China Readings for December 13th

  • U.S. Probe Ties Chinese Cyberspying to Military – WSJ.com – U.S. intelligence agencies have pinpointed many of the Chinese groups responsible for cyberspying in the U.S., and most are sponsored by the Chinese military, according to people who have been briefed on a U.S. intelligence investigation.

    Armed with this information, the U.S. has begun to lay the groundwork to confront China more directly about its expansive cyberspying campaign. Two weeks ago, U.S. officials met with Chinese counterparts and warned China about the diplomatic consequences of economic spying, according to a former official familiar with the meeting.

  • Huge Year For Hugh Hendry’s Anti-China Fund | ZeroHedge – Unlike some of the more noteworthy fund managers who appear on our TV screens all too often, Hugh Hendry seems to have been head-down hard at work. The appropriately named Eclectica fund that he manages has had a stupendous year as The FT reports his 'China Short' fund is up over 52% for the year. We discussed his already-solid performance back in September, when he was up a mere 40% YTD following an exceptional month in September. Given the difficulties of shorting Chinese firms directly, the deeply contrarian manager who makes no apologies for his view of a 1920's Japan-like crash in China is clearly doing something right. His positions in Japanese entities with large Chinese exposures makes great sense and the fact that he has kept outperforming this quarter even as Japanese credit has rallied back quite impressively, from spike wides in September and October, seems testament to our TV-Appearance-to-Performance anti-correlation thesis.
  • FT Alphaville » Sino-Forest admits default
  • My Expensive "Expert" Advise for the U.K. Government On Cyber Warfare | Digital Dao – You can't keep China, Russia, France, or any other State out of your network. They're already there and they aren't leaving.
    You can't secure what you don't own so if you want to secure your power grid, buy it back from the Chinese company that owns it.
    If anyone tells you that they can do 1 or 2 above, grab your checkbook and run the other way.
    While you can't keep bad guys out, you can raise the cost to mount a successful attack. Or – you don't have to out run the bear, you just have to out-run the other countries who are being chased by that bear (or dragon).
    While you can't keep a dedicated adversary out of your network, you can keep your data from leaving. That's in large part where you need to focus your resources and where you'll get the best return-on-investment.
    You have serious supply chain problems and need to start testing firmware updates for all those servers that you own which were made in China for backdoors.
    You have serious software issues and need to investigate any code written by Russian firms for backdoors.
    Cancel your contracts with Chinese telecommunications companies if they are providing products that would give them access to sensitive data.
  • Iran UAV Will Not Expose Latest Technology | AVIATION WEEK – Yet there appears to be no panic in the military or aerospace industry about any loss of stealth or advanced intelligence, surveillance and reconnaissance (ISR) technology in the crash.

    “The Iranians don’t have the ability to reverse-engineer it, and there was no fancy [ISR] technology on board,” says a veteran intelligence specialist with insight into the program. “There could be a bit of a problem if the Russians or Chinese get the [airframe].”

  • China Data, Part 1: Real Estate Downturn « Patrick Chovanec – Last week, I promised to share some of the data points I’ve been collecting on the recent downturn in the Chinese economy.  The challenge I’ve faced is an embarrassment of riches — too much interesting information, rather than too little.  So I’ve decided to chop my presentation up into several smaller-size parts, for the reader’s sake and for mine.  Today, I’ll focus on what’s happening in China’s real estate market.  Over the next day or so, I’ll broaden that to look at the implications for China’s investment-led GDP growth, the health of its banking system, and its currency. 
  • Renminbi: not so fast | beyondbrics | News and views on emerging markets from the Financial Times – FT.com – The weakness of the Chinese renminbi recently has doused speculation that it was imminently going to eclipse the US dollar, that it would become fully convertible in five years…etc etc. The predictions were coming fast and furious. Now, with economic growth slowing, the forecasting mill is whirling again – this time speculating that the weakness in the renminbi is due to capital flight.

    Stephen Green of Standard Chartered has a rather more prosaic explanation. Importers and exporters were behaving as rational business people because they now realised the renminbi may be weak in the near future as China’s GDP growth rate slows. “Trading companies’ behaviour is driven by CNY appreciation expectations, which in turn are influenced by economic fundamentals (such as the trade surplus, expectations of future growth etc),” says Standard Chartered.

