1. WSJ: Senate panel approves Baucus for ambassador to China
Full Senate expected to confirm Montana Democrat later in the week.
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2. WSJ - William Galston Oped: Obama's moment of truth on trade
Bill Clinton bucked his own party to get Nafta. Will this president do the same to get agreements with Europe and Asia?
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3. NYT: Designer seed thought to be latest target by the Chinese
The case of the missing corn seeds first broke in May 2011 when a manager at a DuPont research farm in east-central Iowa noticed a man on his knees, digging up the field. When confronted, the man, Mo Hailong, who was with his colleague Wang Lei, appeared flushed. Mr.
Mo told the manager that he worked for the University of Iowa and was traveling to a conference nearby. When the manager paused to
answered his
cellphone, the two men sped off in a car, racing through a ditch to get away, federal authorities said. What ensued was about a year of F.B.I.
surveillance of Mr.
Mo and his associates, all but one of whom worked for the Beijing Dabeinong Technology Group or its subsidiary Kings Nower Seed. It resulted in the arrest of Mr.
Mo last December and the indictment of five other Chinese citizens on charges of stealing trade secrets in what the authorities and agriculture experts have called an unusual and brazen scheme to undercut expensive, time-consuming research. China has long been implicated in economic espionage efforts involving aviation technology, paint formulas and financial data. Chinese knockoffs of fashion accessories have long held a place in the mainstream. But the case of Mr.
Mo — who was arraigned last week in Des Moines, pleaded not guilty and remains in custody — and a separate one in Kansas last year
suggest that the agriculture sector is becoming a greater target, something that industry analysts fear could hurt the competitive advantage of farmers and big agriculture alike. “Agriculture is an emerging trend that we’re seeing,” said Robert Anderson Jr., assistant director of counterintelligence at the F.B.I., adding that the trend has developed internationally in the last two years. “It’s pretty clear cut. Before then, the majority of the countries and hostile intelligence services within those countries were stealing the other stuff.”
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4. AP: China takes aim at exclusive restaurants in parks
For years, the sumptuous Scholarly House restaurant and its compound of pavilions in the center of Beijing’s Dragon Lake Park has been off-limits to most park goers, catering to wealthy businessmen and government officials. But now it has been forced to throw open its gates to the public, one of many ritzy restaurants and private clubs in public parks that have become the latest targets of an austerity campaign by the government to curb lavish banquets for party cadres — considered a breeding ground of corruption.
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5. FT - Patti Waldmeir: The new year rides in on a whimper
Chinese new year without fireworks would be like Christmas without a tree or Easter without eggs. But this lunar new year, for the first time since I came to China in 2008, it looks like the country could be kicking the habit. What is the world coming to?
New year was always my
favourite time of year: a time when my family could gather around a pile of lethal pyrotechnics while one or the other of my children fired them off into oncoming traffic after igniting them with a lighter shaped like a handgun. Some children just never
realise just how lucky they are to live in a country without a tradition of
explosives litigation. But let’s count our blessings:
WeChat, a social messaging platform, made it possible to send traditional red envelopes of cash, or
hongbao, electronically this year. And when I woke up on New Year’s day, the app on my
smartphone registered a level of fine particle pollution that was a mere 10 times the level considered safe by the World Health
Organisation. After six years in China, that ranks as a blue sky day in my book. Clean
(ish) air on new year – now that’s a year to remember.
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6. NYT: Philippine leader sounds alarm on China
President Benigno S. Aquino III called on Tuesday for nations around the world to do more to support the Philippines in resisting
China’s assertive claims to the seas near his country, drawing a comparison to the West’s failure to support Czechoslovakia against Hitler’s demands for Czech land in 1938. Like Czechoslovakia, the Philippines faces demands to surrender territory piecemeal to a much stronger foreign power and needs more robust foreign support for the rule of international law if it is to resist, President Aquino said in a 90-minute interview in the wood-paneled music room of the presidential palace. “If we say yes to something we believe is wrong now, what guarantee is there that the wrong will not be further exacerbated down the line?” he said. He later added, “At what point do you say, ‘Enough is enough’? Well, the world has to say it — remember that the Sudetenland was given in an attempt to appease Hitler to prevent World War II.”
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7. Reuters: Japan unease over U.S. alliance adds fuel to Abe's security shift
In public, Japanese Prime Minister Shinzo Abe's government lists a more assertive China and a volatile North Korea as its top security concerns. Behind the scenes, though, another concern is growing: that the United States may one day be unable or unwilling to defend Japan, interviews with Abe advisers, politicians and security experts show. The worries are adding momentum to Abe's drive to beef up Japan's air and naval forces while loosening constitutional limits on action its military can take abroad. Japanese angst over the country's security alliance with Washington follows years of double-digit defense spending increases by Tokyo's arch rival in Asia, China. Unpredictable North Korea, whose missiles can hit Japan, has meanwhile pushed ahead with nuclear and missile programs despite international sanctions. "If you are a strategic thinker or alliance
planner you have to be ready for the worst case scenario," a former Japanese diplomat close to Abe told Reuters, citing concerns about a decline in U.S.
military capability and readiness. "We should discuss roles and missions, including the kinds of weapons we have or don't have," added the ex-diplomat, who requested anonymity because he doesn't hold an official position.
