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THE ESSENTIAL EIGHT
1. China sends surface-to-air missiles to contested island in provocative move | Fox News The Chinese military has deployed an advanced surface-to-air missile system to one of its contested islands in the South China Sea according to civilian satellite imagery exclusively obtained by Fox News, more evidence that China is increasingly “militarizing” its islands in the South China Sea and ramping up tensions in the region. The imagery from ImageSat International (ISI) shows two batteries of eight surface-to-air missile launchers as well as a radar system on Woody Island, part of the Paracel Island chain in the South China Sea. // bad news if true, Chinese will no doubt argue they have no choice to militarize because of US aggressive moves like the recent FOBOPS, as very likely they always intended to militarize and were just waiting to concoct a pretense. Interesting timing for deployment and leak given the US-ASEAN summit in Sunnylands…
Related: Joint Statement of the U.S.-ASEAN Special Leaders’ Summit: Sunnylands Declaration | whitehouse.gov 8. Shared commitment to maintain peace, security and stability in the region, ensuring maritime security and safety, including the rights of freedom of navigation and overflight and other lawful uses of the seas, and unimpeded lawful maritime commerce as described in the 1982 UN Convention on the Law of the Sea (UNCLOS) as well as non-militarization and self-restraint in the conduct of activities; 9. Shared commitment to promote cooperation to address common challenges in the maritime domain;
Related: China’s comfortable position in the Spratlys: chipping away at the US-led order-ASPI Strategist What’s worrying is China’s attempts to change the region’s status quo, given the ambiguous legal basis of its nine-dashed line claim on the South China Sea, the scale and speed of its land reclamation work, and the militarisation of the Spratlys features it occupies. While China’s actions are audacious, there’s little left that will dislodge its now favourable position in the Spratlys.
Related: China Closing Tech Gap With U.S., Pacific Air Chief Says – Bloomberg Business When asked if the Chinese were still warning U.S. military planes away from the South China Sea, she said “they are talking, but mostly in my world from airplanes to airplanes everybody has acted professionally in accordance with the rules of behavior.”
Related: RAAF now being routinely challenged by Beijing in South China Sea | smh.com.au The challenges would come in the form of radio broadcasts warning the Australian planes that they were close to Chinese territory and should move away. He stressed this was normal practice by many countries and said the nature of the challenges had not escalated. But he said “nearly all” flight were now challenged – something that had not happened in the past.
2. China seen boosting defence spending as South China Sea, reforms weigh | Reuters Military spending last year was budgeted to jump by 10.1 percent, outpacing slowing, single-digit GDP growth, and another double-digit rise looks set to be announced at the annual meeting of China’s largely rubber-stamp parliament in March. One source with ties to the military who meets regularly with senior officers told Reuters a 30 percent increase in spending this year had been mooted in military circles, though the actual rise was unlikely to be that dramatic. // Interesting story, but Reuters record on PLA exclusives is spotty…if true very important. Reagan launched a massive military buildup during a terrible US economic downturn. No reason China can’t afford to as well, might be useful “military Keynesianism”. Recently I have read some analyses arguing China’s slowdown means its military buildup can’t continue at current or faster pace, analyses I think are very incorrect. We are already seeing the logical next step for Xi’s CCP as the economy struggles-a much harder authoritarianism. Bigger PLA budgets are part and parcel of that. Arms race in Asia just getting started?
3. CPC journal stresses continuing anti-graft campaign – Xinhua Communist Party of China (CPC) journal Qiushi stressed the importance of carrying on the campaign against corruption and bureaucracy in a commentary on Tuesday. Although the CPC has made great progress in fighting corruption, the situation remains complicated, according to the article. It noted a speech of General Secretary of the CPC Central Committee Xi Jinping, at the sixth plenary session of the CPC Central Commission for Discipline Inspection (CCDI) in January. In the speech, Xi said the priorities of the campaign are to strictly implement Party rules, be tough with corrupt officials, extend the anti-graft campaign to the lowest rank of CPC officials and address the source of corruption.
