chinese, whose average income is about a tenth that of Americans.
Loss of farmland and farm labor to urbanization - China's cities are swelling as they absorb hundreds of millions
of people - and grazing restrictions due to land degradation add to food production costs.
"The more the economy develops, the harder it is to raise calves," said Wang Jimin, who tracks China's cattle
trends at the Chinese Academy of Agricultural Science's Rural Economic Development Institute.
"In the short term, I don't see meat prices falling unless there are a lot of imports."
After an international outbreak of mad cow disease a decade ago, China will only allow beef imports from Australia,
New Zealand and Uruguay, so options to tame prices with imports appear limited.
INFLATION EXPECTATIONS
China's beef production has decreased every year since 2008, although it could rise by less than 1 percent this
year, U.S. Department of Agriculture estimates suggest.
"Cattle take at least a year to raise, not like chickens which need a few months at most. Poultry producers can
respond to the market much faster," Yang Shaohui, a poultry vendor in Beijing, said. His chicken was selling for
about a third of the price of the beef at a nearby stall.
High feed costs will also help elevate pork prices for the near future. Rising pork prices are expected to drive
broader inflation gains by the third quarter.
"It's a question of fundamentals, not monthly CPI fluctuations," said Shi Tao, livestock analyst at eFeedlink in
Shanghai. He expects a reduction in pork supplies this year because some pig breeders dropped out of the
business after losing money last summer.
Rising food prices represent a sensitive area for China's Communist Party leadership given that social tension has
often accompanied past price hikes.
They can fuel inflation expectations that lead to a broader rise in inflation and the risk that the central bank will
tweak monetary policy to keep a lid on the price pressures.
But policymakers should resist the temptation for pre-emptive action, said Ting Lu, chief China economist at Bank
of America/Merrill Lynch in Hong Kong.
"Though policymakers should be wary of inflation later this year with an economic growth recovery, it's too early
to call for significant monetary tightening at present yet," he wrote in a note to clients.
(Editing by Nick Edwards and Neil Fullick)
China's ragtag shale army a long way from revolution (Reuters)
Sun Mar 10, 2013
By Chen Aizhu
http://www.reuters.com/article/2013/03/10/china-shale-idUSL4N0B13XF20130310
BEIJING, March 11 (Reuters) - China's plans to unlock what could be the world's biggest shale gas reserves risk
running further off track after 16 firms awarded exploration rights in the latest auction lacked one core skill - not
one has drilled a gas well before.
Beijing is hoping shale gas can transform the country in the same way as the U.S. boom, though to date there has
been little commercial production and a target of producing 6.5 billion cubic metres of gas by 2015 in the world's
biggest energy consumer looks out of reach, according to industry experts.
The lack of experience exploiting shale among new firms scrambling to enter the sector will make it an even bigger
challenge to get at the gas, and if they fail to deliver China will struggle to reduce its dependence on expensive
imports of oil, liquefied natural gas and coal.
The auction winners will have to buy in the expertise they lack, offering the prospect of lucrative contracts for
specialist foreign firms such as Schlumberger or Halliburton for the "fracking" (hydraulic fracturing) technology to
get at the gas.
The first shale auction two years ago was dominated by big Chinese state energy firms such as CNOOC Ltd and
PetroChina .
The second auction attracted interest from more than 100 firms, an eclectic group that included a real estate
developer, a grain trader and a tobacco dealer, lured by gas subsidies and aided by easy access to funds.
The profile of the bidders reflected both the fever pitch over shale and its potential and the government's attempt
to replicate the conditions that underpinned the U.S. shale revolution: competition among a myriad of
independent drillers.
"They will have received very little data about the blocks, will have very little idea about what it is going to cost
them to do exploration wells and no idea about development costs," said Tony Regan of Tri-Zen Consultancy in
Singapore, which advises gas companies doing business in China.
"They are driven by the attraction of getting in early into what could be a huge market."
DEEPER, MORE SCATTERED
China's potential is clear. The government puts technically recoverable shale gas reserves at 25 trillion cubic
metres, while the U.S. Energy Information Agency has them at 36.1 tcm, in both cases larger than U.S. reserves
estimated at 24.4 tcm.
But China's shale deposits are mostly found deeper underground than in the U.S. and reserves are more scattered,
making it difficult to adapt the technology that has worked in the United States to China's geology.
Big oil firms including PetroChina and Sinopec Corp working on what are considered some of the best prospects
are making slow progress. They had drilled more than 60 shale wells by May 2012, mostly in the southwest
Sichuan basin, but PetroChina had produced only just over 11 million cubic metres in its most promising area by
November.
U.S. shale production in 2011 rose to 240 billion cubic metres, nearly 30 percent of total U.S. gas output.
The task for the winning companies in the second auctions is made more difficult by the lack of potential in the
acreage that was on offer, said a government oil and gas expert with direct knowledge of the auction. The 20
blocks were in 8 provinces including Sichuan, Quizhou, Henan, Hubei and Jiangxi.
"Based on the understanding of the reserve potential of these blocks, I am not optimistic," the expert said. "Very
few would yield sizeable finds and even if they strike gas, it could hardly be profitable due to the high exploration
cost."
The cost to drill a single shale gas well in China ranges from $5 million to $12 million - compared to the average
cost per well of $2.7-$3.7 million in the United States, according to a report by law firm Norton Rose.
Shortages of water for fracking in gas basins in China where the shale is located also present formidable
challenges. A U.S. shale well typically requires 8-10 million gallons of water. In China, that rises to 10-13 million
gallons because of the geology, analysts say.
GUNG-HO ABOUT PROSPECTS
Among the 16 winning firms the government announced in January, six are state-run and mostly affiliated to big
utility and coal firms - including Huadian Group, Shenhua Coal Group and China Coal Group. Eight are energy
investment firms freshly formed under the auspice of local governments.
Two are little known private firms, including Huaying Shanxi Energy Investment Co Ltd, owned by Shanghai-listed
coal miner Wintime Energy, which has pledged to spend 437 million yuan ($70 million) on a 1,030 sq-km block in
southwestern Guizhou province, according to Xinhua.
Lured by hopes of a gas bonanza, the prospectors pledged in the auction to spend at least $2 billion over the next
three years to shore up production.
"Although many of the auctioned blocks are very complicated in terms of geology ... we also realise that Chinese
gas prices are better than that of the U.S. and the demand potential much greater," said an executive at one of
the winning firms, asking not to be named as he was not authorised to speak to the media.
China has held wholesale, or well-head gas prices for the last three years at about $5.20 per million British
thermal units, but they are still well above U.S. benchmark gas prices at around $3.50 per mmbtu.
Firms rushing into the sector have also been attracted by Beijing's plans to free up prices for unconventional gas
and subsidies.
For state-owned firms, easy access to funds from state-owned lenders also encouraged aggressive bids. A firm in
the second auction bid 10 times as much as PetroChina for one block, according to industry officials.
U.S. FIRMS
Utility Huadian has already teamed up with U.S. oilfield service operator Schlumberger, according to Huadian's
website. The website gave no details on the extent of the joint venture.
Some of the bidders teamed up with service companies to prepare for the auction, industry sources said.
The lure of multi-billion dollar drilling contracts has also prompted other U.S. firms, including Halliburton and
Weatherford , to invest in Chinese counterparts.
Schlumberger bought a 20.1 percent stake in Hong Kong-listed Anton Oilfield Services Group for about $80 million
last year, while Halliburton formed a strategic alliance with China's SPT Energy Group Inc to provide drilling
operations.
But concerns over intellectual property protection for technology means U.S. firms could limit initial deals to
orders of fracturing fluids and support equipment, and that the winning firms may have to rely on small, local
service companies for drilling, industry experts said.
With some new entrants appearing to be more interested in short-term speculation rather than research and
development, China's shale gas revolution could face an uphill slog.
"If they all fail, it could slow down the pace of developing shale gas in China, and the government will need to
depend on PetroChina and Sinopec to deliver, as they hold the best blocks," said Huang Xinhua of IHS energy
consultancy.
Taiwan regulators, feet to the fire, talk tough on China-linked media deals
(Reuters)
By Clare Jim and Yimou Lee
TAIPEI/HONG KONG | Sun Mar 10, 2013
http://www.reuters.com/article/2013/03/10/us-taiwan-media-idUSBRE9290GI20130310
(Reuters) - Taiwan regulators, under pressure from a public worried that Beijing may meddle in their media, have
begun talking tough on TV and newspaper deals by Taiwanese businessmen with strong ties to the mainland.
The island's media watchdog has proposed new anti-monopoly rules that could scuttle the $601 million sale of
Next Media Ltd's (0282.HK) Taiwan operations to a Taiwanese group including Want Want Holdings (0151.HK)
owner Tsai Eng-meng, who runs a multibillion dollar snacks-to-property empire in China.
Academics and media professionals, as well as the political opposition, fear Tsai and others who make their
fortunes on the mainland will push a pro-Beijing bias on Taiwan's free-wheeling media. Tsai, who already owns a
top-four Taiwan daily, has denied any pro-China agenda but has attracted controversy as a vocal proponent of
Taiwan unification with the mainland.
In January, the island's independent media regulator opposed an anti-monopoly amendment drafted by the
opposition that would have blocked the New Media sale, saying it was too strict. Parliament rejected the measure
and called on the regulator to draft a new bill.
That sparked a public backlash, and now the National Communication Commission seems to be changing its tune,
showing more sensitivity about China's perceived influence in the media.
"Whether or not a group is leaning too much towards China would affect the extent of the health of the market,"
an NCC official, who declined to be named due to the sensitive nature of the issue, told Reuters. "We don't want
to see the market overly dominated by a certain group."
Taiwan's Free Trade Commission, which will also have to sign off on the print portion of the Next Media deal, said
it was well aware of public concerns and would make the review process as transparent as possible.
Perceptions of mainland influence in the media have stirred political controversy on an island that mistrusts China
yet depends heavily on it for trade and investment opportunities.
China claims sovereignty over Taiwan - although many on the democratic and self-ruling island of 23 million want
assurances on future independence - making the media battle for Taiwanese hearts and minds especially vital to
Beijing. Chinese entities are prohibited from investing directly in Taiwanese media.
Around 100,000 people took to the streets of Taipei in January to protest against President Ma Ying-jeou's
China-friendly government, in large part disgruntled with the state of the economy, but many carried signs and
chanted slogans decrying the proposed Next Media deal.
In an interview with the Washington Post in January of last year, Tsai denied that he was trying to please Beijing
to further his China business interests, but said that closer integration with China would be beneficial to all.
"Whether you like it or not, unification is going to happen sooner or later," he was quoted as saying.
BEIJING'S INTERESTS
The sale would add Next Media's print business - including the top-circulation Apple Daily - to Tsai's two Taiwan
TV news stations and three newspapers.
Five years ago, Tsai paid nearly $700 million for the China Times Group, which includes the China Times, another
of Taiwan's four big national dailies, as well as TV channels and other publications. Two years later, he agreed to
pay $2.4 billion for cable TV operator China Network Systems, which would give him an additional 28 percent
share of Taiwan's cable subscribers.
Taiwan's media sector, which burgeoned after martial law was lifted a quarter century ago and boasts seven
major all-news TV channels, has seen several big M&A deals in recent years involving private equity as well as Tsai
and other tycoons with media ambitions.
But the regulators showed their willingness to stand firm against Tsai last month when the NCC officially blocked
the cable deal, ruling that he failed to meet onerous requirements - imposed when the deal got conditional
approval last July - that would sharply reduce his involvement in news broadcasting.
The NCC official told Reuters that concerns over Chinese influence in the media were a factor in the decision.
Critics worried about Tsai's rising media influence and his China ties had protested against last year's approval,
fearing regulators would give the deal a pass despite the conditions.
The most recent anti-monopoly proposal, announced late last month and considered likely to pass given the
regulators' blessing, could also thwart Tsai's media ambitions as it prohibits a print media tie-up with any TV news
business commanding an audience share of more than 15 percent.
Several academics and media professionals said the impact would depend, however, on how audience share is
calculated.
Association of Taiwan Journalists President Chen Hsiao-yi, who has criticized monopolization in the media and
found the regulators' proposal lacking, said the total audience share for all news channels in Taiwan would be less
than 5 percent.
"It is in fact a law that protects media monopoly," Chen said in a statement after the proposal was announced.
Tsai declined to speak to Reuters when contacted after the regulators' announcements.
Other mainland-connected participants in the bid for Next Media's assets include Chinatrust Financial Holdings Co
(2891.TW), a bank with plans to branch out in the mainland, and Formosa Plastics Corp (1301.TW), which owns
petrochemical factories across China.
Chinatrust did not return phone calls seeking comment.
Formosa Plastics Group spokesman Frank Fu played down the possibility that the company might be susceptible
to influence from Beijing, saying it has no financial backing from China.
Fuelling the protests and the pressure on regulators are charges that Tsai's existing newspapers have unduly
favored Beijing's interests.
Chang Chin Hwa, a media professor at National Taiwan University, said her research showed that China Times'
coverage of the June 4, 1989, Tiananmen Square killings has greatly diminished since 2009, after Tsai took over
the publication.
"They stopped reporting on overseas protests and memorials to the June 4th incident, and they used to give
widespread coverage on that," Chang said.
China Times Editor-in-Chief George Wang declined to comment on claims that the newspaper's editorial policy
favors China.
Tsai has rejected accusations of a pro-China bias, writing in an open letter in the China Times last November that
rivals had distorted his intentions in running that paper.
(Additional reporting by Faith Hung in Taipei, James Pomfret in Hong Kong; Editing by Edmund Klamann)
Skype's Been Hijacked in China, and Microsoft Is O.K. With It (Bloomberg)
By Vernon Silver on March 08, 2013
http://www.businessweek.com/articles/2013-03-08/skypes-been-hijacked-in-china-and-microsoft-is-o-dot-k-d
ot-with-it
Jeffrey Knockel is an unlikely candidate to expose the inner workings of Skype’s role in China’s online surveillance
apparatus. The 27-year-old computer-science graduate student at the University of New Mexico, Albuquerque
doesn’t speak Chinese, let alone follow Chinese politics. “I don’t really keep up with news in China that much,” he
says. But he loves solving puzzles. So when a professor pulled Knockel aside after class two years ago and
suggested a long-shot project—to figure out how the Chinese version of Microsoft’s (MSFT) Skype secretly
monitors users—he hunkered down in his bedroom with his Dell (DELL) laptop and did it.
Since then, Knockel, a bearded, yoga-practicing son of a retired U.S. Air Force officer, has repeatedly beaten the
ever-changing encryption that cloaks Skype’s Chinese service. This has allowed him to compile for the first time
the thousands of terms—such as “Amnesty International” and “Tiananmen”—that prompt Skype in China to
intercept typed messages and send copies to its computer servers in the country. Some messages are blocked
altogether. The lists—which are the subject of a presentation Knockel will make on Friday, March 8, at Boston
University, as well as a paper he’s writing with researchers from the University of Toronto’s Citizen Lab—shed light
on the monitoring of Internet communications in China. Skype’s videophone-and-texting service there, with
nearly 96 million users, is known as TOM-Skype, a joint venture formed in 2005 with majority owner Tom Online,
a Chinese wireless Internet company.
The words that are subject to being monitored, which Knockel updates almost daily on his department’s website,
range from references to pornography and drugs to politically sensitive terms, including “Human Rights Watch,”
“Reporters Without Borders,” “BBC News,” and the locations of planned protests. (The system he traced does not
involve voice calls.) Knockel says his findings expose a conflict between Microsoft’s advocacy of privacy rights and
its role in surveillance. Microsoft, which bought Skype in 2011, is a founding member of the Global Network
Initiative, a group that promotes corporate responsibility in online freedom of expression. “I would hope for
more,” Knockel says of Microsoft. “I would like to get a statement out of them on their social policy regarding
whether they approve of what TOM-Skype is doing on surveillance.”
On Jan. 24, an international group of activists and rights groups published an open letter to Skype, calling on it to
disclose its security and privacy practices. Microsoft, when asked for comment on Knockel’s findings and activists’
concerns, issued a statement it attributed to an unnamed spokesperson for its Skype unit. “Skype’s mission is to
break down barriers to communications and enable conversations worldwide,” the statement said. “Skype is
committed to continued improvement of end user transparency wherever our software is used.” Microsoft’s
statement also said that “in China, the Skype software is made available through a joint venture with TOM Online.
As majority partner in the joint venture, TOM has established procedures to meet its obligations under local laws.”
Hong Kong-based Tom Group (2383), the parent of Tom Online, didn’t respond to e-mailed requests for comment
for this story. In an October 2008 statement addressing TOM-Skype censorship, it said: “As a Chinese company,
we adhere to rules and regulations in China where we operate our businesses.” China’s Ministry of Foreign Affairs
didn’t immediately respond to faxed questions seeking comment.
When Internet users in China try to access Skype.com, they’re diverted to the TOM-Skype site. While the Chinese
version bears the blue Skype logo—and provides services for online phone calls and text chats—it’s a modified
version of the program found elsewhere in the world. The surveillance feature in TOM-Skype conducts the
monitoring directly on a user’s computer, scanning messages for specific words and phrases, Knockel says. When
the program finds a match, it sends a copy of the offending missive to a TOM-Skype computer server, along with
the account’s username, time and date of transmission, and whether the message was sent or received by the
user, his research shows. Whether that information is then shared with the Chinese government wasn’t explored
by Knockel—and couldn’t be learned from TOM-Skype.
Knockel’s project began in April 2011, when one of his advisers at the University of New Mexico, computer science
professor Jedidiah Crandall, referred him to a 2008 paper by Nart Villeneuve, a Canadian security researcher.
Villeneuve had identified Chinese servers that stored TOM-Skype’s flagged messages, yet he couldn’t tell for
certain which terms had triggered the surveillance. “He didn’t know what the keyword list was,” says Masashi
Crete-Nishihata, research manager at Citizen Lab in Toronto and an author of the upcoming paper on Knockel’s
findings. “What was interesting about what Jeff did was grab the keyword list.” To get the words, Knockel
downloaded TOM-Skype onto his computer and watched how the monitoring worked. Every time he went online,
servers in China would silently send his machine an updated blacklist that would serve as the surveillance filter on
his laptop.
Yet there was a hitch: The lists were in code. Each term appeared as a random-looking series of numbers and
letters. To crack the code, Knockel focused on one word Villeneuve had identified as being routinely blocked: the
common obscenity known as the f-word. Knockel’s plan was to create a single-word Rosetta stone by figuring out
which string of code corresponded to “f—.” If he succeeded, he could eventually decipher other codes and identify
the associated words that set off the surveillance.
First, he needed to take control of the list on his own computer, instead of letting the Chinese servers send the list
to him.
Once he accomplished this, Knockel analyzed the coding with a technique known as a binary search. He chopped
the list in half, and then sent the f-word in a TOM-Skype instant message. If it got blocked, he knew the banned
term was in a slice of the list under examination. He’d then chop it again. “We would delete half the list. A half. A
half,” he says. “By repeatedly halving the list like this, we were able to eventually find the exact line that contained
the word.” From there, he played with it. Why not change the “f” and see what “duck” looked like? The whole
process took about a week, he says. On later versions of the software, he also poked around and found encryption
keys, or passwords that the program itself uses to understand the garble. “I reverse-engineered the software,” he
says. “From there it just exploded.”
Crandall, his adviser, gave him an A+ for the class. “These things were major feats,” he says of Knockel’s work.
“He comes across as shy at first, but once you get to know him, he’s very much an iconoclast who likes to get into
trouble and speak truth to power.”
The terms Knockel discovered yield a rare view of the faceless actors behind Chinese surveillance. “Some
keywords are highly targeted—specific locations, going down to exact address details of where a protest is going
to happen,” Citizen Lab’s Crete-Nishihata says.
These included lines from demonstration organizers ’ instructions during 2011 ′ s Jasmine Revolution
pro-democracy gatherings, such as “McDonald’s in front of Chunxi Road in Chengdu,” Knockel found. The data
posted on Knockel’s university department website show that the lists have changed over time to keep up with
events. In all, more than 2,000 terms have come and gone from the lists since April 2011, says Crete-Nishihata,
who helped analyze the data.
Recent additions include phrases with the word “Ferrari,” a reference to the March 2012 car-crash death of a
Communist Party leader’s son, and “723,” a reference to the July 23, 2011, date of a train crash that killed 40
people. Knockel says one of the most surprising findings is that the latest enhancement to TOM-Skype sends
information about both sender and recipient to the Chinese computer servers. That means that even users of the
standard Skype program outside China are subject to monitoring if they communicate with users of the Chinese
version, he says. “If you are talking to someone using TOM-Skype, you yourself are being surveilled,” he says.
Analysis: U.S. concern on China currency fades as yuan grinds higher (Reuters)
Doug Palmer
March 10, 2013
http://www.chicagotribune.com/business/sns-rt-us-usa-china-currencybre92909s-20130310,0,3362964,full.st
ory
WASHINGTON (Reuters) - After years of grabbing the spotlight in U.S.-China economic relations, U.S. concerns
over the value of Beijing's currency appear to be fading, giving ground to newer issues like cyber-security and
trade secret theft.
Some lawmakers continue to argue a weak Chinese yuan is robbing jobs from the United States. But action to
force a change is unlikely and the issue will probably remain on the back burner as long as the U.S. economy
continues to improve.
An increase in the value of the yuan, a big drop in China's global trade surplus and a rise in labor costs that has
made Chinese products less competitive have conspired with a pickup in U.S. job growth to take the wind out of
Washington's sails.
On top of that, the United States has faced fury from other countries for an aggressive easing of monetary policy
that critics contend seeks to drive down the dollar, a charge that puts Washington in a tough spot to criticize
China.
"China's currency regime has ceased to be a flash-point in U.S.-China economic relations," said Eswar Prasad,
senior professor of trade policy at Cornell University and a former International Monetary Fund official.
Prasad says the U.S. administration has shifted its attention to issues such as increased market access for U.S.
manufacturing firms and financial institutions that want to do business in China, and better protection of
intellectual property rights.
U.S. President Barack Obama, attacked during the presidential campaign by challenger Mitt Romney for failing to
label China a currency manipulator, did not even address the issue in his recent State of the Union speech.
But he came out swinging on cyber-security concerns in remarks seen directed at China.
"We know hackers steal people's identities and infiltrate private e-mail. We know foreign countries and companies
swipe our corporate secrets ... We cannot look back years from now and wonder why we did nothing in the face
of real threats to our security and our economy," Obama said.
CONGRESSIONAL ROADBLOCK
In recent years, both the U.S. House of Representatives and Senate have passed bills to give Obama new tools to
push China into letting the yuan rise faster in value, but neither made it all way to his desk to sign into law.
The latest legislative effort was stopped dead in its tracks by House Speaker John Boehner, an Ohio Republican,
who said he feared it would start a trade war.
Boehner's opposition and the yuan's strengthening has drained energy in Congress to deal with the issue, said one
congressional aide who has worked on the issue for years.
U.S. preoccupation with its own fiscal problems also may have helped push China off the U.S. political agenda,
said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics.
"But I hope the most important reason is that China has allowed their currency to appreciate a significant amount,
and more importantly their (trade) surplus, as measured by the current account, has come down quite
dramatically," Lardy said.
Since mid-2010, China's exchange rate, adjusted for inflation rates in the United States and China, has risen 16
percent against the dollar, according to the U.S. Treasury.
At the same time, China's current account surplus, the broadest measure of its trade with the rest of the world,
has fallen from a peak of 10.1 percent in 2007 to a preliminary reading of 2.6 percent in 2012.
That makes it hard for Washington to continue to argue the yuan is significantly undervalued, even if the U.S.
trade deficit with China grew to a record $315 billion last year.
Phillip Swagel, a former Treasury official now at the American Enterprise Institute, said the U.S. Federal Reserve's
extraordinary easing of monetary policy is yet another factor cooling Washington's appetite for criticizing Beijing.
"This makes it harder for American officials to criticize other countries," Swagel said.
During last year's presidential contest, Romney blasted Obama for repeatedly deciding not to label China a
currency manipulator in a semi-annual Treasury Department report, and promised if elected he would do that on
"day one."
But in one measure of the low temperature in Congress now on China currency, new U.S. Treasury Secretary Jack
Lew faced only a couple mild questions on the issue during his Senate Finance Committee confirmation hearing
last month.
Lew said he believed the yuan was "still undervalued."
But he sidestepped a question from Senator Sherrod Brown, an Ohio Democrat, on whether the United States
should slap anti-subsidy duties on goods from countries with undervalued currencies as a Senate bill passed in
2011 would have done.
Later, in a written response to a question from Senator Orrin Hatch, the Finance Committee's top Republican, Lew
said "addressing China's exchange rate would be a top priority" and promised to work with Congress on the issue,
but he carefully avoided endorsing the 2011 Senate bill.
CAREFUL APPROACH
That carefully calibrated approach is in keeping with the U.S. tack through the first four years of Obama's
administration; it never threatened to veto China currency legislation but also offered little or no public support.
Instead, it preferred to press China diplomatically during presidential summits and other high-level meetings.
After four years, it can point to progress.
The IMF, in its first published estimate in July 2012, said China's yuan was undervalued by 5 percent to 10 percent,
much less than 25 percent to 40 percent figures touted by many lawmakers for years.
Critics say that was a politically derived estimate since China is a powerful voice on the IMF board. But since then,
the yuan has risen further against the dollar and senior Chinese officials last week promised further reforms to
allow more exchange rate flexibility.
Altogether, the yuan has appreciated 31.6 percent on a trade-weighted, priced-adjusted basis against major
trading partners since July 2005, when it embarked on currency reforms, according to U.S. Treasury Department
calculations.
Also, while China still holds trillions of dollars in U.S. Treasury bonds, bought with proceeds from export sales as
part of Beijing's effort to manage its currency, it has dramatically scaled back its purchases.
"They are no longer intervening very much in the foreign exchange market," Lardy said. "The criticism in the past
was the intervention prevented the currency from appreciating."
"Now the intervention is at such a modest level, you can make the argument the exchange rate is much closer to
an equilibrium rate than it was a few years ago."
(Reporting by Doug Palmer; Editing by Tim Ahmann and Tim Dobbyn)
Print
China's economic model has its roots in the West (South China Morning Post)
Alex Lo
alex.lo@scmp.com
http://www.scmp.com/comment/insight-opinion/article/1187898/chinas-economic-model-has-its-roots-west
Is the China model today's great ideological threat to the West? Yes, but only because many Chinese know
nothing about Western economic history and many Westerners suffer from self-induced amnesia about how they
got rich.
Much of today's China-bashing, especially about its economic policies and intellectual property theft, focuses on
exactly the kind of practices that the US pursued in the 19th century in its trajectory to becoming a pre-eminent
world power.
A nifty essay, by Michael Pettis, entitled A brief history of the Chinese growth model (www.econintersect.com)
should help debunk much nonsense about the uniqueness of China's development model. The Peking University
finance professor traces its key features through Brazil's economic miracle, the Asian Tiger economies and Japan
after the second world war and during and after the 19th century Meiji reforms, back to Alexander Hamilton when
he became the first US treasury secretary.
He practically invented all the "market-distorting" practices: prohibitive import tariffs in strategic sectors, infant
industry protection (Hamilton might have coined the term), industry subsidies, government-mandated internal
improvements and national finance, and yes, intellectual property theft.
On industrial theft, Pettis wrote: "This the US did, and in fact I believe every country that has managed the
transition from underdeveloped to developed country status has done it." (In The Dawn of Innovation: the First
American Industrial Revolution, US economic writer Charles Morris charts how the US high-speed textile and steel
industries took off; it wasn't creativity but massive intellectual theft of closely guarded production techniques
from the Brits - acts of espionage which would put to shame any Chinese hacker today.)
Pettis might even go back further to Henry VII, Elizabeth I and Robert Walpole, sometimes called the first British
prime minister. You can read that whole history in Daniel Defoe's A Plan of the English Commerce; so forget
Robinson Crusoe, the arch-model of Homo economicus.
The China model? It's the hidden US model; or for those who like to wave the British colonial flag, the Tudor
model.
