1. AFP: China's bullying economic diplomacy may backfire: experts
Mountains of Norwegian salmon left rotting at
port. A beachfront resort in Palau abandoned before completion. A sluggish response to a devastating Philippine typhoon: crossing China's "red lines" can have painful economic consequences. Beijing is looking to build up its political and diplomatic status as a "major responsible country" commensurate with its global economic position, and improve its cultural reach worldwide. As well as the world's second-largest economy, China is its biggest trading nation in goods and Africa's biggest trading partner, a fact highlighted last week by Japan's attempt to present itself as a competitor on the continent. But experts say Beijing's tactical moves towards smaller countries risk backfiring against its broader strategy. Beijing has sought to punish Norway since the 2010 Nobel Peace Prize was awarded to
jailed dissident and pro-democracy activist Liu Xiaobo -- despite Oslo
having no control over the prize committee's decisions. Strict new import controls left Norwegian salmon wasting away in Chinese warehouses, and its market share in the country, once 92 percent, plummeted to 29 percent last year. A musical starring Norwegian 2009 Eurovision winner Alexander Rybak had its tour cancelled, and Norwegians are excluded from China's 72-hour transit visa schemes. "The 'bully boy' tactics China has adopted, especially with regard to
small nations such as Norway...
are typical of a passive-aggressive kind of personality," Phil Mead, a British businessman who helps small Chinese companies in the European market, told AFP.
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2. Reuters: China creates teams to spearhead economic change, with top leaders in charge
China has created six teams to supervise its boldest economic and social changes in 30 years, with President Xi Jinping and Premier Li Keqiang personally taking charge, state media said on Wednesday. Xi has been appointed the head of the central leading group for comprehensive reforms that will oversee the six teams, with Li as his deputy, state radio said after the group held its first-ever meeting. Liu Yunshan and Zhang Gaoli, part of China's elite seven-member Standing Committee - the most powerful governing group in the country - have also been named deputies of the central leading group, the radio said. Letting China's most powerful leaders take charge of the nation's quest for change should alleviate investor
scepticism that Beijing may lack the political will to push through the many difficult reforms deemed necessary. The six teams are the reform group for economic, ecological and
civilisation systems; the cultural reform group; the reform group for the democratic rule of law; the social reform group; the reform group for the institution of building the Communist Party; and the reform group for the system of discipline and checks. After three decades of breakneck economic growth that lifted many millions of Chinese out of abject
poverty but also inflicted grave damage on the environment, China wants to change tack and have higher-quality development instead. The government announced its
blue-print for change in November that promised sweeping changes to the economy and social fabric, leading many experts to call it China's most ambitious reform plan in 30 years.
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3. LAT: Leaked files reveal offshore holdings of rich, politically connected
From the brother-in-law of Chinese President Xi Jinping to a daughter of the late Philippine dictator Ferdinand Marcos, thousands of the rich and politically connected have been outed as having secret offshore holdings. The International Consortium of Investigative Journalists on Wednesday said it had obtained a cache of about 2.5 million files with information from two financial firms, Singapore-based Portcullis TrustNet and Commonwealth Trust Ltd.
of the British Virgin Islands, that helped wealthy customers set up offshore accounts. When measured in gigabytes, the data
is more than 160 times larger than the State Department documents released in 2010 by Wikileaks, the Washington-based nonprofit wrote. It did not disclose who leaked the data or the motives behind the disclosure. The names published are a veritable who’s who of political elites from all corners of the globe: the wife of Russia’s deputy prime minister, Igor Shuvalov, and top executives of Russian energy giant Gazprom. From Mongolia, the deputy speaker of parliament; from Azerbaijan, the daughters of President Ilham Aliyev; and from the Philippines, Imee Marcos, a provincial governor and the late leader's eldest daughter. Among the Americans was Denise Rich, a songwriter and the ex-wife of the late Marc Rich, a financier indicted on charges of tax evasion, illegal dealings with Iran and other crimes who was later pardoned by President Clinton.