Related: 作风建设在全面从严治党中扎实推进、成效显著 习近平总书记在十八届中央纪委六次全会的重要讲话中，明确了2016年党风廉政建设和反腐败斗争的五大工作要点。一是尊崇党章，严格执行准则和条例；二是坚持坚持再坚持，把作风建设抓到底；三是实现不敢腐，坚决遏制腐败现象滋生蔓延势头；四是推动全面从严治党向基层延伸；五是标本兼治，净化政治生态。
Related: 认真贯彻执行《准则》和《条例》 推进全面从严治党、依规治党 来源:《求是》2016/04 作者：中共中央纪委办公厅
4. Learning its lesson? What the Iran deal should teach China about sanctioning North Korea | Jonathan Pollack – Brookings Institution Given China’s intransigence, the next Security Council resolution seems unlikely to be appreciably stronger than prior ones. Under such circumstances, the United States and other immediately affected states will increasingly protect their interests by unilateral measures. Seoul’s decision to suspend operations at the Kaesong Industrial Zone (and possibly to cease these activities outright) is the first indication of major policy change, and other measures by the United States and Japan seem likely to follow. This realization ought to be deeply sobering to leaders in Beijing, who as yet seem unprepared to grasp that business as usual with North Korea no longer applies.
Related: South Korea Needs THAAD Missile Defense-Bruce Klingner Deploying THAAD to South Korea would clearly not threaten China in any way. One is left to conclude that, if not extraordinarily ill-informed, Chinese technical objections can only be disingenuous, and Beijing’s true objective is preventing improvement in allied defensive capabilities and multilateral cooperation. The THAAD deployment issue is a microcosm of the greater North Korea problem. Once again, China has shown itself to be more critical of South Korean reactions than to the precipitating North Korean threats, attacks, and violations. On the THAAD issue, China has taken Pyongyang’s side over that of Seoul, disregarding South Korea’s legitimate security concerns and fundamental sovereign right to defend itself against an unambiguous danger.
Related: China, S. Korea hold strategic dialogue on Korean Peninsula nuclear issue – Xinhua The United States and South Korea have decided to discuss the deployment of the Terminal High Altitude Area Defense (THAAD). As one of the most advanced missile defense systems in the world, THAAD can intercept and destroy ballistic missiles inside or just outside the atmosphere during their final phase of flight. Zhang presented China’s serious stance on the possible deployment of THAAD in South Korea. Such a move would not be helpful in reducing the current tensions and not be conducive to maintaining regional peace and stability. Rather, it would harm the strategic security interests of China, he said.
Related: 社评：中国需加强东北军事部署防半岛生乱评论环球网 由于各方不听中国劝告，中国在半岛局势生变直至出现战乱时不需对各方承担道义责任，我们做战略准备的出发点首先应是维护自己的国家利益安全，这一点中方要有勇气对各方讲清楚。 // Global Times editorial says China should strengthen PLA deployments near DPRK border to protect against chaos on the Korean Peninsula
5. Slower Economy a Crucible for Nation’s Steel Industry-Caixin In a January meeting with executives and industry officials in Taiyuan, in the northern province of Shanxi, Premier Li Keqiang reemphasized efforts to trim production overcapacity and close unprofitable factories. Scaling back was also atop the agenda of the Central Economic Work Conference in December, a Communist Party meeting called to set the economic roadmap for 2016. Top leaders have the reason to worry. In 2015, China produced 800 million tons of raw steel, but only 664 million tons was used. Both figures were lower than the year before for the first time in a decade. More worryingly, total production capacity stood at 1.1 billion tons. The prospects for steelmakers are also gloomy. Li Chuangxin, director of the China Metallurgical Industry Planning & Research Institute, predicted that the country’s steel consumption will continue declining and by 2030 stand at less than 500 million tons.