Online
How Social Media
(allthingsd.com)
Usage
Among
China’s
Digital
Natives
Is
Evolving
MARCH 8, 2013
http://allthingsd.com/20130308/the-power-of-connectedness-how-social-media-usage-among-chinas-digital-n
atives-is-evolving/
China today has the world’s most active social media population. According to an April 2012 report released by
McKinsey, 91 percent of those connected to the Internet have visited a social media site during the last six months,
compared with 30 percent in Japan, 67 percent in the United States and 70 percent in South Korea. In a country
where the majority of consumers are skeptical of formal institutions and traditional media outlets, social media
has emerged as an effective and powerful communication channel for Chinese consumers across all segments to
engage, voice their opinions (and frustrations), as well as seek new entertainment and news content.
For nearly 14 years, since the simultaneous births of online forums and Tencent — China’s largest Internet
company and owner of the country’s largest social networking platforms — Chinese netizens both within and
outside of China have been experimenting with social media. Over the past few years, the surge in popular
channels, such as Weibo, Renren, Weixin and others, have also revealed a transformation in people’s online
behaviors as their ages, social statuses and offline needs change.
Online Social Lives Start Early
Many Chinese first encounter social media during their teenage years and sign up for a QQ and a Qzone account.
Both created by Tencent, QQ is the top instant messaging platform in terms of the most active user accounts (784
million as of September 2012), while Qzone is a social networking site where users can write blogs, share photos
and listen to music. Based on a May 2011 report released by Credit Suisse Bank, Qzone has the highest
penetration rate across all user segments compared to its competitors. The most active users of QQ and Qzone
are those below the age of 18. Young, open and enthusiastic, users during this age are usually outgoing and social,
eagerly expanding their networks with classmates and people who share common interests. Students leading
jam-packed schedules, trying to juggle their time between studying and school-related activities, spend a lot of
time online, with the majority logging on through their mobile phones when not on a computer.
As some of the users enter universities, their online behaviors start to change. Influenced by their peers and
aggressive on-campus marketing activities, college students start to view Qzone as childish and immature. Many
migrate to Renren, the social networking site touted as the Facebook of China. In 2011, Renren reported 170
million registered users, of which about 95 million were active, with the majority being college students and
recent graduates. College students love the features of Renren, as it serves as an ideal resource for accessing
news about their respective universities, including curriculum updates, supplementary materials and class
discussion boards. In many cases, the students will keep their Qzone and QQ accounts — usually, they will log in
to QQ to stay in touch with their old friends, parents and classmates, but neglect their Qzone pages and use
Renren instead. Based on Frog’s design research, college students filter their messages and feeds shown on
Qzone and QQ (where their parents are online), while being more transparent and honest on Renren.
Sina Weibo, one of China’s most active microblogging sites, has seen a significant increase in popularity, with
many Chinese youths opening new accounts. Rich in content and celebrity gossip, students browse the news on
Sina Weibo and form networks outside of their immediate social circles. It is during these teen and young-adult
years that students start gaining exposure and forming opinions about brands and public figures that are active
on Sina Weibo, from local brands such as VANCL and Tsingtao to foreign players like Starbucks, LVMH and Adidas.
Same, Yet Different: Social Networking Among Young Professionals and the Working Class
When students graduate from college and enter the workforce, their social statuses, rising incomes and increasing
maturity will start to shape their online behaviors more dramatically. As they become new professionals, these
individuals tend to have relatively established social networks, comprising university friends, family, colleagues
and clients. Young professionals also have a stronger sense of self-identity than students, and are careful of how
that identity gets presented online. During this life stage, according to McKinsey, Sina Weibo emerges as the
predominant social media outlet among consumers in higher income brackets (earning more than 8,000RMB
monthly) who live in Tier 1 cities. These users seek more relevant news and topics concerning their interests,
while curating the outbound content that is shared with the public.
As users’ incomes, educational levels and management positions rise, Sina Weibo increases in its stickiness and
becomes a powerful outlet to help users connect, influence and engage with the community. Huawei’s CEO of
Consumer Business, Yu Chengdong, uses Sina Weibo to communicate Huawei’s strategies and thinking directly to
the public about its consumer electronics products. Dr. Lee Kai Fu, former head of Microsoft and Google China and
founder of Innovation Works, leverages Sina Weibo to actively engage with China’s entrepreneur community.
Foreign public figures, such as Gary Locke, U.S. Ambassador to China, use microblogging via Weibo to win the
hearts and minds of Chinese netizens.
China’s Masses and the Next Generation of Social Media Users
While the majority of the press and brands focus on China’s educated class and users in the Tier 1 cities (Beijing,
Shanghai, Guangzhou, Shenzhen), it’s also worthwhile to examine other user segments as they exert more
influence on the connected world.
Given the significant inroads from local manufacturers and software companies such as Baidu, Oppo, Huawei,
Qihoo and ZTE, more and more Chinese consumers outside the Tier 1 cities, including the rural population and
blue collar workers, are getting their hands on low-entry Android smartphones (priced below 1,500 Yuan).
According to a report released in July 2012 by the China Internet Network Information Center (CINIC), over 50
percent of the year’s new Internet users were from rural areas. For these emerging segments, the smartphones
serve as their primary communication device. When Frog’s research teams observed the workers’ lunch breaks,
we found people quietly sitting side by side, watching videos, chatting on QQ and listening to music instead of
conversing with their colleagues. These lunch breaks served as rare windows of opportunity for the rural
population and blue collar workers to connect with the outside world. With limited free time, and being somewhat
ashamed of their working-class lifestyles, their usage of social platforms such as QQ and Qzone is mainly for
one-on-one communication and less for sharing insights and information.
At the same time, as these working-class users become increasingly tech-savvy, many have already turned to
microblogging sites to vent their grievances and disputes to the public. In 2011, the villagers and farmers in
Wukan protested against the local government for selling land without fair compensation and for the suspicious
death of Xue Jinbo, one of the village representatives. Several people from Wukan broadcasted the incidents on
Sina Weibo, and when the word “Wukan” was censored, the villagers used the letters “WK” to continue to report
the incident and leak the news to foreign media. Since the Wukan incident, other villages have followed suit, such
as the recent uprising in Zhejiang province’s Cangnan country. During the end of July 2012, when Beijing was
experiencing a major flood disaster, the residents of Fangshan, Beijing’s worst-affected district, took matters into
their own hands and published their own deathtoll numbers using public and private chat rooms.
Embracing Openness Online
Chinese consumers across all segments are becoming increasingly connected. In May 2012, the Chinese Ministry
of Industry and Information Technology announced that the number of mobile phone users in China exceeded 1
billion. Additionally, the number of Internet users in the country recently reached 538 million, with mobile
Internet users now up to 388 million. As more users access the Internet, many are also accessing social media
services and applications. McKinsey found that 95 percent of Chinese living in Tier 1, Tier 2 and Tier 3 cities are
registered on a social media site, and that Chinese consumers spend 46 minutes a day visiting social media sites,
compared with only seven minutes in Japan and 37 minutes in the United States.
While the social landscape in China remains crowded with many different players, these rich communication
channels are allowing Chinese consumers to connect in multiple ways. While censorship does kick in, if one tool
suddenly becomes unavailable, it has been shown that the Chinese will simply find another means to interact with
one another. As more and more Chinese go online, digital connectivity — which started off in the ’90s as an
inevitable consequence and supporting tool for the “socialist market economy” — is now being shaped by a wide
variety of consumers. As they find new ways to exchange dialogue, their voices will only become louder and
clearer.
Doomsday Warning Can’t Damp Bubbly Enthusiasm for China Property (THE WSJ
CHINA REAL TIME REPORT BLOG)
March 8, 2013
http://blogs.wsj.com/chinarealtime/2013/03/08/doomsday-warning-cant-damp-bubbly-enthusiasm-for-chinaproperty/?mod=WSJBlog
Beijing’s latest property curbs and gloomy comments about China’s housing market from the founder of the
country’s largest property developer failed to nudge rock-solid investor interest in the much-watched sector.
In a doom-filled interview with U.S.’s CBS News “60 Minutes” that aired over the weekend China Vanke chairman
Wang Shi conjured the specter of mass demonstrations—even revolution—in warning that the country could face
“disaster” if its property bubble were to burst.
Is China’s property market about to implode? Institutional investors who crammed for a seat in a Hong Kong
roadshow for Vanke’s first U.S. dollar-denominated bond earlier this week certainly don’t think so, and are still
willing to bet on the Chinese people’s obsession with home ownership and the government’s ability to prevent a
damaging property-market collapse.
China Vanke, the nation’s largest property developer by market value, said late Thursday that the five-year bond
was well received by international investors, helping the company raise an impressive $800 million.
Mr. Wang, celebrated by many as a visionary in the Chinese property sector, didn’t mince words in the CBS
interview. If the property bubble in China were to burst, he said, the country could see its own version of the
revolutions that have remade the Middle East’s political landscape.
“If that bubble breaks, then maybe, who knows what will happen? Maybe… (it’ll be) next Arabic Spring,” he said.
He also noted that Vanke also “often” sees demonstrations in its showrooms from homeowners unhappy over
real-estate prices.
China’s central government has waged a three-year battle to keep property prices from spiraling higher, fearing
that public anger over the lack of affordable housing would lead to social unrest. But Beijing is also loath to see
prices fall, as many Chinese people who already own multiple homes would be also likely to protest over falling
values.
While home prices were kept in line for much of last year, prices have recently resumed their upward march,
fanning investor interest in the real-estate sector. Sales are picking up, and developers have seized the
opportunity to raise funds.
According to figures from data provider Dealogic, 19 Chinese property companies, not including Vanke, have
raised a combined $7.2 billion from U.S.-dollar-denominated bonds so far this year, compared with $1.2 billion
from four Chinese property companies in the same period last year.
The warm reception for Vanke’s bond doesn’t mean that investors are unreservedly bullish in the overall market.
They are becoming more selective, picking Chinese property developers that have better ratings rather than
subscribing to the notion that a rising tide lifts all boats, analysts said.
The exuberance, indicating that tightening measures haven’t brought prices fully under control, triggered further
moves by China’s State Council, or cabinet, March 1. Shares of Chinese property developers listed on China’s and
Hong Kong’s stock exchanges plunged Monday, but the selloff moderated for the rest of the week.
The State Council said it would strictly enforce a capital gains tax of 20% on profits from home resales. It also said
it would reinforce controls on who is allowed to buy a home and push banks to raise down-payment and mortgage
rates for second-home buyers in some cities.
To be sure, Mr. Wang isn’t forecasting an impending property market apocalypse. Expressions of faith in the
ability of the country’s leadership to calibrate the property market are a regular refrain among property bulls.
“I believe top leaders have enough smarts to deal with that (threat of social unrest from a property-market
fallout),” Mr. Wang told CBS—only to add, “But that’s uncertain.”
– Esther Fung
‘Iron Man 3′ Blasts Away at China Co-Production Myth (THE WSJ CHINA REAL
TIME REPORT BLOG)
March 8, 2013
http://blogs.wsj.com/chinarealtime/2013/03/08/iron-man-3-blasts-away-at-china-co-production-myth/?mod=
WSJBlog
Before it even hits theaters, where it’s expected to do well, “Iron Man 3” has already become one of the most
lauded China-U.S. co-productions in history.
What’s the secret recipe? Part of it, according to one industry expert, is avoiding official co-production status.
In a commentary posted to his website on Thursday, China film consultant Robert Cain said the three companies
behind “Iron Man 3″ — Walt Disney Co.’s China division, Marvel Studios and Beijing-based DMG Entertainment
— have likely opted out of trying to gain China’s co-production stamp in favor of winning global appeal.
In ignoring the official co-production process, the film is challenging conventional wisdom about how best to tap
China’s lucrative but tightly controlled film market. Over the past several years, foreign film producers have
signed a number of official co-production deals in China under the assumption that such deals were the most
efficient method for bypassing the country’s foreign film quotas, which the cap the number of foreign films the
country can show at its theaters each year to 34 each year, provided 14 of them are filmed in 3D or fit the jumbo
Imax screen format.
While achieving official co-production status would have streamlined entry into China for “Iron Man 3,” it would
have done so at the expense of handing over creative control to the Chinese government, Mr. Cain wrote.
A Disney spokeswoman the studios had not yet filed for co-production status but did not respond to requests for
clarification.
Co-production deals — which require a foreign film company and a Chinese film company to share copyright, risks
and profits in creating a story that involves China in the plot – have resulted in the creation of a few box office
flops.
The 2011 film “Snow Flower and the Secret Fan,” a co-production between IDG China Media of Shanghai and Fox
Searchlight, fell flat in both of the world’s largest box offices, making $1.3 million in the U.S. and $6 million in
China’s box offices, according to box office database Box Office Mojo and the film’s producers.
Other co-productions have found success in China but failed to win over a global audience. Each installment of the
two-part John Woo epic “Red Cliff,” produced by Lion Rock Entertainment and China Film Group, raked in more
than 100 million yuan ($16 million) in its first week of release, according to media-research firm EntGroup. A
condensed version for Western audiences, meanwhile, earned less than $700,000, according to Box Office Mojo.
The creators of Iron Man hope to win everyone over, so they’ve avoided over-playing any China plot for an easy
entry into the market, said Mr. Cain. At the same time, producers have kept things friendly with China by shooting
scenes in the country and featuring Chinese stars Wang Xueqi and Fan Bingbing next to Hollywood stars Robert
Downey Jr. and Gwyneth Paltrow.
The film is already getting big play in China, where officials have allowed studios to promote the film for the past
year. Typically foreign studios only allowed to promote their films in China a few weeks prior to the their release,
Mr. Cain said, noting that “Iron Man 3″ may even be released in China first.
The film was also promoted on China Central Television’s annual Lunar New Year’s Gala, the country’s
most-watched TV event.
What Mr. Cain’s post does not note is that “Iron Man 3” is a 3D production, a type of film that the government has
rolled out the red carpet for in the past year.
The demand for 3D in China has been through the roof. Films such as “Journey to the West: Conquering the
Demons” and “Painted Skin: The Resurrection” have broken records, helping to build up box office sales, which
the Chinese government wants.
The Chinese government has recently pinpointed 3D as a segment of the film industry in which it aims to develop
strong domestic players. Officials are eager for local studios to pair up big budget Hollywood companies to learn
and duplicate successes to propel China’s name and culture overseas.
“Iron Man 3” is set for international release on Imax screens on April 25 and May 3 elsewhere.
– Laurie Burkitt. Follow her on Twitter @lburkitt
HTC Calls ‘Mayday’ As Phone Sales Fall (THE WSJ CHINA REAL TIME REPORT
BLOG)
March 8, 2013
http://blogs.wsj.com/chinarealtime/2013/03/08/htc-calls-mayday-as-phone-sales-fall/?mod=WSJBlog
HTC Corp. is turning to Taiwanese rock band Mayday to help sell its phones in the Greater China region, but some
view the promotional gimmick more as a distress signal for the struggling smartphone maker.
HTC, once the top seller of Android phones in the U.S., has been edged out by Apple Inc. and Samsung Electronics ,
which have poured considerable resources into cementing their dominance of the global smartphone market. To
offset weakening demand for its products in the U.S. and Europe, HTC has been focusing more on China, the
world’s largest smartphone market, and other emerging markets in Asia. But it is also facing rising competition
from Chinese rivals ZTE Corp. and Huawei Technology Co. , said analysts.
HTC declined to disclose how much it is spending on endorsements by Mayday, which is popular in the
Mandarin-speaking region. It is the first time the company has turned to celebrity endorsers Morgan Stanley
estimated HTC will allot 80% of its 10 billion Taiwan dollar (US$337 million) operating expenses in the first quarter
for marketing.
The company’s new flagship product is the HTC One, a 4.7-inch touch-screen smartphone with an all-aluminum
body running on Android. The phone will be available in late March in more than 80 countries through more than
185 carriers, in 32-gigabyte and 64-gigabyte models.
See more on this story at Digits
China’s “Black” Public Relations Industry (pekingduck.org)
MARCH 8, 2013
http://www.pekingduck.org/2013/03/chinas-black-public-relations-industry/
As a former PR practitioner in China, I’ve heard stories of unethical, underhanded and illegal activities carried out
by certain Chinese PR companies many times. A common complaint I heard was the agencies slandering their
client’s competition and artfully spreading the attacks on search engines and blogs and portals. But that said, I
worked with a few Chinese PR agencies and found them to be incredibly hard-working, industrious, talented and
ethical. I never worked (to my knowledge) with agencies in China that dealt in the “black arts” of PR though I
heard their stories and have no doubt they’re true.
And now we have documentation. Thanks to commenter t_co for bringing to my attention this intriguing article on
just how China’s “black” PR industry operates. This summer the government waged a widespread crackdown,
arresting hundreds of practitioners of Internet deletion and shutting down a number of companies that sold clients
on their ability to scrub away material on the Internet that they believed harmed their reputations.
Almost everyone knows about the public relations industry, but fewer people know about what in China is referred
to as Black PR, the underground internet industry that has evolved with the spread of web 2.0 through China.
Black PR firms provide client companies with both post deletion services to help them escape negative news
stories, and some also provide placement for soft ads and hit pieces attacking competitors. The top black PR firms
can offer these services even for stories posted to China’s most popular news portals.
Getting posts deleted is an exercise in sleaze. One of the original and worst perpetrators was a PR company, now
closed down, called Yage Times. Its founder, Gu Dengda, now awaiting trial for bribery and other charges, used
to work at Baidu, where he developed a business on the side helping companies scrub posts from Baidu’s search
engine and portals. Gu figured out how to game the system at Baidu and began to make serious money. As an
accompanying article in Caixin notes,
Gu’s knowledge of Baidu’s website-user rules worked to his advantage. He knew, for example, that the search
engine’s around-the-clock complaint department would work with website technicians to quickly remove any
posts about which they received a Baidu-user complaint. At that time, blog posts, comments and other data could
be scrubbed based entirely on a single complaint.
Moreover, Gu knew how to make direct contact with website administrators and their colleagues. This skill –
coupled with his ability to grease palms and cultivate good relations with website staffers – proved to be the key
to his business success.
Gu started by charging 800 to 1,000 yuan per deleted post while still employed at Baidu. He would start working
his magic after finding an image-conscious customer who wanted something scrubbed from the Internet. He
would then file complaints with Baidu about relevant postings, and watch the Web until they disappeared.
Blocking keywords on Baidu requires high-level connections, but Gu did it, probably by bribing Internet
management officials outside of the company. It is to the government’s credit that they have cracked down hard
on this activity, but it reveals an Internet management system rife with corruption.
Yage is gone, but I suspect there are many other “black” PR companies still in operation. Yage used to boast
openly on its website of its ability to block keywords on Baidu. Now, companies that offer such services will
probably go underground.
If you want to get a negative article scrubbed from the web, or post fake bad news about your competitors, you
still have plenty of options. And while it’s increasingly well-understood that such services are illegal — a Baidu
search for “delete posts” now displays a special warning reminding users these services aren’t legal, for example
— it’s not likely that much will change if black PR companies can make literally millions in profit, and internet
management officials and police are all also onboard the money train.
No way to stop it until the corruption is dug up by its roots. I suggest no one hold their breath.
Tencent
Adjusts
(chinatechnews.com)
E-commerce
Subsidiary
Structure
In
China
March 11, 2013
http://www.chinatechnews.com/2013/03/11/19177-tencent-adjusts-e-commerce-subsidiary-structure-in-china
According to an internal email reportedly sent by Bu Guangqi, chief executive officer of Tencent's e-commerce
subsidiary 51buy.com, the company will implement a structural adjustment, aiming at sales of CNY15 billion to
CNY20 billion in 2013.
With this move, the company will establish a new e-commerce operating unit, a logistics unit, an enterprise
development unit, and a new area management committee. 51buy.com's new e-commerce operating unit will
focus on procurement, sales, and operations as well as the establishment of the company's reputation. This unit
will have four business sectors, including 3C products, mobile communications, home appliances, and daily
commodities.
The newly established logistics unit will be based in Shanghai and focused on building the largest automated
warehouse distribution center in Asia. It will have over ten warehouse distribution bases in cities like Chengdu,
Jinan, Fuzhou, and Changchun.
The enterprise development unit will be responsible for new business development and pre-research work,
integrating the former cloud distribution business unit and branded business unit of the company. At the same
time, this new unit will continue to work with top brands in China and abroad.
The new area management committee will establish a more flexible decision-making system for non-mature
regional markets. The committee will be formed by senior executives of the company, which helps better support
the national strategy of the company. The developing non-mature regions will directly report to the committee.
In addition, 51buy.com will maintain the IT information center, HR and management platform, and financial
management platform.
Bu said over the past three years, 51buy.com's sales increased by nearly 20 times. Starting from 2012, the
competition in the industry entered a new heated phase and the structure of the entire industry will be shaped in
the next two to three years.
Motorola Mobility Axes More Chinese Employees (chinatechnews.com)
March 10, 2013
http://www.chinatechnews.com/2013/03/10/19185-motorola-mobility-axes-more-chinese-employees
Google just announced a new round of layoffs targeting Motorola Mobility and 1,200 employees will lose their jobs,
accounting for about 10% of all employees in the company.
The layoffs will reportedly affect employees in China, U.S. and India, though the amount of redundant employees
for each region are not yet available.
Motorola reportedly sent an email to its employees, announcing this layoff plan. Soon after that, Google made a
public announcement, confirming the news.
After being acquired by Google, Motorola Mobility faced a difficult restructuring process. In August 2012, Motorola
announced plans to cut about 4,000 employees around the world, accounting for 20% of its total staff. Meanwhile,
the company shut down one-third of its 94 offices worldwide. Its executive team also experienced large-scale
changes and nearly half of its vice presidents departed their positions.
In early December 2012, Motorola announced its decision to withdraw from the South Korean market in 2013,
cutting over 500 employees. At the end of that month, Google said it would sell Motorola's set-top box business
Motorola Home to the American cable device maker Arris for USD2.35 billion.
Who To Read On China’s Economy? (chinalawblog.com)
By Dan Harris on March 10th, 2013
http://www.chinalawblog.com/2013/03/who-to-read-on-chinas-economy.html
I did a post yesterday touting a podcast by Jing Ulrich on China’s economy. In that post, I referred to Ms. Ulrich
as belonging “on the very short list of those discussing China’s economy who actually know whereof they speak.”
In response to that, I received the following comment from “Michael RightSite”:
Hi Dan,
Since the list is short, can you name some others who are worth listening to? (Granted that we all have our
biases).
Thanks,
Michael
To which, I responded as followings:
I know I will be leaving people off this list, but generally, it is those who actually have advanced degrees in
economics and/or those who actually study/report on China’s economy who know the most. That should not be
a surprise. And I want to stress that I do not necessarily agree with any of these people, but I do respect their
analysis. Having said all this, here goes: Michael Pettis, Patrick Chovanac, Tom Orlick (who writes for the WSJ),
Elias C. Grivoyannis. I am sure there are a lot more out there working at universities or investment banks, but
these are the ones who write a fair amount and with whom I am familiar. Would love to hear about more though.
I really would, as I know that I am leaving out a number of very good economists who often write about China (in
fact, there is one who I frequently read, but whose name escapes me right now). So it would be great if you,
loyal readers, would in the comments list out the economists that frequently write about China’s economy, in
English, and do so from a position of knowledge, not mere uninformed speculation.
Thanks.
Adidas in China: reaching out (The FT Beyond BRICs Blog)
Mar 8, 2013
by Patti Waldmeir
http://blogs.ft.com/beyond-brics/2013/03/08/adidas-in-china-reaching-out/#axzz2NAqRjkyb
If there is one thing that China’s smaller cities do not lack, it’s sportswear stores. The average fourth-, fifth- and
sixth-tier Chinese city – everyone defines their tiers differently – has a high street with multiple Chinese
sportswear retailers lined up in a row. Do these towns really need more running shoes?
Adidas certainly thinks so and its latest greater China sales – up 15 per cent in 2012 – seem to indicate that it’s
right. The German sportswear brand, currently number two by sales behind Nike, has expanded into 350 more
Chinese cities in the past 18 months, to 900 in total. Of the 800 stores opened last year, 400 were in lower-tier
cities. The goal is to have 1,400 cities buying Adidas by 2015.
How low can they go? Colin Currie, Adidas greater China managing director, says China’s smaller cities still have
plenty to give: “consumers in lower-tier cities have a lot more time to participate in activities that do not cost a
lot, like running,” he says, adding that “there is not so much choice in lower-tier cities in apparel so it’s ok to wear
sportswear for going to work or even a wedding”.
More sophisticated big city Chinese consumers would, like their counterparts in the West, almost certainly eschew
a tracksuit as wedding attire. But in China, sportswear – especially foreign sportswear – is viewed as almost a
luxury good: an aspirational rather than a practical buy, as the admen would say.
And that’s where another sportswear shop on the high street may make perfect sense: buying a pair of shoes from
one of China’s multitude of virtually interchangeable sportswear brands, who have severely fragmented the
market and cannibalised each other’s margins, just does not have the same cachet as buying Nike or Adidas. And
though famous foreign brand logos have begun to lose their overwhelming appeal in big cities, the smaller cities
are still mad keen on them.
Multinationals, take note: all of you are counting on China’s lower-tier cities to deliver the growth that is no longer
possible in the near-saturated big cities. Let’s see how Adidas fares, in cities where many residents are just a few
steps away from farm and field. If Adidas can make it work, there may be hope for the rest of you.
After Chávez, will China still be financing chavismo? (The FT Beyond BRICs Blog)
Mar 8, 2013
by Jamil Anderlini
http://blogs.ft.com/beyond-brics/2013/03/08/after-chavez-will-china-still-fund-chavismo/#axzz2NAqRjkyb
The death of Hugo Chávez this week has deprived Venezuela of a controversial and charismatic leader and left it
with a mountain of debt to China.
With an election scheduled to be held within a month, many are inevitably wondering whether Venezuela’s Beijing
bankers are going to continue to fund El Comandante’s successors.
Reports in the Venezuelan media suggest China has already become much tougher and less willing to extend new
loans since Chávez was reelected last October. Last month, foreign minister Elías Jaua Milano was in China
seeking further loans but went home empty-handed.
But people familiar with the thinking of China Development Bank, the main source of lending to Caracas, say
Beijing is prepared for a new era in that country and intends to continue cooperation, including the practice of
providing loans for oil.
State-owned CDB has agreed to lend Venezuela $42.5bn since 2008, or around half the loans the country received
during that period. Almost all of those loans are backed by sales contracts for crude oil, according to public
announcements and independent reports.
Shipments of oil to China by Venezuela’s state energy giant PDVSA have increased nearly ten times since 2006
and the country now sells around 19 per cent of its oil output to China, which has become Venezuela’s second
biggest trading partner after the US.
From Beijing’s perspective, Venezuela is now its seventh-biggest supplier of oil and rapidly rising up the list.
That is a major incentive for Beijing and CDB to continue to provide the country with a steady supply of cheap
credit no matter who is running the show in Caracas.
With a new leadership under Communist party boss Xi Jinping taking over in China there may be some change of
emphasis and the death of Chávez may give CDB an opening to negotiate for slightly better terms on any future
loans it gives to his successor.
But a glance at the terms of the loans extended by CDB so far show that the Chinese lender has been thinking for
a long time about how it would get its money back when Chávez eventually left the stage.
As well as securing most of the loans with oil contracts, CDB has insisted that most of the loans are spent on
projects that directly benefit the Venezuelan people, particularly housing and public infrastructure projects.
Part of CDB’s stated mandate is to support Chinese businesses to expand overseas and so large chunks of the
loans it gives to Venezuela and other countries are also conditional on Chinese companies getting the contracts to
build that housing and infrastructure.
Sources close to CDB have told the FT that the bank’s thinking in Venezuela was that as long as the money was
spent on projects that obviously benefit the nation then whoever comes after Chávez will not be able to easily
default on the loans.
The very interesting thing about this line of thinking is how similar the intended outcome, if not the underlying
logic, is to the kind of lending done by the World Bank and western lenders.