  • Goldman’s Mark Machin Leaving After 20 Years – Bloomberg
  • iTunes – Podcasts – D J Clark Multimedia Stories by DJ Clark
  • Hong Kong’s Richest Man, Bankers to Choose Leader to Succeed Donald Tsang – Bloomberg – Hong Kong’s wealthiest resident, Li Ka-shing, will help choose the successor to Chief Executive Donald Tsang along with HSBC Holdings Plc banker Peter Wong and actor Stephen Chow.
    Li is part of a 1,200-member election committee that will pick the city’s new leader in March, according to a government website. He’s joined by Lee Shau Kee, founder of Henderson Land Development Co., Hang Seng Bank Ltd. Chief Executive Officer Margaret Leung and other executives, sparking criticism the panel isn’t representative of a city with Asia’s widest rich- poor gap.
  • 中国渔民刺死韩国海警_腾讯新闻_腾讯网 – qq news section on the murder of ROK coast guardsman by Chinese fisherman cum cheng'guan
  • Management Team | Rubenstein Investor Relations – shills for China RTOs?
  • Zhiguo “Full of It” Fu’s Hilarious Letter. (ABAT) « BuyersStrike! – On the morning of 28 November 2011, then halted Chinese reverse merger company Advanced Battery Technologies‘ (ABAT) CEO Zhiguo “Full of It” Fu issued a howler of a letter, available here, to his long suffering shareholders stuckholders. Here are some choice bits:

    NASDAQ decided that, solely because we are Chinese, we should be required to provide an extraordinary level of confirmation from our banks. Despite the lack of any evidence of wrong-doing on our part, NASDAQ insisted that we approach our banks, inform them that our U.S. regulators consider them untrustworthy, and ask them to permit our auditors to “look over their shoulders,” as it were, while they prepare bank confirmations. Initially NASDAQ insisted that this degrading procedure be conducted at the highest level of the bank. After we obtained written refusals from each of our banks, NASDAQ agreed to have the process carried out at our local bank branches.

    No Zhiguo, you have it wrong.

    Not solely because you are Chinese, but because several sources have exposed ABAT for being garbage (see here, here, here, and here, and of course here). Chinese garbage, it is true, but trash nonetheless. Further, it is not the banks that are considered untrustworthy (though some bank employees are likely involved in the subterfuge), it is the fetid collection of Chinese reverse merger companies that are listed in the US, and their filthy management teams that are untrustworthy.

  • Beijing Environment Official: City Air Faces ‘Crisis’ – China Real Time Report – WSJ – Beijing is facing its third air-pollution “crisis” of recent years and needs to crank up its efforts to cut emissions, a city environmental official said Monday, acknowledging a big metaphorical cloud hanging over the city.
  • China’s WTO Anniversary and the West’s Greatest Fear | China Hearsay – No one likes JVs. They are a compromise. The Chinese firm might be limited in terms of the entire value chain. On the other side, the foreign investor is virtually handcuffed to their partner, sometimes in a death grip, all the while teaching a possible future competitor how to run the business.

    But if JVs were not the original intent here, what exactly did the Chinese government expect was going to happen? Were foreign auto makers going to simply hand over the keys to the kingdom, governed by even less favorable terms?

    Again, I’m not sure who actually believes that, but if that does represent a popular government position, then both sides might not be reading from the same free trade page. If so, the next ten years should prove fascinating for WTO watchers.

  • FT Says Sina Weibo Becoming Less Vibrant, User Warns Of Castration | DigiCha – As for the risks of castration, emasculation has sometimes been a path to riches in China. More than a few eunuchs have amassed great power and huge fortunes.  A neutered Weibo could still be a successful business.
  • China Detains Pair for Spreading Rumors Online Amid Internet Tightening – China Real Time Report – WSJ – Police in the central province of Hunan detained two men for online rumor-spreading after they said 5,000 police were guarding a wedding convoy in the provincial capital of Changsha, the latest in a string of detentions as part of a growing government campaign to manage information online.
  • No, Hu Didn’t Call for War | China Power – dumb mistake by AFP//
    Earlier this week, media reports suggested that China had placed a new emphasis on preparing for war in response to recent events in the region, including the disputes in the South China Sea and the “pivot” in U.S. policy from the Middle East to Asia. According to the AFP, “Hu Jintao…urged the navy to prepare for military combat amid growing regional tensions over maritime disputes and a U.S. campaign to assert itself as a Pacific power.”

    The AFP report, however, contained two significant errors. First, the report stated that Hu’s remarks were delivered at a meeting of the Central Military Commission (CMC), suggesting they were part of a major policy speech. In fact, as reported in the PLA’s own newspaper (Chinese, English), the Jiefangjun Bao, Hu made the remarks when he and other members of the CMC met with party delegates from the People’s Liberation Army Navy (PLAN). Second, the report mistranslated a key term, junshi douzheng, as “military combat,” implying a new emphasis on preparations to fight a specific war.