6. China inaugurates national R&D plan – Xinhua The plan now covers 59 specific projects, Hou told a Ministry of Science and Technology press conference. The plan merges several prominent state sci-tech programs, including the program 863 and program 973, focused on key fields such as biotechnology, space, information, automation, energy, new materials, telecommunications and marine technology.To address low efficiency resulting from redundant programs, over 100 programs will be merged into five plans: natural science, major sci-tech, key R&D plan, technical innovation and the sci-tech human resources. // “973”“863”取消 国家重点研发计划正式启动
7. China draws criteria to evaluate local poverty-relief work – Xinhua The evaluation criteria, released by the general offices of the Central Committee of the Communist Party of China and the State Council, will mainly check on local authorities’ efforts to identify, help and reduce the impoverished population, as well as whether poverty relief funds are used effectively. // [视频]中共中央办公厅 国务院办公厅印发《省级党委和政府扶贫开发工作成效考核办法》
8. 网络强国战略助推发展转型（人民要论）–观点–人民网 推进网络关键技术设备自主创新和国产化。应着力实现关键技术自主可控，为维护国家安全、网络安全提供技术保障。我国信息化需求巨大，但目前在一些关键技术领域如操作系统、芯片技术、CPU技术等方面，还难以做到自主可控，对国家安全和网络安全造成威胁。在实施网络强国战略中，应采取有力措施，补齐这个短板，从根本上改变关键技术受制于人的局面。 加强与网络强国相适应的软硬件建设。在实施网络强国战略中，关键信息技术自主可控、互联网基础设施建设、互联网广泛应用、发展壮大互联网产业、国家互联网治理能力提升、相关体制机制变革、法治的完善以及高端人才培养等方面都需要从整体上做出谋划，以切实推进这一重大战略的实施。 （作者为国家信息化专家咨询委员会委员、国家行政学院教授）// China serious about building itself into an Internet Superpower, these two pieces from page 7 of Wednesday’s People’s Daily. Building an Internet Superpower also one of the items in the draft new 5 year plan.
Related: 尊重国家网络主权评论中国政府网 尊重国家网络主权具有多方面实际内容。首要的是尊重各国在自己网络主权范围内选择互联网发展道路、管理模式和公共政策的权利。同时，在国际网络空间治理上，应坚持多边参与，由大家商量着办，发挥政府、国际组织、互联网企业、技术社群、民间机构、公民个人等各个主体的作用，不搞单边主义，不搞一方主导或由几方凑在一起说了算。中国所提出的国际互联网治理四项原则，得到越来越多国家特别是广大发展中国家的认可与支持，成为推动国际互联网治理体系变革、促进网络公平正义的重要指导原则，是中国在互联网全球治理领域作出的重要贡献。（中国社会科学院法学研究所副研究员 支振锋）
BUSINESS, ECONOMY AND TRADE
Fairchild rejects Chinese offer on U.S. regulatory fears | Reuters In a filing with the U.S. Securities and Exchange Commission, Fairchild said there was an “unacceptable level of risk” that the deal with the Chinese would be rejected by the U.S. Committee on Foreign Investment in the United States (CFIUS), an inter-agency panel led by the Treasury Department which assesses potential mergers to ensure they do not endanger national security. China Resources Microelectronics and Hua Capital had offered $2.46 billion for Fairchild in December. Fairchild said that the Chinese offer did not compensate them for the CFIUS risk.
央行政策紧急调整的四层深意 – 经济观察网 － 专业财经新闻网站 一；整体货币投放量将会大幅提高； 二；工业信贷两极分化、产能过剩领域信贷更加两极分化； 三；新一轮银行呆坏账核销大潮登场； 四；以工业企业不良资产、应收账款两者为试点，多年犹豫不前的资产证券化开始扩围。//Economic Observer identifies what is says are four PBoC policy moves to support the economy
China Plans 400 Billion Yuan in Special Building Projects – Bloomberg Business The National Development and Reform Commission plans to offer 400 billion yuan ($61 billion) this quarter so local authorities can finance infrastructure and help spur investment growth, said the people, who asked not to be identified because the plans aren’t public. More resources will be allotted in subsequent quarters this year, and the total will be determined by economic conditions, they said.
Will China’s Lower Downpayments Lift Home Sales? | Mingtiandi China made a major rule change regarding its housing market just before the spring festival holiday, lowering downpayments on purchases of new homes by first-time buyers from 25 percent to 20 percent, and from 40 percent to 30 percent for buyers of second homes.