China has maintained a foreign policy of “non-interference in internal affairs” towards other countries for decades
and often criticizes the west for attaching all sorts of strings to its aid and lending in Africa, Latin America and
elsewhere.
But the conditions attached to loans to Venezuela show just how far China’s non-interference policy has been
eroded by the reality of China’s ever-growing engagement around the world.
Chinese institutions, including CDB, are often accused of opacity, poor governance and corruption in their dealings
at home but they are increasingly in the position of demanding good governance from their debtors.
CDB has even set up various mechanisms to monitor the disbursement and eventual use of their loans in
Venezuela just as the World Bank or a large western donor might have done in the past in China.
EM trade boosts China exports (The FT Beyond BRICs Blog)
Mar 8, 2013
by Stefan Wagstyl
http://blogs.ft.com/beyond-brics/2013/03/08/em-trade-boosts-china-exports/#axzz2NAqRjkyb
The statistical drama in China’s February trade figures is in the 15.2 per cent drop in imports, coming after
January’s 28.8 per cent increase.
But this roller coaster, driven primarily by the impact of the New Year holiday, isn’t the biggest attraction in the
trade figures. The real thrills lie in the remarkable strength of exports – and the importance of emerging market
demand for Chinese manufacturers.
Exports rose 21.8 per cent year on year in February, down from 25 per cent growth in January. Average this out
over the two months to reduce the effects of the holiday and exports come out with an increase of 23.6 per cent
compared to January-February 2012.
This isn’t quite the whole story. As Simon Rabinovitch wrote for the FT, the Lunar New Year celebration fell in the
second week of February this year (as opposed to January last year) so some of the distortions in factory activity
will persist into March. So, we must wait another month to get a clear view of what’s happening to Chinese trade.
The government is concerned about the underlying direction of export growth and warned last wee in its 2013
economic plan that the outlook for exports was “grim”. It forecast only single-digit trade growth for 2013.
That would be roughly in line with last year, when exports rose 7.9 per cent and fell short of the 10 per cent target.
Trade still makes a big contribution to the Chinese economy – last year’s surplus was US$ 233bn, almost 47 per
cent more than that in 2011 and its highest since 2008. Andy Ji of Australia’s CBA forecasts $10bn-$15bn a month
for 2013, with the to the projection “mainly on the upside”.
Absolute numbers can be misleading, as the 2012 surplus was the equivalent of only 3 per cent of GDP, compared
to a peak of 7 per cent in 2007. The long-term trend points unmistakably downwards, as China adjusts its
economy by boosting domestic demand.
(See Chart)
Source: CEIC, RBS
But, as the chart above shows, the adjustment is eased by the strength of exports to emerging markets, which
partly compensate for the weakness of the advanced economies. RBS calculates that exports to EMs grew by 25.1
per cent in January, compared to an increase of just 1.9 per cent in exports to advanced economies. In the whole
of 2012, EM-bound exports rose 13.6 per cent while advanced-world exports managed a mere 1.8 per cent
increase. Tiffany Qiu of RBS expects these trends to remain in place. “This reflects global demand,” she says.
Guest post: China investors should bet on urbanisation (The FT Beyond BRICs
Blog)
Mar 8, 2013
By Kristina Sandklef of East Capital
http://blogs.ft.com/beyond-brics/2013/03/08/guest-post-china-investors-should-bet-on-urbanisation/#axzz2N
AqRjkyb
The annual National People’s Congress (NPC), which is meeting in Beijing this month, is expected to take steps to
deepen the economic reforms required to ensure a sustainable economic development.
While it is still too early to confirm any major changes instigated by the new leaders, we can assume urbanisation
will be an important part of the new economic reforms and a building block of fulfilling the Chinese dream, the new
mantra of the new party chief Xi Jinping.
For investors this opens many windows of opportunity as over 300 million Chinese are expected to move into the
cities from the countryside and become urban citizens over the next 20 years.
When looking at investment opportunities in China, it is important to remember that the Chinese economy is like
an ocean liner that keeps cruising and it takes time to change its direction. This means taking a long-term
perspective.
We cannot expect dramatic changes in policy as the new leaders enter the stage, instead it is likely that they will
continue the policies outlined in the 12th Five Year Plan. China’s GDP will keep growing, but at lower levels of
around 7 per cent annually rather than the double digits figures we have been spoiled with during the last decade.
With urbanisation as an important driving force for growth, there are still many interesting investment
opportunities in China. As in any emerging market, it is crucial to deeply understand the market and be on the
ground to be able to make good investments.
Today, the hukou, or household registration system, prevents rapid urbanisation as it categorizes Chinese people
as either rural or urban citizens with different entitlements to social security programs such as health care,
education, unemployment benefits and pensions.
There has been quite a lot of talk about easing the hukou system as a way to speed up urbanisation. Already,
approximately 200m Chinese live in urban areas with a rural hukou and so are deprived of the basic social security
provided to the urban citizens. One step towards abolishing the hukou will be better social security for everybody.
This would immediately make the health care sector even more interesting as an investment opportunity. With an
ageing population and increasing public health concerns, we can already expect health care to become a crucial
priority, making it a sector filled with potentials. Companies that are interesting in this sector are Shandong
Weigao, which specialises in medical devices like syringes, and Shanghai Fosun, a manufacturer and distributor
of pharmaceutical products.
Real estate is also interesting for investors, despite the reports on deserted ghost towns in different parts of China.
Sure enough, there has been over-investment in property and real estate speculation, and there are ghost towns.
We believe that the government will continue to curb speculation with its restrictions on real estate. But this is
actually a good thing, as it benefits ordinary citizens who wish to buy homes for their own use and to invest in
improvements to kitchens and bathrooms and so on.
Besides, continued demand for housing for rural-migrants-turned-urban-citizens, not least for so-called social
housing, is good for companies involved in construction. In his Work Report, premier Wen Jiabao said that 4.7
million units of social housing targeting poorer urban citizens will be finished this year and the construction of a
further 6.3 million units will be started.
It is important to remember that the main investment opportunities may not be in the big cities, but rather in
smaller townships which are set to become new, big cities. In 2030, 1bn Chinese, or 70 per cent of the population,
are expected to live in cities, according to the World Bank’s projections, and in 2025, there will be 225 cities with
over a million inhabitants.
Many of these new cities will need good city planning to counter environmental pressure and pollution, which is a
huge problem in China today. Clean tech and energy saving sectors, which are high on the agenda in China, are
thus interesting for investors, especially considering that the Chinese are very keen on “leap-frogging”, which
means that jumping directly into the latest technology.
Urbanisation will also mean that the Chinese consumption story will continue. Until now, much of the growth in
China has been driven by fixed asset investment, but for 2013 the National Reform and Development Commission
is lowering the target for growth of fixed asset investments.
We can also see that the service sector is increasing its share in the Chinese economy, as the role of consumption
expands. Single children growing up and will be more accustomed to consumption than their parents.
Telecoms and consumer technology play a big part in their lives, as they do in the lives of other young people.
Examples of interesting companies in this sector are ZTE and Lenovo. Compared with many of their international
peers, Chinese firms have the potential to grow quickly for a sustained period on what most likely will be the
world’s largest telecom industry.
To summarise, despite all the challenges lying ahead of the new Chinese leaders, economic growth will continue,
even if the pace slows a bit. While we still do not know exactly what reforms the new leaders will embark on, we
can expect them to do their best to realise the Chinese dream of Xi Jinping. Urbanisation will be part of that
dream.
Kristina Sandklef is Asia macro economist at East Capital
Chinese travellers leave frugality at passport control (The FT Beyond BRICs Blog)
Mar 8, 2013
By James Kynge, principal of FT China Confidential
http://blogs.ft.com/beyond-brics/2013/03/08/chinese-travellers-leave-frugality-at-passport-control/#axzz2NA
qRjkyb
Frugality may be the new watchword of incoming President Xi Jinping, but while wealthy Chinese consumers may
be cutting conspicuous consumption at home, they are spending ever-larger sums in ever-greater numbers
abroad.
A recent survey by FT China Confidential shows the wealthiest 26 per cent of outbound tourists spent an average
of Rmb32,628 ($5,241) on their most recent overseas trip, with shopping accounting for almost half the total
spend (Rmb15,699).
Furthermore, this cohort of 21m travellers, which we expect to grow significantly in the coming years, plans to
spend an average of Rmb43,770 ($7,032) on their next overseas trip this year, representing a 34 per cent
increase on their most recent trip.
So, if the outbound trips of China’s high-flying consumer cohort materialise as planned, a total of roughly
US$160bn may be spent, according to the survey of 1,227 consumers in ten first- and second-tier Chinese cities
by China Confidential, a research service of the Financial Times.
The unprecedented boom in overseas tourism (the definition of overseas here includes Hong Kong, Taiwan and
the popular gambling destination of Macau) derives from a confluence of factors including rising incomes, the
appreciation of the renminbi, the relaxation of visa policies for Chinese visitors and a growing desire among the
middle-class to seek experiential pleasures to enrich their quality of life.
But aside from the curiosity to see different cultures and famous sights, outbound travellers are lured by the
chance to buy well-known foreign brands – often at significant discounts to prices charged at home for the same
items. Many tourists said they leave passport control in China with a long list of items they have promised to buy
for friends, family and contacts back home.
Price is an important factor – 47 per cent of respondents cited the cheaper cost of goods overseas as the reason
why they made purchases abroad – but it is far from the only reason underpinning the surge in overseas spending
by Chinese tourists.
Instead, our survey reveals that a fundamental lack of trust in domestically produced and sold goods is a key
driver of the trend. 56 per cent of respondents cited the fact that they believed goods purchased overseas to be
genuine, rather than the counterfeit equivalents widely available in mainland China, as a reason for buying goods
while travelling abroad. 50.2 per cent ascribed their overseas purchases to the fact that goods bought outside of
China are safer or higher-quality; while 48.9 per cent said they bought overseas because they trust the origin of
the product. (see chart)
(See Chart)
Source: China Confidential
Cutting back at home, spending overseas
The overseas shopping bonanza stands in contrast to an environment of enforced frugality that is descending
upon China itself. Xi, who is set to be sworn in as China’s President during the current session of the National
People’s Congress (NPC) this month, has singled out lavish lifestyles and corruption as targets for strong criticism.
As a result, gala events and extravagant banquets paid for by public funds were curbed or cancelled during the
Chinese New Year holiday that ended on February 15. Officials who have been caught gorging themselves on the
public purse – including one man who spent nearly US$6,000 on a dinner for himself and associates – have been
stripped of their jobs.
Even though some high-living has merely retreated into secrecy in China, the impact of the frugality campaign
upon the business of Western luxury brands has been significant in the past few weeks, several executives at
luxury companies said. This makes the buoyant sales at overseas outlets even more valuable for luxury brands.
French brands to benefit
Leading western brands with strong recognition among middle- and higher-income mainland consumers were
most frequently purchased by outbound tourists and appear best positioned to continue to profit from the Chinese
outbound tourism boom. Visitors to Europe and the US are more inclined to purchase higher-priced luxury brands,
likely due to stronger spending power, the cheaper cost of these goods in comparison with mainland China and a
desire to purchase Western brands in their home nations.
French brands Chanel (27.6 per cent of respondents) and Dior (25 per cent of respondents) ranked as the top two
most popular designer fashion and bag brands, with 27.6 per cent and 25 per cent of respondents who purchased
these goods overseas buying these brands, respectively.
Buying goods in their country of origin is extremely important to Chinese consumers, both due to the cachet
afforded by being able to say to friends and family that they bought an LV handbag in Paris, but also because of
an acute lack of trust over the quality and authenticity of goods stemming from the high instance of counterfeit
and low-quality goods sold in China.
This explains why 37 per cent of Chinese visitors to France who spent money on luxury items during their most
recent trip bought Chanel, 34 per cent bought Dior and 30 per cent bought Louis Vuitton. While the same French
brands were popular with Chinese visitors to the US, the proportion who purchased these brands was much lower
(see chart).
(See Chart)
Source: China Confidential
In fact France – and Europe in general – appears best-placed to benefit from the burgeoning Chinese outbound
tourism trend. While Asian destinations ranked highest in terms of our respondents’ most recent trips, Europe is
increasingly where this influential group of travellers is looking.
Four of the five top destinations that the survey sample planned to visit in 2013 are in Europe – France, UK, Italy
and Germany, while nine out of their 10 dream destinations were also in Europe; the sole non-European country
to make the list was Australia.
The scale of this spending and the clear growth trends that our survey identifies underscores the fact that the
Chinese consumer story now extends well beyond China’s borders. This is a point worth bearing in mind amid
mounting concern about the outlook for luxury brands in China.
James Kynge is Principal of FT China Confidential, a research service on China at the Financial Times
Travel China in Video Games: Western Developers Increasingly Looking to China
for Game Settings (techinasia.com)
Mar 9, 2013
by C. Custer
http://www.techinasia.com/travel-china-video-games-western-developers-increasingly-china-game-settings/
Call it a reflection of China’s growing soft power. Call it a response to gamers getting tired of playing through the
same brown middle eastern environments over and over again. Whatever the reason, it’s clear that Western game
developers are increasingly sending their players into China (or China-inspired virtual environments) to kill the
bad guy, find the treasure, or save the princess. Here are just some of the recent games that have let gamers into
the Middle Kingdom:
Call of Duty: Black Ops
The first Black Ops game features a major mission in Hong Kong, which tasks players with sprinting through the
city’s cramped hallways and across roofs during a rainstorm. It’s all very reminiscent of the real thing (except for
all the gunplay, of course). And China also plays a big role in Black Ops II as a major antagonist in a new cold war.
Deus Ex: Human Revolution
Set in a future where humans can augment themselves with technology — a future that’s looking a lot closer these
days, by the way — about half of Deux Ex takes place in a futuristic Chinese city. Sure, there’s a lot of dramatic
license happening, but the developers did their homework, and the place does actually feel quite a bit like China
even if it’s full of Blade Runner-esque sci-fi squalor. You’ll even get people shouting “Laowai!” at you on the street,
just like real foreign visitors to China do!
Sleeping Dogs
Sleeping Dogs puts players in the shoes of an undercover cop in Hong Kong as he worms his way into one of the
city’s most powerful triad gangs. It’s a lot like a Chinese Grand Theft Auto, and wandering around a fully-realized
and completely alive Hong Kong in the game is a pretty cool way to do some traveling if you can’t afford the plane
tickets. I’ve never been a triad, of course, but speeding around the city on a bike and slamming into buses
because I keep forgetting Hong Kongers drive on the left side of the road is some of the most fun I’ve had in a
China-based game. (I don’t have much time for gaming these days, but I’ve been slowly working my way through
Sleeping Dogs over the last few months and so far it has been great).
Resident Evil 6
The latest entry in the Resident Evil series takes players to China for some of the series’ typical zombie-slaying.
Sure, it’s not the best resident evil game — not even close, really — but if you want to fight zombies in China, this
is probably your best bet. (Though of course there’s always Plants vs. Zombies: Great Wall Edition to consider as
well).
Cursed Mountain
Cursed Mountain is a spooky survival horror game that takes place in Tibet’s Himalayan heights. Sure, it’s a Wii
title so it’s not nearly as nice looking as most of the other games on this list, but in what other game will you get
a chance to visit Tibet?
Uncharted 2: Among Thieves
Oh right, adventurers also get a chance to traipse to Tibet in Uncharted 2 when the game’s protagonist wakes up
in a Tibetan village. If you ever wished that Indiana Jones had taken a trip to Tibet, this is the game to fulfill your
fantasy.
Whore of the Orient
This one isn’t even out yet, but when it does drop sometime in 2015, it will allow players to explore early 20th
century Shanghai. And given that the team behind it is the same folks who made L.A. Noire, expect a lot of
attention to detail. This is one virtual China trip I’m definitely looking forward to.
Kane and Lynch 2: Dog Days
Dog Days was, by all accounts, a pretty bad game, but it was set in Shanghai and the whole game takes place in
the dirty back alleys and buildings of that city. In fact, it even ends — spoiler alert — with a raucous crime spree
in Shanghai’s Pudong international airport.
Army of Two: The 40th Day
The 40th Day is another China-based game that didn’t do too well with the critics. It features a masked duo of
burly dudes blasting and bro-fisting their way through Shanghai. Along the way they even visit some landmarks
like the Shanghai Zoo, the Bund, and a traditional temple that’s probably based on some real Shanghai location
(it looks a bit like the City God temple).
And of course, these aren’t the only games with a strong Chinese influence. The latest World of Warcraft
expansion, for example, is pretty obviously inspired by China, and Enslaved: Odyssey to the West is a fanciful take
on one of China’s literary classics: Journey to the West. Since China doesn’t seem likely to disappear from the
world stage anytime soon, expect to see more games set in China as time goes by. And, hopefully, expect to see
more games developed in China making it big on the global stage!
(This post was inspired by a similar list on QQ Games)
Qihoo’s Search Engine Market Share Up 2%, Mainly at Expense of Baidu
(techinasia.com)
Mar 8, 2013
by Steven Millward
http://www.techinasia.com/china-qihoo-market-share-goes-up-but-baidu-down-february-2013/
When we last looked at search engine market share in China, the bruiser of a newcomer, Qihoo’s (NYSE:QIHU)
So.com search service, was slowly making inroads on its major rival. But new data from the same stats source
suggests that Qihoo has leaped up two percent from December 2012 to February 2013 – going from 10.39 to
12.36 percent.
Perhaps not entirely coincidentally, market leader Baidu (NASDAQ:BIDU) dropped by nearly the same amount in
that period of time. Elsewhere in the new traffic pageviews numbers from CNZZ, Google continues its slide down
while most of the other rivals are fairly stagnant.
To get a sense of the big impact of Qihoo’s search engine since it launched last August, let’s compare the new
February numbers with ones from October last year:
(See Chart)
Over that whole time, Baidu has gone down by almost the same as Qihoo has gone up. And don’t forgot that a
chunk of Qihoo’s initial share upon arrival on the scene also came from Baidu.
Though Qihoo is currently facing serious charges over abuses of user privacy on its software apps – including the
web browser that feeds so much traffic to its fledgling search service – the company posted a strong Q4 financial
report earlier this week that caused its share price to hit an all-time high.
(Source: CNZZ data, via Marbridge Daily)
Car Sharing Startup
(techinasia.com)
iCarsClub
Raises
$482,000,
Expands
to
China
Mar 8, 2013
by Vanessa Tan
http://www.techinasia.com/icarsclub-funding-expand-china/
iCarsClub, a peer-to-peer marketplace for renting cars, today announced that it has successfully raised
S$589,000 (US$482,000) from Red Dot Ventures, where the latter is under the National Research Foundation’s
Technology Incubator Scheme.
With this investment, Singapore-based iCarsClub is looking to expand the business to other countries within the
region. As mentioned in our previous coverage on iCarsClub, the team (pictured right) is made up of mostly
mainland Chinese exptrepreneurs, hailing from backgrounds at Tsinghua University and Baidu. Naturally, the first
step in the expansion plans would be to their homeland, China, kicking off in major cities such as Beijing and
Shanghai. Its goal for China this year is to have 1,000 participating cars in its marketplace.
The numbers seem pretty encouraging for the team at iCarsClub. Just three months from its official launch last
December, the company has 3,000 members in its database with over 300 cars available. The five-man team has
also set goals for 2013 – to gather a total of 5,000 members and 1,000 cars.
Why Sogou’s Input Method Search Could Change the Chinese Internet (and More)
(techinasia.com)
Mar 8, 2013
by C. Custer
http://www.techinasia.com/sogou-input-method-search-change-chinese-internet/
Earlier this week, I wrote about Sogou’s new method of integrating search results into its Chinese-language input
method. I also gave the system a test run on my own computer, and came away pretty impressed. In fact, the
more I think about it, the more I think this move has the potential to change the way Chinese users search, and
maybe even the way they interact with their computers on a more fundamental level.
Typing on the keyboard is probably the most fundamental way we interact with any computer, or for that matter
almost any digital device. Voice recognition and dictation software might replace it someday, but as any Siri user
knows, we’re definitely not there yet. And for Chinese users, input method software is simply a part of the typing
process. Because Chinese is written in characters but keyboards tend to use the Latin alphabet, to type anything
in Chinese you need software that interprets the phonetic sounds the user types (for example: baidu) into Chinese
characters. But of course, many phoentic sounds have multiple possible interpretations, which means that input
method software needs to include a graphical user interface (GUI) so that users can choose which baidu they
meant (For example, 百度, 拜读, 摆渡, 白都, 败毒 and more would all be typed as baidu).
What that means is that Chinese users are used to clicking things from a GUI as they type. These days, many
input methods have incredible predictive text algorithms that make it possible to type long sentences and have
the correct characters filled in automatically, but no algorithm is perfect (or knows every proper noun) so some
user intervention is always necessary. This is just a part of everyday computing for Chinese users on a more
fundamental level than even, say, using a web browser.
(See Image)
So why is Sogou’s implantation of search results into its input method system so significant?
It moves the search war closer to users. Until now, Baidu, Qihoo, and Sogou have been battling for search
supremacy mostly within the confines of the web browser. Now, Sogou has brought the war to users’ desktops,
their word processors, and even competitors’ websites. If you allow it to, Sogou’s input method search will display
the search results you’re looking for even when you’re typing in Baidu.com’s search bar. And since users are
already in the habit of interacting with and clicking things in the input method software’s GUI, getting them to click
on relevant search results isn’t that much of a stretch. If Sogou’s input method search catches on, Baidu and
Qihoo may be forced to produce similar offerings. But neither company has nearly as strong a user base for their
input method software as Sogou (in fact, Qihoo doesn’t have any input method product at all). By redefining the
battlefield, Sogou has put itself in a strong position — at least, if it gets its users to adopt the new “smart” version
of its software.
It feels like a natural extension of language input. When I read about this new feature, I’ll be honest — I was
expecting it to be awful. The prospect of having search results pop up as I typed just seemed intrusive and
annoying, and if it wasn’t my job, I probably wouldn’t even have bothered to download the software and try it out.
But when I did try it, I was very pleasantly surprised. Because it gives you a great deal of leeway in defining where
and how the search results pop up, it is simultaneously unobtrusive and convenient, and I could easily see it
becoming a regular part of users’ computing experience. After all, why bother booting up a browser when you can
just type the search term and see the results you want immediately, no matter what program you’re using?
Search is just the beginning. Sogou’s current implementation of input method search is limited to specific kinds
of searches, but it doesn’t have to stay that way. In fact, it doesn’t have to stay search-oriented at all. Imagine
simply typing the name of a brand’s product and then purchase that product directly from the desktop in the input
method GUI. Or typing the name of a friend from inside any program to bring up a video chat with them, or even
share your screen with them. The possibilites are virtually endless, and in moving into input method search,
Sogou may have taken us one step closer to a world where users interact much more quickly with the web by not
using a browser at all.
Of course, Sogou’s new search input method could just as easily lead to nothing at all. As it’s not a mandatory
update to Sogou’s input method software — at least, not yet — many of Sogou’s users may not even know about
it, and plenty who do know about it may choose not to download it because it sounds intrusive and pointless. And
to be clear, while this product is cool, it isn’t going to change the world by itself. But is it the first step down a new
path towards a new way of interacting with the internet? Call me a dreamer, but I think it could be.
Chinese Government Rep Says E-Commerce Sites Have Evaded Billions in Taxes
(techinasia.com)
Mar 8, 2013
by C. Custer
http://www.techinasia.com/chinese-government-rep-ecommerce-sites-evaded-billions-taxes/
On Wednesday, NPC representative Wang Tian made a rather shocking accusation: Chinese e-commerce
platforms have permitted sellers to evade more than 100 billion RMB ($15 billion) in taxes. And that’s just in the
year 2012. In fact, the taxes lost from Alibaba platforms alone add up to more than 35 billion RMB ($5.5 billion),
according to Wang.
To be clear, Wang isn’t saying the problem is e-commerce companies themselves — at least not entirely. Rather,
he says that an investigation has revealed most sellers on e-commerce platforms don’t provide official invoices to
customers along with their purchases. But those invoices, which are printed on special paper and must be
purchased from the government, are the primary way the government taxes business transactions like consumer
purchases — if sellers aren’t providing them, that means they’re not paying the taxes they should be.
How and to what extent e-commerce sites should be taxed has been a hot topic in China since online shopping
became popular, but in part thanks to these numbers, the topic has bubbled to the surface again at this year’s Two
Meetings. Chinese lawmakers are considering alternative ways to tax the industry. Song Lan, an assistant director
at the State Administration of Taxation, expressed some skepticism about Wang Tian’s sky-high numbers but
agreed that the taxation of e-commerce transactions was a serious problem:
E-commerce is a difficult topic we’re researching, because virtualized transactions are pretty difficult to monitor.
Additionally, our [transaction] management methods are relatively outdated. So the taxation of e-commerce sites
is something we’re researching right now.
The trick, of course, is to extract additional tax dollars from e-commerce platforms without crushing them, and
Song Lan has said that the State Administration of Taxation is considering how to tax the industry in a way that
promotes its healthy development while not, at the same time, allowing it to shirk its tax obligations.
It’s a difficult balance to strike, and one that authorities aren’t likely to take a crack at before this year’s Two
Meetings ends. But the renewed attention could mean that new regulations might be coming sometime later this
year. If e-commerce platforms are really resulting in billions in lost tax revenue, you can be sure that tax
authorities won’t allow that situation to go on forever.
(via Sina Tech, image source)
China Unicom is Tracking Your Mobile Browsing History, and Now You Can Check
Their Database
Mar 8, 2013
by C. Custer
http://www.techinasia.com/china-unicom-tracking-mobile-browsing-history-check-database/
Mobile users of China Unicom’s data networks, the company has some news for you: now you can check your own
browsing history as stored on the company’s database. Unicom subscribers anywhere will be able to call the
company’s customer service line and check their own history including sites visited, time spent online, and
bandwidth used for any browsing session over the past three months. Users in select provinces will also be able
to check this data via an official iPhone app. Of course, if you’re checking over the phone you’ll need to confirm
your identity with your state ID number.
On the one hand I suppose this is a useful service, but it’s also a creepy reminder that ISPs — and not just Chinese
ISPs — are tracking every website you visit and hanging on to those records. Moreover, Unicom’s new database
checking mechanism makes identity theft an even scarier proposition: now whoever knows your state ID number
also has access to everything you’ve done online with your phone over the past three months. I don’t even want
to imagine the horrible things that could be used for.
Unfortunately, China has a pretty vibrant black market online that trafficks in stolen personal data like names and
state ID numbers, which would be all you’d need to check Unicom’s new browsing history database. And the fact
that the database will now be available through phone systems and an iPhone app might also make it easier for
hackers to crack into directly.
In any event, there’s not much you can do about it. Other mobile providers are certainly already tracking browsing
data as well, and I wouldn’t be surprised to see them roll out similar services in the future. Consider this news a
reminder that, wherever you are, you really ought to get a VPN.
(via Sina Tech)
FedEx Agrees To Ship Special Cargo from China (chinasourcingnews.com)
March 11, 2013 | By Editorial Staff
http://www.chinasourcingnews.com/2013/03/11/064718-fedex-agrees-to-ship-special-cargo-from-china/
FedEx Express, a subsidiary of FedEx Corp. is donating its logistical expertise and in-kind transportation for two
giant pandas heading from Chengdu to a new home in Toronto.
FedEx Express will ship Er Shun, a five-year-old female panda, and Da Mao, a four-year-old male panda, via a
dedicated charter flight on an MD-11F aircraft specially named the "FedEx Panda Express." Animal care experts
from both China and Canada have been granted special flight privileges to accompany the giant pandas onboard
the aircraft to ensure the animals' safety and comfort. The pandas are tentatively scheduled to arrive in Canada
in spring 2013, with the final date of delivery subject to final regulatory approvals.
A cooperative conservation agreement between Canada and China means Er Shun and Da Mao will spend five
years at the Toronto Zoo, followed immediately by another five years at the Calgary Zoo. This marks the first time
in twenty years that giant pandas have been loaned to a Canadian zoo, and allows both zoos to contribute to
ongoing international efforts to preserve the species. Conservationists estimate that just over 2,000 giant pandas
remain in the wild.