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4. NYT: Report finds elite Chinese using offshore companies
Members of the Chinese elite, including some of the country’s most politically connected figures, have set up a large number of offshore companies that allow them to conceal billions of dollars abroad, according to a new report released Wednesday by the International Consortium of Investigative Journalists, a Washington-based group that works with a number of news organizations around the world. The report’s authors say it is based on leaked documents concerning tens of thousands of tax-haven clients. The report names more than a dozen of China’s wealthiest people, as well as relatives of top officials, including those of the country’s leader, Xi Jinping; the former premier, Wen Jiabao; and the descendants of the ruling Communist Party’s revolutionary founders. The report was released at an awkward time for Mr. Xi, who has made cracking down on corruption and reining in officials’ displays of wealth among his top priorities since taking charge of the Communist Party in 2012. The combination of wealth and power illustrated in the report could become a political liability for the government at a time when the Chinese public is increasingly concerned about official privilege. During a regular news briefing, a Foreign Ministry spokesman who was asked about the report dismissed it as “hardly convincing,” and suggested that those who leaked the documents had ulterior motives. Censors blocked access to the consortium’s online report in much of China on Wednesday, and Chinese media made no mention of it.
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5. Reuters: Massive Internet mishap sparks Great Firewall scrutiny in China
Human error likely caused a glitch in China's Great Firewall that saw millions of Internet users ironically rerouted to the
homepage of a U
.S
.-based company which helps people evade Beijing's web censorship, sources told Reuters. Hundreds of millions of people attempting to visit China's most popular websites on Tuesday afternoon found themselves redirected to Dynamic Internet Technology (DIT), a company that sells anti-censorship web services tailored for Chinese users. The official Xinhua news agency on Tuesday quoted experts as saying that the malfunction could have been the result of a hacking attack, and domestic media
was full of speculation along those lines. DIT is tied to the Falun Gong, a spiritual group banned in
China which has been blamed for past hacking attacks. During a daily news briefing, Chinese Foreign Ministry spokesman Qin Gang said he had "noted" reports of Falun Gong involvement, but said he did not know who was responsible. "I don't know who did this or where it came from, but what I want to point out is this reminds us once again that maintaining Internet security needs strengthened international cooperation. This again shows that China is a victim of hacking."
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6. NYT: Chinese internet traffic redirected to small Wyoming house
In one of the more bizarre twists in recent Internet memory, much of the Internet traffic in China was redirected to a mysterious company in Cheyenne, Wyo., on Tuesday. A large portion of China’s 500 million Internet users were unable to load websites ending in .com,
.net or
.org for nearly eight hours in most regions of China, according to Compuware, a Detroit-based technology company. The China Internet Network Information Center, a state-run agency that deals with Internet affairs, said it had traced the problem to the country’s domain name system. And one of China’s biggest antivirus software vendors, Qihoo 360 Technology, said the problems affected roughly three-quarters of the country’s domain name system servers. Those servers, which act as a switchboard for Internet traffic behind China’s Great Firewall, routed traffic from some of China’s most popular sites, including Baidu and Sina, to a block of Internet addresses registered to Sophidea Incorporated, a mysterious company that– until last year– was housed on a residential street in Cheyenne, Wyo.
and moved to a two-story building last year.
NYT Back to Top
7. NYT: Chinese web outage blamed on censorship glitch
Chinese authorities on Wednesday suggested that a major disruption of the Internet in China this week was the work of hackers. But others blamed the massive outage on a malfunction of the government’s own Great Firewall, the sprawling, hidden infrastructure used to restrict what ordinary Chinese can see online. Millions of Internet users in China attempting to access a range of websites on Tuesday afternoon were rerouted to servers run by a small American firm dedicated to fighting web censorship. For more than an hour, Chinese users reported being unable to access websites ending in
.com, .
net, and
.org, including the popular search engine Baidu and
microblogging platform Sina Weibo. The problem is said to have affected as much as two-thirds of Internet traffic in China. The state-run Global Times called the disruption a “mysterious attack” most likely carried out by hackers. Other official media also quoted experts speculating about a hacking attack. During a regular news briefing, Foreign Ministry spokesman Qin Gang said he had noted reports of involvement by Falun Gong, a banned spiritual movement, but he added, “I don’t know who did this or where it came from.”
