China Readings for January 28th

  • McConnell, Chertoff and Lynn: China’s Cyber Thievery Is National Policy—And Must Be Challenged – WSJ.com – It is more efficient for the Chinese to steal innovations and intellectual property than to incur the cost and time of creating their own.
    BY MIKE MCCONNELL, MICHAEL CHERTOFF AND WILLIAM LYNN
  • Letter from China: Ai Weiwei At Home, In Absentia : The New Yorker
  • FBI Raids Chinese Reverse Merger Shop – US Business News Blog – CNBC
  • New York Times Co. Faces Leadership Vacuum – Bloomberg – The departure of New York Times Co. (NYT) Chief Executive Officer Janet Robinson last month leaves the company with a leadership vacuum amid falling revenue, profit squeezed by pension costs and pressure from family members to restore a dividend once worth more than $20 million a year.
    Robinson, 61, was pushed out by Chairman Arthur Sulzberger Jr. and his cousin Michael Golden, said a person familiar with the situation. Golden, who is chief operating officer, just lost part of his responsibilities when the company sold the regional newspaper division he’d run and will take on new duties, said the person, who wouldn’t be named because the matter is private.
  • China clamps down on budding Tibetan revolt – The Globe and Mail – A string of mountain towns along the edge of the Tibetan Plateau that set out to mourn, rather than celebrate, the Chinese lunar new year are now under lockdown following days of clashes between Tibetan protesters and Chinese police that left several people dead.

    Tens of thousands of residents of the towns of Serthar and Luhuo – and more in the surrounding Tibetan-populated western corner of Sichuan province – have been effectively cut off from the outside world after the violence. Telephone and Internet services to the region have apparently been severed, and checkpoints have been set up along the roads to control who gets in and out.

  • China’s carbon tax is very real: response to John Lee’s Wall Street Journal article accusing Beijing’s environmental policymakers of political theatre | chinadialogue – An incendiary Wall Street Journal article has accused Beijing of trying to dupe the world with a smokescreen carbon levy. The author is plain wrong, write Yang Mingche and Yang Fuqiang.
  • Summers: “Inside Job had essentially all its facts wrong” | Felix Salmon – Krishnan then brings up Inside Job and the issue of the revolving door, which of course Summers took full advantage of with his $5-million-a-year job working one day a week for DE Shaw.

    “Inside Job had essentially all its facts wrong,” replies Summers, unbelievably, resorting to an argument based on timing: because he didn’t work in financial services before he was Treasury secretary, and because he waited a few years before taking that job at DE Shaw, Summers says it’s “absurd” to blame the revolving door for any of his actions.

    It’s weird that Summers, who loves debate, generally refuses to sit down in some public forum and answer serious, informed questions about the legacy of his tenure at Treasury; it might well be that this single interview is the closest we’ll ever get. And on the basis of this interview, it’s clear that, far from apologizing for his actions, Summers is going Full Bluster, denying any culpability, and choosing instead to violently reject and belittle any suggestion that he holds any responsibility for the crisis at all.

  • Sina Weibo to Face the Tencent Empire in 2012 | TechRice – It’s the Chinese Lunar New Year in China, the Year of Dragon, which feeds a television frenzy that culminates in CCTV’s (China Central Television) Spring Festival Show. Watching these shows I noticed that Tencent Weibo–not Sina–is the dominant partner (surely because they paid the most money).

    In 2012, Tencent will continue to push forward aggressively in social and present a formidable challenge to Sina. In my first blog post of 2012, let’s have a look at how the two top microblog players in China will fare against each other.

  • Chinese Blockbuster ‘Flowers of War’ Leaves U.S. Audiences Cold | Reuters – The Flowers of War," a dark and violent Chinese-language movie about the Rape of Nanking that cost more than $90 million to produce, grossed an anemic $48,558 in 30 U.S. locations last weekend. Its per-location average: A mere $1,619.

    "The Flowers of War" belly flop — and the problems it has faced on the way to the U.S. market — underscores the challenges Chinese movies can face in America.

  • Blogger Han Han Controversy On Democracy in China – NYTimes.com – Three weeks after Han Han, China’s most prominent blogger, published three controversial blog posts in which he casts a sullen eye on Revolution, Democracy and Freedom, the online debate has slid into absurdity.