In addition, FedEx is collaborating with the Memphis Zoo to ensure the pandas have the food necessary for a
healthy and plentiful diet. Bamboo harvested locally by the Memphis Zoo provides food for its own giant pandas,
Ya Ya and Le Le, and will be delivered to the Toronto Zoo via FedEx Express two to three times per week. The
Memphis Zoo will send multiple species of bamboo to determine which varieties Er Shun and Da Mao prefer to eat.
Experts say adult giant pandas eat an average of 100 pounds of bamboo per day, necessitating the frequent
deliveries.
Sogou Bundles Search Service with Input Software, bypassing Browser
(technode.com)
By Tracey Xiang on March 7, 2013
http://technode.com/2013/03/07/sogou-bundles-search-service-with-input-software/
Sogou released a major update of Sogou Pinyin, the dominant Chinese Input software in China, adding a new
feature called something like “mind-reading” to the ”intelligent edition” that echoes what Wang Xiaochuan, CEO
of Sogou and former CTO of Sohu, referred to as this year’s “big move”.
When a user types out the Pinyin (currently used romanization system for Chinese) of a video’s name, the Sogou
Pinyin interface would feature the video directly – no search box and no need of click on a search button. Besides
online videos, it enables another eight categories of content, including music, weather, app downloading and
other Internet services.
Whatever shown are from partners who, according to Sogou, haven’t been charged. But it’s not hard to imagine
it will drive revenue before long.
It looks like a combination of Baidu’s Box Computing and Tencent Soso context search. When you type in the
name of a video in Baidu search box, the first search result would feature the video and users can watch it within
the search page by merely clicking on a play button. Tencent QQ users could select words in the dialog box of the
chatting software and trigger search by clicking on a button. Search results will be shown on the right side of the
dialog box. Adding the Sogou one, it seems what those big Chinese Internet companies always want is to keep
users within their signature product.
Bypassing Browser
It’s no secret that Sogou adopted the Qihoo approach to monetize its huge input software user base, channeling
users gained there to its browser where start-up page ad placements, search service, online games and the like
are revenue sources. Wang Xiaochuan always compared Sogou to a three-stage rocket with the input software,
browser and search service as the three sub-rockets.
Both the two companies began developing their killer services, Qihoo’s Internet security service and Sogou’s input
software, around 2006. But the competence is all about browser, as Charles Zhang, CEO of Sohu, said on its latest
earnings conference call.
Qihoo has run much faster in browser market and have gained a dominant market share, with 310 million active
users as disclosed in its latest earnings release. According to CNZZ, a third-party data service, Qihoo browsers
have a 28.44% market share and Sogou’s has 8.85% in February 2013. The room for Sogou is limited.
Sogou’s revenue in 2012 is $131 million, 40% of Qihoo’s albeit with a 108% year-over-year increase. It had a net
loss of $2 million while Qihoo made $ 97 million in net revenue.
It seems Sogou finally came to realize, or decide, that there’s another way around besides browser in order to
expand realm and reach advertisers and consumers’ pockets. And it has become obvious that browser cannot play
such an important role in mobile ecosystem that users access Internet services through apps. Wang Xiaochuan
pointed out at various occasions that mobile search would vary from that on the desktop, too. The company rolled
out Sogou Voice Assistant, Siri-Like voice interactive service, last year.
The question with the new feature is whether it is acceptable with and used by input method users. Either the
Baidu Box Computing or Soso context search doesn’t seem a success. It’s hard to say whether Sogou can make
a difference with a combination.
Will China Follow the Valley’s Lead in Enterprise Tech? (techrice.com)
by JAMES HOPKINS on 03/08/2013
http://techrice.com/2013/03/08/will-china-follow-the-valleys-lead-in-enterprise-tech/
Whether providing software-as-a-service (SaaS) for enterprise resource planning (ERP), on-premise ERP,
infrastructure-as-a-service (e.g. offsite servers and storage), security or something else, enterprise tech
companies have been a relative bright spot in U.S. markets compared to overly-hyped consumer facing
companies such as Groupon (77% of value lost since IPO), Zynga (66% of value lost since IPO) and the mercurial
Facebook (about 25% of value lost since IPO, but up from a low point of 52% down in September).
Last September, a Wall Street Journal article titled “Revenge of the Nerds, the Sequel” illuminated this sea change,
noting the performance of new enterprise-serving market entrants (albeit two have since faltered): Splunk
(real-time data indexing of apps, servers and network devices, -2% post-IPO), ServiceNow (SaaS for IT
Management, +37% post-IPO) and Infloblox (software and hardware to automate network infrastructure, -10%
post-IPO after a dismal November).
But more important than these short-term stock fluctuations is the shift in Valley attitudes described in the WSJ
piece. Most telling was the anecdote regarding Guidewire, an enterprise company that’s seen a 90% increase in
its stock price over the past year:
When Marcus Ryu took his company, Guidewire Software Inc. public in January [2012], he says some investment
bankers told him he couldn’t hope to land a similar valuation to Groupon’s or Zynga’s—even though his firm,
which makes software for insurance companies, was increasing revenues by double digits to around $175 million
a year and was profitable. The bankers said “there’s magic in those names…we got the feeling we were a
second-tier name.”
In addition to these up-and-coming players, growing powers Teradata (big data analytics, market cap $10.48
billion), Seagate (storage, $12.36 billion), Salesforce.com (customer relationship management software with
emerging social media analysis capabilities, $24.85 billion) and established industry titans Cisco, SAP and Oracle,
representing another $370 billion in combined market value, display the lucrative opportunities in selling tech to
businesses.
So what about China?
Given the relative success of these companies in the U.S., the game-changing trends they are bringing to market
and the intrigue they’ve generated among investors, will Chinese entrepreneurs and venture capitalists follow the
lead and attempt to duplicate these models in China? At the time of Groupon’s meteoric and misguided rise in
pre-IPO valuation, China saw thousands of unprofitable group buying copy-cats emerge (5,058 according to this
2011 China Early-Age Startups summary by Tayler Cox) which continue to sputter out or consolidate.
I spoke with Innovation Works’ investor Mickey Du to learn whether the trend might repeat itself—albeit not on
the group buying scale—with enterprise tech in China. Du played a large role in the fundraising for the Kai Fu
Lee-led Venture Capital firm’s oversubscribed $275 million second fund and has been looking closely at enterprise
opportunities in China.
Du shared that Chinese start-ups are not ready to simply duplicate Valley models, but that enterprise tech will
emerge organically here as the base infrastructure matures: “It’s just a matter of time. The growth of the sector
is an inevitability.”
Du said that U.S. startups targeting the enterprise can operate on far less capital than their hypothetical Chinese
counterparts, as they are able to plug into mature and dependable platforms like Amazon’s cloud services: “At
Innovation Works, we believe China is not caught up to the U.S. in terms of ecosystem maturity. The base
infrastructure has not been optimized.” Du commented that the relatively slower education of key decision
makers has impeded adoption as well: “the whole concept of cloud computing is just starting to stick…China is 3-4
years behind the U.S. in this regard.”
At the core of the infrastructure problem is regional and ISP fracturing. According to Du, the resulting limits on
transferring information make building a layer of cloud services impossible for a startup. Du said the loss in speed
of data packets and lower reliability challenge all internet companies in China, but are by virtue much more
damaging to enterprise-targeting start-ups who aim to sell reliability and real-time solutions. Chinese and
western companies are growing China’s cloud at a stunning pace, however. According to Gartner, though only 3%
of the global cloud computing market now, China is growing by 40% per annum.
Beyond infrastructural issues, Du referred to the Chinese business tendency to “throw warm bodies at a problem”
as a limiting factor in ERP adoption. Indeed, even if Chinese companies adopt ERP, they may be resistant to the
necessary business process reengineering (BPR) that makes ERP effective.
Du said platforms such as 37 Signals or Salesforce, while successful in the U.S., are less scalable in China and
require door-to-door salesman. Du compared Google and Baidu to illustrate fundamental differences in sales and
adoption in China and the U.S. Unlike Google, Baidu has tens of thousands of sales people offline peddling their
products and selling advertising.
Who will pay?
While other China-based VC’s have expressed that the lack of Chinese businesses willing to pay for these services
would limit their success, a sentiment Microsoft’s struggles with piracy might support and one echoed by the
Silicon Dragon VC Panel last October, Du did not think this was a real factor. Citing the Chinese business paradigm
that earning an additional RMB in revenue is better than saving 5 RMB in costs, Du said that most important for
ERP or other services targeting Chinese companies is that they “tangibly add value and contribute to day-to-day
revenues or operations”.
This is not to say that there aren’t already domestic players. Indeed, a now dated 2005 study by AMR, “Inside the
Chinese ERP Market,” found that Chinese companies UFIDA (now Yonyou), Kingdee and Digital China were
out-performing their western competitors by large margins in China. While SAP has chipped away at the leaders,
it still struggles with meeting local needs and gets just 3% of its global revenues from China.
Barriers to Entry in Enterprise Tech
Responses from a Quora thread “Why don’t more startups target the enterprise” propose a number of factors
which naturally limit the number of enterprise startups, all of which may be especially applicable to the more
nascent Chinese tech sector. A common answer proffered that younger entrepreneurs are less able to create
enterprise-targeting companies because they lack the work experience to understand and improve upon existing
marketing, sales, HR, finance, customer service processes. Others noted that selling to enterprises is difficult, as
is the necessary after sales service to make them successful with the product (in China: the lack of BPR
accompanying ERP). That enterprise tech valuations have been more rational than those for consumer-internet
products like Groupon or Instagram also diminishes the appeal of the sector. However, as China’s young base of
tech entrepreneurs matures and appreciates the nuances of local business needs, one would expect more related
start-ups to blossom. Chinese companies looking to go global or grow along with domestic consumption will need
services that help them retain talented employees, make sense of huge quantities of data and reduce inventory.
Looking to Invest
Du shared that Innovation Works first fund of $180 million was intended to last three to four years, but was
quickly allocated in the first year to make timely investments in mobile related to Android’s emergence. He said
a much larger proportion of the firm’s second fund will target start-ups in the enterprise space with some
promising players already identified.
Du said Innovation Works is not excited by horizontally-oriented enterprise start-ups like SalesForce, and that
companies who excel at one thing are better bets in China:
“[We] look for companies which serve a large enough vertical and not those building a horizontal platform who are
vulnerable to other vertical players.”
One of Innovation Works (loosely) enterprise-related investments is AnquanBao. Essentially the CloudFlare for
the Chinese market, AnquanBao protects businesses websites from viruses and security breaches and optimizes
their loading times—highly valuable to frustrated Chinese internet users. AnquanBao was founded by one of
Innovation Works entrepreneurs in residence (EIR) who previously led one of China’s top security software
companies. Du said Anquan Bao currently has over 15,000 customers, some of which are premium paying
customers. Innovation Works recently participated in AnquanBao’s Series B funding, led by Northern Light
Venture Capital, which raised well over $10 million.
Follow TechRice as we keep a closer eye on the emergence of enterprise start-ups in China.
Politics & Law
Newswire
China eyes residence permits to replace divisive hukou system (Reuters)
By John Ruwitch and Hui Li
BEIJING | Wed Mar 6, 2013
http://www.reuters.com/article/2013/03/06/us-china-parliament-urbanisation-idUSBRE92509020130306
(Reuters) - China's new leaders are planning a system of national residence permits to replace the household
registration or 'hukou' regime, a government source said, a vital reform that will boost its urbanization campaign
and drive consumption-led growth.
The hukou system, which dates to 1958, has split China's 1.3 billion people along urban-rural lines, preventing
many of the roughly 800 million Chinese who are registered as rural residents from settling in cities and enjoying
basic urban welfare and services.
Critics have called for changes for years and a government researcher told Reuters a "unified national residence
permit system" would be adopted as policy as part of a 10-year urbanization plan to be published after the current
annual session of parliament.
Benefits and entitlement under the new system would be "basically equal", he said, although the changes would
be eased in slowly. He did not say how long it would take.
"The trend is to dilute the urban-rural household registration divide", said the researcher, who was briefed on the
details but declined to be identified because the plan has not yet been made public.
Previous administrations have experimented with reform on the fringes of hukou for years but have not delivered
on calls to overhaul the system, which affords different welfare and civic services to urban and rural citizens.
In a speech to parliament on Tuesday that laid out the blueprint of the new leaders, outgoing Premier Wen Jiabao
said hukou reforms should be accelerated to drive an urbanization effort that he said would underpin economic
development.
Zhang Ping, head of the National Development and Reform Commission, China's main economic planning agency,
said on Wednesday that guidelines for the urbanization plan would be launched in the first half of 2013.
"Urbanization is the biggest potential force driving China's domestic demand in the years ahead," Zhang told
reporters.
China plans to spend 40 trillion yuan ($6.4 trillion) to bring 400 million people to cities over the next decade as the
new leadership of president-in-waiting Xi Jinping and premier-designate Li Keqiang seeks to turn China into a
wealthy world power with economic growth generated by affluent consumers.
Wen said consumption was the key to unlocking the full potential of domestic demand in the economy and would
reduce excess, inefficiency and inequality. It would also help deliver growth of 7.5 percent in 2013 - a level China
barely beat in 2012 when growth eased to 7.8 percent, its slowest pace in 13 years.
Hukou reform can also unlock the funds of about 200 million rural residents who work in cities as migrants and
spend much of their incomes on benefits like medical services and education for their children, which are given
free to urban dwellers.
If policymakers successfully harness this demographic shift, China will enjoy continued economic strength,
analysts say. If not, it could lead to social and political instability.
UNDERCLASS
"If they don't get it right, instead of growing a middle class, they are going to grow a huge underclass in the city,
and that's very scary," said Kam Wing Chan, a population expert at the University of Washington.
"Without granting urban hukou to rural urban migrants it is very hard to turn them into the middle class. They will
always be second class," he said.
One of the main reasons the reform has been delayed is money. Local city governments have dragged their feet
on plans to give migrants equal welfare, saying they lack the fiscal means to foot the bill.
"If the central government is serious they've got to talk about how to finance this," said Tom Miller, an analyst
with GK Dragonomics and author of the recently published book "China's Urban Billion".
The state researcher who declined to be identified said the urbanization plan would broadly put the burden of
funding on central and local governments, enterprises that employ migrants and individuals. He did not discuss
specifics.
"In doing so we can ensure that some people can transition from being rural to urban citizens and ensure basic
public services for this segment of people," he said.
Another key reform needed in the urbanization plan would be new rural land management rules, although the
researcher said there would be few details on this.
Peasants now do not have the freedom to sell their land at market prices, which has exacerbated China's wide
rich-poor gap and made many reluctant to fully abandon their rural plots.
Officials like Chen Xiwen, head of the Central Committee's rural working group, have cautioned against
urbanization, saying it could lead to a shrinking of farms as land is converted to other uses.
Migrant workers have for years lamented inequalities in the hukou system, like the lack of local medical coverage
or equal access to higher education.
"In the countryside we generally want to change our rural hukou for city hukous," said Wang Baiqiang, an
18-year-old who left a village in Henan province last month for a job in an Adidas factory in the coastal province
of Jiangsu, 14 hours away by bus.
"It's just better if you have a city hukou (if you live in a city)," he said.
(Editing by Raju Gopalakrishnan)
Analysis: Bellicose North Korea forces China to shift stance on old friend
(Reuters)
By Ben Blanchard and Sui-Lee Wee
BEIJING | Sun Mar 10, 2013
http://www.reuters.com/article/2013/03/10/us-korea-north-china-idUSBRE92901W20130310
(Reuters) - Six months ago China's state media was lauding North Korea as a great place to invest as both
countries tried to promote a cross-border economic zone.
One nuclear test, a long-range rocket launch and much sabre-rattling later and China is a central player in new
U.N. sanctions against Pyongyang, something Chinese experts say marks a major shift in Beijing's policy toward
its impoverished neighbor.
At the same time, Chinese newspapers have been calling North Korea an ungrateful and unreliable liability.
Businessmen and officials charged with building commercial ties don't even want to talk about the country.
No one is suggesting China will abandon the regime of leader Kim Jong-un or even implement the new sanctions
to the letter, but a relationship once regarded "as close as lips and teeth" is on thin ice as China's frustration
grows.
"I think it's remarkable and identifiable, the change in China's policy towards the Korean peninsula," said Zhu
Feng, director of the International Security Programme at the elite Peking University.
Zhu said China was now putting its hopes on diplomatic coercion to get North Korea to change its behavior.
"Beijing has ultimately woken up to reality ... At the U.N. Security Council, Beijing very noticeably shifted to a
harder policy to get North Korea very badly hurt."
China has backed previous sanctions against North Korea's nuclear and ballistic missile programs. China also
officially says it does not believe sanctions will resolve the latest crisis over North Korea, a position repeated by
Foreign Minister Yang Jiechi on Saturday.
But after North Korea's third nuclear test, on February 12, China negotiated the new sanctions with Washington
and said it wanted them implemented fully. The measures, announced on Thursday, tighten financial curbs on
North Korea, order mandatory checks of suspicious cargo and strengthen a ban on luxury goods entering the
country.
An exasperated China appears to have run out of patience after years of trying to coax Pyongyang out of isolation
and to embrace economic reform.
To top it off, Kim Jong-un has failed to pay fealty to China, his country's only major ally, as his father and
grandfather did. He has not visited China since taking over when his father Kim Jong-il died at the end of 2011.
Even the modicum of affection Chinese used to feel towards North Koreans, brothers-in-arms during the 1950-53
Korean War, has all but vanished, the country and its leader becoming an object of derision and incomprehension,
especially as China powers ahead economically and rises in global stature.
The Global Times, an influential tabloid published by Communist Party mouthpiece the People's Daily, has called
for China to cut North Korea off completely. It warned on Friday that Pyongyang should not underestimate China's
anger.
"The 'friendship' between China and North Korea ... obviously cannot be decided by Pyongyang's temper," the
widely read newspaper wrote in an editorial.
HOW QUICKLY THINGS CHANGE
Back in August, an editorial by a Chinese Commerce Ministry official in the People's Daily said China needed to
encourage and support its companies to invest in North Korea. The China Daily cited another official as praising
North Korea's growth prospects.
At this month's annual meeting of China's largely rubber stamp parliament, Chinese with North Korea links
wanted to talk about anything but North Korea.
A question from a Reuters reporter at a news conference by officials from Jilin province, which borders North
Korea and does a lot of business with the country including trying to develop the Rason economic zone, caused
consternation.
Asked if the central government had ordered Jilin to reduce trade and investment with North Korea in the wake
of the February 12 nuclear test, officials looked flustered and finally asked a low-ranking bureaucrat to answer.
"Regarding international trade, I haven't noticed anything in particular. As for the next step, the Chinese
government has already expressed its attitude on this issue. I'll leave my response at that," said Jin Shuoren, an
ethnic Korean legislator from part of Jilin which sits on the border.
Not long after the nuclear test, one Chinese official at the economic zone told Reuters that plans to invest had not
been put on hold.
North Korea has not helped by treating some major Chinese investors poorly -- and then denouncing their
complaints in its state media. North Korea previously almost never criticized its neighbor or any Chinese entities
in public.
Signs of unhappiness with Pyongyang have seeped out of China's military establishment too, although it is hard
to know for certain what the top brass are thinking.
"It does not matter if you were a comrade and brother-in-arms in the past, if you harm our national interest then
we'll get even with you," retired major-general Luo Yuan, a prominent foreign policy hawk, wrote on his blog on
Saturday.
LAST THING XI JINPING NEEDS
Kim's actions have also become an unwanted headache for incoming Chinese president Xi Jinping, who is already
facing a host of domestic problems from corruption to pollution.
Besides the February 12 nuclear test and a long-range rocket launch in December, Pyongyang last week
threatened the United States with a preemptive nuclear attack, a largely empty warning since experts believe it
does not have the capability to hit the U.S. mainland.
North Korea has also told China it was ready to push ahead with a fourth and even a fifth nuclear test, a top official
with direct access to both capitals told Reuters in February.
"The timing of this with the new leadership coming onboard causes some discussion amongst the leaders when
there normally would be very little foreign policy discussion," said Paul Haenle, former China director on the U.S.
National Security Council and White House representative to the North Korea denuclearization talks.
"The elites within China have really come out strongly."
China's new leadership, including Xi, do not have the emotional ties to North Korea that their predecessors had.
Visits then used to be marked with smiles and bear hugs.
Xi also understands there is little public sympathy at home for Pyongyang.
"North Korea's behavior has infuriated ordinary Chinese, and this has put pressure on the government. Xi Jinping
has talked about how the government has to pay attention to public opinion," said Cai Jian, an expert on Korea at
Shanghai's Fudan University.
"The new leadership will be more practical, more cooperative with the international community when it comes to
North Korea."
To be sure, China will not cut North Korea off completely.
The country is a useful buffer from U.S. troops stationed in South Korea, and Japan too. China also does not want
North Korea to go the same route as Myanmar, once a staunch ally of Beijing but which is now rapidly expanding
ties with Washington.
And if China turns the screws too much then North Korea could collapse -- Beijing's ultimate nightmare scenario.
Not only would that release a flood of refugees into northeastern China, it would also raise the question of what
would happen to North Korea's nuclear material.
"China does not want these sanctions to affect North Korea's stability or cause domestic unrest or instability in the
leadership," said Fudan's Cai.
In fact, China may not enforce the sanctions as toughly as it could.
One well-connected Chinese expert on North Korea, Zhang Liangui of the Central Party School, said he didn't think
the sanctions would do any good, given how adept Pyongyang is at skirting them.
"These sanctions will not cause pain for North Korea," he said.
(Additional reporting by Terril Yue Jones, John Ruwitch and Megha Rajagopalan, Editing by Dean Yates)
UN Imposes Sanctions on North Korea as Country Threatens Attack (Bloomberg)
Peter S. Green
Friday, March 8, 2013
http://www.sfgate.com/business/bloomberg/article/UN-Imposes-Sanctions-on-North-Korea-as-Country-43395
47.php
March 7 (Bloomberg) -- The UN Security Council voted unanimously today to impose tougher sanctions on North
Korea over a forbidden nuclear test explosion, just hours after the totalitarian state threatened to launch a
preemptive nuclear strike against the U.S. and other “aggressors.”
The council voted 15-0, with no debate, to adopt a resolution drafted by the U.S. and China in the aftermath of the
Feb. 12 underground blast.
“Our warnings were not heeded,” said Russian Ambassador Vitaly Churkin, who holds the council’s rotating
presidency. “Now the choice is for the DPRK to make,” he said referring to the country by its official title, the
Democratic People’s Republic of Korea. “Now other interested parties must behave responsibly,” he added.
The new United Nations sanctions target “illicit activity” by North Korean diplomats, bulk transfers of cash by
North Koreans, and banks and companies funneling cash or materials to support the country’s ballistic missile and
nuclear weapons programs.
The US ambassador to the UN, Susan Rice, said that if North Korea conducts another test, the Security Council
would “take further significant measures.”
North Korea “will exercise the right to a preemptive nuclear attack to destroy the strongholds of the aggressors
and to defend the supreme interests of the country,” a foreign ministry statement carried by the official Korean
Central News Agency said today. It warned the UN “not to make another big blunder.”
Countering Threats
White House spokesman Jay Carney responded today that the U.S. is “fully capable” of dealing with any North
Korean threat and said that nation “will achieve nothing by threats or provocations.”
North Korea has issued nuclear warnings in the past, although it has yet to demonstrate the ability to put a
nuclear device on a ballistic missile.
“We take all North Korean threats seriously enough to ensure that we have the correct defense posture to deal
with any contingencies that might arise,” Glyn Davies, the U.S. special representative for North Korea policy, said
today after testifying to the Senate Foreign Relations Committee.
“It will be long journey,” to remove North Korea’s nuclear threat, China’s UN Ambassador, Li Baodong, said after
the council vote. The top priority for the international community now is to defuse tensions, “bring down the heat”
and focus on a diplomatic solution to the North Korea’s nuclear weapons program, he said.
Enforcement Key
China’s enforcement of sanctions is crucial, said Davies. China “remains central to altering North Korea’s cost
calculus,” he said in testimony. “Both geography and history have endowed the People’s Republic of China with a
unique —- if increasingly challenging -— diplomatic, economic, and military relationship” with North Korea.
“Close U.S.-China consultations on North Korea will remain a key locus of our diplomatic efforts in the weeks and
months ahead as we seek to bring further pressure to bear on North Korea and, over the longer term, seek
genuine diplomatic openings to push forward on denuclearization,” Davies told the Senate hearing.
Implementation by China has “been the Achilles heel” of past council resolutions on North Korea, Michael Green,
senior vice-president for Asia at the Center for Strategic and International Studies in Washington, wrote on the
blog shadow.foreignpolicy.com.
“Rather than pat itself on the back and use the international community’s outrage as leverage to get the North
back to the table (a mistake made after the 2006 and 2009 sanctions), the Obama administration should keep at
China to implement the new sanctions in terms of specific actions,” wrote Green.
Yachts, Racing Cars
China’s support for the sanctions may reflect its mounting frustration with North Korea after the Feb. 12 nuclear
test held in defiance of both the UN and the Chinese government.
The resolution includes bans on equipment used to make chemical and nuclear weapons, front companies for the
country’s weapons programs and importation of yachts, racing cars and jewelry for the regime’s elite, and obliges
UN member-states to stop any North Korean ships or planes suspected of carrying supplies for weapons
programs.
Diplomatic steps to impose new sanctions on North Korea began after the country tested a three-stage ballistic
missile last year and intensified immediately following the nuclear test that showed the country is assembling the
building blocks for a nuclear-armed ballistic missile that could reach as far as Hawaii.
Chinese Views
A hint of official Chinese frustration toward the regime now headed by 30-year-old Kim Jong Un emerged in a Feb.
27 opinion article in the Financial Times by Deng Yuwen, deputy editor of Study Times, the journal of the Central
Party School of China’s Communist Party.
“China should consider abandoning North Korea,” Deng wrote. A nuclear-armed North Korea might put China on
the losing side of any confrontation on the Korean peninsula, and North Korea’s ruling elite simply won’t let the
regime reform, he added. “Beijing should give up on Pyongyang and press for the reunification of the Korean
peninsula,” he wrote.
The Chinese are also clearly worried that a nuclear-armed North Korea could provoke an incident that would send
millions of people flooding across its 880-mile border, Orville Schell, director of the Center on U.S.-China
Relations at the Asia Society in New York, said yesterday.
“You don’t want to draw too much from it, but it suggests this new leadership wants to do exactly what Xi Jinping
said it did want to do: establish a new and better relationship with the U.S.,” he added.
--With assistance from Indira A.R. Lakshmanan in Washington and Cynthia Kim and Shinhye Kang in Seoul.
Editors: Terry Atlas, Robin Meszoly
China investigates 30 ministerial-level officials within five years (Xinhua)
2013-03-10
http://news.xinhuanet.com/english/china/2013-03/10/c_124439560.htm
BEIJING, March 10 (Xinhua) -- A total of 30 officials at the ministerial level or higher have been placed under
investigation for corruption or other job-related crimes over the past five years, China's top procurator said
Sunday.
Prosecutors have investigated about 13,000 officials at the county level or above for corruption and other
job-related crimes since 2008, said Cao Jianming, procurator-general of the Supreme People's Procuratorate
(SPP), when delivering a work report of the SPP at the first session of the 12th National People's Congress (NPC).
The work report of China's supreme court also delivered at the session showed that during the same period courts
nationwide meted out verdicts on 138,000 cases of bribery and malfeasance involving 143,000 criminals.
The past five years have seen the investigation of several high-level officials including Bo Xilai, a former member
of the Political Bureau of the Communist Party of China (CPC) Central Committee, and Liu Zhijun, former railway
minister.
Li Dajin, an NPC deputy and Beijing-based lawyer, said China had always attached great importance to anti-graft
work. After the 18th CPC National Congress in November, the new leadership raised many new requirements and
approaches to anti-graft work, demonstrating its resolve to combat corruption.