中信证券遭调查事件现转机：7名高管回家 边控被取消 | 每经网 中信证券前期遭公安部门边控人员，已在春节期间顺利出境，这些遭边控人员多数为中层人员。知情人士判断，这意味着公安机关对中信证券的调查已取得初步结果，并且调查结果比业界预想的要乐观，中信证券遭调查事件已现转机。 // new developments in CITIC Securities investigation, 7 executives under investigation allowed to return home, some mid-level execs allowed to travel outside China
Ailing Northeast Struggles to Keep Young Talent-Caixin “I have no intentions of going back home any time soon. It’s just not the place I can realize my ambitions.” This attitude is typical among twenty-year-olds from the region that Caixin interviewed. The latest national census shows that net migration per year from the three northeastern provinces grew from 360,000 in 2000 to 1.3 million by 2010. The loss of these “mid-to-high-level talents” is being acutely felt in this industrial region, Zhou Jianping, head of an office at the National Development and Reform Commission dedicated to “revitalizing the northeast,” said at a press conference in August.
POLITICS AND LAW
What NOT to learn from Zhou Yongkang and Ling Jihua: Fall of China’s corrupt party ‘gangs’ a lesson for its cadres | South China Morning Post “The Petroleum Gang and the Secretary Gang have already been eradicated. They are lessons to be learned and others should watch their steps. If you don’t toe the line, get out,” read the piece in the China Discipline Inspection Paper on Tuesday. // 中纪委机关报刊文：石油帮、秘书帮已覆灭，不入列看齐就出列
走到哪里讲到哪里 越讲越坚决越硬气越深刻 坚持党的领导 总书记在国际上是怎么讲的————头条——中央纪委监察部网站 三年多来，国家主席习近平出访20次，累计138天，行程近40万公里，相当于绕地球飞行近10圈，足迹遍布各大洲。无论走到哪，或者即将出访前接受当地媒体采访时，习近平经常会谈到坚持党的领导、加强党的建设、全面从严治党，以及反腐败国际追逃追赃等内容。请跟随我们一起到世界各地听听总书记的声音：
国家安全的法律保障-来源：《求是》2016/04 作者：马怀德 Ma Huaide, Politics and Law University Deputy President, in latest “Qiushi” on the legal safeguards of national security // 维护国家安全，还必须健全国家安全保障体系，增强维护国家安全的能力。要加大对国家安全各项建设的投入，保障国家安全工作所需的经费。在国家安全战略物资储备、科技创新、人才培养、新闻宣传和舆论引导等方面，采取必要措施，提供有力保障。特别是在国家安全教育培训方面，要将国家安全教育纳入国民教育体系和公务员教育培训体系，通过多种形式开展国家安全宣传教育活动，增强全民国家安全意识，为维护国家安全奠定思想基础。 （作者：中国政法大学副校长）
贪官被带走时的戏码：有人欲跳楼，有人被吓瘫国内新京报网 The Beijing News details the reactions of some officials as they were taken away by CCDI investigators
FOREIGN AND DEFENSE AFFAIRS
Honeywell Partnering With China’s Comac on Jet Certification – Bloomberg Business “It will be just as efficient and just as safe as predicted and as we’re saying, especially certified to Western — whether FAA or EASA — standards,” Honeywell’s Asia-Pacific president Steven Lian told Bloomberg TV Tuesday at the Singapore Airshow. Honeywell supplies the narrowbody jet’s flight-control systems, wheels, brakes, auxiliary power units and navigation systems.
China: ‘Serious’ fallout if Washington plaza renamed for jailed dissident – The Washington Post China warned the United States on Tuesday it would face “serious consequences” if it renamed a stretch of street in front of the Chinese embassy in Washington after a jailed Chinese dissident and Nobel Peace Prize winner. On Friday, the U.S. Senate unanimously backed a proposal introduced by Republican presidential candidate Sen. Ted Cruz of Texas to rename the plaza in front of the embassy after Liu Xiaobo, who was jailed for 11 years in 2009 for inciting state subversion. // has the US ever threatened China with “serious consequences” if it does not release Liu Xiaobo?
Is China Considering a High-Risk Change to Its Nuclear Deterrence Posture? | The Diplomat It’s unclear if the recent creation of China’s People’s Liberation Army Rocket Force (PLARF) suggests that a shift to a high alert nuclear force is more likely or, indeed, that it is a fait accompli and already in place without public notification (a highly dangerous idea and unlikely for now). It is clear that changes are afoot for China’s nuclear forces. For example, as my colleague Franz-Stefan Gady noted recently, China is upgrading its older ICBMs with multiple, independently retargetable reentry vehicles (MIRVs), a destabilizing modifier to its existing nuclear forces. Moreover, China has been testing hypersonic launch vehicles capable of delivering nuclear strikes, another highly destabilizing innovation for strategic stability. Interestingly, China’s 2015 Defense White Paper explicitly affirmed its no-first use policy and highlighted that its nuclear weapons were position solely for “strategic deterrence and nuclear counterattack.” Interestingly, as Tong Zhao noted in The Diplomat last year, the White Paper, for the first time, explicitly notes that Beijing was interested in improving its “strategic early warning” for its nuclear forces.