    The latest nonsense came from Mai Tian, another popular blogger, who asserted that Han Han could not possibly be the author of his blog posts, given that he was racing cars on some of the same days they were published.

  • At Davos: German Statesman the Inspiration Behind China’s State Control – China Real Time Report – WSJ – The most alarmist commentary on Friday morning came from Xu Xiaonian, a professor at the China-Europe International Business School.

    “State capitalism is not something new. When Bismarck invented this idea in 1870 it gave Germany impressive performance over the main superpower of the time, Great Britain,” he said. “But 20 years later, it was the First World War.”

  • China’s Online Ad Spend Tops Print – ZILA BLOG – Alizila
  • What Would it Take to Get Twitter Unblocked in China? – China Real Time Report – WSJ – how likely is it that Twitter’s proposed changes are aimed at earning access to the world’s largest population of Internet users?

    “Unlikely” says the answer from Beijing- based investor and Internet watcher Bill Bishop.

    As Mr. Bishop notes, a large part of the speculation that Twitter might be getting ready to kow-tow to China’s censors stems from Twitter co-founder Jack Dorsey’s visit to Shanghai earlier this month, during which he complained about not being able to read his tweets. That trip came almost exactly a year after the founder of another social-media site banned in China, Facebook’s Mark Zuckerberg, visited Beijing amid talk of trying to tap the Chinese market.

    But for all the salivating over China’s potential in board rooms across Silicon Valley, Mr. Bishop says Twitter would have to be “incredibly naive” to think they could wedge their way into the country.

    “It would be stupidity,” he says. “One, I don’t think the government would go for it. And two, the market is already saturated.”

  • The long arm of the state: Where’s the party? | The Economist – How the Communist Party is trying to expand its influence in the private sector
  • QQ Music: A Sweet Music Streaming Service with a Touch of Piracy | TechRice
  • Twitter Announces Micro-Censorship Policy – NYTimes.com
  • This New View of America’s Deadliest Drone Is Formidable
  • Digging in: Earthmover sales reflect risks to China’s economic growth | China SignPost™ 洞察中国
  • China: earthmoving landing | beyondbrics | News and views on emerging markets from the Financial Times – FT.com – Which is why the following chart should alarm investors. It shows how sales of excavators, bulldozers, and wheel loaders have plunged in recent months.
  • Photos: Center for Zuo Yue Zi, Chinese tradition of postpartum recovery, charges US$60,000 per month in Shanghai | Ministry of Tofu 豆腐部
  • Symantec: We Didn’t Know in 2006 Source Code Was Stolen | Threat Level | Wired.com – Anti-virus giant Symantec says it did not know back in 2006 that source code for its software was stolen when it experienced a breach at that time.

    The company surprised the public last week when it disclosed that hackers had obtained source code for its pcAnywhere software and other products, and that the code had likely been stolen in a six-year-old breach that Symantec had never disclosed.

  • Thousands battle forest fire in southwestern China – Yahoo! News – Thousands of fire fighters are battling a blaze in the forest near the famed southwestern Chinese tourist town of Lijiang.
  • Two Uighurs deported from Cambodia to China get life – Yahoo! News – China has jailed two Muslim Uighurs deported from Cambodia for life, Radio Free Asia reported on Friday, showing no sign of loosening its grip on far-western Xinjiang Uighur Autonomous Region which holds rich deposits of oil and gas.
  • Chinese Developer Wins Approval to Buy 16 New Zealand Farms – Businessweek – Shanghai Pengxin Group Co., a Chinese property developer seeking to export dairy products to Asia, won approval to buy 16 New Zealand dairy farms amid local objections to rising foreign ownership of assets.
  • China: ‘Anti-American Warrior’ Gets Head Stuck in DC Airport Escalator · Global Voices – “America is the enemy of all the people in the world.”

    So wrote Sima Nan, one of China's most vocal opponents of Western liberal values, before he boarded a plane to Washington, DC on January 20. At some point after arriving at Dulles International Airport, Sima leaned over the handrail of an escalator and wound up getting his head pinched between the handrail and an approaching section of wall.