Xi Jinping, general secretary of the CPC Central Committee, said at a CPC disciplinary watchdog meeting in
January the Party should crack down on "tigers" and "flies" at the same time by dealing with illegal activities of
officials on the one hand and tackling malpractices and corruption cases, which closely impact the people, on the
other.
Since the 18th CPC national congress, China has remained tough on corruption. Within two months since the
congress concluded, the CPC sacked several officials who were suspected of violation of law or discipline, including
Li Chuncheng, former vice-secretary of the CPC committee of Sichuan Province.
Meanwhile, spurred on by new leaders' resolve to fight corruption, China's netizens have used the Internet to
expose corrupt local cadres.
The recent fall of some officials in the country was caused by online muck-rakers who used China's popular social
networking websites to reveal the officials' unlawful behaviors.
During the CPC disciplinary watchdog meeting in January, Xi ordered enhanced restraint and supervision on the
use of power and said "power should be restricted by the cage of regulations."
A disciplinary, prevention and guarantee mechanism should be set up to ensure that people in power do not dare
to, are not able to and can not easily commit corruption, Xi said.
Li Chaogang, an NPC deputy and Party chief of Beijing's Fengtai District, said "restricting power by the cage of
regulations" is the key to anti-corruption campaign.
In combating corruption, it was not enough to rely on self-discipline of people in power and a bigger role should
be given to the functions of anti-corruption systems, said Li.
According to the SPP report, prosecutors took about 19,000 bribers to court over the past five years.
At the same time, the SPP set up a national anti-corruption hotline and website, and improved its work in
collecting clues and protecting whistleblowers and witnesses, he said.
A national database of bribery cases has been established and more than 2 million searches were conducted,
according to Cao.
This year, prosecutors will continue to pay attention to graft cases which harm public interests, Cao said.
The top procurator also warned of outstanding problems in the work of prosecutors.
This year the SPP will work to curb corruption and misconduct among prosecutors and tighten supervision on
senior officers of procuratorates, he said.
Editor: Mu Xuequan
Print
China Unveils Government Agency Shake-Up Proposal (The Wall Street Journal)
By CARLOS TEJADA
Updated March 9, 2013
http://online.wsj.com/article/SB10001424127887324128504578351002554801198.html
BEIJING—China plans to shake up government agencies including the organizations that oversee its contentious
one-child policy and its food and drug safety, in a nod by authorities to flash points in China's rapid growth and
development.
The proposals outlined Sunday include a widely expected revamp of its troubled Ministry of Railways. China also
plans to combine agencies that oversee energy policy, and regulation and censorship of print and film. It will also
consolidate fishing and maritime regulation at a time when China's fishing industry has come under scrutiny for
its growth and its role in international disputes.
The proposals were outlined in a report to be delivered Sunday by State Councilor Ma Kai before the National
People's Congress, which is holding its annual two-week session in Beijing. It follows vows by China to streamline
government authority by combining agencies and eliminating overlapping responsibilities. The congress typically
approves the proposals set before it by senior Communist Party leaders.
The proposals include merging the commission that oversees the one-child policy with the Ministry of Health and
shifting development of China's population strategy to the National Development and Reform Commission,
China's top economic planning body. The National Population and Family Planning Commission oversees China's
one-child policy, which critics say has led to harsh local enforcement that can include forced abortions and
sterilizations. Economists inside and outside the country have also warned that the one-child policy is eroding
China's labor force, hurting its long-term competitiveness.
It wasn't clear how the move would result in changes to the policy, and Chinese Premier Wen Jiabao said in a
report released at the beginning of the National People's Congress that China would stick to its 2013 population
goals. Still, the merger paves the way for an end to China's one-child policy, said Cheng Li, a political expert at the
Brookings Institution in Washington, D.C.
"This is a signal to an end of a policy that in reality is not in line with China's other reforms," Mr. Li said, citing
government efforts to accelerate market reforms and its vow to focus on urbanization. In addition, China needs
a reliable labor force that has been jeopardized by the one-child policy, Mr. Li said.
China's top demographers and statisticians have called the policy into question in recent years, saying it is
shrinking the nation's pool of workers. The absolute size of the working population, ages 15 to 59, fell by 3.45
million people to 937 million last year, Ma Jiantang, head of China's National Bureau of Statistics, said in a news
briefing in January.
The proposals include elevating the State Administration of Food and Drugs to a general administration and
combining a number of oversight responsibilities now spread around other agencies. China has struggled with
food and drug safety for years, as many believe a system overloaded with overlapping bureaucracies has
obscured problems and prevented effective solutions. The General Administration of Quality Supervision,
Inspection and Quarantine has overseen imports and exports while commercial and industrial authorities have
overseen packaging.
Industry watchers say that the reorganization, while it is still dependent on other effective changes being made,
will likely produce an agency "that is capable of acting when demand from the public arises and will not be
subordinate to any agency with higher or alternative priorities," said Lester Ross, a Beijing¬based attorney with
U.S. law firm WilmerHale.
Awareness of China's food-safety issues intensified in 2008, when milk tainted with the industrial chemical
melamine resulted in the death of six infants and illnesses in 300,000 others. The issue shocked the public and has
spurred leaders to issue high-profile crackdowns.
The government will also establish a new energy bureau and merge the National Energy Administration and the
State Electricity Regulatory Commission, according to the proposal. The new agency will be overseen by the NDRC.
It comes as China looks for ways to make its economy more energy efficient and as it looks for ways to make its
energy price controls more closely adhere to market price changes for oil and natural gas.
It also proposed merging the regulators overseeing its publishing and its film and broadcast industries, combining
the General Administration of Press and Publication with the State Administration of Radio, Film and Television.
Beijing plans to merge its maritime law-enforcement agencies into one administration under the Ministry of Land
and Resources, uniting the coast guard with fisheries law-enforcement and antismuggling authorities. Those
those responsibilities are now shared among different ministries.
The new authority will likely play a role in China's increasing maritime territorial disputes with Japan and with
Southeast Asian nations. Fishing boats and civilian maritime regulatory vessels have played a major role in those
disputes, testing Tokyo and other nations with claims overlapping China's in the East China and South China seas.
—Shangguan Zhoudong and Chuin-Wei Yap contributed to this article.
China Collapses 2 Major Ministries (The New York Times)
By EDWARD WONG
Published: March 10, 2013
http://www.nytimes.com/2013/03/11/world/asia/china-announces-reduction-of-cabinet-level-ministries.html
BEIJING — Chinese officials announced Sunday that the government would consolidate some cabinet-level
ministries in an attempt to smooth out bureaucracy. The move is the seventh such restructuring attempt in three
decades, according to Xinhua, the state news agency.
Officials said the number of ministries under the State Council, China’s cabinet, would be reduced to 25 from 27.
The plan was submitted on Sunday at a session during the annual meeting of the National People’s Congress, a
legislative body that generally approves policy already made by senior Communist Party officials. The changes
were presented by Ma Kai, secretary general of the State Council.
The Ministry of Railways, long criticized for being a haven of corruption, will be split into administrative and
commercial arms. China Railway Corp. will oversee the commercial duties, while the actual network of trains and
railways will fall under the Ministry of Transportation.
The railway ministry has come under particularly harsh criticism in recent years. In February 2011, Liu Zhijun, the
minister at the time, was placed under investigation for corruption. He was expelled from the party months later
and now awaits a formal trial. In July 2011, China’s ambitious plans for high-speed rail construction across the
nation were called into question following a fatal high-speed train crash near the eastern city of Wenzhou.
Among the other changes announced Sunday, the Health Ministry will merge with the National Population and
Family Planning Commission, according to a report by Xinhua, the state news agency. The family planning
commission manages China’s one-child policy, which some economists now say is meaningless, given
demographic changes taking place in the country. The policy has led to widespread abuse and corruption by family
planning officials at local levels — forced sterilizations and abortions still take place — and has resulted in a stark
gender imbalance across China, in which men outnumber women.
The Xinhua report also said the State Administration of Food and Drug would be elevated to a general
administration, giving it more power to combat tainted food and drugs.
Two agencies that manage and censor the media, the General Administration of Press and Publication and the
State Administration of Radio, Film and Television, will be merged into one.
The government will also streamline the National Energy Administration to change the way the energy industry is
regulated.
Xinhua reported that at the legislative session on Sunday, Mr. Ma, the member of the State Council, said,
“Departments of the State Council are now focusing too much on micro issues. We should attend to our duties and
must not meddle in what is not in our business.”
China Calls for Global Hacking Rules (The New York Times)
By DAVID BARBOZA
Published: March 10, 2013
http://www.nytimes.com/2013/03/11/world/asia/china-calls-for-global-hacking-rules.html
SHANGHAI — China has issued a new call for international “rules and cooperation” on Internet espionage issues,
while insisting that accusations of Chinese government involvement in recent hacking attacks were part of an
international smear campaign.
The remarks, by Foreign Minister Yang Jiechi, were China’s highest-level response yet to intensifying reports that
the Chinese military may be engaging in cyberespionage.
“Anyone who tries to fabricate or piece together a sensational story to serve a political motive will not be able to
blacken the name of others nor whitewash themselves,” he said.
Speaking to the news media on the sidelines of the annual session of the National People’s Congress on Saturday,
Mr. Yang said that the reports were “built on shaky ground” and that cyberspace should not be turned into a
battlefield.
Beijing has stepped up its response to the attacks in recent weeks, saying that China is often the victim of such
attacks. Although security experts have found evidence that many of the most aggressive attacks can be traced
back to Internet addresses inside China, the Chinese military recently said that attacks on its own computers were
linked to Internet addresses in the United States.
Many experts on the issue acknowledge that it is difficult to pinpoint the origins of attacks. However, some experts
in the United States and Canada say there is more and more evidence that the attacks on Western governments
and multinational companies are coming from China and that the data that is being retrieved seems to involve
issues of concern to the Chinese government.
American intelligence officials have also said privately that they have evidence of Chinese government
involvement in the attacks, and the White House is expected to press Beijing on the issue.
US main source of cyberattacks against China (China Daily)
Updated: 2013-03-11
http://usa.chinadaily.com.cn/china/2013-03/11/content_16296323.htm
China was subject to an increasing number of cyberattacks in the first two months of this year, with more than half
launched from the United States, China's Internet security watchdog said.
In the past two months, 6,747 overseas servers were found to use Trojans or botnets to control nearly 1.9 million
mainframes in China. Among them, 2,194 servers located in the United States had controlled 1.287 million
mainframes, making it the largest point of origin of cyberattacks against China, the National Computer Network
Emergency Response Coordination Center said on Sunday.
More than 11,000 Chinese websites were hacked by 5,324 mainframe computers from overseas in January and
February using the backdoor method, with more than 3,500 websites hacked by 1,959 mainframe computers in
the United States. Some 132 mainframe computers located in Japan controlled 473 websites.
Ninety-six percent of phishing sites targeting Chinese e-commerce users were running on foreign servers, with
US-based servers hosting 73.1 percent, the Chinese computer emergency response center affiliated to the
Ministry of Industry and Information Technology said.
The popular news portals China.com.cn, People.com.cn and Tibet.cn have all been victims of attacks from foreign
Internet Protocol addresses in the past two months, the report said.
A total of 85 websites of public institutions and companies were hacked from September 2012 to February,
including government agencies, a provincial examination authority, a property insurance company and a virus
research facility in Central China, according to the report.
It noted that attacks on 39 of those websites were recorded from IPs within the United States.
From November to January, the China National Vulnerability Database also recorded 5,792 hacking attempts from
US IP addresses, the report said.
US accusations
Last month, the US cybersecurity firm Mandiant released a report alleging that a secret Chinese military unit in
Shanghai was behind years of cyberattacks against US companies.
It said Chinese cyberspies infiltrated overseas networks and stole massive amounts of data from US companies
and other entities.
The report was followed by criticism from Western media of hacking by China, saying that their computer
networks were targeted by cyberattacks originating from China and backed by the government or military.
Foreign Minister Yang Jiechi on Saturday said "cyberspace needs rules and cooperation, not war", adding that
China is vulnerable to cyberattacks.
"The international community is closely interconnected on the Internet, therefore cyberspace needs rules and
cooperation, not war," Yang said at a news conference held on the sidelines of the national legislature's annual
session.
"We oppose turning cyberspace into another battlefield, or to capitalize on virtual reality to interfere in other
countries' internal affairs," he said.
China always advocates a peaceful, secure, open and cooperative cyberspace and supports relevant international
rules under the framework of the United Nations and proposes concrete initiatives, Yang said.
"We hope irresponsible rebuke or criticism (against China) will end," the foreign minister said.
Defense Ministry has also refuted the accusations from the US.
The US government's "pre-emptive" policy against attacks by expanding its cyberwar force and setting rules on
cyberwar, exposed by the American media, will not be constructive in promoting cybersecurity among the
international community, Geng Yansheng, ministry spokesman, said on Feb 28.
Chinese military websites were attacked an average 144,000 times a month in 2012 by foreign hackers, with 62.9
percent from the US, he said.
"China has been a major victim of cyberattacks for years, and the Chinese government is strongly against hacking
behaviors and will crack down on hacking in accordance with the law," a spokesman with the CNCERT said.
Xinhua and Associated Press contributed to this story.
China adjusts approach to North Korea (The Financial Times)
By Kathrin Hille in Beijing
March 10, 2013
http://www.ft.com/intl/cms/s/0/b4fbeee8-8964-11e2-ad3f-00144feabdc0.html#axzz2NB45YMic
The contrast could not have been more striking. Some delegates at China’s National People’s Congress last week
were heatedly discussing whether Beijing should scrap its alliance with North Korea.
But when Yang Jiechi, foreign minister, faced the press at the weekend, he did not divert an inch from Beijing’s
traditional policy script.
“We have always believed that sanctions are not the end of the Security Council’s actions, nor are they the way
to fundamentally resolve the issues in question,” he said. Mr Yang – again – urged calm and restraint on all sides.
Following the adoption last Thursday of a new round of sanctions against North Korea, all eyes are on China to see
how far it will go in cutting support for its long-time ally.
“Beijing is the key actor with regard to all the banking and trans-shipping issues. […] If the Chinese government
chooses to enforce resolution 2094 rigorously, it could seriously disrupt, if not end, North Korea’s proliferation
activities,” write Marcus Noland and Stephen Haggard from the Peterson Institute for International Economics on
their blog.
“[The new resolution] is unlikely to advance the denuclearisation agenda unless China decides to treat them as a
floor rather than a ceiling and really apply the pressure.”
The contrast between increasingly public challenges to Beijing’s dated alliance with Pyongyang and its cautious
official response underlines the dilemma China finds itself in. A foreign policy with the main goal of maintaining
stability appears to be failing in the case of North Korea, and now the remaining options seem to pose the risk of
making things even worse.
“Chaos in the Korean peninsula would put China’s security under huge pressure,” says Cai Jian, deputy director of
the Korea Center at Fudan university in Shanghai.
He says China will enforce the latest sanctions “a little bit more strictly than in the past but not too strictly”.
There is a growing consensus in Beijing that the North Korean government’s brinkmanship is harming Beijing’s
interests and that just repeating past appeals to return to the negotiating table is having no effect.
Deng Yuwen, deputy editor of the Communist party publication Study Times, wrote in the FT earlier this month
that Beijing should ‘abandon North Korea’ as Pyongyang had long lost its supposed strategic value as a “buffer”,
and China’s interests and values were more aligned with the west.
The government has been very careful not to back such radical change, but it is quietly adjusting its attitude.
Although China’s support for the latest Security Council resolution is no sharp change following its backing for
three earlier rounds of sanctions against North Korea, diplomats say it has been more engaged in consultations,
especially with the US.
“Although the US and China differ in their political tactics towards North Korea, they both advocate safeguarding
peace and stability on the Korean peninsula,” says Wei Zhijiang, director of the Korea Studies Institute at Sun
Yat-sen University. “Therefore I personally believe that the two should work together to control the crisis on the
Korean peninsula. In other words, there is a lot of room for strategic co-operation between China and the US on
the Korean peninsula problem.”
Beijing’s problem lies in how to do this. Chinese diplomats last week rejected almost angrily suggestions of a
US-China deal on a draft resolution. Chinese foreign policy experts fret that taking too hard a line against North
Korea, or being seen as openly siding with Washington, could trigger either more bellicose acts from Pyongyang
or even the regime’s collapse – both scenarios which Beijing views as worse than the status quo.
Chinese academics point to recent incidents where Beijing has been reluctant to turn against regimes it has long
worked with even where there was less at stake than in North Korea. China’s insistence that it must not interfere
in other nations’ internal affairs has made it, alongside Russia, a de facto backer of the regime of Syria’s Bashar
al-Assad, and exposed it to blame for the failure to end the country’s two years of civil war. In Libya, Chinese
companies saw their operations disrupted following the overthrow of Muammer Gaddafi as Beijing had backed his
regime until the very end.
“This was inconvenient, but we stuck to our principles,” says a Chinese diplomat. “In the case of North Korea, we
are bound by more than just principles: We have a friendship treaty. So we can only make the most subtle of
adjustments.”
Additional reporting by Zhao Tianqi
Online
Socialist Ghost Haunts Reform Prospects in China (THE WSJ CHINA REAL TIME
REPORT BLOG)
March 10, 2013
By Russell Leigh Moses
http://blogs.wsj.com/chinarealtime/2013/03/10/socialist-ghost-haunts-reform-prospects-in-china/?mod=WSJB
log
Does the new Chinese leadership have a Lei Feng problem?
Lei Feng is the socialist icon whose dedication to Mao Zedong and to helping those in distress has produced
various campaigns to study his example —including a current one tied to the 50th annual “Learn from Lei Feng
Day” that has so far produced a new set of commemorative stamps, a large exhibition in Beijing, innumerable
articles and commentaries in the state media, and no less than three films.
The legend of Lei Feng is a relic of the Mao era that perhaps should have died out long ago, but instead it’s still
breathing–a sort of political zombie in a period when the Party’s main theme is supposed to be about moving on,
and refocusing reform to the modern era.
Kitschy as much of it may seem, the current fuss over China’s most famous Good Samaritan has worrying
implications for the country’s political direction.
In one sense, of course, the campaign is perfectly benign. In a period when Chinese social media is swamped by
self-examination over breakdowns in morality, officials naturally want to promote examples of selflessness as a
way to build trust in a society that has little of it.
“True faith, great love, selfless dedication, and striving forward is the common component in the hearts of all the
people who work for the prosperity of the country and a happy life,” reads the lead editorial in Friday’s edition of
the Communist Party’s flagship newspaper People’s Daily (in Chinese). Lei Feng and other more recent exemplars,
the paper says, are “the backbone of the nation” and “the living spirit of the people.”
These appeals to gallantry are aimed at cadres more than citizens. While the previous Chinese leadership
shuddered when turmoil surfaced in society, new Party chief Xi Jinping and his allies are more concerned with
official misbehavior (in Chinese). Campaigns like this one about socialist heroics should be another happy sign
that this new group has arrived armed with new methods.
But there’s another side to this revival.
The exaggerated emphasis on Lei Feng and other socialist champions sends a signal that major political reform
under China’s new leadership is going to be very tough to engineer. The very same editorial extolling socialist
virtues on Friday also tried tying those qualities to the “China Dream” theme that Xi Jinping has been referring to
since he took over as Communist Party leader in October, speaking of the “Chinese soul” as a means by which the
nation would “get back to the glory and dignity” necessary to “achieve our dream of China.”
Trusting in political campaigns for inspiration is more than just an exercise in nostalgia for some in the Party. It’s
an alternative path, and a sign of early opposition to the change in political thinking that Xi’s been sponsoring.
Where’s this cheekiness coming from?
Certainly some of it comes from conservatives, who encourage these Lei Feng initiatives because they believe that
focusing on morality puts ideology—rather than reform—at the top of the agenda. Leftists also like this new
nostalgia, because the campaigns keep alive the opportunity for the kind of mass appeals that they hope will bring
people out in the street to support the sort of economic leveling many of them think China desperately needs.
Party reformers—and those in society who see Xi as a savior—have to be perplexed as to why these sorts of
campaigns haven’t been killed off by now.
Are Xi’s forces too weak to prevent reminiscence from getting in the way of reform, or is this the real Xi we’re
seeing? An announcement Sunday that China plans to reorganize some of the country’s largest and most powerful
ministries proves Xi is capable of pushing through necessary administrative changes. But what reformers want is
an ideological rethink and they have to be wondering why the new leadership hasn’t been willing or able to bury
socialist nostalgia in the ground for good.
Good Lord: In China, Christian Fundamentalists Target Tibetans (Time World
Blog)
By Clarissa Sebag-Montefiore / XiningMarch 08, 2013
http://world.time.com/2013/03/08/good-lord-in-china-christian-fundamentalists-target-tibetans/
When Dawa said yes to a party held by American friends in the city of Xining, she expected music, drinks, and a
chance to practice her English. But it soon transpired that there would be more to the evening’s activities.
“When we arrived one person said loudly: ‘Lord!’ and started to cry,” Dawa, an earnest Tibetan in her late 20s,
recalls in a café in Xining, the capital of China’s Qinghai province. “Some people came and touched me and cried.
We were so afraid. We thought, Why are they crying?”
For Dawa and her friend Tenzin (names have been changed to protect their identities), both Tibetans from
nomadic families trying to make it in the big city, the situation was not only potentially dangerous if they had been
caught by police but humiliating. “We were upset,” explains Tenzin. “They had told us we could learn English. We
felt like fools.”
The pair had been roped into an evangelical Christian gathering. For missionaries, places like Xining provide rich
pickings among so-called unreached peoples. In the city, Hui Muslims sporting white caps live side by side with
Tibetans, many wrapped against the cold in colorful robes. An increasing number of the latter have come from the
sprawling Qinghai-Tibet Plateau in search of work and education.
Tibet is one of the most coveted locations for nondenominational American and Korean Christian groups angling
for mass conversion. Most are fundamentalist Christians who prioritize preaching and winning converts over the
charitable works traditionally performed by mainstream missionaries. The more radical evangelists believe in the
biblical notion of the “Great Commission” — that Jesus can only return when preaching in every tongue and to
every tribe and nation on earth is complete.
On websites like the U.S.-based Joshua Project, ethnic minorities are seen as “the unfinished task.” Of these,
“Tibet has long been one of the greatest challenges,” reads a summary. “In 1892 Hudson Taylor said: ‘To make
converts in Tibet is similar to going into a cave and trying to rob a lioness of her cubs.’”
Missionary work remains illegal in China and is viewed as a tool of Western infiltration. In 2011, officials issued a
secretive 16-page notice ordering universities to counteract foreigners suspected of converting students to
Christianity. But in parts of Qinghai proselytizing is being quietly tolerated, according to Robert Barnett, a Tibet
scholar at Columbia University. He cites estimates that as many as 80% to 90% of the few hundred foreigners
living in Xining are fundamentalist Christians.
Barnett believes the reason for the government’s tolerant attitude is twofold. First, American missionaries, often
funded by their churches, provide a valuable service teaching English for scant pay. Second, by targeting Tibetan
Buddhism, missionaries might just help the government erode this integral part of Tibetan identity. Keeping a lid
on restive Tibet, which China invaded in 1949–50, is paramount. Under Chinese rule, self-immolations by
Tibetans protesting religious and political subjugation have become common in recent years. Tibetan-language
schools have been closed down, nomads resettled in towns and cities, and monasteries subject to close police
surveillance. Images of the exiled Dalai Lama, Tibet’s spiritual leader, are banned.
“There is a certain underlying commonality of purpose between the evangelizers and the new modernizing
Chinese state. It’s just convenient for them to use each other,” explains Barnett. “[Today missionaries] have
greater opportunities coming in on the coattails of the Communist Party.”
Jason, whose name has been changed at his request, is one such American working clandestinely on a student
visa. He knows foreigners who have been kicked out of more politically sensitive areas of Tibetan-populated
Qinghai by authorities. But he is thriving in Xining. Leaning forward enthusiastically in the bustling Western-style
business he manages, he lays out his reason for coming to China: “When I moved out one of my main agendas
was to see if the teachings of Jesus work in an environment where they are not known at all.”
Jason compares the Kingdom of God to an outstretched hand available for anyone to “grab.” But for most Tibetans
grasping the hand of Jesus is a moot point. Some might adopt him as one of a pantheon of gods; others simply
find his story unimpressive. “[Missionaries say,] ‘Well, look at the miracles Jesus is able to perform, to turn water
into wine and to heal the sick,’” Elizabeth Reynolds, a Fulbright scholar researching Tibetan culture in Xining,
explains. “The Tibetan goes: ‘Is that all he can do?’ It’s believed that such special phenomena [already] occur
around high lamas.”
To combat such indifference, radical Christians in the past have employed tactics such as tract bombing —
undercover distribution of thousands of leaflets in Buddhist areas. In one blog, published in 2006, a young zealot
gives a blow-by-blow account of tract bombing among Tibet’s “satanic” monasteries. After his mission is complete,
he observes: “Man how blinded these people are.”
Many missionaries today are subtler. Many become Tibet scholars in their own right. Most entrench themselves in
local life. Much of the informal English instruction in Xining is run by missionaries as are the majority of the foreign
cafés. They translate the Bible into Tibetan, distribute flash drives containing their beliefs and rework Tibetan folk
songs with Christian lyrics. Some help run orphanages. Targeting the young is key. When a South Korean
missionary asked Tenzin which Tibetans needed help, he suggested the elderly. According to Tenzin, the Korean
replied: “Not old people — [we want] children.”
Aggressive tactics persist, however. In a quiet Tibetan town three hours drive from Xining, one local describes
seeing a missionary throw coins into the air. “This comes from Jesus,” he declared to the astonished crowd. The
same Tibetan remembers with an incredulous laugh being told that Christianity brings cash. “All Buddhist
countries are poor,” the missionary said. “If you believe in Jesus, you will be rich.”
If conversions are to be found, it is among those who stand to benefit the most from missionary-led charities and
social enterprises. Tibetans in Xining reported knowing at least one convert, an uneducated teenage Tibetan given
a job and board by missionaries. According to sources, he hangs around hospitals, spreading the word of God and
translating for nomads who do not speak Mandarin.
Open conversion, however, remains rare. Few would risk the wrath of family members by abandoning their own
faith. Barnett describes hearing about one case in which relatives threatened to kill a missionary who had
converted their kin. As such it is impossible to know how many converts there are. Barnett says: “I think we are
going to wake up one day and see these people have made serious inroads into a culture already under threat.”
For Jason, it is about providing choice. If a Tibetan travelled to America to share Buddha’s teachings, he reasons
you “have a right” to hear their views. It is misguided to think that “Tibetans are too stupid to make decisions
about their own life,” he says. “Personally, I would like for all people in the world to have access to the teachings
of Jesus.” Asked how he envisions Christianity in China, he insists: “I don’t think it is building big gaudy churches
and having people wear suits and changing their culture.”
Back in the café, Dawa is not so sure. Religion is essential to her Tibetan identity. “I know my way,” she says
resolutely. “I believe in Buddhism. They cannot change me.”
Chinese
Student
(chinasmack.com)
Kills
American
Overseas,
Posts
$2
Million
Bail
by Cecilia Miao on Friday, March 8, 2013
http://www.chinasmack.com/2013/stories/chinese-student-kills-american-overseas-posts-2-million-bail.html
From NetEase:
Chinese Study Abroad Student Hits and Kills American, Posts 2 Million USD Bail
SAN FRANCISCO (People.com.cn) – American local media are reporting that the mother of a 19-year-old Chinese
international student, whose speeding in Seattle of King County in Washington state caused one death and injured
four local residents, has posted the astronomical 2 million USD bail to get his son released. Prosecutors were
worried that the foreign student would jump bail but nonetheless allowed the release.
According to a Seattle Times report, in 2012 November, Xu Yichun, a Chinese international student studying at
the South Puget Sound Community College in Seattle, was driving his newly purchased Mercedes-Benz C350 with
four other students on their way back to the apartment from grocery shopping. Xu Yichun did not stop at a stop
sign and broadsided a car driving towards him, causing severe injuries to the other driver, 25-year-old American
female Brenda Gomez-Zapata, who died of her injuries 9 days after being taken to the hospital, with the other
three passengers in car being severely injured as well.