China May Put its Nuclear Weapons on High Alert, and It’s a Dangerous Idea The Union of Concerned Scientists has long recommended that the United States take its own nuclear weapons off high alert, and President Obama could do that without congressional approval before leaving office. Such a move, which has the support of a significant number of former high-ranking administration and Pentagon officials, would help put international pressure on Russia to do the same and China to refrain from adopting such a policy. “It’s critical for the Obama administration to pay attention to this ongoing debate in China over a hair-trigger policy because it’s part of a bigger conversation about the future of the country’s nuclear forces,” said Kulacki.
U.N. rights boss urges China to release lawyers, treat Hong Kong booksellers fairly | Reuters Zeid Ra’ad Al Hussein, U.N. High Commissioner for Human Rights, also voiced concern for five missing booksellers from Hong Kong and urged Beijing authorities to ensure a “fair and transparent procedure” for their cases and allow family and lawyer visits. “We are seeing a very worrying pattern in China that has serious implications for civil society and the important work they do across the country,” Zeid said in a statement, voicing fears that a Chinese draft law on non-governmental organizations would curb freedoms of expression and assembly.
Thailand bets on China-led AIIB to finance massive infrastructure needs – East by Southeast Thailand’s junta is attempting to revive the country’s flailing economy with an ambitious spending program of over US$100 billion that would include large-scale infrastructure upgrades for the country’s railways and roads, as well as air and seaports. Being one of the fifty-seven founding members of the AIIB, Thailand could potentially receive cheaper loan rates and more flexible lending conditions from the Beijing-based bank, compared against the US-led World Bank or the Japan-led Asian Development Bank.
社评：政党政治对美“司法独立”的顶层渗透评论环球网 Global Times finds propaganda value in GOP obstructionism over replacing Justice Scalia // 大法官任命毕竟不是美国政党政治最突出的镜子，美国人即使反政党政治，大概也想不到从这里开刀。然而斯卡利亚突然去世，美国两党迅速掐起来，还是很有戏剧性。所有规矩都是人定的，政治的影响到什么时候都具有主动性，为斯卡利亚补缺的争夺战让人看到，美国这个西方“司法独立的榜样”也未能在这个问题上免俗。
大法官之争为美国司法独立打上问号（深度观察）–国际–人民网 People’s Daily also finds propaganda value in GOP obstructionism over replacing Justice Scalia
HONG KONG, MACAO AND TAIWAN
‘Lay down the law’: Basic Law Committee member Rao Geping calls for national security legislation in Hong Kong after Mong Kok riot | South China Morning Post A leading mainland expert on Hong Kong affairs yesterday called for shelved national security legislation to be enacted urgently in the wake of last week’s riot in Mong Kok, backing Beijing’s move to label the rioters “separatists” in a similar category as those in Tibet and Xinjiang.
TECH AND MEDIA
SEC: Tech Company Bribed Chinese Officials An SEC investigation found that two Chinese subsidiaries of PTC Inc. provided non-business related travel and other improper payments to various Chinese government officials in an effort to win business. PTC agreed to pay $11.858 million in disgorgement and $1.764 million in prejudgment interest to settle the SEC’s charges and its two China subsidiaries agreed to pay a $14.54 million fine in a non-prosecution agreement announced today by the U.S. Department of Justice.
32 billion virtual red packets were sent out over WeChat last week!: Shanghaiist That’s tenfold the number of electronic red envelopes from last year’s Spring Festival, which was a mere 3.27 billion, reports Shanghai Daily. This time 516 million participants on WeChat joined in on the virtual version of the holiday tradition. Reminder that China’s population in 2013 was estimated at 1.357 billion….Meanwhile, Alipay also has done well for itself, boasting more than 100 million players in its interactive sessions during the Spring Festival Gala. Interestingly, 64% of that crowd were from third and fourth-tier cities. In collaboration with 45 sponsors Alipay awarded a cumulative 800 million yuan as prize money. // I sent a couple of dozen, got a handful, almost broke even
Apple Pay to go live in China on Feb 18 | Reuters Apple Inc’s (AAPL.O) Apple Pay mobile payment system will be available in China from Feb. 18 for Industrial and Commercial Bank of China Ltd (ICBC) (601398.SS)(1398.HK) customers, bank representatives said in social media posts on Tuesday.