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8. Businessweek: China’s oil pipeline through Myanmar brings both energy and resentment
Until recently, 80 percent of China’s oil and gas imports were transported by ship through a narrow waterway separating Indonesia and Malaysia, known as the Strait of Malacca. The possibility that hostile forces could one day block that crucial passageway and starve the country of energy has long made China’s leaders nervous. In 2009, two state-owned energy giants inked a $2.5 billion agreement to loosen the pinch: China National Petroleum and Myanmar Oil & Gas Enterprise agreed to lay down more than 500 miles of oil and gas pipelines from Myanmar’s western coast
to China’s southwestern Yunnan province. When the oil pipeline goes online later this year, tankers carrying crude from the Middle East and Africa will be able to dock at Myanmar’s port of Kyaukpyu and send as many as 440,000 barrels of oil a day overland to China. Industry news service Platts (MHFI) reports that the oil pipeline is 75 percent complete and should be operational by June.
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9. Bloomberg: China savers’ penchant for property magnifies bust danger
Chinese households’ concentration of wealth in real estate is magnifying the danger to the world’s second-largest economy of any property bust, as the nation grapples with the consequences of its record credit surge. Some 66.1 percent of family assets were in housing in 2013, a national survey of about 28,000 households shows. Mortgage debt as a share of disposable income rose to 30 percent from 18 percent in 2008, according to estimates by Nicholas Lardy at the Peterson Institute for International Economics in Washington.
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10. FT: Move to save ICBC trust echoes Guangdong affair of 1998
A mixture of relief and concern greeted the decision in late January to keep an investment product distributed by China’s largest bank, ICBC, from defaulting. “The concern is that if a default occurs, investors may walk away and put the whole shadow banking market into a liquidity-driven credit crisis,” wrote JPMorgan economist Haibin Zhu in a note to clients. “But a well managed default could be a positive step for China’s shadow banking industry.” Mr Zhu added that slowing growth makes a default more likely this year in the lightly regulated world of trust companies that come up with such investments to get around China’s artificially low rates of return for savers. “It would help restore market discipline and mitigate the moral hazard problem,” he noted. If the authorities fail to act, these investment products will continue to attract money from households desperate to earn a better return than they currently get on their deposits. That money will then flow to areas such as property development where authorities fret that prices are already way too high for ordinary people. The possibility of defaults on the one hand and bubbles on the other could threaten social stability, Beijing’s biggest recurring nightmare. Still, a default would not be unprecedented.
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11. SD: Service sector growth slowest in 23 months
Business activity in China’s service sector expanded in January at the slowest rate in 23 months due to the weak real estate sector. The official non-manufacturing Purchasing Managers’ Index fell for the third straight month to 53.4 in January from 54.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. This
was the lowest reading since February 2012. The bureau surveys 1,200 non-manufacturing enterprises in 27 industries to generate the monthly gauge where a reading above 50 indicates expansion. “Indices for business activities and new orders in the real estate sector dropped significantly for two consecutive months and fell below 50 in January,” said Wu Wei, an analyst at the federation. “The trend of the data showed that real estate activity was weak, indicating that the sector is undergoing a low season.”
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12. Caixin: U.S. detains property tycoon wanted in HK over bribes to bank executives
Zeng Wei stopped while trying to enter the Pacific island of Saipan, and Hong Kong says it is preparing extradition documents.
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13. FT: Lenovo crashes on concerns over aggressive dealmaking
Investors ditched Lenovo shares after the four-day lunar new year holiday on Tuesday, as weekend speculation of a third acquisition by the Chinese computer maker in as many weeks added to concerns about its aggressive
dealmaking. Lenovo’s shares fell more than 16 per cent on the first full day of trading since its $2.9bn takeover of the Motorola handset business owned by Google was announced last week. That deal, on top of the $2.3bn deal for IBM’s low-end server business announced a week earlier, led to a string of downgrades from analysts at banks including CCB, Jefferies, Morgan Stanley and UBS. Lenovo was also touted as a buyer for Sony’s Vaio laptop business outside of Japan in one Japanese press report over the weekend. Sony denied that any talks were under way with the Chinese company, while Lenovo declined to comment on
rumours. Yang Yuanqing, Lenovo’s chairman, has won some praise for the audacity of his
dealmaking, designed to elevate Lenovo from being the world’s largest manufacturer of PCs to a leading player in technology.
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14. Reuters: Carmaker Tesla wins China fans with 'fair' price strategy
In China, where higher prices mean prestige, luxury U.S.
electric carmaker Tesla is taking a bold step to win over clients and cachet by curbing the markup to just half of what some of its rivals can command. Though it risks relegating its brand to a lower tier, Tesla's marketing strategy could prove a model for other imported brands, which have come under fire from China state media and regulators for allegedly ripping off shoppers with inflated prices. In an unusual blog post last month, the firm detailed the lower-than-expected 734,000 yuan ($121,400) China price tag for its high-end Model S electric car. The price, still 50 percent higher than in the United States, includes only "unavoidable" taxes and transport costs, it said. "If we were to follow standard industry practice, we could get away with charging twice as much for the Model S in China as we do in the United States. But we're doing things differently," Tesla said in the blog on January 22, posted to consumers through popular Chinese social media channels.
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15. Bloomberg: Pimco’s Bill Gross says he avoids China ‘mystery meat’
Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co., said the pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets. “I call China the mystery meat of emerging-market countries,” Gross said yesterday during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. “Nobody knows what’s there and there’s a little bit of bologna, so we’re just going to have to wonder going forward through this year as to the potential problems in China and other emerging markets.”
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16. NYT - Yu Hua Oped: The censorship pendulum
If you want to understand the current state of self-expression in China, the best indicator must be the line “Sorry, the text has been deleted.” Last year began as a relatively permissive period for expression of opinion. Following the 18th National Congress of the Communist Party, in November 2012, officials both in Beijing and in the provinces acknowledged the need to heed criticisms coming from the people. Such criticism was not to be found in the official media, of course, so one had to go looking for it in the world of
Weibo, the
microblogging site. But often you wouldn’t find the criticisms there, either, because Weibo was chock-full of the message, “Sorry, the text has been deleted.”
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