The police investigation found that at the time, Xu Yichun was driving his car at over 60 mph, when the residential
area’s speed limit was 30 mph. Xu Yichun told police that he was driving only a little faster [than the speed limit]
and it was only because his GPS navigation system showed that he had taken the wrong road that he had made
a U-turn.
The police then found out that Xu Yichun does not actually hold a Washington driver’s license, nor an international
driver’s license. He confessed to police that although he has a driver’s license in China, he has never driven in the
United States before.
Xu was arrested and taken into custody by the police. King County prosecutors on 2012 November 14th charged
him with 6 offenses, including one count of vehicular manslaughter, three counts of vehicular assaults, and two
counts of reckless endangerment. On December 6th, this case will be heard for the first time at the King County
Superior Court located at the regional justice center in Kent.
Recently, Xu Yichun’s mother rushed over from China and produced a 2 million USD cashier’s check at the March
1st local time bail hearing. After verification by the county jail, her son was released at 8 o’clock that night, but
Xu Yichun’s Chinese passport was still held by the court.
Deputy Chief of Staff for the King County Prosecuting Attorney’s Office Ian Goodhew said, “Rarely is a bail of that
amount posted.” He said prosecutors asked the court to set the bail at 2 million USD because if the bail was too
low, Xu Yichun would very likely jump bail once he posts bail. He said there had been similar cases where Chinese
nationals somehow fled to China after paying the bail despite having their passports seized. He said: “We are very
much concerned he won’t show up for court.”
China and the United States currently do not have an extradition treaty. Goodhew said that if [Xu Yichun] jumps
bail, it’ll be hard to get him back. But at the same time he also acknowledged that because Xu Yichun does not
have a violent criminal record nor has he failed to appear in court before, it would be very difficult for the court to
refuse bail.
This case has a lot of attention from the Seattle media, with the local population actively commenting on news
websites.
Comments on NetEase:
山姆猫大叔 [网易北京市朝阳区网友]：
Investigate, where does the money came from!?!
cd8yangjin [网易重庆市网友]：
Investigate, what kind of “second generation” is he??
网易贵州省贵阳市网友: (responding to above)
If not Official Second Generation [children of government officials], then it’s Rich Second Generation [children of
the wealthy], so just go with first degree murder and a life sentence of having his ass fucked by foreigners.
网易江西省手机网友：
Xu Yichun’s mother rushed over from China. Such a big incident, why didn’t his father come?
Mother: Your father is in meetings in Beijing and simply couldn’t.
bfett16 [网易浙江省温州市网友]：
1.18 million naked officials, your sons are in deep shit, really deep shit…
网易上海市手机网友
There have been proposals suggesting that civil servants should be allowed to have two babies, but I think we
should enforce compulsory castration on all civil servants, and furthermore only recruit eunuchs for civil servants.
Doing this has many benefits. First of all, it eliminates the dangers of government officials keeping mistresses.
Additionally, having no descendents also reduces their need for taking money, as well as putting an end to their
improper transferring of assets as “naked officials” into the hands of their children abroad. Not only this, China
currently has a gender imbalance, so if only the castrated can be hired as civil servants, this can effectively
alleviate the gender imbalance problem, and what more, can eliminate at the root the instances of government
officials buying sex from underage girls, maintaining law and order as well as morality in society. Because of being
castrated, the assets left over by officials after they die can all be handed over to the national treasury or directly
distributed to the poor and disadvantaged masses. This truly is killing multiple birds with one stone. Furthermore,
eunuchs are one of the oldest occupations of the Chinese people, originating from at least the Spring and Autumn
Warring States Period. Thus, castrating all civil servants can foster and promote Chinese culture. So, in the
interests of the nation, for the welfare of the people, for the young girls, for social harmony, please castrate all
civil servants.
网易美国手机网友:
This piece of news deliberately deleted the part where Xu Yichun tried to bribe the cops after the accident. The
person is the son of the CEO of TaxChina.com Xu Zhaohong.
网易江苏省无锡市手机网友 [马克斯主义]: (responding to above)
Is this information accurate?
网易吉林省长春市网友 [philip094]: (responding to above)
Requesting verification.
天香:
Bailed out? Isn’t the U.S. a country with a robust legal system and model of international human rights? The
reporter is too lousy, and should have made public the U.S. traffic accident laws, preventing us from thinking the
crows of the world are all black [the whole world is the same kind of corrupt], that even Western officials can be
bought, where just having money can cover for crimes. [Some Chinese netizens misunderstood the paying bail as
Xu Yichun successfully resolving his legal troubles and getting away with his crime.]
yubei771:
It should be possible to determine the source of the money. An amount that even most Americans can’t produce
but us Chinese can, what an honor. I just checked and the richest guy in China is not surnamed Xu.
网易英国手机网友：
Investigate your ass, just because they have money it has to be dirty money? If your son was in trouble, wouldn’t
you pay to bail him out?
shiyumaomao2010: (responding to above)
Looks like you stupid cunt should also be investigated! Fancy car, hits and kills a person, and pays a 2 million USD
bail! Can you be certain what he’s earning is clean money? If not, then isn’t the money they’ve embezzled all from
the ordinary common people? What’s wrong with us investigating it? Looks like you’re also a retarded Rich Second
Generation or Official Second Generation!
摸石头摸到金子:
Finally we can let all the patriots get excited. Killed an American, and we’ve all become rich people.
网易江苏省南京市手机网友:
Rich Second Generation have emigrated abroad, to cause trouble for Americans.
Gauche
Graft:
Official
(beijingcream.com)
Corruption
And
Conspicuous
Consumption
By John Wagner Givens March 9, 2013
http://beijingcream.com/2013/03/gauche-graft-official-corruption-and-conspicuous-consumption/
It’s the political season in China, with the dual National People’s Congress (NPC) and Chinese People’s Political
Consultative Conference (CPPCC) swinging into annual two-week sessions. The period is normally a huge
gift-giving event and a tremendous boon to the luxury goods industry. Businesspeople hoping to curry favor with
officials shower them with preposterous presents, from overpriced cigarettes to ”Gucci handbags, Hermès scarves,
Montblanc pens and $30,000 diamond-studded Swiss watches” so ostentatious they would make Kim Kardashian
blush, as New York Times reported a few years back.
But vigilante netizens have begun to expose the conspicuous consumption of particularly brazen officials, and top
leaders seem increasingly concerned about the light such tawdriness casts upon the supposedly communist ruling
party of a very unequal country. They’ve banned public spending on luxury goods, and more recently, according
to CNN, stopped “advertisements for luxury products on… official state radio and television channels,” a move that
immediately lowered the share prices of Burberry, LVMH, Richemont, and Chow Tai Fook (a Hong Kong-based
jeweler that seems to specialize in huge pieces of gold).
Between official anti-corruption and frugality campaigns, luxury gift-giving might appear to be down this year, but
some expect “the gifts to eventually be given, but very carefully and only once the campaigns slow down,” as Bill
Bishop writes. All of this makes this blogger reflect that, Bourdieu notwithstanding, if China’s aristocracy had not
been completely wiped out by revolution, perhaps there would be someone around to point out how ridiculous and
unnecessary all this is.
Classism is nothing to be blasé about. Ethically and economically there is nothing more antithetical to human
progress than the idea that who your parents are is more important than who you are and what you have
accomplished. At the very least, however, old money helps expose conspicuous consumption for what it is, the
lurid exhibition of wealth. The ultimate guide to American old money, The Official Preppy Handbook, for example,
recognizes that wealth is not for flaunting: “Mummy may have inherited a king’s ransom in sables, but she prefers
to wear her four-year-old ski parka.”
While this ethos of not flaunting one’s wealth seems sadly absent from contemporary Beijing, it was evident in the
scholar-gentry class of Imperial China. The scholar-gentry prided themselves in, for example, having the good
taste to prefer simple and elegant Tang Dynasty writing implements to newer and flashier gilded ones. But the
Cultural Revolution and the harsh equality of the Mao years put an end to that. This means that there was no old
money class to provide an example for the nouveau-riche. Couple this with nearly three decades of double digit
GDP growth and you have the perfect recipe for mixing “expensive first growth Bordeaux with Coca Cola.” Obvious
parallels could be drawn with the situation in Russia.
Of course, “good breeding” hardly prevents corruption. But the overconsumption of ostentatious luxury goods
fuels graft by forcing Chinese officials to keep up with the Zhangs. A cornerstone of combating official corruption
is to make sure that civil servants receive adequate salaries that provide a secure, if plebeian, middle-class
lifestyle. This does not happen in China, where top leaders earn around $22,000 a year and judges (crucial targets
for corruption) in China’s poorer inner provinces make as little as $2,000 a year. But if Chinese officials feel the
need for yet one more $15,000 Swiss watch, then not even substantial salary increases would allow them to live
within their means.
In the Qing Dynasty, wealthy Manchu princes, considered somewhat useless as they possessed neither the
horsemanship of the Manchu solider nor erudition of the Chinese official, were known as the “children of the Eight
Banners (八旗子弟).” Today, the term is sometimes used to refer to the Princeling Party (sons and daughters of
communist high officials) whose increasing dominance of China’s politics puts them at the heart of ostentatious
corruption. But at least the Manchus would have had a class of scholar-gentry to look down their noses at
princelings speeding around Beijing in $260,000 Ferraris.
John Wagner Givens is a researcher at Louisville’s Center for Asian Democracy and contributor to The Durian. He
also writes for the Huffington Post and tweets @JWagerGivens.
Reporter Asks Emotional Three-Minute Question About The Environment,
Receives No Response From NPC Delegates (beijingcream.com)
By Anthony Tao March 8, 2013
http://beijingcream.com/2013/03/reporter-asks-emotional-three-minute-question-about-the-environment/
(See Video)
The environment is everyone’s concern, because we all live under the same sky — in Beijing, often a dark, dirty
one, rife with health hazards. It’s our collective duty to take care of it, but what can anyone — an individual,
particularly one with power — do to spur a collective response against man-made threats to our natural world?
What would they do?
That’s exactly the question one reporter — described by local media as a “foreign journalist” — posed to a panel
of delegates at a National People’s Congress press conference on Wednesday. Watch a clip of the inquiry above,
and the response — specifically, the lack thereof.
The excellent English subtitles are provided by Liz Carter, a frequent contributor to Tea Leaf Nation who blogs at
A Big Enough Forest.
“I am also very concerned about environmental problems,” the unnamed reporter says. “So I want to ask every
delegate — because every time this question is asked to an individual, we all say, ‘Well, that’s not under my
control.’ Now, if we think about things in a different way, if I just think, if I were the minister of the enivornment,
if I, myself, were the environment minister, if I wanted to improve air quality, well, what could I do?”
“Everyone has to breathe this air,” she continues. “If you could somehow live here and avoid that, that would be
some kind of magic, right? So it’s because every person, work unit, and company must, by necessity, face this
problem — that is to say, if we solve this problem soon, won’t everyone have a chance to be healthy, won’t we
have a good environment?
“If we all take responsibility, and commit to one purpose, if I said, ‘At my work unit, we must have X number of
cars, employees show up at 8 and work for X number of hours, if I can’t allow for any changes, if that’s how things
are, can we change our environment?”
She goes on for a bit longer, then gets emotional through this next part.
“We always say we must, absolutely must develop economically. But I believe GDP and the environment are
connected. Even if our GDP is zero, but if we are able to solve environmental problems quickly, I think this would
be a great accomplishment for officials. Right? And even if we grow by 15 percent, but our environment was
already so terribly polluted, our lifespans would be shortened, our living bodies would be in pain, at that point,
what good is having a lot of money?
“I think this is a problem for everyone.
“Now, let’s look at it from a different angle: can’t we do anything in our professional capacities? Because everyone
says, that’s not my problem. Coming here to ask these questions, I haven’t ridden in a car, I’ve taken the subway
the whole time.”
She ends abruptly. The delegrate running the session, the newscaster tells us, said “she just answered her own
question.”
In a way, by not caring to reply, the delegate answered her question, too.
NPC Delegate Zhong Nanshan: What Good Is The World’s Highest GDP If The
People Can’t Breathe? (beijingcream.com)
By Robynne Tindall March 8, 2013
http://beijingcream.com/2013/03/npc-delegate-what-good-is-gdp-if-people-cant-breathe/
Although the skies were conveniently blue for the first day of the National People’s Congress on March 5, by the
next day the AQI was already creeping back above 300. In an interesting twist, a prominent member of the
National People’s Congress has criticized the Chinese government for its anti-pollution efforts.
In an interview with Shenzhen Evening News published yesterday, Chinese Academy of Engineering scholar and
NPC delegate Zhong Nanshan, 77, who rose to fame in 2003 for his work during the SARS crisis, said he hopes the
government will start paying as much attention to pollution levels choking our fair city as it does to GDP.
We just saw a panel of delegates refuse to answer a female reporter’s question about the environment — perhaps
she should have asked Zhong, who has conducted research into the true scale of Beijing’s pollution problem:
The Beijing Municipal Health Bureau’s 2010 tumor prevention report reveals that the lung cancer rate among
Beijing men has reached 76.57 in 100,000, while the breast cancer rate among Beijing women has reached 48.6
in 100,000. “Pollution rates are highest in the Chaoyang, Fengtai and Shijingshan districts and lowest in Miyun
and Huairou.” Zhong fears that if this level of pollution continues, the number of cancer patients will increase
astronomically.
“People have no natural defense against pollution.”
Zhong also hit back at China’s national oil companies for claiming that national standards are too low and that
they aren’t to blame for the current crisis. “So we can’t make any international comparisons?” Zhong asks. “Does
internationalization not come into it at all?”
Zhong believes the environment should be used as an indicator of government performance. Although GDP is a
clear indicator of economic progress and living standards, priority should also be given to the environment: “When
basic actions like eating, drinking and breathing become an issue, what good is having the highest GDP in the
world?”
Naturally, he finishes on an inspiring note.
“When the Chinese people come together, there is nothing we can’t achieve,” he says. “If the government acts
now and people give up their polluting habits, we will see a real difference in the next 10 years. Hopefully I will still
be alive to see it.”
Will it ever actually happen? You decide.
Robynne is a writer, translator and Chinese graduate living in Beijing. She tweets @frommyplate.
(H/T John Hanrahan)
After Young Family’s Arrest, Tension Between Street Vendors and China’s City
Officers Comes to Fore (tealeafnation.com)
March 10, 2013 | by Minami Funakoshi
http://www.tealeafnation.com/2013/03/after-young-familys-arrest-tension-between-street-vendors-and-china
s-city-officers-comes-to-fore/
A one-and-half-year-old girl wraps her arms around her mother’s neck, crying. Her mother, handcuffed, cannot
hug her back—she can only squat down beside the police car to match her daughter’s height. “I’m sorry, mommy
can’t hold you…”
On March 6, 2013, one Chinese female street fruit vendor, along with her husband and daughter, were arrested
in Haizhu, a district in the southern metropolis of Guangzhou. They were released after a 24-hour detention.
According to public statements by the city management bureau, officers from the bureau—referred to in Chinese
as chengguan—warned the merchant, who remains unnamed, that street vending is illegal and ordered her to
leave. Though the woman replied that she would leave after completing one last transaction, she continued to sell
fruit. When the chengguan ordered her to stop, she began showering curses and abuse upon the chengguan and
began attacking them. Her husband, who later arrived at the scene, also joined the skirmish.
After scuffling, the chengguan grabbed the vendor by her neck, handcuffed her, and led her to the local police
station.
Mommy, don’t go!
The violence and cruelty inflicted upon the vendor’s one-and-half-year-old daughter shocked Chinese Web users
on Sina Weibo, China’s Twitter. Many protested that the police had no reason to detain the daughter and deplored
the harsh treatment she received. “During the 24-hour detention, the police forbade anyone from even changing
the one-and-half-year-old girl’s diaper,” reported Kai-Fu Lee (@李开复), a prominent investor and social
commentator. “The key point is that the kid is completely innocent!” wrote @增肥威猪.
What angered many Web users the most, however, is the psychological trauma the little girl suffered. Some
insisted on the need for more humane management methods: “When I saw that last photo [of the daughter
hugging her mother], I couldn’t stop my tears from falling…we need law and order, but we also need humanity,”
commented @gogoRebecca.
Others, who recognize the need to regulate peddlers, called for a much simpler approach—cover children’s eyes.
“Regardless of whether or not the peddler has violated regulations, chengguan should not have strangled the
peddler or demonstrated their power in front of a small, weak child,” wrote @名家评说.
“Although peddlers have difficult lives, it is also undeniable that their illegal businesses affect social order. The
lack of humanity in society that the photos depict is also an undeniable fact—especially in front of small kids! Even
if we need to execute criminals, we cannot do so in front of children. This is the most important point,” argued
@炯john.
Recently, cases of innocent children being exposed to gruesome aspects of society have plagued China: in 2011,
two-year-old Yue Yue died after being run over twice and ignored by 18 passersby, and earlier this week, a
two-month old infant named Haobo was strangled to death by a car thief. Perhaps Chinese users responded in
uproar to this incident because they view it as part of a disturbing series.
A “cleaner” China
Crackdown on illegal street vendors peaked before and during the 2008 Beijing Olympics, when the government
sought to present to the world a clean, civilized, and developed China. This process of “sanitization” of the city
continued even after the Olympics concluded, at times sparking violent confrontations.
Many of the illegal street vendors are poor migrant workers who, because of unemployment and low wages, are
forced to peddle to make ends meet. In 2011, a clash between chengguan and migrant street vendors in Xintang,
Guangzhou sparked a protest, which gathered the support of other migrant workers.
Some observers wonder whether chengguan target peddlers not necessarily because they engage in illegal
activities, but because they are migrant workers who often have little means of protecting themselves and
therefore make easy targets. Some city residents regard migrants as an eyesore.
The Weibo blame game
Street vendors—who sell anything from chuanr (roasted meat on skewers) and stuffed buns to DVDs and jade
bracelets—are, however, a vibrant part of Chinese city life. They sell various household items at affordable prices,
and cater to the needs of many local residents. Many Chinese Web users argue that peddlers make their lives
more convenient and accuse chengguan of abusing their powers during crackdowns.
In this case in Haizhu district, however, the blame seems harder to pin. The “out-of-the-control” female peddler
pushed, hit and kicked the city management officers, and was about to pick up a fruit knife when the officers
called the police. Her husband also attacked police officers and vandalized their car.
Some Chinese Web users maintained a neutral position regarding this incident. “The chengguan politely told the
woman to leave. Not only did she not leave, she also cursed, hit, and called up her husband to help her stir up
trouble. It is true that we have to sympathize with those in weak positions, but we also have to judge each case
according to circumstances. If the officers didn’t stop her, then who would have done so?” asked @88湘湘.
Other users took sides. Some denounced the city management, deploring it for incompetence and violence: “All
this happened because the chengguan has no way of implementing civilized measures. The reason why they
cannot make the people comply with them through talking is because the people are all disappointed in them,”
wrote @小叶同学要奋斗.
“They don’t capture the people they should be capturing, and they use all their energy to capture those who
shouldn’t be captured. A few big guys pressing against one weak, delicate woman—what is this!” wrote @圆
圆Queenie.
Some took the opposite stance, defending the city management and dismissing the street vendors as threats to
social order. “Actually, many city-management officers are very good…we can’t only require city-management
officers to be civil. If peddlers are being unreasonable, what can you do?” asked @ 告诉你也没用.
“It’s getting warm and the number of peddlers around my complex is increasing again. The roads are already
narrow; every time a car comes the roads become blocked. After they finish selling breakfast, they throw garbage
and sewage everywhere. The smoke from the chunr is unbearable. They are so disorderly—such a disturbance!
Someone must regulate them,” complained @guardaisy.
Chengguan or peddlers—who is the victim?
Web users’ ambivalence toward the incident perhaps stems from the controversial positions chengguan and
peddlers occupy in Chinese society. Though Chinese citizens often view chengguan as aggressors, street vendors
resort to violence as well, as shows the 2009 case in Shenzhen, Guangzhou where a street vendor stabbed a
chengguan officer to death.
Or perhaps it reflects a shift in public opinions about the position of illegal peddlers and the role of chengguan in
maintaining social order. As one anonymous chengguan purportedly wrote, “Our job is to deal with society’s most
vulnerable citizens and squeeze them further; conflict is inevitable…[but] the vulnerable are not necessarily
innocent. The sympathy these illegal vendors get has, to some extent, made the vulnerable privileged while we
chengguan have become the humblest of the humble.”
Chinese society, it seems, must re-evaluate stereotypes surrounding chengguan and street vendors. As one
columnist wrote on Minxi Times, a Fujian Province newspaper: “Even when suffering curses and abuse,
[chengguan] must restrain himself not to curse back, not to hit back…all this is for the sake of the city…Don’t they
deserve more sympathy than these illegal street vendors we call ‘marginalized’ groups?”
Is the ‘China Dream’ Really a ‘Strong Military Dream’? (tealeafnation.com)
March 8, 2013 | by Rachel Wang
http://www.tealeafnation.com/2013/03/is-the-china-dream-really-a-strong-military-dream/
On March 3, an article entitled “Focusing and Building up a ‘Strong Military’ Dream” appeared on the front page
of the PLA Daily. At first glance, the article appeared to be a typical propaganda piece, appropriate to publish
during China’s Two Sessions, the meeting of China’s congress. The article was replete with slogans like, “Obeying
the Party is the soul of a stronger military,” and “Working hard and efficiently is an important sign of solid work.”
On a deeper level, however, it may be a political piece echoing the unveiling of the national budget on Tuesday,
in which China estimated it would 720.2 billion yuan ($114.3 billion) on its military in 2013, which represents an
increase of 10.7%.
The concept of the “Strong Military Dream” might have bigger implications – it could represent the China Dream.
A day after the PLA Daily article was published, an article entitled “The China Dream is a Strong Military Dream;
a Great Nation Must Have a Strong Military” appeared on several big-name websites, including huanqiu.com, the
Chinese-language edition of the Global Times. The article pointed out that the “‘China Dream’ is not a ‘Dream of
Riches,’” and that, “On the political world stage, a rich nation is not the same as a strong nation.” The main thrust
of the article was that the China Dream was one of a strong nation – and a strong military.
Around the same time as these articles were publicized, China Central Television’s 24-hour English news channel
promoted a topic of discussion on Weibo:
#CHINA DREAM# ‘I have a dream!’ At no other time in history have the Chinese people so openly declared their
hopes, their dreams, and their vision of a better future. Millions inside China are nurturing their China Dream,
while millions of people outside China are fascinated by life here. Share your China Dream with the world and
inspire others!
A short movie entitled “China Dream,” which was made up of individual portraits, was also produced. While the
state media was trying hard to push positive statements like, “I want our country to be courageous, and have the
vision, and wisdom to overcome difficulties,” reactions to the movie and the China Dream rhetoric in general
showed that most Chinese Web users were not buying in. Instead, the phrase gave rise to skepticism, sarcasm,
and complaints. One Weibo user with the handle @天堂鸟128 wrote: “My dream is that I will not be invited to
‘drink tea’ [slang for being summoned to meet with government officials] while discussing contemporary
Chinese issues.” Another called @如果奶茶 commented, “According to my basic knowledge of foreign history,
when a dream is attributed to a nation, this dream must be accompanied by a huge wave of immigration, as with
the American Dream. We could check with Two Sessions representatives, who are calling for us to protect and
realize the China Dream, and ask how many of them or their relatives have already realized the American Dream.”
Web users also took the opportunity to comment on the disparity between the state-promoted “China Dream”
and their own unrealized hopes. User @周旖婷 wrote, “Cleaner air, healthier water, safer food, safer baby
formula, on-time flights, unimpeded roads, lower gas prices, lower taxes…not a lot, just a little…I have a dream,
just a dream.”
State media promoted its dream, but failed to define it concretely. According to one article, achieving the China
Dream entails “unswervingly following the road of socialism with Chinese characteristics, achieving national
development and socialist modernization in a peaceful and civilized way.” Weibo user @籍佳婧JJJ felt it was just
another empty slogan:“Why do I feel like the recent popular news catchphrase ‘the China Dream’ is a bit hollow,
is this an imitation of the ‘American Dream’? Even I can’t stand by the Party this time.”
The cold reception that the “China Dream” got from its target audience shows a certain disillusionment with the
government’s ability to make dreams come true. Most discussion of these dreams involved calls for new
governmental involvement or regulations. As Weibo user Yu Jianrong (@于建嵘), a researcher from the Chinese
Academy of Social Sciences with over one million Weibo followers, commented: “The ‘American Dream’
represents the dreams of each American, and it is based on the protection of individual rights; the ‘China Dream’
represents the dream of the nation, which is based on re-enforcement of the state’s power.”
Harsh realities and a lack of upward mobility might constitute a couple of the reasons that it is difficult to define
the “China Dream.” Perhaps an editor from the Henan Business Daily put it best: “In mainland China, for the rich
and the powerful ones, the biggest dream is the ‘American Dream,’ while the smallest is the ‘Hong Kong Dream.’
For someone with no money or power, even bringing back baby formula is a just dream.”
The Words That Cause Skype to Spy on You, Snitch to Chinese Authorities
(techinasia.com)
Mar 8, 2013
by Steven Millward
http://www.techinasia.com/news_ticker/how-skype-spies-on-what-chinese-users-are-saying/
It has been known for years that the made-for-China version of Skype, run in conjunction with local web company
TOM Online, spies on its users. Now a 27-year-old computer-science graduate student, Jeffrey Knockel, has
figured out a bunch of keywords that cause Skype to snitch on you and send a chat-log to its servers where
authorities, in accordance with local laws, may find out what you’re chatting about. Of course, most of the terms
are obvious “sensitive” words that get removed from all over the Chinese web every minute of every day. Still, it’s
a fascinating read over on BusinessWeek. Here’s a snippet:
Knockel, a bearded, yoga-practicing son of a retired U.S. Air Force officer, has repeatedly beaten the
ever-changing encryption that cloaks Skype’s Chinese service. This has allowed him to compile for the first time
the thousands of terms—such as “Amnesty International” and “Tiananmen”—that prompt Skype in China to
intercept typed messages and send copies to its computer servers in the country. Some messages are blocked
altogether.
[...] Microsoft, which bought Skype in 2011, is a founding member of the Global Network Initiative, a group that
promotes corporate responsibility in online freedom of expression. “I would hope for more,” Knockel says of
Microsoft. “I would like to get a statement out of them on their social policy regarding whether they approve of
what TOM-Skype is doing on surveillance.”
Hit the source for the full piece.
[ Source : BusinessWeek ]
Online outrage over fruit seller's run-in with China cops shows power of social
media (NBC Behind The Wall Blog)
By Le Li, Producer, NBC News
http://behindthewall.nbcnews.com/_news/2013/03/10/17237642-online-outrage-over-fruit-sellers-run-in-with
-china-cops-shows-power-of-social-media
Cops in China charged with fighting petty crime have become so notorious for their abuse of power that their
official name, Chengguan, has become slang for thuggishness. “Don’t be too chengguan,” one might admonish
another, meaning “don’t be such a bully.”
That reputation was given more fuel Wednesday when a newspaper ran pictures of an officer tackling a diminutive
fruit vendor in the southern boomtown of Guangzhou as her 16-month-old daughter looked on. During the
incident, he grabbed Li Shengyan's neck and wrestled her to the ground after a dispute over a fruit knife.
Once such incidents would have provoked little comment and the authorities did not need to fear the court of
public opinion.
But the popularity of social media websites has changed all that. Users of China’s two most popular Twitter-like
services had commented on the pictures some 7 million times by Friday, many expressing their disgust at the
police.
There are now signs that those in power are being forced to take people power seriously, even if the eventual
outcome is much the same.
One expert on Chinese social media said that while officials’ first instincts were “to cover up and distract attention”
from controversial events, they now faced losing their jobs if they handled them badly.
Wednesday’s incident – as described by the report in the Southern Metropolitan newspaper -- started after
officials confiscated her fruit knife. One officer, Ao Dating, then threatend to take away her fruit and the cart.
Pomegranate thrown
Li then yelled at Ao and hurled a pomegranate at him. This enraged Ao and he grabbed her by the neck. The
officer then forced her to the ground. His colleagues eventually dragged him off Li.