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8. WSJ: New frugality puts strain on Chinese firms
As China prepares for the Year of the Horse, a crackdown on wasteful spending and corruption is weighing on calendar maker Li Zhen. A growing list of new rules requires government officials to
downshift their lifestyles by reducing public money spent on cigarettes, banquets, cars and travel, and fully eliminating perks like fireworks and private-jet travel. Tallying up edicts from the Communist Party's internal corruption watchdog, more than a dozen
broad categories of behavior, from entertainment to funerals, are being monitored for profligate spending. The policy shift, announced in November, throttled the printing agency Mr. Li and his wife own, Shanghai Magnificent Star Calendar and Gift Ltd., by summarily forbidding thousands of government-owned banks and other companies from sending customers free calendars. Mr. Li's longtime business customers abruptly canceled orders. His warehouse now bulges with hundreds of thousands of increasingly unmarketable 2014 calendars worth over $170,000, including many embossed with corporate logos for companies that won't pay. "The impact is really huge," says 42-year-old Mr. Li.
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9. Bloomberg Businessweek: Chinese smog reaches all the way to Los Angeles
Pollution doesn’t pay attention to national boundaries, so there’s nothing stopping China’s smog from drifting back across the Pacific Ocean to plague Los Angeles. And that’s just what’s happening, according to a new study published in the Proceedings of the National Academy of Sciences. Researchers from China, Britain, and the U.S.
estimate that emissions from Chinese factories add up to an extra day of unhealthy air quality per year in the Hollywood Hills. Over the past 30 years, many international companies have moved manufacturing operations—and much of the pollution that accompanies them—to East Asia. But that doesn’t mean factories far away are operating cleanly. “We’ve outsourced our manufacturing and much of our pollution,” study co-author and University of California at Irvine earth-systems scientist Steve Davis said in a statement. “But some of it is blowing back across the Pacific to haunt us.” As much as a fourth of the sulfate pollution in the western U.S.
derives from Chinese factories. But as Davis points out, it’s not entirely fair to wag fingers at China alone—after all, it’s Western consumers that fuel demand for China’s polluting export industries. “This paper shows that there may be plenty of blame to go around,” he says.
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10. Charlie Rose: Interview with Cui Tiankai, Chinese ambassador to the United States (video)
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11. Reuters: China's Xi to pay first visit as president to Europe in March
China's Xi Jinping is expected to make his first trip as president to Europe in March, to meet the country's most important export partners after a year of trade tensions, EU diplomats said. Xi will participate in a Nuclear Security Summit in The Hague on March 24-25, which U.S. President Barack Obama will also attend to discuss efforts to prevent nuclear terrorism with other world leaders. One diplomat said Obama and Xi, who became president in March last year, are likely to hold talks on the sidelines of that meeting. From the Netherlands, Xi will travel to France and Germany before concluding his trip in Brussels on March 29, the diplomats told Reuters. "The Chinese President is expected to come to Brussels on March 29 and meet EU leaders," one said. Xi's arrival in Brussels would follow an EU-U
.S.
summit in the Belgian
capital which is planned
on March 26.
Reuters Back to Top
12. Reuters: Japan-China tensions take center-stage with Abe in Davos
Tensions between Tokyo and Beijing took
centre-stage at the World Economic Forum in Davos on Wednesday as Japan's prime minister called for military restraint in Asia and a senior Chinese academic branded him a troublemaker. Prime Minister Shinzo Abe defended his visit to a controversial shrine to Japan's war dead, which outraged China and South Korea, and took a veiled swipe at China's military buildup in his speech to global business leaders. Sino-Japanese ties, long colored by what Beijing considers Tokyo's failure to atone for its occupation of parts of China before and during World War Two, have deteriorated in the past two years over a territorial dispute, Abe's visit to a shrine that critics say glorifies Japan's wartime past and a new Chinese air-defense zone. Asia's two biggest powers each accuse the other of bellicosity. Strategic experts in Davos said their tensions posed the biggest risk of conflict around the world in 2014, along with hostility between Iran and Saudi Arabia. "We must
... restrain military expansion in Asia, which could otherwise go unchecked," Abe, the first Japanese leader to give the keynote address, said in a speech dominated by a defense of expansionary economic policies dubbed Abenomics.