    Did Hu urge war? No.

  • 彭少彬:新浪微博已成最大政务微博平台_互联网_科技时代_新浪网
  • AFP: Christian Bale denies his Chinese film is propaganda – Oscar winning actor Christian Bale defended Sunday the upcoming Nanjing Massacre film "The Flowers of War," by China's most famous director, Zhang Yimou, as more than an anti-Japanese propaganda film.
  • The Associated Press: A few hacker teams do most China-based data theft – As few as 12 different Chinese groups, largely backed or directed by the government there, commit the bulk of the China-based cyberattacks stealing critical data from U.S. companies and government agencies, according to U.S. cybersecurity analysts and experts.
    The aggressive but stealthy attacks, which have stolen billions of dollars in intellectual property and data, often carry distinct signatures allowing U.S. officials to link them to certain hacker teams. Analysts say the U.S. often gives the attackers unique names or numbers, and at times can tell where the hackers are and even who they may be.
  • The Magically Circular World of Neil Shen, Venture Capitalist : The Financial Investigator
  • 汤灿工作室否认其被调查 称稍后将统一回应_网易娱乐
  • Chinese fish pirates murder Korean coast guard officer – Chinese fish pirates illegally operating in the waters off Incheon killed a Korean Coast Guard commando as he and his mates seized the Chinese boat.

    According to the Chosun Ilbo, the 66t fishing boat was boarded after it ignored warning broadcasts. Eight commandos were dispatched in two rubber boats to seize the Chinese vessel. Letting loose a battle cry, the Chinese crew of nine fought back fiercely with weapons, but resistance was quelled by the Korean commandos.

    The Chinese captain locked himself in the pilothouse and attempted to turn the boat northward, but was subdued by commandos. The captain seemed to be obeying the commandos obediently, but then suddenly went wild branding what is believed to be a shard of glass. A 41-year-old Sgt. Lee was stubbed in the stomach and side; he was quickly transported to a military hospital, but died from his wounds. Another 33-year-old officer was stabbed in the stomach, but his injuries are not believed to be life threatening.

  • Death in custody follows fresh unrest in Chinese village – Yahoo! News – A Chinese man accused of participating in a riot over land claims in September died in police custody on Sunday, threatening to fan tensions in a far southern region that has become a source of persistent unrest.
    The death in Guangdong province occurred as masses of riot police moved to quell a longstanding dispute in Wukan village on the east coast of the booming province, where industrial development has consumed swathes of rice paddies.
    The government of Shanwei, an area that includes Wukan village in its jurisdiction, said in the early hours of Monday that Xue Jinbo fell ill on Sunday, his third day in detention over the riot. Hospital doctors later pronounced the man dead despite frantic efforts to save his life.
  • AFP: Top China official urges more ‘forceful’ web controls – A top Chinese government official has urged authorities to be "more forceful" in the way they manage the web, state media said, as Beijing tries to tighten online controls over fears of social unrest.
    Wang Chen, head of the State Internet Information Office — a government body set up this year to supervise online content — also urged officials to use the web to "guide public opinion and promote positive social values".
    "All regions and departments must… use more forceful and effective measures to strengthen the construction and management of cyber culture," he was quoted as saying by the official Xinhua news agency late Saturday.
  • SKorea: Chinese sailors stab coast guard officers – Yahoo! News – SEOUL, South Korea – South Korean officials say a coast guard officer stabbed by the Chinese captain of a boat stopped for suspected illegal fishing in South Korean waters has died.
    Coast guard officials say two South Korean officers were stabbed early Monday morning. The other officer is in a hospital in Incheon.
    The attack happened in Yellow Sea waters rich in blue crabs, anchovies and croaker.
  • Police employ Predator drone spy planes on home front – latimes.com – As the unmanned aircraft circled 2 miles overhead the next morning, sophisticated sensors under the nose helped pinpoint the three suspects and showed they were unarmed. Police rushed in and made the first known arrests of U.S. citizens with help from a Predator, the spy drone that has helped revolutionize modern warfare.

    But that was just the start. Local police say they have used two unarmed Predators based at Grand Forks Air Force Base to fly at least two dozen surveillance flights since June. The FBI and Drug Enforcement Administration have used Predators for other domestic investigations, officials said.

  • China Policy