One picture showed Li with her hands tied -- unable to comfort her daughter as the young girl hugged her.
After the confrontation, Li was arrested and taken to a police station along with her daughter. Her cart was
confiscated.
By Thursday, the story had become an internet sensation.
“Brute!” one blogger posted.
“Can’t you be a little more civilized? Do you know how much it will traumatize the girl,” another said.
The traditional response given by officials to international press enquiries about events like this is: “I do not
know.”
However, this time, a spokeswoman for Guangzhou’s City Urban Administrative and Law Enforcement Bureau was
surprisingly forthcoming.
“Our bosses are investigating the incident and will inform the public once we find out,” she said. “We are waiting
for the results too.”
Jeremy Goldkorn, an expert on Chinese media and Internet culture, said local governments were increasingly held
to account by higher authorities for issues raised on the blogosphere.
“If they do not react, these lower level officials like city urban management police could lose their jobs,” he said.
“The first reaction of these types of officials is just to try to cover up and distract attention from the case. Because
of the speed and growth of the social media, it becomes more and more difficult for that kind of distraction
happen,” he added.
Investigation blames Li
After its investigation, the law enforcement bureau said an officer had been suspended and there was a report Li
had been given an apology as she was released from custody.
However, the investigation blamed it on Li, accusing her of attacking officials, injuring one. A picture of Li throwing
the pomegranate was also released.
The original report in the Southern Metropolitan was taken down and other websites commenting on the incident
also disappeared.
Li's cart was returned, but she was left unhappy.
“They (the officials) said ‘The girl, and her parents were well taken care of by the police,” she posted on a Tencent
Weibo account which was registered to her. “It was just a show. My girl’s diaper was not changed in 24 hours …
the police should face what they have done instead of writing a nice article to make themselves look good."
Huang Pei, of NBC News, contributed to this report.
Miscellaneous
Newswire
In China, public anger over secrecy on environment (Reuters)
By Sui-Lee Wee and Adam Jourdan
BEIJING/SHANGHAI | Sun Mar 10, 2013
http://www.reuters.com/article/2013/03/10/us-china-parliament-pollution-idUSBRE92900R20130310
(Reuters) - When China's environment ministry told attorney Dong Zhengwei he couldn't have access to two-year
old data about soil pollution because it was a "state secret", it added to mounting public outrage over the
worsening environment.
Microbloggers, state media and even delegates to this week's session of the National People's Congress, the
largely rubber-stamp parliament, were already critical of the government for poor air and water quality. Now they
are also expressing disquiet over the scarcity of information about the environment available to them.
For incoming President Xi Jinping, who formally takes over towards the end of the parliament session, the
two-pronged challenge is to find the balance between growth and further degradation of the environment, and
also to decide whether to level with citizens just how bad the problem is.
"The significance of this event goes far beyond just environmental protection," said Dong, in an interview with
Reuters. "It concerns the problem China has had for many years - the issue of government transparency. (They)
shouldn't use 'state secrets' as a shield when they're not in the right."
The environment has already been one of one of the most frequently raised issues at the annual parliament
session and China's authoritarian government has admitted it has a problem.
"Our country, in a very short time over the past 30 years, has achieved brilliant economic achievements," Xin
Chunying, vice-director of the NPC standing committee's working group on the legal system, told reporters on
Saturday.
"But at the same time, we have paid a heavy price with the environment. This price must stop, it has to be reduced,
we must say ‘no' to the status quo."
China does not usually allow public scrutiny of governance, particularly on sensitive issues such as corruption and
security. But public anger over the environment may force authorities to accommodate the public in small ways.
"In other areas it is still dangerous," said Gary Liu, a professor at the China Europe International Business School
in Shanghai. "But pollution is a relatively safe area, because people have enough justification to fight against the
government and they can easily get enough public support because everybody is in the same country, breathes
the same air."
SILENT KILLER
A choking smog in Beijing in January, far above hazardous levels, has been one of the most dramatic signs of
China's environmental problems, but Dong is convinced that soil pollution is the country's "silent killer."
About 40 percent of China's agricultural land is irrigated with underground water, of which 90 percent is polluted,
according to Liu Xin, a food and health expert and a member of an advisory body to parliament, who was quoted
in the Southern Metropolitan Daily.
Citing "state secrets", the environment ministry last month denied a request from Dong for information on data
on soil samples that was collected in a national survey that started in 2006 and ended in 2010.
The decision was perplexing to Dong, since he had been given signals that authorities would be accommodating
on environmental issues.
He said after filing more than 10 lawsuits against other government departments in 2008, officials from the
legislative affairs office of the State Council, or cabinet, pleaded with him to stop suing those agencies and "sue
the environment ministry on the basis of the public's interest".
The government has caved in to public pressure for access to environmental information before. In early 2012,
amid growing public outrage about air quality in the capital city, Beijing began announcing publicly the amount of
tiny pollution particles in the air that measure 2.5 micrometers or less in diameter.
"Before the release of PM 2.5, there was controversy, some people thought that releasing the information on air
quality may lead to panic in the society," Yan Chengzhong, a Shanghai delegate, said on the sidelines of the
parliament session, according to the Wen Wei Po newspaper.
"But the facts proved this is not the case. 'Being unaware' would only cause people to panic."
And just last month, the government acknowledged for the first time that pollution had given rise to "cancer
villages", admitting that cancer rates in villages near factories and polluted rivers were far higher than they should
be.
But examples of the environment ministry's shortcomings abound.
Pan Zhizhong, a resident in Panguanying village in northeastern Hebei province, has led his village of 1,900
people in protesting against the construction of an incinerator plant since 2009.
When Pan sued the Hebei Department of Environmental Protection in 2011, he was given access to the
environmental impact assessment that the environment ministry claimed it had done in the village. Pan
discovered that the assessment, carried out by the Chinese Academy of Meteorological Sciences, had names of
people who had left the village two decades previously and even a person who had been dead for two years - all
"expressing favor" for the project.
Pan surveyed 100 people in his village, showing them the purported environmental impact study. The majority of
them gave him written statements that declared: "I've never seen this form," according to documents seen by
Reuters.
A PRICE TO PAY
Sometimes, challenging the government comes at a cost.
Chen Yuqian, 60, a farmer from the town of Pailian in eastern Zhejiang province, said he has been beaten up five
times in his decade-long fight against soil and water pollution --beatings for which he blames local officials.
On February 20, Chen issued a challenge on Weibo, China's version of Twitter, daring officials from the local
environment protection bureau to swim in a stretch of polluted river. He offered 300,000 yuan ($48,200) as a
reward.
Four days later, dozens of men, carrying sticks and rocks, charged into his home and started smashing things,
Chen said.
"They are trying to scare me so that I don't petition anymore, so that I don't report on the pollution anymore,"
Chen said.
Xu Shuifa, the Communist Party secretary of the district that governs Chen's village, told Reuters by telephone
that he had no links to the attackers and said the attack was linked to a land dispute Chen has with three of his
neighbors.
Back in Beijing, Dong, the attorney, said he had filed an appeal with the environment ministry for the soil survey
data and expected a decision within two months. He said he would go to court if he was denied.
(Additional reporting by Hui Li and Beijing Newsroom in BEIJING and John Ruwitch in SHANGHAI, Editing by Bill
Powell and Raju Gopalakrishnan)
Print
China Plans Overhaul of Railway System (The Wall Street Journal)
By Colum Murphy
March 10, 2013
http://online.wsj.com/article/SB10001424127887323826704578351602004699408.html
BEIJING—China will shake up its massive but troubled railway system and invite greater participation from private
investors including foreigners, according to the head of the country's powerful Ministry of Railways.
Under a plan issued Sunday, the ministry will be dismantled and its administrative and commercial functions
separated.
Currently, the ministry both regulates and operates China's rail system, which has made for a murky structure
and impeded both competition and financing.
Railways Minister Sheng Guangzu also invited investment from both foreign and domestic sources to help deliver
on China's rail ambitions, he said on the sidelines of the National People's Congress, which is holding its annual
two-week session in Beijing. "We are encouraging the involvement of foreign investment," he said.
Long plagued by corruption allegations and heavy debt, since a deadly 2011 train crash China's Ministry of
Railways has also labored under a cloud of safety concerns.
Under the new blueprint, the Ministry of Transport will absorb administrative duties including overseeing
technology and safety standards and service and railway-project quality. A new entity, China Railway Corp., will
focus on operational and commercial areas such as management of freight and passenger business as well as
railway construction. Given the ministry's problems, such a move was widely expected.
Details of the overhaul were outlined in a report delivered to the congress Sunday by State Councilor Ma Kai.
While the plan has yet to be formally approved by the assembly, the congress typically accepts proposals
presented by Communist Party leaders.
The government said it would continue to support railway construction, vowed to speed up reforms related to
investment and financing of railways and pledged to establish a modern corporate system for providing rail
services.
Shaking up the ministry will be a considerable task, but one that analysts say is necessary to keep China's
economy and transportation sector humming.
"The large railway system is critical to China's economy—and will become even more so with the economy's shift
from coastal areas inland," said Gerald Ollivier, senior transport specialist with the World Bank, adding that the
current multiplicity of roles at the ministry creates "some conflicting objectives."
Splitting it up into parts—which could eventually entail creating several regional rail companies—could intensify
competition and improve fundraising. This could help reduce China's relatively high rail costs and fuel the
system's continued development. It could also create additional business for international companies that supply
parts and know-how for China's rail ambitions.
In 2012, China's rail system carried 1.9 billion people. It also carried 17% of the country's freight, as measured
by freight-ton kilometers, according to national statistics. Under Beijing's current five-year plan, the ministry also
oversees annual investment of around $90 billion a year, equivalent to around 1% of China's GDP. Mr. Sheng said
there would be no change in investment goals laid out in the current five-year plan.
China has 98,000 kilometers of railway and plans an additional 5,200 kilometers. Only the U.S. has more rail, with
228,500 kilometers, according to the World Bank. China also has ambitions to build out its high-speed rail
capabilities. In October, the central government said China aims to complete the construction of its high-speed
railway network stretching 18,000 kilometers by the end of 2015, nearly double its current size.
According to the China Federation of Logistics and Purchasing, transportation and logistics costs accounted for the
equivalent of around 18% of GDP—double that of advanced economies. Inefficiencies related to rail, such as poor
interconnection with other transport modes, contributes significantly to costs, said Tom Behrens-Sorensen,
co-founder of transportation-focused consulting firm Navisino (Beijing) Advisors Ltd. "The Chinese economy has
paid a very high price in terms of transportation inefficiencies," he said.
China's rail build-out also came at a price. As of the end of September, the Railways Ministry had debts totaling
2.66 trillion yuan ($418.34 billion) and a leverage ratio of 62%, its financial reports show. In the
January-September period, it reported a loss of 8.54 billion yuan.
The Railways Ministry's Mr. Sheng said Sunday he didn't consider the debt situation "risky" at the moment. "The
current rate is lower than the average debt rate for state-owned enterprises," he said.
Analysts say success of the plan will hinge on acceptance by the Railways Ministry's more than two million
employees. Mr. Sheng said that all ministry staff would keep their jobs. "There won't be any cuts or layoffs," he
said.
Another important factor will be public response to any changes in the prices of rail tickets in China. Mr. Sheng
said the average price for rail tickets is "a bit low." "Later the price should be set according to market rules," he
said.
Former Railway Minister Liu Zhijun—nicknamed "Great Leap" Liu on account of his ambitious plan to roll out
high-speed trains in China—was fired from his post in February 2011 for what state media said was "severe
violation of discipline." State media said he helped Ding Yuxin, a chicken farmer turned businesswoman, win
around three billion yuan in contracts. Under one such arrangement, Mr. Liu walked away with a consulting fee of
10 million yuan, state news agency Xinhua said. Mr. Liu, whose case was transferred to the judiciary in January,
has been unavailable for comment.
The ministry's biggest public blow came later in 2011, when one bullet train rear-ended another in the eastern city
of Wenzhou, killing 40 people and injuring 172. The incident prompted intense public criticism of China's
breakneck growth, prompting one anchor on the official China Central Television to ask on air, "Can we ride a train
that arrives safely?"
Breaking up the ministry could improve fundraising for the rail industry, after the Wenzhou crash made financing
more difficult and as debt has mounted.
"This will improve financial transparency and is an initial step toward leveraging capital markets," said Patrick Xu,
analyst with Barclays Bank. "This will open up the avenue to equity markets."
Citibank analyst Paul Gong said the overhaul will potentially benefit train makers, and that China still needs more
railway capacity. "The pressing issue is how to fund," he said.
If more competition is introduced to China's rail sector—which is seen as a long-term outcome of reform—then
that, too, could bring a windfall to suppliers to the railways sector.
"When you set up competing [rail] companies, it will trigger greater capital expenditure as players push to buy
more trains to grow market share."
—Yang Jie and Rose Yu contributed to this article.
Film buffs thrilled after China unblocks IMDB movie database (South China
Morning Post)
IMDB site blocked since January 2010 after movie site's homepage featured a preview of a documentary about the
Free Tibet movement
Thursday, 07 March, 2013
http://www.scmp.com/news/china/article/1185315/netizens-thrilled-after-china-unblocks-imdb-movie-databas
e
China’s movie fans were thrilled and baffled after finding out on Wednesday that popular movie website IMDB
(Internet Movie Database) had been unblocked by censors - an unexpected move many consider a signal that
more changes are coming.
Both the English- and Chinese-language websites of IMDB were blocked by the government in January 2010.
Given no official explanation, many believed IMDB had offended Chinese authorities when its homepage featured
a preview of When the Dragon Swallowed the Sun, a documentary about the Free Tibet movement led by the Dalai
Lama.
The 2010 move had angered and frustrated netizens, especially avid fans of foreign movies.
On Wednesday, many debated why the site was unblocked. In particular, they questioned its timing - as the
National People’s Congress (NPC) and People’s Political Consultative Conference (CPPCC) were holding their
annual legislative meetings in Beijing.
“Thank you, China’s new leaders, this is wonderful,” wrote a blogger on Sina Weibo, China’s Twitter-like service.
Many speculated on the next sites to be "freed".
“What’s next? Facebook or Twitter?,” commented a blogger.
“Don’t have any expectations for the censors,” advised another. "Unblocking a movie site means nothing."
China's "Great Firewall“, a system of internet restrictions, blocks access to websites the government considers a
threat, among them Facebook, Twitter and Youtube.
Authorities last year blocked the New York Times website after the newspaper reported on Premier Wen Jiabao's
family wealth, amounting to US$2.7 billion. Both its English- and Chinese-language websites still remain
unavailable on the mainland.
“Is China really going to change?”, asked a blogger on Weibo.
Online
Hyundai, Buick dealer apologize in wake of Chinese baby social media incident
(autoblog.com)
By Seyth Miersma
Posted Mar 9th 2013
http://www.autoblog.com/2013/03/09/hyundai-buick-dealer-apologize-in-wake-of-chinese-baby-social-m/
A very strange story out of China today, as Hyundai and a Chinese Buick dealer were forced to face allegations of
using allusions to an infamous child murder on a social media site as a way of promoting the safety features of
their respective vehicles.
The original sad tale goes something like this: On March 4, a man reported to police that he had left his infant child
in a running Toyota RAV4 while he ran into a supermarket briefly. When he came back out, the vehicle and the
child were gone. Later in the week a suspect turned himself in to the police; confessing to them that he had stolen
a sport-utility vehicle, strangled the infant that was in it, and then buried the child in the snow.
As you might imagine, the grisly incident was covered massively in the Chinese media. (There was huge public
outcry as well, as evidenced by the vigil scene, above.) "Changchun baby abduction" was very quickly amongst
the highest ranking search teams of the China's Weibo social media site – an equivalent of Twitter in the
English-speaking world.
With the scary news trending near its peak, a post on Hyundai's Weibo account touted the safety features of the
company's Santa Fe, while also making reference to the child being abducted. In a similar vein, a Chinese Buick
dealer posted this on March 5:
"When buying a car it's completely okay to choose brands with better technology. Tianhe Buicks carry the OnStar
GPS system, which can track down the location of a stolen vehicle at any time and automatically report it to the
police. Feel at ease, have peace of mind, if you're going to buy a car, why not choose a completely safe Buick!!!"
For its part Hyundai claimed that its Weibo post was made by a non-Hyundai employee, and that it would redouble
its efforts at "managing our social networking service accounts." The independently owned Buick dealer
apologized for making "inappropriate" remarks. Meanwhile a Shanghai-based representative of General Motors
said that the company is "monitoring" the situation, and has yet to release a statement.
Women Gain Ground in China. Or Do They? (THE WSJ CHINA REAL TIME REPORT
BLOG)
March 8, 2013
http://blogs.wsj.com/chinarealtime/2013/03/08/women-gain-ground-in-china-or-do-they/?mod=WSJBlog
On this year’s Women’s Day, a host of Chinese media outlets are trumpeting a new study that finds China’s
businesses rank the highest in the world for employing women in senior management roles.
The proportion of women in senior management in China has climbed to 51% this year, up from 25% in 2012 and
outpacing the global average of 21%, according to the study, produced by the Beijing arm of accounting firm
Grant Thornton. In a survey of 200 businesses in China, 94% of them employed women in senior roles, the study
said.
The survey’s findings would seem to represent great news for women in a country with a long history of
entrenched patriarchy – except they conflict significantly with other studies that show Chinese women have
actually been losing ground in the labor force, politics and society.
One recent study by National University of Singapore’s Lee Kuan Yew School of Public Policy and the New
York-based Asia Society, for every five Chinese men who rises to a senior position in the workplace only one
woman achieves the same level of advancement. The ratio is even more lopsided inside the Communist Party: In
the party’s Central Committee, where major policy decisions are discussed, only 10 of the 205 members are
women, and no woman has ever held a spot on the Politburo Standing Committee, the party’s top decision-making
body.
Things are slightly better in the country’s rubber-stamp parliament, the National People’s Congress, where 23%
of the 2,987 delegates are female.
In the World Economic Forum’s gender equality index, an annual ranking of countries by their ability to develop,
retain and attract female talent, China’s ranking declined to 69th last year, down from 57th in 2008.
State-controlled media and economic restructuring have actually added pressure for women to settle down at
home, said Leta Hong Fincher, a doctoral candidate at Tsinghua University in Beijing who studies gender and
wealth equality in China. She cites the legacy of the restructuring of China’s massive state-owned companies in
previous decades, which that led to millions of job cuts that took a hefty toll on employed women.
In a 2010 survey of women’s social status in China by the All-China Women’s Federation, the Chinese
government’s women’s advocacy organization, 61.6% of men and 54.6% of women said that “men belong in
public life and women belong at home,” an increase of 7.7 and 4.4 percentage points respectively from 2000.
“There’s an increase in the number of people who believe women should be in the home,” Ms. Fincher said. “That’s
unusual. In most other societies you see more progression.”
Around one-third of the businesses surveyed by Grant Thornton were state owned and public businesses, while
one third were privately owned and the other third were foreign-funded.
Grant Thornton concedes that females still face obstacles in China’s business world. “ Women still lack equal
opportunities with men in various career opportunities,” said Xu Hua, Grant Thornton’s China CEO.
– Laurie Burkitt. Follow her on Twitter @lburkitt
Popular Topic: Beijing Pollution (chinahearsay.com)
March 8, 2013
http://www.chinahearsay.com/popular-topic-beijing-pollution/
On my infrequent trips to the U.S., I enjoy listening to folks talk about China. The fun is twofold: hearing the
misconceptions and finding out what China issue has risen to a level where your average American is aware of it.
To determine what China issue is making the rounds usually requires several days, at least with the people I
usually talk to. FYI, in the past it was usually lawyers, many of which came to Asia on an infrequent basis, if at all.
On this trip, it’s been mostly software guys and administrative/exec types. What makes this crowd different is that
a very high percentage of them have to been to China recently, many within the past year. Moreover, since the
company has a significant presence in China, the country never really drops off anyone’s radar screen.
So given all that, it took basically 1/2 of my first day to determine that the China story on everyone’s mind is . . .
the air pollution in Beijing.
As a long-time Beijing resident, this actually made me a bit sad. The one thing that foreigners, and least the ones
over here, are associating with the country, and the capital city I’ve lived in for so long, is the air quality. That’s
a bummer.
I’ve been saying for a while now that I have confidence that the government will eventually solve this problem. In
addition to the health problems, the image/PR problem is significant. Based on my experience over the past week,
I think I underestimated the PR disaster that is Beijing’s air.
If officials begin to realize that folks in other countries are not talking about Beijing opera or duck or the Forbidden
City, but rather coughing and air filters and such, perhaps that will spur some new government policy in this area.
I’m trying to find a silver lining here . . .
Chinese netizens turned their noses up at The Times’ description of the Chinese
middle class (offbeatchina.com)
Alia | March 8th, 2013
http://offbeatchina.com/chinese-netizens-turned-their-noses-up-at-the-times-description-of-the-chinese-middl
e-class
China’s growing middle class, a group that almost every business on this planet wants to get hold of, isn’t one that
is easy to define, partly due to China’s unique model of development; and partly due to the country’s own history
and culture.
British newspaper The Times recently gave another try at deciphering the mindsets and lifestyles of the Chinese
middle class. But Chinese netizens, many of whom are, presumably, either from middle class families or are part
of the cohort themselves, don’t seem to agree with what the newspaper has categorized as the Chinese middle
class life.
“She loves Gucci handbags, buys organic food from Tesco (Beijing branch), has an IKEA kitchen, smuggles
formula milk from Hong Kong, uses an app to track the pollution in Beijing, loves BBC’s Sherlock series.
He drives a Hyundai Tucson SUV, wants a BMW SUV, smokes Hongtashan cigarettes, owns a Canan EOS-60D
camera and an iPad2, wants to buy a property aboard, is obsessed with British private school.”
Thus goes the description of “How the Chinese middle class really live.” If we can ignore the unconscious (or
conscious) emphasis on British brands, it seems a pretty decent depiction of a middle class family (In fact, if we
replace BBC’s Sherlock series with American TV dramas, and British private school with US Ivy League, it’s much
more convincing.)
However, none of the Chinese netizens on Sina Weibo, China’s leading microblogging service, and Douban.com,
China’s most active online community for movie music and book reviews, seems to agree with The Times. To
them, a Chinese middle class family should live a much fancier life. Like netizen Gary原创 commented: “The
British are making a joke of the Chinese middle class.”
Much of the disagreement comes from the brands mentioned in the description. For example, netizen KK爱在
Mayday pointed out: “I think the middle class in China should at least use Chanel. Gucci is for old ladies who sell
vegetables in the market.” 付昊_轮印前行 went on: “Chinese middle class drive BMV. Hyundai is for losers.”
Netizen 张幼驹 commented: “Smuggling formula milk, watching Sherlock, and buying Hongtashan cigarette.
These are all behaviors of a loser.” Netizen Annie asked: “An IKEA kitchen counts as middle-class? Are you
kidding me?” 阿华甜 has the same question: “Isn’t IKEA for the poor?” Netizen 叶子Cathy picked on Tesco:
“Serious? The Tesco in Beijing is almost in the country.”
In one word, as netizen 快乐成长的小鱼 concluded: “This is not how the Chinese middle class really live. This is
how the Chinese middle losers live.”
Criticism aside, some other netizens started to shift to a more interesting discussion of whether the concept of a
Chinese middle class makes sense at all. Netizen A-l-i-z-a weighed in: “In my opinion, China has never
experienced a period that is good for a healthy middle class to grow. We step into an M-shape society directly –
more poor and more rich, but very few middle class.”
Today, a report from the Wall Street Journal quoted statistics from McKinsey & Co, and estimated that the Chinese
middle class, with annual disposable income of between $16,000 and $34,000, make up only 6% of the urban
population in China. By that definition, many of China’s middle class may not even be able to afford the life
depicted by The Times, given the higher prices of houses, cars and even a Starbucks coffee. But apparently,
Chinese netizens have much higher expectations of a middle class lifestyle.
Many netizens concluded that the description by The Times showed that the West knows nothing about China and
its middle class. But could it be that it’s the Chinese themselves who don’t understand themselves? Many of
China’s netizens, mostly urban youth and young professionals, are exactly the middle class that many brands try
hard to sell. And yet, they don’t seem to think themselves live up to the label.
For whatever reason, the possession of luxury brands (luxury even by Western standards), instead of premium
brands, is seen as the symbol of middle class. China’s nouveau riche, with rapidly growing disposable income in
the past 2 decades, moves directly from “I know no brand” to “I want the best brand.” A product is either for the
mass market, or for the affluent. In a sense, many Chinese equal middle class with rich.
Another possible reason of the lack of self-identification is the fact that the Chinese middle class aren’t living an
easy life. In no means can China be said to have a strong middle class. The feeling of lack of security is paramount
with sky-rocking property prices, deteriorating food safety, increasingly unbearable pollution, and the pressure
from a 4-2-1 family structure, thanks to the one-child policy (a typical working couple needs to support 4
grandparents and 1 kid).
In this whole discussion of the Chinese middle class, the most interesting piece is that all, except for the cigarette,
are foreign made. There is no doubt that China’s rising middle class look to their Western counterparts for
aspirations – being foreign means middle-class. But something is lost in translation.
Seth MacFarlane is Big in China (theatlantic.com)
1 MAR 9 2013
http://www.theatlantic.com/china/archive/2013/03/seth-macfarlane-is-big-in-china/273873/
One of many charming touches in Seth MacFarlane's Oscar-hosting role -- remember that? -- was the line about
those wacky, funny-talking Hispanics. It was a good thing, he said, that Salma Hayek, Javier Bardem, and
Penelope Cruz were all so easy on the eyes, since "we" could barely understand a word they say.
Seth got some flak for that in America, but they appreciate him here in China. According to Still and Always My
Favorite Newspaper™, the China Daily, the country's foreign minister, Yang Jiechi, had this exchange with a
French reporter at his news conference yesterday. Here's how the story looks, with details below:
(See Image)
Foreign reporters flaunt their Mandarin skills
Caroline Puel, French magazine Le Point correspondent in Beijing, was surprised twice on Saturday at the press
conference with China's Foreign Minister Yang Jiechi.
Besides getting a chance to ask a question out of the hundreds of reporters at the scene, Puel also got high marks
from Yang for her Chinese.
"Your Chinese is so good I can understand your question without asking you to repeat it", Yang told her with a big
smile.
Yes, I did notice the "with a big smile" touch; and this story caught my eye mainly because I find it droll. At the
same time, I am trying to imagine the counterpart in America: a Secretary of State Clinton or Kerry hearing a
question from a German or Japanese reporter and, before answering, noting that the questioner's English is "so
good" that it can actually be understood. It's another little marker on the long road of China's developing a sense
of ease as an international presence and power.
Bonus Favorite Newspaper™ Detail. Here's today's front page:
(See Image)
Yeah, I could go for some of those cyber rules myself. This morning all of my normal VPNs appear to be blocked,
and I am filing this by working out some rococo routing to the Atlantic's corporate VPN, which is not really
designed for this sort of international intrigue. The accompanying story is actually worth reading for the Chinese
perspective on the ongoing cyber wars. For instance this detail, which is how the situation is often described from
the Chinese point of view:
Cyber security has become an increasingly prominent issue as security threats in a peaceful era, and seems
another way for Western powers to apply pressure to contain China's rise, they [various Chinese officials] say.
Wen Weiping, a professor at the School of Software and Microelectronics at Peking University, put forward his
explanation on the belligerence.
The US believes it is justified to launch military attacks on any country that launches cyber attacks threatening its
cyber space, he said, and it must raise a fuss against such alleged attacks to build up a case. Wen said the US also
aims to strengthen its cyber security forces as a deterrent and maintain its advantage during the information war.
Winning in China: Henry Winter's Story (theatlantic.com)
4 MAR 9 2013
http://www.theatlantic.com/china/archive/2013/03/winning-in-china-henry-winters-story/273871/
On our China Channel, Eli Bildner posted an eloquent appreciation of Henry Winter, an American who had made
a big impression in China before his death last year, from a cerebral hemorrhage, at age 43. I mention it now for
these reasons:
- To encourage you to read it. I never met Henry Winter, but I feel as if I know him thanks to this essay. And, as
you will see, Bildner is writing about much more.