  • Vietnam’s military growth raising eyebrows in region-SCMP.com – From submariners training in St Petersburg to secret discussions with India to obtain state-of-the-art cruise missiles, Vietnam's naval expansion is attracting considerable notice across the region.
    While China's naval build-up dominates regional military discussions, particularly its potential as an eventual challenger to the long-dominant Asian presence of the US, Vietnam's attempt to create a maritime deterrent against its giant neighbour is being closely watched by military attaches and strategists.
  • China audit season opens | China Accounting Blog | Paul Gillis – Auditing season will begin in earnest next week as the auditors and companies return to work. Last audit season saw a number of Chinese companies fall to fraud allegations as auditors tightened audit procedures, particularly those surrounding cash confirmations. I have talked with a number of audit partners about new procedures they are putting in place to uncover potential frauds. Most of them center on enhanced cash audit processes that do not rely on mailed in bank confirmations. Good auditors are putting unpredictable procedures into their audit routine that may trip up companies that are trying to conceal fraud.  

    Because many of these enhanced audit procedures were not in place early last audit season, I expect there will be a number of additional Chinese accounting frauds discovered in the next few months. I expect the auditors will have the help of the many short-selling research operations that have targeted Chinese companies. Deloitte Watch, a website I have commented on before, is back with suggested audit procedures for Qihoo 360. Andrew Left of Citron has previously used Deloitte Watch to encourage Deloitte to focus on Longtop and CCME, leading to the demise of these companies. We will soon see whether he has figured out Qihoo 360 ahead of Deloitte. 

  • Clueless in Davos | Prestowitz – This is actually not surprising in view of the forum's two major flaws. The first is that the Davos meeting is a gathering of the global establishment. By definition, establishments are slow and even unable to see and understand developments that run contrary to the orthodoxy of the establishment. One should never expect the unexpected from an establishment institution. The second flaw is even more serious. It is that the theory of globalization underlying the Davos concept is false. That theory holds that globalization is a win-win economic movement that will enrich the whole world and thereby lead the nations to democracy and eternal peace.

    This is false. Or, at least, it is false under present circumstances.

  • Victory on Antipiracy Issue Buoys Internet Lobby – NYTimes.com
  • Military Contractors Brace for Cutbacks – NYTimes.com
  • Marijuana Push in Colorado Likens It to Alcohol – NYTimes.com – not sure this will help US compete w China//

    Proponents of marijuana have argued for years that the drug is safer than alcohol, both to individuals and society. But a ballot proposal to legalize possession of marijuana in small amounts in Colorado, likely to be on the November ballot, is putting the two intoxicants back into the same sentence, urging voters to “regulate marijuana like alcohol,” as the ballot proposition’s title puts it.

  • Lee Woodruff: Dementia: Caring For Parents With Alzheimer’s And Coping With Grief
  • Pandit Does Davos, 0.1% Gloat, Madness Reigns: Jonathan Weil – Bloomberg – It’s one thing for Citigroup to blow itself up so spectacularly that it needs multiple taxpayer bailouts to stay afloat. What seems strange is that an organization like the World Economic Forum would honor the fellow who was Citigroup’s CEO throughout most of the financial crisis, by selecting him as one of its six co-chairmen. If Sheila Bair had gotten her way when she was head of the Federal Deposit Insurance Corp., Pandit would have been fired years ago.
    It’s stunning when you think about it: How does Pandit, who owes much of his fortune to the American public’s largess, wind up being showcased as a paragon of leadership and free enterprise, little more than a year after the U.S. Treasury finally sold the last of its Citigroup common stock?
  • China’s Next Boss Has Some Capitalist Cred – Businessweek – Xi Jinping, likely China's next President, ran a province that’s a showcase for private enterprise in the People's Republic
  • River pollution triggers water panic buying in China | Reuters
  • Unrest in China: A dangerous year | The Economist – Economic conditions and social media are making protests more common in China—at a delicate time for the country’s rulers
  • The Economist, it is time for a new editorial overhaul | Hidden Harmonies China Blog
  • China: The paradox of prosperity | The Economist – For China’s rise to continue, the country needs to move away from the model that has served it so well
  • China Bears Have Seized The Commanding Heights of The Media | Sinocism
  • China Unicom’s Smart Call on Cheap Phones – Businessweek – Not sure how Party will manage when everyone has a camera, 3g and weibo//