Reuters Back to Top
13. Xinhua: China's reform leading group holds first meeting
China's leading group for overall reform on Wednesday convened its first meeting, which approved the working rules of the group as well as the working rules and members of six sub-groups. Xi Jinping, Chinese president and leader of the group, presided over the meeting, which was also attended by deputy group leaders Li Keqiang, Liu Yunshan and Zhang Gaoli, all members of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee. The leading group for overall reform was established upon a decision passed at a key meeting, the Third Plenary Session of the 18th Central Committee of the Communist Party of China in November last year, a measure to promote the country's comprehensive deepening of reforms. Attendees of the meeting on Wednesday deliberated on and passed the working rules of the leading group, the general office, and sub-groups for reforms in six areas, including the economy and ecological civilization, democracy and law, cultural system, social system, system of Party building, and discipline inspection system. Xi said at the meeting that the responsibility of the leading group is to implement all reform measures put forward
at the Plenary Session. He urged attendees to understand the spirit of the session, which serves as the basis of decision making. A series of reforms have already been put in place after the Plenary Session, including the axing of the reeducation through labor system, an easing of the one-child policy, and reform of the industrial and commercial registration system.
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14. Xinhua: China approves 12 more free trade zones
China's central government has given the nod to 12 free trade zones (FTZs) following the one in Shanghai, amid a spurt of nationwide enthusiasm for such schemes. Tianjin Municipality and Guangdong Province have been green-lit to set up FTZs, a source with knowledge of the approval told Xinhua-run Economic Information Daily on Wednesday, refusing to leak the remaining 10. After consent from the cabinet, a group of central government departments will conduct a joint survey of the proposed
zones, and hammer out specific establishment plans in a process that may last more than a year, said the source. So far, Tianjin and Guangdong have completed the survey part, which the other 10 have just started, according to the source. Provincial
regions including Zhejiang, Shandong, Liaoning, Henan, Fujian, Sichuan, Guangxi and Yunnan, and cities including Suzhou, Wuxi and Hefei have all said that filing FTZ applications is high up their 2014 priority list. "China sets no limits on FTZ
numbers and no timetables on building them, as long as they meet the requirements of an FTZ," added the source
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15. SCMP: Beijing announces strict new curbs on heavy industry to combat smog
New measures to combat smog, including strict curbs on heavy industry and stiffer fines, but critics argue city could have been even tougher.
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16. Xinhua: State companies’ profit grows 5.9% last year
Profit of China’s state-owned enterprises grew 5.9 percent last year, compared with a rise of 8.2 percent in the January-November period and 10.1 percent in the first 10 months of 2013, official data showed yesterday. The growth
pace, however, marked a significant change in fortunes compared with a decline of 5.8 percent in 2012. State-owned non-financial companies made a combined profit of 2.41 trillion yuan (US$398 billion) last year, the Ministry of Finance said in a statement on its website. The total business revenues of SOEs climbed 10.1 percent year on year to 46.47 trillion yuan last year, the ministry said. It did not give any explanation for the lower profit growth rate, but said SOEs in sectors including transport, electronics, auto production and real estate posted relatively fast profit growth, while those in nonferrous metals, coal mining and chemicals reported declines.
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17. DealBook: Muddy Waters turns up heat on auditor of Chinese firm
Carson C. Block has already issued a blistering critique of NQ Mobile, a Chinese mobile security company. Now, he is going after NQ Mobile’s auditor. Mr.