New China regulation seeks to tighten control over ‘creative works’ published online | South China Morning Post Foreign firms and their joint ventures to be barred from directly publishing games, animation, comics, audio recordings and video
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
China’s Rich Kids Head West – The New Yorker Zhou Xueguang, a sociology professor at Stanford who received his bachelor’s degree in China, told me, “The competition in the Chinese school system is known to be brutal.” He went on, “There are only so many slots in good schools, and, at a certain level, it doesn’t matter how much money you have—you won’t be able to get in.” But, for affluent Chinese, the most basic reason to move abroad is that fortunes in China are precarious. The concerns go deeper than anxiety about the country’s slowing growth and turbulent stock market; it is very difficult to progress above a certain level in business without cultivating, and sometimes buying, the support of government officials, who are often ousted in anti-corruption sweeps instigated by rivals.
Cabinet Bans Younger ‘Left-Behind Children’ from Living Alone-Caixin The children of migrant workers would be better off joining their parents in the city, but the reality is that the youngsters are denied access to basic services such as public schooling when they move, Du said.
ENERGY, ENVIRONMENT, SCIENCE AND HEALTH
China uproots 9,000 people for huge telescope in search for aliens | World news | The Guardian China is to relocate more than 9,000 people in the lead-up to the opening of the world’s largest radio telescope later this year – a move that Beijing hopes will boost the global hunt for extraterrestrial life. Work on the 1.2bn yuan (£127m) Fast (Five-hundred-metre Aperture Spherical Radio Telescope) project began in the south-western province of Guizhou in 2011 and is expected to be completed by September.
Xinjiang Region of China Bans Glacier Tourism, Citing Risk to Ecosystem – The New York Times The report said that, over the last 50 years, the average temperature in Xinjiang had risen 0.33 to 0.39 degrees Celsius a decade, or about 0.6 to 0.7 degrees Fahrenheit, nearly three times the global average. China has 46,377 glaciers, and about 47 percent of the national ice reserves are in Xinjiang, a rugged region of deserts, forests and soaring mountains that shares borders with more than half a dozen countries. The report said that “global warming, grazing, mining and tourism have accelerated destruction of the glaciers, and led to water shortages in several areas.”
China embarks on new era of space science | gbtimes.com Dr Wu Ji, director-general of the National Space Science Centre (NSSC) under the Chinese Academy of Sciences (CAS), has combined with colleagues across the country to provide a long-term vision for Chinese space science. They have produced the ‘Prospect for Chinese Space Science in 2016-2030’ ( Chinese) which outlines fundamental questions for study such as the formation and evolution of the universe, exoplanets and potential extra-terrestrial life, and new physics beyond the current theories.
Medical Fees Proposal Jolts China’s Pensioners-Caixin Under a plan mulled by the government, the days of free medical insurance coverage could soon be over for 72 million retirees in urban areas
AGRICULTURE AND RURAL ISSUES
Dim Sums: Rural China Economics and Policy: Banks for Poor Chinese Farmers Go Bust Sour investments bankrupted dozens of rural cooperative banking organizations in China, destroying the life savings of thousands of peasants. It seems that small cooperative banks are just as vulnerable to looting and irresponsible investments as big ones on Wall Street.
新华：农村攀比购车之风堪忧 不少有车族欠巨债新闻腾讯网 Xinhua looks at rural residents going into debt to buy cars, buying because they feel the need to keep up with others in the villages who have cars
FOOD AND TRAVEL
Record number of Chinese travel abroad for Spring Festival-China DaIly Of the 300 million Chinese who traveled during the weeklong holiday, a record 6 million visited overseas destinations, according to Ctrip.com International Ltd, the nation’s largest online travel agency. It is customary for Chinese to visit their hometowns and celebrate Chinese New Year with family.
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