- To point you to two items of context about Win in China, the idealistic/crazy game show on Chinese TV that made
Henry Winter famous there. One is my article on the show's early days back in 2007; the other is an item about
Ole Schell's documentary film on the program.
- To embed a clip of one famous moment from the show, which Bildner describes. This is when Henry Winter
exchanges quick repartee, all in Mandarin, with the judges on this Chinese reality-TV show. Eli Bildner describes
one of the exchanges:
In a question-and-answer session following Henry's pitch, one of the panel's three judges, a software billionaire
named Shi Zhuyu, asks Henry whether he is just a "floral piece" for his company. At first, Henry looks confused,
and the show's host -- thinking that perhaps Henry had become lost in the rapid-fire Mandarin -- interjects to
clarify:
"Are you just one of those good-looking but useless CEOs?" she asks.
"I got it the first time," Henry replies with a grin. "I was just waiting for him to ask a bit more tactfully."
You can see that exchange starting shortly after time 3:00 of the short clip below. His "bit more tactfully" zinger,
and the laughing reply by its target and the Chinese audience, is around time 3:35. Even if you don't understand
a word of it you will enjoy the personal dynamics that need no interpretation, including the pose Henry Winter
strikes around time 3:18.
(See Video)
I'm sorry never to have met Henry Winter, and am glad for Bildner's effort to see that he is remembered.
How to Succeed in China Without Really Trying (theatlantic.com)
MAR 8 2013
http://www.theatlantic.com/china/archive/2013/03/how-to-succeed-in-china-without-really-trying/273850/
Henry Winter, who passed away last summer at the age of 43, did just that.
My favorite video of Henry Winter shows him strolling down the streets of Shanghai's central business district
wearing a wool poncho, a red-plumed cowboy hat, white wrap-around sunglasses, and knee-high leather boots.
It's an outfit that would probably pass as unspectacular in Greenwich Village or San Francisco. But in Shanghai,
a tall white man promenading in a Zorro costume draws stares. Two girls in matching track suits (China's take on
the school uniform) point at Henry and giggle. The camera pans to show two men on electric bikes jolting to a stop
as Henry walks by. They're wearing black coats and shaded glasses, their faces as austere as the chalky Shanghai
sky.
I first saw the video in late 2010, and forgot about it soon after. But when I heard of Henry's death this past
summer -- at age 43, from a cerebral hemorrhage -- I found the clip once more. The video is from a
now-discontinued Chinese television show called Wealth Story Forum. It tells the story of Henry's life, touching on
his schooling at Columbia and Wharton, work stints in France and Hong Kong, a stretch as a kung fu student in
China, and finally, his emergence as a Shanghai-based tech entrepreneur with an outré fashion sense.
But it's the first part of the video -- of Henry parading around in his Zorro outfit -- that sticks with me. Part of what
shocked me about Henry's death was how lightly broadcasted it was. The only obituary I'd found of him was a
seven-line piece appearing in the Lansing State Journal, a small daily in southern Michigan. That and a handful of
posts on Chinese social networks: these were the only public tributes to a person that I'd considered an
embodiment -- and an inimitable one at that -- of "making it" in China.
But in the months since Henry's passing, I've thought less about the record of memorials and panegyrics, and
more about the specific images that kick off the video clip. Those thirty seconds of Henry in full Zorro raiment
constitute a scene of pure joy. It's a scene that needs no context or commentary, a scene that is perfectly content
to be where it is.
Which is, perhaps, Henry's greatest lesson.
****
I first encountered Henry Winter through a "Business Mandarin" course I took while living in southwest China. Our
class had spent most of the semester working through the canon of Chinese business case studies: KFC,
Starbucks, China and the WTO. But with our workbook complete and a couple of sessions to go, our instructor
rolled out a television set and popped in a pirated DVD; it was the third season of a reality TV show called Ying Zai
Zhongguo, or "Win in China."
I've had friends describe Win in China as a Sinocized version of The Apprentice, and based on their explanation it
does seem like a reasonable analogue. But unlike The Apprentice, in which participants contend for a job
placement, the contestants on Win in China are all entrepreneurs vying for 10 million RMB (US$1.5 million) of
venture capital. Over the course of a season, an initial cohort of thousands of contestants is winnowed down to
108 semifinalists, who then undergo a series of business simulations, debates, and nerve-wracking interrogations
as they compete for the final prize.
Win in China ran for three years, from 2006 to 2008, and Henry Winter appeared as a contestant during the
show's third and final season. In the show, each semifinalist has two minutes to pitch his or her business to a panel
of judges comprised of some of China's most prominent entrepreneurs. By chance, the first clip we watched was
of Henry's presentation.
Later, I'd watch clips of some of the other pitches. And while the contestants vary widely in age and background
-- from American-born engineers to hardscrabble high-school dropouts -- their presentations are largely similar:
solemn, earnest, full of technical explanations of revenue models and competitive advantages. Each contestant on
the stage -- save Henry -- wears a somber black suit.
Henry, on the other hand, gives his pitch attired in a flashy pink changshan robe. Speaking in flawless Mandarin,
Henry cracks jokes, gesticulates frenetically, and manages to insert his company's (rather long) domain name
three times. When his two minutes expire, the audience erupts in applause. "It's like we're at a rock concert!" the
show's amused host ad-libs.
Henry's performance on the rest of that episode is just as spectacular. In a question-and-answer session following
Henry's pitch, one of the panel's three judges, a software billionaire named Shi Zhuyu, asks Henry whether he is
just a "floral piece" for his company. At first, Henry looks confused, and the show's host -- thinking that perhaps
Henry had become lost in the rapid-fire Mandarin -- interjects to clarify:
"Are you just one of those good-looking but useless CEOs?" she asks.
"I got it the first time," Henry replies with a grin. "I was just waiting for him to ask a bit more tactfully."
A moment later, another judge asks Henry whether he works overtime.
"There's no glory in working overtime," Henry responds. "I believe in doing quality work in the shortest time
possible."
"But does your CTO work overtime?" the judge presses. "If he works overtime, and you don't, don't you feel bad?"
"I got over those guilt feelings a long time ago," Henry retorts.
The three judges continue to cross-examine Henry; Henry continues to unload his quiver of one-liners and
ripostes. At one point, the host asks Henry to demonstrate his hobby of disco dancing, a request to which Henry
gleefully accedes. At the episode's end, Henry is declared the winner of the day's pitches; given a final minute to
make a speech, Henry kneels on the stage and proposes on-camera to his girlfriend.
Admittedly, I'm the type of person who's moved to tears by most Disney movies and even some poignant car
commercials. But even taking into account that low emotional threshold, watching Henry on Win in China
transfixed me in a way that -- since moving to China -- few things had.
As a college senior, I'd decided to move to China after graduation. Or -- perhaps more accurately -- I'd ventured
the idea of moving to China and allowed everyone I encountered that year to validate my hypothesis.
"I'm moving to China," I'd tell anyone who asked -- friends, parents, parents' friends.
"How wonderful," I'd invariably hear in return. "China is the future." For a year I felt, like perhaps every college
senior since the late '60s, an uncomfortable affinity with Dustin Hoffman's diving suit-clad character from The
Graduate.
But my decision to move to China had less practical roots as well. As graduation neared, I'd realized that I'd spent
my entire education attempting to discover the truth of "the good life." Now, with senior year nearly at its end, I
felt no closer to answering that question -- and clueless as to how to make any life decision in the absence of that
certainty. College had become my fortress, a vehicle for deferring any consideration of my place in what my
classmates and I termed "the real world."
The only way I could conceive of breaking out of this fortress was to go somewhere. I'd always believed in the
alignment of mental and physical
At one point, the host asks Henry to demonstrate his hobby of disco dancing, a request to which Henry gleefully
accedes. itineraries. Perhaps it was an intuition that stemmed from my Judaism, from the story of Abraham,
whose path to holiness begins in the Book of Genesis with a simple command: Lech l'cha -- "Go!" Perhaps it was
a belief that I'd gleaned from my favorite Kafka parable: "When the sage says 'Go over,' he does not mean that we
should cross over to some actual place ... he means some fabulous yonder ... something that he too cannot
designate more precisely, and therefore cannot help us in the very least."
In a sense, I'd spent four years reading about "going over." Moving beyond college required -- almost literally -a leap of faith. I'd studied Mandarin in school, spent a summer in Beijing, and had a couple of contacts at Chinese
universities. That was all I needed. It was decided: I'd "go over" -- to China.
****
Perhaps unsurprisingly, when I actually arrived in China in the late summer of 2010, both my practical and
metaphysical rationales for moving there seemed hopelessly misconceived.
For one, while China may have been (and may still be) "the future," it remained unclear to me what, exactly, my
role in that "future" should be. Nominally, I'd come to China on a research grant, aiming to study micro-finance
and rural development. In practice, I ended up spending day after day in Mandarin classes, wondering why I'd
come to China at all.
And, frankly, by the fall of 2010 even China's status as "the future" seemed precarious. I'd last been in China in
2008, as a summer language student in Beijing. That summer, the reality of China's rise felt palpable; anyone
could perceive it in the ubiquitous construction, the packed streets, the endless Olympic banners proclaiming
"One World, One Dream!" This is the zeitgeist captured in Win in China, which filmed its final episodes in the
months leading up to the Beijing Olympics. With its soaring orchestral theme music, its frequent panoramic shots
of Beijing's swelling skyline, its lofty tagline ("Inspiration illuminates human life, entrepreneurship can change
destiny!") -- Win in China plays like a constant reminder of the magnitude of China's epochal ascent.
The reality in 2010 seemed more complicated. Within weeks of my arrival, the entire country was rocked by
anti-Japanese protests stemming from the capture of a Chinese fishing boat in the disputed Diaoyu Islands. A
month later, netizens cried foul after the son of a provincial official ran over a 20-year-old university student and
then shouted, while speeding away, "Sue me if you dare! My father is Li Gang!" Even the nation's economic
indicators seemed to warn of a less blithe future. In November 2010, China's consumer price index hit a two-year
high of 5.1%. Exports had slowed -- a casualty of the global recession -- and financial analysts within China and
abroad warned of an impending real estate bubble.
Since arriving in China, I'd felt bogged down by these statistics, felt defeated by the sense that I'd "gone over" and
ended up in the wrong place. But, for some reason, watching Henry Winter -- successful, uninhibited, ebullient -on Win in China lifted me from this despair. I didn't know what "winning in China" would mean for me, but I
believed again in its possibility.
****
In January 2012, after a year and a half of living in China, I decided to return to the United States. I'd left my
language studies in southwest China at the start of 2011, and quickly worked my way through three jobs and
three cities. Shanghai was a fitting last stop -- sprawling, glitzy, Starbucks cafés everywhere. I felt halfway home
to New York without even leaving.
I made my decision a day before the arrival of chunjie, the Chinese New Year. This would be my second chunjie
in China; a year earlier I'd spent the holiday with a close friend in his ancestral hometown of Sanming, a
fourth-tier city of two and a half million people in Fujian province. In Sanming, I'd reveled in the vibrancy of the
New Year experience: the drum roll of firecrackers that began at dawn; the cluster of uncles and aunts and cousins
crowding the dining room table; my friend's diminutive grandmother (who'd worked repairing power lines during
the Great Leap Forward) force-feeding piece after piece of chicken into my friend's mouth; the fusillade of
midnight fireworks spurting color into the dark night.
All these details confirmed for me what I'd already suspected from a few hours of watching him on TV -- that
Henry was a worthy benchmark for success in China. My plans for a second chunjie in China involved stockpiling
a week's worth of noodles, Vitamin Water, and Kindle books and waiting out the holiday from my 14th-floor
apartment in downtown Shanghai. On New Year's Eve, I sat in my living room drinking tea and watching fireworks
explode into shards five feet from my apartment. In the morning, I saw that the blasts had left smoke rings on all
the windows.
The official New Year holiday lasts seven days; during that time I left my apartment maybe four or five times. I
didn't really have anywhere to go. Though I'd decided to leave China only a few days before, for months I'd felt
myself slowly pull away -- I worked late, cancelled dinner dates, dreamt of home.
It was after one of my rare ventures out of the apartment that I saw Henry Winter. I'd just returned from an
aimless evening walk around the neighborhood, and I was standing in the foyer of the apartment building, waiting
for the elevator. The doors opened, and there he was, clad in a crisp white suit and a matching fedora.
Since moving to Shanghai a few months earlier, I'd run into Henry a handful of times. We'd first met at a demo day
for tech start-ups; I'd been working for a small investment firm and had come to take in a few of the presentations.
I'd had a hunch that Henry might be there; I knew from his LinkedIn profile that he still lived in Shanghai and that
he was active in the start-up world. And, sure enough, just as the pitches began I spotted Henry across the room.
Later, I asked Henry if he'd sit down with me for coffee and, while arranging to meet, we realized that we lived in
the same apartment building, separated by just three floors. When we did meet for coffee, I was amazed to
discover how similar Henry felt in person to the character I'd come to know on Win in China. Henry's life trajectory,
it was clear, had taken shape out of the same cheerful iconoclasm I'd witnessed on the TV show.
In person, for instance, Henry told me of how when he first began work as a consultant in Hong Kong, he
discovered that he could complete his daily tasks within the first few hours of the day. And so, after a few days of
goofing around in the office, Henry realized that by strategically positioning his suit jacket on the back of a desk
chair, he could furtively slip away from work to spend his afternoons sailing, hiking, and horseback riding.
Henry also told me how he'd grown sick of management consulting, and decided to strike out as an entrepreneur.
He told me how he'd moved to Shanghai to launch a marketing agency, and how he'd ended up creating China's
first text-message promotional campaign. He told me about how he'd decided to audition for Win in China -- how
he'd shown up at the casting call wearing a red blazer, red pants, and a giant blue Superman buckle.
All these details confirmed for me what I'd already suspected from a few hours of watching him on TV -- that
Henry was a worthy benchmark for success in China. And they confirmed for me that by Henry's standard, my own
time in China had been a failure. I'd followed my intuition. I'd left home, "gone over", opened myself up to the
world. But I'd never arrived.
Henry's life trajectory, it was clear, had taken shape out of the same cheerful iconoclasm I'd witnessed on the TV
show.
Henry paused as he exited the elevator. I wished him a happy new year. He reiterated an earlier invitation to join
him for dinner sometime. And then he was off, strolling into the charcoal night.
****
At the end of our coffee date in Shanghai -- the only time that Henry and I actually sat down together -- Henry
handed me a thin book called Made it in China. The book compiled the experiences of a handful of China-based
foreign entrepreneurs, and Henry had authored one of the chapters. Taking out a pen, Henry added a short
inscription on the page before his chapter: "To Eli," Henry wrote, "with best wishes for true success." Reading his
inscription at the time, I didn't feel much -- or if I felt anything at all, it was perhaps even a slight disappointment
at the generic nature of the tidings.
It wasn't until after Henry's death that I returned to Made it in China, and actually read through Henry's chapter.
And while the facts of Henry's story, as recounted in the book, fit perfectly with what I'd already learned, the
framing of the chapter felt entirely foreign.
Henry's contribution to Made it in China is titled "Resilience and Persistence." His essay is less a chronicle of a
series of successes, and more a record of a succession of setbacks; of failed projects, lost sales, and barely
averted bankruptcies. Even Henry's appearance on Win in China, I was reminded, was hardly an unvarnished
success: Despite making it into the final round of the show, Henry ended up placing 12th, six slots away from the
prize money.
Of course, by almost any measure, Henry did achieve real success in China: He built profitable companies,
garnered awards, and lived comfortably. But what I hadn't grasped earlier was that I admired Henry not so much
for how successful he'd been in China, but for how successful he'd been in being himself -- unconventional,
uninhibited, playful, alive.
I'd overlooked that critical modifier that Henry had added in his inscription to me, that Henry had wished me not
"success" but "true success." And that for Henry, "true success" had little to do with winning or "making it in
China" -- succeeding by "going over" -- and everything to do with succeeding by being exactly who he was.
Although Henry is gone, I feel fortunate in knowing that he left his particular prescription for the good life in our
hands, in the short biography that accompanies his chapter in Made it in China:
After a grueling day of telling other people what to do, Henry enjoys recovering with a glass of red wine and a foot
massage, while watching Star Trek in his home theater. He is a firm believer in enjoying each day, and pursuing
passions now rather than later. After all, if aliens blow up the Earth tonight, what was the point of sacrificing
everything for tomorrow?
Today's Chinese Air-Emergency Info Source (theatlantic.com)
3 MAR 7 2013
http://www.theatlantic.com/china/archive/2013/03/todays-chinese-air-emergency-info-source/273832/
There's no longer any surprise in noting that China has grave environmental problems. For the record, I am
sticking with my claim that the simultaneous degradation of air quality, water quality, water supply, food safety,
soil quality, and other environment-related variables is the main challenge to China's continued development. And
of course the global effects of China's rise to wealth -- through atmospheric emissions, pressure on natural
resources, acceleration of deforestation and over-fishing, market demand for ivory and other body parts of
endangered species -- are urgent issue to be resolved with the rest of the world.
The news to me for the day is a site that pulls together relevant pollution readings for cities all across China. Here,
for instance, is the almost unbelievably hellish current reading shown for the city of Tangshan, which is in Hebei
province near Beijing and has been best known as the site of a disastrous earthquake in 1976:
(See Image)
How I am judging hellishness: Two days ago in Beijing, the AQI readings were in the 350ish "hazardous" zone.
That was considered very bad when we were living in Beijing in 2009 and 2011. It's also the level at which I
usually can feel the pollution, in the form of a chronic headache and a layer-of-something in my throat and lungs.
Earlier this year, during the "Airpocalypse" in northern China, the readings in Beijing and other cities were
previously unimagined 700s or above. At face value this Tangshan chart shows something over 1000.
My main purpose for now is to highlight the AQICN site; if you go here, for the Beijing readings, you'll see links to
other provinces and cities, and an explanation of what is being measured. Thanks to @pdxuser and Mark
MacKinnon for pointing it out.
Malware In China, Part 2: iOS Users Are Vulnerable, Too (beijingcream.com)
By John Artman March 10, 2013
http://beijingcream.com/2013/03/malware-in-china-part-2-ios-users-are-vulnerable-too/
Before Spring Festival, we warned Beijing Cream readers about some of the dangers of using Android, how a
specific type of malware works, and what users can do to protect themselves. As mentioned in that post, it’s not
just Android users who should beware, but also those using the iOS platform in its many physical expressions,
especially those with jailbroken devices.
iOS can, too
Because of the open nature of the Android platform, users can easily and unknowingly download applications
repackaged to carry various kinds of malware. With Apple’s mobile operating system, and the amount of control
built into the OS, applications, and hardware itself, the chance of downloading malware capable of hijacking your
connection or retrieving personal information is quite slim. However, that doesn’t mean it can’t happen.
According to Apple (PDF), they don’t need any built-in or third party antivirus software, as the complete
ecosystem is built around control. Even if malware passed the vetting process, including certificates only given to
verified developers, to get onto the App Store, they are then “sandboxed” so that they don’t have access to any
other parts of the system. That being said, that doesn’t mean that malware is not created for iOS, nor is it
impossible for applications to carry malware through the App Store and onto your device.
F-Secure Q4 2012 Mobile Threat Report (PDF) shows that Android accounts for 79% of all mobile malware,
whereas iOS accounts for only 0.7%. Yes, a small number, but as Philip Elmer-Dewitt points out, 2012 was is the
first year that any threats on iOS were discovered by F-Secure.
Tony DeLaGrange, from Secure Ideas, says that there have already been apps approved by Apple that had hidden
and undocumented functionality. Luckily, they weren’t carrying malicious code:
For instance, the iRandomizer Numbers and Handy Light apps had a hidden undocumented feature that provided
free tethering. I wouldn’t categorize this a malware, but the point is that if someone is able to hide functionality
within an app and get through Apple’s review process, then a malicious app getting through this process could
potentially reach a large volume of devices before being identified and removed, especially if the malware delays
its malicious actions to allow time for further distribution.
He adds that it would difficult to pull off, as the app would need to be quite popular and regularly used, but the
payoff would be that much more rewarding.
Jailbroken Nation
As with Macs, there is a veneer of security for iOS, as just not much malware is created for the platform. However,
as we mentioned above and as Kaspersky Lab CEO Eugene Kaspersky believes, this has more to do with other
platforms being more easily targeted than the inherent security of iOS.
When users jailbreak their device, they also disable some key security measures. As Tony DeLaGrange puts it, this
can be dangerous, as more and more of our lives are stored on our mobile devices, including credit card
information, passwords, and social security numbers (emphasis mine):
Jailbreaking an iOS device basically disables code signing, which disables Apple’s Data Execution Prevention (DEP)
control. Once DEP is disabled, pretty much any code can be executed on the jailbroken device. Consequently,
jailbroken iOS apps are not sandboxed, which permits easier access to any data on the device, as well as device
features. Removing these controls opens up the iOS device to malware infestation and potential compromise of
their information.
While the number of jailbroken devices in China seems to be going down, it already presents itself as a target-rich
environment. On top of that, it is amazingly easy to find jailbreak solutions online and offline, with stores actually
advertising jailbreaking services. Easy things tend to attract people without the knowhow or savvy, thus making
for easier targets as the Ike virus from 2011 shows.
Ike.A relied on the fact that many who jailbreak really don’t understand how their device works and used the
default iOS credentials and SSH to infect the jailbroken iPhone and (harmlessly) Rick-Roll the user by changing
the background to Rick Astley. According to DeLaGrange, Ike.B, however, was not as friendly. Using the same
vulnerabilities, it created command and control that made the iPhone part of a botnet that was suspected of
engaging in phishing of ING user login credentials.
Sometimes the Rules Feel Good
While there are certain advantages to jailbreaking, the downsides can be quite severe. And, to be honest, the
non-practical advantages of jailbreaking only really count if you want to tweak the system and know what you’re
doing
I came round to not jailbreaking my device after I found that I couldn’t (a long story). At first, I was very wary of
actually purchasing applications, especially games. But after that first purchase, I have to admit that it feels good
to know that I’m helping to support developers who make interesting content. Also, I now no longer have to worry
about strange ways around Apple controls when upgrading: every single application on my iPad will follow me
version after version with no work on my part.
I’m never going to stop being a cheap person (well, usually), so that’s why I have apps like TouchArcade and
AppsGoneFree that alert me to great games and applications that have either become free or have been reduced
in price.
My advice to all of our readers: Don’t jailbreak; it’ll only put you at more risk. Even if you’re not jailbroken, still be
careful about what you’re putting on your device, put a password on the lock screen, and make sure “Find my
iDevice” is turned on.
And never, never, never leave your device (whatever platform, make, or model) on the table at Starbucks while
you go to the bathroom. It probably won’t be there when you come back.
John Artman has been China watching and covering tech since 2010. Follow him @KnowsNothing.
Hong Kong Viewers Irate At Pretentious TVB Travel Show Featuring This
$360,000 Tourbillon Phone (beijingcream.com)
By Sylvia Wang March 9, 2013
http://beijingcream.com/2013/03/viewers-irate-at-tvb-travel-show-ft-tourbillon-phone/
The largest television station in Hong Kong, TVB, has been catching flak for the reduced quality of its
entertainment programs, from soap operas to games shows. Recently, the station introduced a new travel show,
“Nat Around The World” (叻哥遊世界), in which host Natalis Chan travels luxuriously with his friends to places
such as Dubai, Milan, London, Tanzania, and, of course, mainland China. The episode aired on March 7 and has
received particularly harsh criticism from Hong Kong netizens for being extremely ostentatious.
In the episode, Natalis and his friends are greeted by two so-called local celebrities, and together they enjoy a
dinner worth HK$60,000. Natalis humbly shows his “cheapest” mobile phone to his friends – one that’s worth
HK$2.8 million.
Natalis’s phone looks like an ordinary low-end fold-up, and its specifications are probably slightly better than a
Nokia 3310. So why is this phone so expensive? The host reveals the secret – melded into the mobile is a
tourbillon watch.
Who but a parvenu would purchase such a thing? Next time, to show off, perhaps Natalis can glue the deeds to his
house to his mobile.
Or maybe he can film himself giving to charity. At least that type of flaunting won’t cause viewers to call him an
idiot for carrying such lavishly nonsensical items.
Born Rich in China: Explaining the Disdain for ‘Fu’erdai’ (tealeafnation.com)
March 9, 2013 | by Ning Hui
http://www.tealeafnation.com/2013/03/born-rich-in-china-explaining-the-disdain-for-fuerdai/
For a China still undergoing rapid economic development, a new and divisive character has emerged: the wealthy
young scion. Children who come from money in China, colloquially called fu’erdai, are often associated with many
negative stereotypes.
Fu’erdai literally translates to “rich second generation.” Fu’erdai are generally either guan’erdai, meaning
“government official second generation;” xing’erdai, meaning “super-star second generation;” or hong’erdai,
children whose families have strong roots in the Communist Party and can “eat from both plates.”
Perhaps the most representative incident of backlash against fu’erdai occurred in 2010, when the 22 year old Li
Qimin, intoxicated and speeding in his luxury car, hit a college girl and killed her. When apprehended, he shouted
“My father is Li Gang!” The phrase quickly went viral, and to this day represents fu’erdai arrogance.
A recent case that angered millions of Chinese microbloggers was that of Li Tianyi, who was both fu’erdai and
hong’erdai. Li Tianyi, the 17-year-old son of famous Chinese general and singer Li Shuangjiang, was prosecuted
for his involvement in a gang rape. Many Chinese netizens saw Li Tianyi’s crime as proof that their negative
feelings about privileged families were right, and stoked their worries that the privileged will always be above the
law in Chinese society. The case of Li Tianyi and Li Shuangjiang differs from those of other rich and powerful
families because Li Shuangjiang’s popular “red songs” from the Cultural Revolution praise the Party’s greatness.
In this case, online criticism was directed both at Li’s wealth and his political privilege.
Even the People’s Daily, a state-run media outlet, recognized the significance of the issue: “Multiple incidents
involving ‘keng die‘ [children whose misdeeds have tarnished their fathers’ reputations] have become hot-button
issues in society, because of who they are and because of the violence or arrogance involved. Moreover, the era
they live in is characterized by a public trust gap that stems from China’s current class divisions, and we must
build a bridge to re-build that trust.”
Anger among the public is directed not just at these individuals, but at an unaccountable justice system. As user
@破破的桥 wrote on Sina Weibo, China’s Twitter, “We already have a society that lacks trust. Do you trust the
police? No, they are corrupt. Witnesses? No, also corrupt. Judges? No, they listen to the people in power. Do you
trust government agencies? No, they only follow orders.”
As fu’erdai increasingly become stand-ins for this lack of accountability, social media is becoming a dangerous
place for children of the wealthy. A few days ago, photos posted by a 16-year-old fu’erdai named Zhang Jiale went
viral online, with many Web users ogling at his lifestyle and trying to investigate his family background. Chinese
netizens have often conducted “human-flesh searches,” probing every detail of a person’s internet history, to
expose corruption and other crimes. Thus far, Web users have not come up with any information to implicate
Zhang Jiale.
Xu Danei, a columnist for the Chinese-language version of the Financial Times, cautioned:
In this society which has lost its accountability, [fu’erdai] must be deeply aware that they should not give the other
side a chance. Enjoying their high lives, they must stay cautious and never slip, because if they do, there will be
millions of hands to take people like Li Tianyi to hell. For grass-roots Chinese who feel deeply abused, this perhaps
is their only opportunity to address the unjust gap they feel exists between themselves and the rich and powerful,
even it’s only by oral ‘revenge.’
It is clear from reactions to fu’erdai that the issue is larger than the young people involved. As with most labels,
fu’erdai simplifies a complex issue, serving as an anchor for negative feelings about societal, economic, and
political conditions in today’s highly unequal China. Whether the stereotypes associated with the term will change
over time depends largely on how China handles the growing gap between the rich and the poor and the role of
privilege in society.