    Low-end handsets have set off a smartphone boom in China

  • Architecture update: Letter from China | Architecture | Wallpaper* Magazine – If buildings could talk, China’s would be heard round the world. From gleaming culture halls and multinational hotels to cities like Ordos, in Inner Mongolia, where futuristic masterpieces rise from the desert like modern phoenixes, the sheer number of new constructions is mind-blowing. Consider places like Chongqing, Ningbo and Dalian, minor outposts just a decade ago – today they defy cartographers with skylines that can transform in an instant.
  • Solar CEOs Predict Boom in China Will Ease Glut in 2012: Energy – Businessweek
  • China Economic Watch | Chinese Housing Market Correction Update – One of the most important trends underway is the change in expectations. Over the last decade, buying a house has emerged as a preferred form of investment for households because the rates of return were so much higher than interest on bank deposits. Housing prices rose so steadily during the 2000s, particularly after the onset of negative real interest rates on deposits in 2004, that many people began to believe that housing prices in China could only go up. The correction that began to take hold in 2007–08 was not allowed to fully play out because policymakers stimulated the housing market during the Global Financial Crisis. As a consequence, unreasonable expectations about the housing market were not altered.

    The change in expectations that didn’t occur during the last correction appears to now be underway. According to a People’s Bank of China (PBoC) survey (Chinese language), the number of people expecting housing prices to increase has declined from 45.8 percent during the last quarter of 2009 to 19 percent at the end of 2011. Moreover, the share of people who think housing prices will fall or stay the same is now 67 percent. Similarly, the number of people anticipating purchasing a new home in the next three months has declined by 14 percent.

  • China’s Global Quest for Resources and Implications for the United States | Center for a New American Security – On January 26th, Dr. Patrick M. Cronin, CNAS Senior Advisor and Director of the Asia-Pacific Security Program, testified before the U.S.-China Economic and Security Review Commission. He discussed the subject of China's approach to managing natural resources and its implications for U.S. national security.
  • One Per Cent: FBI releases plans to monitor social networks – The US Federal Bureau of Investigation has quietly released details of plans to continuously monitor the global output of Facebook, Twitter and other social networks, offering a rare glimpse into an activity that the FBI and other government agencies are reluctant to discuss publicly. The plans show that the bureau believes it can use information pulled from social media sites to better respond to crises, and maybe even to foresee them.
  • AsiaEye – Official Blog of the Project 2049 Institute: China’s Fengyun Weather Satellite Support to Maritime Surveillance
  • Twitter will censor tweets, but will try really hard not to — Tech News and Analysis – The company says that it will not accede to just any request for removal, regardless of whether it comes from a government, and has made it clear that its commitment to free speech extends to dissidents using Twitter for revolutionary purposes during events such as the Arab Spring in Egypt. But as Twitter becomes more and more of a global phenomenon, those commitments could be put to the test. What happens when someone posts a tweet that makes fun of the founder of Turkey, something that is a crime under Turkish law?

    More than anything else, Twitter’s announcement highlights both how integral a part of the global information ecosystem it has become, and how vulnerable that ecosystem can be when a single entity controls such a crucial portion of it. How Twitter handles that challenge will ultimately determine whether it deserves the continued trust of its users.

  • Twitter Blog: Tweets still must flow – As we continue to grow internationally, we will enter countries that have different ideas about the contours of freedom of expression. Some differ so much from our ideas that we will not be able to exist there. Others are similar but, for historical or cultural reasons, restrict certain types of content, such as France or Germany, which ban pro-Nazi content.

    Until now, the only way we could take account of those countries’ limits was to remove content globally. Starting today, we give ourselves the ability to reactively withhold content from users in a specific country — while keeping it available in the rest of the world. We have also built in a way to communicate transparently to users when content is withheld, and why.

  • Twitter Changes The “Contours” Of Censorship With Country-By-Country Blocking | TechCrunch – Twitter has announced in a blog post a glorious new ability: “the ability to reactively withhold content from users in a specific country — while keeping it available in the rest of the world.” At last!

    There are two ways of looking at this new “ability,” one optimistic and one pessimistic. One is that Twitter is now more able to effectively tailor itself to the needs of certain countries. The other is that Twitter is now more able to effectively tailor itself to the needs of certain countries.

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