Block, the head of the Muddy Waters research firm, has sent a letter to senior executives of PricewaterhouseCoopers, urging the accounting giant to take a closer look at the books
of NQ Mobile, which Mr. Block contends are a “massive fraud.” If the accounting firm is prevented from doing so, then it should consider resigning as NQ Mobile’s auditor, Mr. Block wrote. The letter, dated Jan. 13, has not been previously reported. "Any PwC partner who believes the value of the PwC brand is worth preserving should take heed of the experience of other firms operating in China,” Mr. Block said in the letter. “Further unqualified opinions for NQ will likely end in embarrassment and litigation against the firm and its partners.” A spokesman for PricewaterhouseCoopers declined to comment.
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18. WSJ: For liquor makers, cheer dries up in China
More than a year after the Chinese government banned extravagant gift giving and scaled back state-funded banquets, liquor makers are starting to feel punch drunk. The crackdown on conspicuous consumption—part of an anticorruption drive led by President Xi Jinping —has hit spirits companies harder than most. Profit warnings, executive departures and restructuring drives have all been linked to the ban. One potential opportunity for a revival is the coming Lunar New Year celebration over two weeks starting Jan. 31, traditionally the busiest sales period of the year for drinks companies in China. But the omens for a shot of New Year's cheer don't look good. "No significant recovery can be expected due to the Chinese New Year," Rémy Cointreau SA, the maker of Rémy Martin cognac, said Tuesday.
WSJ Back to Top
19. AFP: US to host Africa summit amid concern over China's influence
US President Barack Obama will invite 47 leaders to a landmark US-Africa summit in August, countering Chinese inroads on the continent with offers of wider US trade, development and security ties. Obama will send out invitations
to all African nations that are currently in good standing with the United States or are not suspended from the African Union - meaning there will be no place for states like Egypt or Zimbabwe. Obama will hold the talks on August 5 and 6, seeking to cement progress from his trip to Africa last year. A White House statement said the trip would "advance the administration's focus on trade and investment in Africa, and highlight America's commitment to Africa's security, its democratic development, and its people". The idea for the summit, which takes place
with Washington increasingly aware of China's attempt to enhance its own diplomatic profile in Africa, was first announced by Obama in a speech in Cape Town in June. Obama cautioned last year against the idea that a new proxy cold war with China could play out in Africa. "This is not a zero-sum game. This is not the cold war. You've got one global market, and if countries that are now entering into middle-income status see Africa as a big opportunity for them, that can potentially help Africa," the president told reporters during a visit to the continent.
AFP Back to Top
20. Bloomberg: Fisker’s Chinese buyer would have to keep work in U.S.
The winner between two Chinese-backed bidders for
assets of bankrupt electric-car maker Fisker Automotive Inc.
will have to keep manufacturing and research in the U.S., Energy Secretary Ernest Moniz said. Hybrid Tech
Holdings LLC and Wanxiang America Corp.
are competing in U.S.
bankruptcy court for the remains of Fisker, an Energy Department loan recipient that stopped making its luxury plug-in hybrid cars in 2012. “I’m not going to pick a winner of the auction,” Moniz said today at the Washington Auto Show after giving a speech. “What’s key for us is of course the terms of our loan have to be respected. We have technology transfer limitations first of all. No matter who the winner is we will be looking at both engineering and manufacturing in the U.S. That’s the key for us.”
Bloomberg Back to Top
21. Reuters: China must spend $330 billion more to do fair share on climate - report
China must increase spending on emission cuts and clean technologies by 2 trillion yuan ($330 billion) to do its fair share to halt climate change, a report by Beijing's Central University of Finance and Economics said. It urged the government to raise money from carbon markets to fund investments. The report's conclusion contrasted with China's official policy that the main responsibility for ramping up action against climate change rests with developed nations. China, the world's biggest-emitting nation, has already pledged to spend 520 billion yuan to help prevent global temperatures from rising more than 2C, according to Chen Bo, co-author of the report. But that is only a fifth of what is needed if China - trailing only the United States on the list of history's biggest carbon emitters - is to shoulder a proportionate burden in global efforts to stop climate change, the report said.
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22. FT - David Piling: China abandons its pursuit of growth at all costs
Beijing knows the stakes are too high to allow for anything other than a gradual change of dosage.
FT Back to Top
